Does a charging order sever a joint tenancy?

In Ho Hai Kwan v Chan Hon Kuen ([2015] HKEC 132, CFI) the question was whether there had been an equitable severance of a joint tenancy by virtue of a charging order in respect of the property against one of the co-owners. Was it an act operating on the joint tenant’s share? There were obiter dicta in previous Court of Appeal decisions (Malahon Credit Co Ltd v Siu Chun Wah Alice and Fortis Bank v Yu Kam Hoi Herman) to suggest that this was the case. In this case, it was successfully argued that a charging order did not have this effect. The argument was that a charging order (enforceable in the same way as an equitable charge by virtue of section 20B(3) of the High Court Ordinance) does not confer any title on the person who obtained it but merely creates an encumbrance ([19]). Thus, a charging order had no effect on the four unities of the joint tenancy and was insufficiently final and irrevocable; there was no alienation ([20] – [31]). The charging order did not sever the joint tenancy ([58]).

Michael Lower

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2 Responses to “Does a charging order sever a joint tenancy?”

  1. Raymond Tang Says:

    hi Michael
    in this respect, is it true to suggest that a potential purchaser could acquire the charged property, without having the charing order discharged, by completing an Assignment which made subject to the chargingvorder?

    • Michael Lower Says:

      Hi Raymond,
      If the priority of the charging order is protected by registration the purchaser would take subject to it whether or not the assignment was expressed to be subject to it. Hope I haven’t missed your point.

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