A lis pendens must affect land

In Luen Ford Industrial Co Ltd v Woo Ming Han Juliana ([2015] HKEC 2639, CFI) D alleged that her father had procured her late mother’s execution of a transfer of the mother’s shares in a company (‘the parent company’) through the exercise of undue influence.  Her primary claim was for a declaration that the transfer was null and void. A subsidiary of the parent company (‘the subsidiary’) owned an industrial unit (‘the property’). D also sought orders preventing the subsidiary from selling the property or, alternatively, from disposing of the proceeds of sale. D’s solicitor registered the writ as a lis pendens against the property.

Deputy Judge Kenneth Kwok SC  ordered the registration to be vacated pursuant to section 19 of the Land Registration Ordinance. He referred to Thian’s Plastics Industrial Company Limited v Tin’s Chemical Industrial Company Limited and Anstalt Nybro v HK Resort Company Limited. This litigation did not affect land. There was no action against the owner of the land (the subsidiary). The action concerned the father and the parent company and their future conduct. The claim for an injunction to restrain the sale of the land was an artifice designed to give the appearance that there was a claim affecting land:

‘The registration was a blatant tactical move to bring about a standstill in the sale of the Subject Property. What is objectionable is that Juliana Woo and her then solicitors did not seek judicial approval to achieve her objective. Instead, they simply abused the registration system.’ ([33])

The alternative claim restraining the disposal of the sale proceeds was adequate protection for D.

The judgment closes with this warning:

‘Registration of a lis pendens is a clog on the owner’s title. Those who act in concert to procure registration of a lis which does not affect land should beware of possible liability.’ ([36])

Costs were awarded against D on an indemnity basis.

Michael Lower

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