Priority contest between a charging order and an assignment

Asparouh Ianov Dimitrov v Dominic Tak Ming Lau ([2022] HKCA 1146 ) was a dispute between a creditor with a charging order over the debtor’s property (‘the Property’) and the debtor’s ex-wife to whom the debtor assigned the Property.

The sequence of events was:

  • 20 November 2017 –  charging order nisi obtained
  • 23 November 2017 –  charging order nisi registered
  • 3 January 2018         – debtor assigned the Property to his ex-wife
  • 15 January 2018       – charging order absolute obtained
  • 19 January 2018       – assignment registered
  • 25 January 2018       – charging order absolute registered

The creditor sought a declaration that the charging order had priority over the assignment and an order for sale and succeeded at first instance. The debtor’s wife appealed.

There was no difficulty in confirming that the charging order had priority over the assignment: the priority date for the charging order absolute relates back to the priority date for the charging order nisi ([20]).

Section 5A of the Land Registration Ordinance specifies that a charging order has priority from the day after its registration. The priority date of the charging order was 24 November 2017 (the day after the 23 November 2017 registration).

Section 5 of the Land Registration Ordinance says (in effect) that assignments registered within one month take effect as from the date they were executed. The priority date of the assignment was 3 January 2018.

The debtor’s wife relied (unsuccessfully) on an argument that she had a prior unwritten equitable interest to which the charging order was subject.

She argued, for example, that there was an oral gift of the Property to her before the date of the charging order nisi. She relied on Re Rose to argue that she had an equitable interest because her husband gave her the title deeds.

Hon Chow JA pointed out that her husband had not executed a deed of gift at the relevant time and so had not done everything in his power to divest himself of his interest in the land.

Arguments based on proprietary and / or promissory estoppel failed because, even assuming there to have been an assurance, the wife incurred no detriment.

The declaration that the charging order had priority and the order for sale were upheld.

Michael Lower

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2 Responses to “Priority contest between a charging order and an assignment”

  1. Chan Man Wa Says:

    so, if the deed of gift had been made before the charge was registered on 24th Nov, the court judgement would have been reversed in favour of the ex-wife, is it right? Thanks, Professor Lower.

    • Michael Lower Says:

      If it was made before the deed of gift and registered within one month or, at least, registered before the charging order nisi was registered then the deed of gift would have priority.

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