Archive for the ‘Land Registration Ordinance’ Category

Registration of Bankruptcy Order against spouse’s property

March 6, 2013

In Re Flat F 30/F Tower 20 (Hoi Kwai Mansion), Riviera Gardens ([2013] HKEC 286, CFI) H gave W the net proceeds of sale of a property he had sold. She used this money towards the cost of the renovation of a flat that she bought in her sole name. H became bankrupt and the Official Receiver registered the bankruptcy order against the title to the flat. W now sought to have the registration removed. She failed. Rule 73 of the Bankruptcy Rules allows the Official Receiver to register a bankruptcy order against the property of a spouse. W’s attempt was not helped by the fact that she had acknowledged that H had an interest in the flat (though it is not clear that the lack of such an acknowledgement would have made a difference). A bankruptcy order is not a lis pendens.

Charging order made after debtor had assigned the property to another

November 1, 2012

In Ng Kam Ha v Vincent Sina Traders (HK) Ltd [1987] HKLR 1193, HC):

C assigned a flat to N on 10 December 1985 and this was registered on 7th February 1986,

V obtained a charging order nisi over the flat in respect of a debt owed to it by C on 3rd February 1986 and this was registered on 6th February 1986.

It was held that the charging order did not affect N’s interest in the flat. C had assigned the flat, and so had no interest in it, by the time of the charging order. There was nothing for the charging order to attach to.

V could not invoke section 3(2) of the Land Registration Ordinance since it was not a purchaser or mortgagee.

Look at underlying nature of competing interests and their relative priorities before considering the impact of the Land Registration Ordinance

October 31, 2012

In Hong Kong Chinese Bank Ltd v Sky Phone Ltd ([2000] 3 HKLRD 749, CFI) the following events took place:

9 April 1995 – T granted a charge to X Bank and this was registered on 20 November 1995

1997

10 April 1997 – T borrowed from B1 and granted it a charge which was registered on 21 April.

21 April 1997 – T borrowed from B2 and granted it a charge which was registered on 23 May. The loan advanced by B2 was used to pay off the loan from Bank X which was discharged.

It was held that B2 was entitled in equity to stand in the shoes of X Bank since its funds had been used to repay the loan from X Bank. This unwritten equitable interest had priority over B1’s charge. Since it was not registrable, its priority was not affected by the Land Registration Ordinance.

The case illustrates the fact that the Land Registration Ordinance is not a self-contained system. One has to look at the interests involved and their relative priorities under an unregistered system before considering how that situation is affected by the Land Registration Ordinance.

The court also approved an alternative unjust enrichment analysis. B1 had bought a second charge. If it were to be given priority over Bank X (and B2) it would be unjustly enriched since it would have a first charge.

Charging order subject to prior unwritten equitable interest?

October 30, 2012

In Wa Lee Finance Co Ltd v Yau Tak Wah ([2002] HKEC 1102, CFI) W had charging orders over Y’s property and had registered them at the Land Registry. The applicants sought to be joined as defendants and to set aside the charging orders. They claimed that they had made substantial contributions to the cost of building the house on Y’s land. They had done so, they alleged, pursuant to a joint development agreement with Y under which they were to be assigned the ground and first floors of the house. The agreement had not been registered but they claimed to have the benefit of an unwritten equitable interest (by virtue of their financial contributions) independently of their rights under the unregistered agreement. The CFI decided that their claim was arguable. They were added as parties to the proceedings but the charging orders were not overturned. This question would have to await the trial of the action proper.

Registration of lis pendens when the dispute concerns ownership of shares of company owning the relevant land

October 22, 2012

In Lau King Teng v Cheng Miu Har ([2008] 4 HKLRD 563, CFI) D claimed that M held the shares in three companies partly in  trust for D. The companies’ assets comprised interests in land. D issued a writ seeking injunctions to prevent any dealings in the properties. The writ was then registered as a lis pendens. The Court accepted that this was legitimate even though, strictly speaking, D was claiming an interest in the shares and not in the property.

Vacation of registered lis pendens

June 18, 2012

Yeung Tsz Ying v Shen Frieda Tong ([2012] HKEC 844) concerned an application for an order to vacate a registered lis pendens under section 19 of the Land Registration Ordinance on the grounds that it was not prosecuted bona fide or for other good cause. The court expressed the view that the section was concerned with the process or handling of the litigation rather than the reasons behind its institution (para. 18). It was a question of whether the plaintiff had been dilatory in prosecuting the action. This certainly could not be said of the plaintiff in these proceedings. The court went on, out of caution, to consider whether there was any bad faith involved in bringing the litigation and found that this was not self-evidently so and the matter would need to be explored at a trial of the action.

Registration of application for ancillary relief as a lis pendens

May 18, 2012

In Choi Sung Po v Lai Woon Lan ([2012] HKEC 563) C and L had divorced in 2010. After that C bought a flat in his own name and C and S bought a flat as joint tenants. L amended her application for ancillary relief (Form A) to include an application for a settlement of property order and a transfer of property order in respect of these two properties. This was registered at the Land Registry against the properties. C sought to have the registration vacated. The Court pointed out that since the Form A was prima facie registable, the burden was on C to show why the registration had been vacated. He had failed to discharge this burden.

Late re-registration of charging orders does not affect priority vis-a-vis charging orders antecedent to the re-registration

July 22, 2011

The Land Registration Ordinance requires charging orders to be registered. Section 17 of the same ordinance requires them to be re-registered every 5 years. Where there are two charging orders, A and B, with A initially having priority over B, the later re-registration (or failure to re-register within the stated time period) does not give B priority over A (even during the period before B needs to re-register). Failure to re-register only affects A’s priority vis-a-vis interests that arise after A’s failure to re-register on time.

In Incorporated Owners of Century Centre v Bank of China (Hong Kong) Ltd ([2011] HKEC 864) Bank of China obtained and registered charging orders nisi and absolute in respect of certain property in 2001. HSBC obtained and registered  charging orders nisi and absolute in respect of the same property in 2002. Section 17 of the same ordinance requires them to be re-registered every 5 years. Each bank made its first re-registration within 5 years and Bank of China made its second re-registration in 2010 (a few weeks late). HSBC argued that it had priority (even if re-registration occurred within time) because the effect of re-registration was that the re-registered charging order was postponed to any existing registered charging orders. This argument failed. The re-registered charging order retained whatever priority it had previously enjoyed as against interests (including other charging orders). Were it not so, the priority of one interest over another would vary depending upon when the question of priority had to be addressed. Thus, on HSBC’s argument, it would enjoy priority from 2010 (the date of Bank of China’s registration) until the time came for it to re-register (when Bank of China would resume priority). Authority and principle were against HSBC’s submission. Bank of China had priority.

Priority as between unregistered instrument and a subsequent registered instrument

March 26, 2011

A registrable but unregistered instrument ranks after the interest of a later bona fide purchaser for value  even if the latter purchaser had notice of the prior instrument. Good faith and notice are not the same.

In Kwok Siu Lau v Kan Yang Che ((1913) 8 HKLR 52) the defendant had taken a lease of property but not registered it. The plaintiff then bought the reversion and registered the agreement for purchase. The plaintiff did not know of the lease at the date of the agreement but did know of it by the time of registration. The Full Court had to consider for the first time fundamental questions about the relationship between sections 3 and 4 of the Land Registration Ordinance and the equitable doctrine of notice. It held that priority in such a case as this depended entirely on whether or not the prior interest was registered. In the absence of bad faith, the equitable doctrine of notice had no part to play. Having notice of the earlier interest did not mean that one lacked good faith for the purposes of section 3(2).

Good faith and section 3(1) LRO

March 25, 2011

Section 3(1) of the Land Registration Ordinance is to be applied without any reference to the concept of good faith.

In Keep Point Development Ltd v Chan Yi Yim v Full Country Development ([2000] 2 HKLRD 145) Full Country bought units in a building to be redeveloped from their owners (the defendants). It granted them options to purchase units in the redeveloped building. These were not registered at the Land Registry. Full Country sold the building to the plaintiffs who registered their title. There was thus a priority contest between the plaintiff’s title and the defendants’ unregistered options. The CFI agreed that section 3(1) of the Land Registration Ordinance could be applied to resolve this question. The question of the purchaser’s good faith is irrelevant here. Even had the plaintiff relied on section 3(2) there was nothing to indicate a lack of good faith.