Posts Tagged ‘Land Registration Ordinance’

Registration of a personal loan agreement unjustified

May 4, 2016

In Flat 4 on 3/F of Block A, Tin Yau Court, No 1 Tin Shing Road, Tin Shui Wai, Yuen Long, New Territories ([2016] HKEC 751, CFI) title to the property had been in the joint names of a husband and wife. An order had been made to the effect that when a decree absolute had been made in the matrimonial proceedings, the husband would transfer his interest in the property to his former wife but it seems that this transfer did not take place. Over three years after the order, the husband entered into a personal, unsecured loan agreement. The lender sought to register the agreement against the property at the Land Registry. It was not registered but appeared as a deed pending registration. The wife asked the lender to withdraw the registration but it refused to do so. The wife applied for, and  was granted, a declaration that the loan agreement did not create an interest in land and so was not registrable. The court has an inherent jurisdiction to vacate the registration or purported registration of any instrument in the Land Registry which does not affect land ([16]). The question of costs was left for later but Anderson Chow J. referred to authorities where, on similar facts, costs had been awarded to the property owner on an indemnity basis; the courts are concerned to prevent the abuse of the land registration process ([9] – [10]).

Michael Lower

Land Registration Ordinance: a lis pendens involves a claim to a proprietary interest

January 27, 2016

In Wide Power Corp Ltd v Manhattan Court (IO) ([2015] 4 HKLRD 480, CFI) the incorporated owners of a building sought an injunction requiring an owner to remove unauthorised building works carried out in breach of the DMC. They registered the claim as a lis pendens. The owner successfully argued that the counterclaim did not relate to land or any interest or charge on land and so did not fall within the definition of a lis pendens in section 1A of the Land Registration Ordinance. A lis pendens must involve a claim to a proprietary interest or right in real property (Louis Chan J. at [76]). Here, the claim was an in personam claim against the owner. If the owner were to sell the property, the new owner would not be affected by the proceedings against the former owner. He would, of course, be liable under the terms of the DMC but this would involve a fresh claim against the new owner.

Michael Lower

A lis pendens must affect land

December 23, 2015

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

The court’s power to vacate a lis pendens

December 2, 2015

In Join Win Holdings Ltd v City Target Ltd ([2015] HKEC 2477, CA) the first instance judge dismissed P’s claim for a declaration that it had entered into an oral contract for the acquisition of D1’s property and for specific performance of that contract. There was no writing to satisfy section 3(1) of the Conveyancing and Property Ordinance and part performance had not been pleaded. The judge had also ordered that the lis pendens registered at the Land Registry be vacated. P appealed against this judgment and registered the notice of appeal as a lis pendens at the Land Registry. D1 successfully applied for the vacation of the notice of appeal from the Land Registry.

The Court of Appeal (Cheung JA giving the only full judgment) referred to the court’s power under section 19 of the Land Registration Ordinance to order the vacation of a lis pendens when it is satisfied that ‘the litigation is not prosecuted bona fide, or for other good cause shown.’ It also pointed to its inherent jurisdiction to order the vacation of a registration.

In deciding whether or not to vacate the registration, the court had to assess the merits of the appeal. This appeal was doomed to fail given the lack of any writing to satisfy section 3(1) ([2.11]). ‘The notice of appeal should never have been registered because putting the plaintiff’s case at its highest it is not one that can be said to affect the property.’ ([2.16]).

Michael Lower

 

Effect of failure to register a written declaration of trust

July 15, 2014

In HKSAR v Lau Kam Ying ([2013] HKEC 1503, CFA)  Company X transferred the title to land to indigenous villagers. The villagers executed declarations of trust to the effect that each of them held his section on trust for company X. This declaration was never registered. Company X was wound up.  When the Government resumed the land, some of the villagers assigned their land to Company Y which had been set up to collect compensation on their behalf. They made false statutory declarations to the effect that the title deeds had been lost. These were then submitted to the Government as part of the process of claiming the compensation.

The leading players behind the scheme were convicted of conspiracy to defraud. They had falsely represented that company Y was a bona fide purchaser for valuable consideration and concealed the beneficial interest of company X. In this decision, the Court of Final Appeal rejected the defendants’ application for leave to appeal against the convictions.

The defendants argued, first, that the declarations were null and void as against company Y as a result of section 3(2) of the Land Registration Ordinance. This failed since sections 3 and 4 of the Land Registration Ordinance, ‘concern priorities between registered instruments but do not affect remedies which may be available whether in contract, tort or equity.’ (Tang P.J. at [19]). The second argument was that the declaration was unenforceable on the grounds of public policy. This would have failed anyway since company X would not need to plead an illegal act (Tinsley v Milligan) ([20]).

In any event, the conviction relied on the fact of the concealment not on whether company X had an indefeasible beneficial interest ([21]).

 

 

Application to vacate the registration of a writ

November 12, 2013

In Huen Wai Kee v Choy Kwong Wan Christopher ([2013] HKEC 1784, CFI) H and C were the shareholders of P Ltd. C agreed to buy H’s shares for HK$40 million. C agreed that property (‘the property’) owned by R Ltd (a company controlled by C and his wife) would be security for C’s payment obligations under the share sale agreement. R Ltd entered into an agreement to sell the property to CG Ltd (a company controlled by H for HK$38.4 million). Any amount unpaid by C in respect of the shares would be set off against the price to be paid by CG Ltd. C failed to pay the full purchase price.

H and CG Ltd brought proceedings against C and R Ltd. H / CG Ltd sought the amount unpaid under the share sale agreement and in respect of dishonoured cheques and specific performance of R Ltd’s agreement to sell the property to CG Ltd.

They obtained an order for the payments to be made and, in the alternative, for specific performance of the agreement to sell the property to CG Ltd (with the amount owed by C being deducted from the purchase price of the property).

The order was registered at the Land Registry. C then entered into an agreement to sell the property to a third party for much more than the price payable by CG Ltd. C and R Ltd sought the vacation of the registration of the writ under section 19 of the Land Registration Ordinance.

They failed. The court’s intention was that it was H and CG Ltd who, under the terms of the order that had been made, had the option as to whether or not to insist on specific performance.

This hearing was not the occasion on which to argue that the order should not have been made.

Michael Lower