The Incorporated Owners Of Century Centre v Bank Of China (Hong Kong) Ltd And Another

HCMP 166/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 166 OF 2011

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BETWEEN

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J U D G M E N T

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1. Pursuant to an order of Yam J made on 29 April 2009 obtained by the plaintiff in Miscellaneous Proceedings No. 328 of 2009 the plaintiff sold the property known as Unit No. 5, 10th Floor, Century Centre, Nos. 44-46 Hung To Road, Kowloon (“the property”) for HK$2,130,000.

2. The sale of the property was completed on 14 January 2011.

3. These are interpleader proceedings taken out by the plaintiff against the 1^st defendant (“BOC”) and the 2^nd defendant (“HSBC”) who have competing claims to the balance of the proceeds of sale of the property.

4. By the order of Master Ho made on 29 April 2011 it was ordered, inter alia, that the plaintiff do within 14 days pay the net proceeds of sale into Court in the sum of HK$1,734,357.71 with interest if any. It was also ordered that the plaintiff be excused from further attendances before the Court and that an issue be tried before a judge.

5. The issue to be tried as ordered by the master is: Who is the person entitled to the net proceeds of sale?

6. On 6 May 2011 the plaintiff paid the sum of HK$1,734,357.71 into Court.

7. The plaintiff has no further interest in these proceedings and has been excused from further attendance.

8. BOC and HSBC each claim that it has the right to payment of the sum paid into Court in priority to the other. Both have registered charging orders against the property and the question to be determined is who has priority over the other.

9. The relevant facts are undisputed.

10. BOC obtained a charging order nisi against, inter alia, the property on 12 June 2001 in enforcement of a judgment dated 1 December 2000 in HCA 7501 of 2000. The charging order nisi was registered at the Land Registry on 14 June 2001.

11. BOC’s charging order was made absolute on 7 July 2001 (“BOC’s charging order absolute”). It was registered at the Land Registry on 23 July 2001.

12. HSBC obtained a charging order nisi against the property on 12 August 2002 in enforcement of an order dated 24 June 2002 in Miscellaneous Proceedings 1919 of 2001. The charging order nisi was registered at the Land Registry on 17 August 2002.

13. HSBC’s charging order was made absolute on 27 September 2002 (“HSBC’s charging order absolute”). It was registered at the Land Registry on 18 October 2002.

14. On 13 August 2005 BOC’s charging order absolute was re-registered at the Land Registry.

15. On 7 September 2007 HSBC’s charging order absolute was re-registered at the Land Registry.

16. On 29 September 2010 BOC’s charging order absolute was re-registered at the Land Registry.

17. Ms Sit, for BOC, contended that BOC’s charging order absolute has priority over HSBC’s charging order absolute so that an order should be made that the amount paid into Court by the plaintiff should be applied in the following priority:

(1) in discharge of what shall be due to BOC under the BOC’s charging order absolute; and

(2) the balance if any, in discharge of what shall be due to HSBC under the HSBC charging order absolute.

18. Mr Pao, for HSBC, contended that HSBC’s charging order absolute has priority over BOC’s charging order absolute and that the whole amount paid into Court by the plaintiff should be paid out to HSBC there being no dispute that the amount outstanding under HSBC’s charging order absolute far exceeds the amount paid into Court.

19. The answer to the question of which charging order has priority over the other turns upon the proper construction of the relevant provisions of the Land Registration Ordinance (Cap. 128) (“the Ordinance”).

20. It is important to bear in mind the relevant principles of statutory construction which are not disputed.

21. The starting point in statutory interpretation must always be the ordinary linguistic meaning of the words used (per Litton NPJ in Chan Tin Shi & Others v Li Tin Sung & Others (2006) 9 HKCFAR 29 at paragraph 10).

22. On the question of statutory interpretation, Bokhary PJ in Medical Council of Hong Kong v Chow Siu Shek (2000) 3 HKCFAR 144 at page 152 said

“ Statutory interpretation

The issue before the Court is one of statutory interpretation. There is a good deal of discussion in the cases and in academic writings of the rules or so-called rules of statutory interpretation. No useful purpose would be served by attempting to catalogue, let alone calibrate, all of them. But a proper appreciation of the law’s history being essential to its structured and enlightened development, it is worthwhile noting that historically the most significant rules of statutory interpretation appear to have been:

(i) the “literal rule” which accorded primacy to the literal meaning of the language used in the legislation unless and until some other factor or factors demonstrated that some other meaning represented the true intention of the legislature;

(ii) the “golden rule” which was that, whatever the literal meaning of the language which the legislature used, there was a presumption that it did not truly intend to bring about an absurd result; and

(iii) the “mischief rule” which presumed that the legislature has targeted a particular mischief and provided a remedy for it.

These old rules are of a complementary nature or at least have the potential for complementing each other. Elements of each of them can still be found in how the courts interpret statutes nowadays. And the modern tendency to give statutes a purposive construction may, I think, be viewed as being to an appreciable extent a development from the mischief rule in particular.”

23. With those observations I turn to the relevant provisions of the Ordinance.

24. The purpose of the Ordinance is to provide for the registration of deeds, conveyances, judgments and other instruments affecting real or immovable property, the keeping of Land Registry records and for other matters relating to land registration.

25. Section 2(1) provides that the Land Registry shall be a public office for the registration of, inter alia, deeds, conveyances, judgments and other instruments in writing affecting land in Hong Kong.

26. It is provided by section 2(2) that judgments include judgments and orders of, inter alia, the Court of First Instance.

27. Section 3 which deals with the priority of registered instruments and the effect of non-registration provides

“3.Priority of registered instruments;

effect of non-registration

(1) Subject to this Ordinance, all such deeds, conveyances, and other instruments in writing, and judgments, made, executed, or btained, and registered in pursuance hereof, shall have priority one over the other according to the priority of their respective dates of registration, which dates shall be determined in accordance with regulations made under this Ordinance.

(2) All such deeds, conveyances, and other instruments in writing, and judgments, as last aforesaid, which are not registered shall, as against any subsequent bona fide purchaser or mortgagee for valuable consideration of the same parcels of ground, tenements, or premises, be absolutely null and void to all intents and purposes:

………………………………………………………………………..”

28. It seems to me to be plain that section 3(1) deals with the order of priority of the deeds, conveyances, instruments in writing and judgments registered in the Land Registry whereas section 3(2) deals with the effect of non-registration.

29. Priority is determined by the respective dates of registration of the deeds, conveyances, instruments in writing and judgments (section 3(1)).

30. The effect of non-registration is that all such deeds, conveyances and other instruments in writing and judgments which are not registered shall, as against any subsequent bona fide purchaser or mortgagee for valuable consideration of the same property be absolutely null and void to all intents and purposes (section 3(2)).

31. Section 4 provides that no notice whatsoever, either actual or constructive, of any prior unregistered deed, conveyance or other instrument in writing or judgment shall affect the priority of any such instrument as is duly registered.

32. Thus it is clear that the question of priority is to be determined in accordance with section 3(1). Even if one were to have actual or constructive notice of any prior unregistered instrument or judgment affecting land section 4 clearly provides that this does not affect the priority of instruments or judgments which are duly registered.

33. Section 17 of the Ordinance provides

“ 17.Expiry and re-registration

The registration of a judgment, order or lis pendens shall cease to have effect at the end of 5...