Mortgages – Application for declaration that lot free from mortgage after payment into court of sum redeeming mortgage – Whether one-stage approach appropriate – Correct procedure considered – Conveyancing and Property Ordinance (Cap 219) s 12A

RE LIGHT TIME INVESTMENTS LTD [2010] 4 HKC 64
Court of First Instance
Miscellaneous Proceedings Nos 326, 328, 330-47 of 2010
Deputy Judge L Chan
25 March 2010

Nancy Leung (Johnson, Stokes & Master) for the applicant.

The applicant was the owner of 20 lots in the New Territories, all of which had mortgages registered against them. He wanted to conduct an in situ exchange of lots with the government but the mortgages had to be cleared before the exchange. Most of the mortgages were created in or before 1905 and were endorsed against the lots in the block government lease, giving only the names of the mortgagees. The applicant sought directions under s 12A of the Conveyancing and Property Ordinance to pay into court a
sum sufficient to redeem the mortgage of each lot and the interest accrued, and in a one-stage approach declare upon payment being made that the lot was free from mortgage. No inquiries had been made with the applicant’s predecessors about the mortgagees or their descendants and there had been no advertising of the proceedings.

Held, stating that a one-stage approach was not appropriate:
Section 12A(2) gave the court a discretion whether to make the declaration or other orders or grant no relief at all. In exercising the discretion, the court had also to consider the question of notice to the encumbrancer. But the discretion only arose upon, and not before, payment being made under an order pursuant to s 12A(1).

Section 12A also did not authorise the court to give any remedy before payment into court. There was, therefore, no jurisdiction to declare the conditional release of the mortgage before payment into court had been made.

If the court adopted the one-stage approach, then these proceedings would be concluded without any notice to the public though the hearing was open to the public. For all these reasons the one-stage approach would not be adopted.

There was rarely any opposition to such applications. In most cases, the further hearing under s 12A(2) was short and formal, making a declaration to free the land from the mortgage. The second hearing should be obviated if it could be done without risk of injustice to the mortgagees or their descendants.

The court was satisfied that none of the mortgagees in these applications could be found and ordered the applicant to pay the agreed sums of moneys into court to redeem the mortgages as registered against the lots and any interest thereon. Within seven days after the payments into court, the applicant should put a notice in a widely circulated local Chinese newspaper making known this order and the fact that payments had been made into court and stating that any person interested in the mortgages and/or the payments might apply within 14 days to be joined as a respondent to the proceedings. No less than 21 days after the publication of the notice, the applicant might make a paper application pursuant to s 12A(2) of the Conveyancing and Property Ordinance for a declaration that the lots were free from the mortgages.