Wide Power Corp Ltd v Manhattan Court (IO)

Court of First Instance
High Court Action No. 1485 of 2013
Louis Chan J in Chambers
Land Law
31 July 2015

Registration – lis pendens – counterclaim for injunction requiring plaintiff to remove unauthorised building works within premises – not registrable as lis pendens

P, the owner of a flat in a building, claimed against D, the incorporated owners, for various reliefs. D’s defence and counterclaim (the “Counterclaim”) alleged that P or previous owners had erected unauthorised building works (“UBWs”) in the flat contrary to the deed of mutual covenant (the “DMC”). The Counterclaim sought, inter alia, an injunction against P to remove the UBWs and to restore the flat to its previous condition. D registered the Counterclaim as a lis pendens against the flat. P took steps to remove the UBWs and applied for an order to vacate the Counterclaim from the Land Registry. D claimed that the removal works were incomplete and refused to do so. Before the hearing of P’s application, P sold the flat to a third party. The Master then dismissed P’s application. P appealed.

Held, allowing the appeal:

  • If the Counterclaim were a claim in personam, as D now accepted, the judgment that it might establish would not bind a subsequent bona fide purchaser or mortgagee. Thus, there was no reason why it should be allowed to be registered. Res judicata did not apply as between D and a subsequent bona fide purchaser or mortgagee of the flat. The judgment was also not a matter of title although it might be evidence of a breach by the existing owner of the DMC. What bound the subsequent purchaser or mortgagee was the DMC which had been registered. Even if the Counterclaim was not registered as a lis pendens, no bona fide purchaser or mortgagee of the flat could obtain a title to it free of the DMC. It was for the subsequent purchaser or mortgagee to be satisfied of any breach of the DMC before completion. If the owners had covered up such breaches when conveying the premises to the purchaser, then the purchaser could resort to contractual remedies against the previous owner.
  • As for the issue of notice, pursuant to s. 4 of the LRO, if a judgment (or lis pendens) was not registered, then even if the subsequent purchaser had actual notice of it, the assignment of the subsequent purchaser would still have a higher priority over it. If the importance of the registration lay in the giving of notice of a claim to the subsequent purchaser and the claim was not for any proprietary interest in or charge on the property, then there was no reason to limit the mode of giving notice only to registration at the Land Registry and to compel such registration with the sanction of listing priority. There were many ways of giving notice of an infringement of the DMC to a potential purchaser. Hence, s. 4 should not be for compelling registration for such purposes, but to compel registration of a judgment (or lis pendens) that claimed an interest in or charge on the property in question. This would facilitate the tracing and ascertaining of title.
  • These and other provisions of the LRO, namely, ss. 2, 3(2), 5, 5A, 14, 16 and 17, provided for and regulated the registration of a lis pendens which claimed a proprietary interest or right in a real property. They also regulated the priority of the claim in the lis pendens. The need to re-register a lis pendens was to ensure that it was a live claim. Such registration was not to give notice to a subsequent purchaser or mortgagee of alleged breaches of a DMC committed in a property and the claim for restoration to be executed in the property as in the Counterclaim.

Thomson Reuters – Sweet & Maxwell are the publishers of the Authorised Hong Kong Law Reports & Digest ("HKLRD") and the Authorised Hong Kong Court of Final Appeal Reports ("HKCFAR"), and providers of Westlaw HK (www.sweetandmaxwell.com.hk / www.westlaw.com.hk).