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1935 Supreme(SC) 45
Privy Council At Hong Kong
Russell of Killowen, Tomlin, Justice Lords Atkin, JJ.
Li Tse Shi -Appellant
Versus
Pong Tsoi Ching -Resopndent
Appeal No. 6 of 1935
Decided On : 10-10-1935
Important Points
Subject
Property Law - Land Registration and Estoppel
Headnote
(B) Estoppel by Representation - If the owner of property clothes a third person with apparent ownership and right of disposition, and acknowledges receipt of consideration, they are estopped from asserting their own title against a person who takes the property in good faith and for value.
(C) Notice and Title Deeds - The absence of title deeds and reliance on a statutory declaration does not necessarily imply a flaw in the registered title; the risk associated with missing deeds is typically the risk of an undisclosed adverse interest, not the total absence of title in the registered owner.
Facts of the case:
The beneficial owner of a property, through a fraudulent transaction, procured the registration of an assignment of the property to a third party, representing that the property had been sold for valuable consideration. This third party subsequently mortgaged the property to a mortgagee who relied on the land register. Following a default, the mortgagee exercised the power of sale and the property was purchased by a third party. The beneficial owner later sought to recover the property, arguing that the initial assignment was a nullity as it was executed by a deceased person.
Findings of Court:
The court found that the beneficial owner had authorized the creation and registration of the fraudulent assignment. The mortgagee had searched the register and acted upon the representation contained therein. Consequently, the beneficial owner was estopped from denying the title of the transferee, and the subsequent purchaser's title was held to be unimpeachable.
Issues: Whether the beneficial owner is estopped from challenging the title of a subsequent purchaser when she had authorized the registration of a fraudulent assignment that clothed a third party with apparent ownership.
Ratio Decidendi: A person who authorizes the registration of a memorial of a deed of assignment, representing that another is the owner having purchased the property for value, is estopped from denying that ownership against a party who relies on the register and advances money in good faith. The lack of physical title deeds does not constitute notice of a lack of title if the register is relied upon and a statutory declaration explains the absence of deeds.
Result: Appeal dismissed.
Legal Category Hierarchy
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property law
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land registration
- estoppel by registration
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mortgages
- power of sale
- notice of title
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land registration
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equity
- estoppel
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administration of estates
- liability of administratrix
W.M. Hunt, J.M. Gover , H.G. Robertson, W.P. Spens
Lord Russell of Killowen:-
This is a very peculiar case, depending in large measure on its very peculiar circumstances, which must first be stated.
One, Li Woon Nam, died on 19th April, 1925 leaving his widow, Li Tse Shi (the appellant), and an adopted son, Li Kai Loy, him surviving. He was the owner of a Crown lease of certain premises (hereinafter referred to as the premises), 73, Bonham Strand West situate at Victoria in the colony of Hong Kong, which he had acquired from one Ng Yu Hon by an assignment dated 11th October 1924. His name appeared at his death as such owner in the Hong Kong Land Registry, the premises being then in the occupation of the said Ng Yu Hon as sub-lessee.
By his will the premises, together with other property, were bequeathed absolutely to the appellant. As will appear, no legal personal representative of the testator was appointed until some years after his death. In the meantime a strange transaction had taken place.
On 24th March 1930, an indenture was signed, sealed and delivered, purporting to be an assignment on sale of the premises by Li Woon Nam to Li Kai Loy, in consideration of a sum of 70,000 dollars paid by Li Kai Loy to Li Woon Nam, the receipt of which Li Woon Nam duly acknowledged. The sole witness to this document was a partner in a firm of solicitors known as Deacons. His good faith is in no way impugned. Li Kai Loy had been introduced to him by Ng Yu Hon and Li Kai Loy had in turn introduced some other man as being the proposed vendor Li Woon Nam. This man, whoever he was, came armed with the title deeds, viz., a deed of 19th February 1917, vesting the property in Ng Yu Hon, and the assignment to Li Woon Nam. These he left with Deacons. After the matter had been completed, Deacons registered this assignment by Li Woon Nam to Li Kai Loy in the Hong Kong Land Registry, and by a letter of 7th April 1930, sent to Li Kai Loy the title deeds above mentioned.
Obviously there was something wrong here. Li Woon Nam had been dead for nearly five years. Whatever may have been the reason which prompted the person or persons responsible for bringing this document into existence and recording it in the Hong Kong Land Registry, it is clear that per se the assignment was a nullity and passed nothing to anybody. For the purposes with which their Lordships are concerned however it is crucial to know whether the appellant was in any way and to what extent responsible for the transaction; and at this point the findings of fact by the Courts in Hong Kong are of vital importance.
The trial Judge found that "contemporaneous knowledge of the impersonation" of Li Woon Nam had been brought home to the appellant. The full Court on appeal, having had the advantage of some further evidence, took the same view. From these concurrent findings their Lordships see no reason to dissent. The case falls to be decided accordingly upon the footing that the appellant (who was by virtue of her husband's will and possession of the title deeds in command of the situation), procured the premises to be apparently conveyed into the name of Li Kai Loy, as on a sale to bim by Li Woon Nam, and entries to be made in the Hong Kong Land Registry, representing that Li Woon Nam had, on 24th March 1930, sold and conveyed the premises to Li Kai Loy in consideration of a price of $70,000.00.
The rest of the story now remains to be told. In the following year Li Kai Loy proceeded to raise, money on the security of the premises. The title deeds meanwhile had found their way, for some reason or other, into the possession and custody of one Wong Wa Kong, who was the father-in-law of Li Kai Loy. Li Kai Loy, being thus unable without outside consent, to produce the title deeds to an intending mortgagee, made a statutory declaration on 13th April 1931, in regular form under the Act, explaining the reason for the non-production of the title deeds. Therein be stated that while travelling from China to Hong Kong with the title deeds in his suit ease, his
