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May 10, 1909.]
the property after its purchase. He submitted that those two terms were conditions precedent to the decree being enforced.
The Chief Justice-How far would you push that?
Sir Henry Berkeley-To the utmost. The Chief Justice-Supposing, he had spent far more money than he ought to have done?
Sir Henry Berkeley-My proposition is that in any event he is entitled to have back the money he expended on the purchase. Then he is entitled to have an inquiry as to what monies he has laid out on the property, which has enhanced its value.
The Puisue Judge-The judgment in the Court below. I understand, practically came to fraud?
Sir Henry Berkeley-Legal fraud, in that the managers had conducted the sale. There is no frand otherwise.
The Chief Justice-If you accept the judg- ment you must accept the terms.
Sir Henry Berkeley-There is a distinct pronouncement that the main fact which weighed upon the mind of the Court in coming to the conclusion that there was fraud in this case, was the fact that the mortgagors had conducted the sale.
This was the only thing that could justify the Court in finding fraud. The Chief Justice-But for that there would have been no sale.
Sir Henry Berkeley-It might have been sold by public auction.
The Chief Justice-It would have been per- fectly legitimate for the plaintiff companies to have sold to a syndicate of which their managers were members. The effect of your contention is that a sale which the Court below held ought to be set aside for certain inherent defects, is now to turn the judgment aside so that you are to have all the benefit of it?
Sir Henryerkeley said the Chief Justice had stated the
proposition in effect. lmt in words otherwise than he would have The only decree that could be made in an action of this kind. having regard
used.
was to say:
to the facts before the Court. was what might be called a decree for redemption, that If a man mortgaged his property to another, and in that mortgage there was a power of sale, and he over-exercised that power of sale, the man who mortgaged the property had only two remedies. He might come to the Court to ask to have the sale set aside; or he could treat the sale as subsisting. leave it unchallenged, and bring an action against the mortgagor for au abuse of the power of sale, claiming as damages what he may prove should have been obtained at the sale in excess of what
was obtained. If he does not pursue that remedy at law to recover damages for the improper
CHINA OVERLAND TRADE REPORT.
The Chief Justice Nobody said he should not be recouped, but the question is. should he be reconped by Li Po Yung.
Sir Henry Berkeley-The proper and only form of order is that Kwok Yik Ting re-convey the property to Li Po Yung and Li Po Kam on condition that they repay the purchase money, plus any sums which the Registrar finds that Kwok has expended in enhancing the value of the property.
After quoting authorities in support of his arguments, Sir Henry Berkeley concluded by asking the Court to fix an early date for the payment of this money to Kwok Yik Ting It was quite intolerable that a person should be kept in suspense where such large sums of money were involved. It was before the Court in evidence that the operations on this building transaction were very large. Whatever way the decree went, he asked that it be made speedily. Already six months had elapsed, and practically six months elapsed before any steps were taken. He would ask the Court for costs on the appeal. but submitted that so far as the counter claim went each party should pay its own costs.
Mr. Slade remarked that before dealing with the arguments he would put in certain fresh evidence as to events which had happened since the trial of the action.
381
the transfer of the first mortgage they became first mortgagees for the whole of the two advances which amounted to $210,000. At that time they had all the ordinary rights of mortgagees. They could go into possession; they could bring an action for foreclosure; or they could sell under the powers contained in the mortgages. They purported to sell under the power in the mortgage, but if that sale bad been a good one it would have extinguished the mortgagors equity of redemption, divested the two insurance companies of their legal estate, and passed over the whole of the estate, free from encumbrances, from Kwok Yik Ting. The judgment in this action amounted to a declaration that that sale must be set aside as it was a bad sale, and also that the necessary rectifications in the register be made. By that judgment alone the title to the property, as distinguished from the rights of the parties, was affected only by the notice; because there was notice to all the world that the apparent holders of the legal estate had not got a complete title. They had never sought to deny the right of the Hongkong Fire Insurance Company to receive their money under the circumstances, but as those circumstances were complicated he would not go into them at present. The judgment in the Court below being merely a declaratory judgment, and not going on to make the consequential orders which would, when carried out, change the title, the position of the parties so far as the actual title to the land was concerned was not im- mediately affected: That was to say that Kwok Yik Ting was entitled to remain in possession, and the mortgage to the Hip On and Yuen Shing had not been in fact revived. As a preliminary to applying for the consequential order to put the judgment of the Court below into actual effect, an application for a re- ceiver was made in order that the rents and profits of
estate should be in neutral hands to be handed over by the receiver eventually to whomsoever was entitled to them. In order to defeat that application Kwok Yik Ting voluntarily went out of possession, and allowed the Hip On and Yuen Shing Companies The posi- to go into possession as mortgagees. tion was perfectly clearly defined in Mr. Bowley's affidavit of October 26th. There was no order on Kwok compelling him to vacate possession; he went out voluntarily. He submitted that whatever the true state of the title to this pro- perty was, that as between Li Po Yung, Kwok Yik Ting and the Hip On and Yuen Shing Companies, the Yuen Shing was in possession of the legal estate and in actual physical posses- Mr. Slade-Yes, and when the mortgageession of the property. Kwok Yik Ting had no took their legal rights there was nothing else to
interest in the property, and Li Po Yung was do. In the decree of the Court below there is mortgagor out of possession. The title as be-
tween those thres had created an estoppel.
Sir Henry Berkeley objected. If this applica. tion was going to be made, it should have been made before the appeal was opened so that his friend and he might have had an opportunity of knowing what the evidence was and dealing with it.
opportunity.
The Chief Justice-You will have ample
Sir Henry Berkeley asked his Lordship to note the objection.
Mr. Slade said the new facts to which be referred were that in October last an application
was made on behalf of Li Po Yung for a re-
reiver of the rents and profits of his property, In order to defeat that application the Hip On and Ynen Shing Companies, the appellants. went into possession as mortgagees under their mortgage given by Li Po Kam and Li Po Yung. and in consequence the Chief Justice refused the application. An affidavit filed by Mr. Bowley at the time, showed under what title the plaintiffs went into possession of the property, They went into possession and Kwok Yik Ting went out, because up to that time Kwok was in possession under the assignment from the plaintiffs to him.
The Chief Justice-On this affidavit I refused a receiving order?
no order directing Kwok Yik Ting to vacate the land. He submitted that the act of the plaintiffs in going into possession, and turning Kwok Yik Ting out in pursuance of, not an order of the Court, but their own volition, con. stituted an absolute estoppal to both of them from contesting the validity of the judgment in the Court below. Having voluntarily altered their positions, they must be taken to have accepted the title which was declared in the
exercise of the power of sale, then he must go to a Court of Equity to get the sale set aside. In this case Li Po Yung had come into a Court of Equity. He was asking that the sale to Kwok Yik Ting he set aside, and the Court had acceded to that application. One would think that in a Court of Equity provision would be made for repayment to Kwok of the purchase money. Also Li Po Yung asked that the sale of the property be set aside. One would think. if that was going to be the decree, that provision | Court below. would be made to recoup Kwok for sums of money expended on the estate in euhan- cing the value thereof. The decree was silent on both these points, silent because the Lord Chief Justice disagreed with Counsel. This action must either be dismissed, or the sale set
aside on the terms that the monies expended by Kwok for purchase and for improvements should be repaid to him.
The Chief Justice-Supposing Li Po Yung did not want those developments. Why should you compel him to take what you choose to have done?
Sir Henry Berkeley-The sale took place on October 31st, 1906, and Li Po Yung's counter claim was not filed until July, 1907. Li Po Yung took no steps whatever to have the sale set aside until after he and his brother. Li Po Kam. had been sued by the mortgagees for the balance due, as they contended, after crediting the amount received by the sale. In the meantime Kwok had expended money upon the property. It would be opposed to the principles of equity that he should be compelled to return this improve dproperty to Li Po Yung without being recouped one penny.
|
The case stands part heard.
Wednesday, May 5th.
Mr. Slade continued his argument. He stated that in order that their Lordships might
fully appreciate the position created by the taking possession of this estate by the Hip On
and Yuen Shing after the decision in the C'ourt
below, it would be desirable to recapitulate shortly the facts and the legal position of the parties before and after the judgment. Before the transaction which purported to pass the property to Kwok Yik Ting, the position was that Li Po Kam and Li Po Yung were mortgagors to the Hip On and Yuen Shing: that was to say. the Hip On and Yuen Shing had the legal estate, and Li Po Kam and Li Po Yung had the equity of redemption. Just before the transaction which was questioned in this action the Hip On and Yuen Shing, who had been only second mortgagees became first mortgagees by taking the assignment of the first mortgage for $60.000 from the Hongkong and Shanghai Bank; 80 that by being second mortgagees and taking
this
The Chief Justice-The form of the order was expressly reserved by the judgment. It was, to be made subject to special application hereafter.
Mr. Slade said that was so, and he could
submit a series of authorities which would show that title by estoppel was as effectual as an actual conveyance.
Mr. Pollock-I don't know whether it is correct to say that there was liberty to apply in these matters in the judgment.
The Chief Justice-I said-what the form of the order will be, must be argued.
Mr. Pollock-But your Lordship had already directed the necessary rectification.
The Chief Justice-I don't know that that
would be sufficient for the rectification to be made.
Mr. Pollock-Oh, yes. On that Kwok's name could been struck out.
The Chief Justice It so happens that at the time this judgment was given I had been looking into the question of registration of titles, and I should never have made that order if I thought the title was affected. The sale would not be set aside until the order was drawn up.
Mr. Pollock-The order takes effect from the date it is made.
Mr. Slade There must be a formal decree drawn up and passed. Then that formal decree is shown to the Land Officer, who makes the corrections in the register ordered by the decree. As a matter of fact, in this case the rectification in the register was not effected The decree was finally until November 19th.
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