Question 2

(a) The system produced by the LRO (Lands Registration Ordinance) is that of registration of deeds, under which registration has no effect on the creation of interests in land. Registration does not produce title; instead, it gives priority to those interests which can be registered, it acts as a record of transactions, and it acts as a notice to those dealing with land (Sihombing and Wilkinson, A Guide to Hong Kong Conveyancing).

Explain to what extent you agree with this quotation, with illustration by way of two examples.

(b) Peter, a businessman who operates a logistics company called Ponderland Ltd., is planning to expand Ponderlands business and buy open land in the northern New Territories as a depot for additional delivery vans that Ponderland expects to acquire late next year. Alan, an estate agent, has introduced to Peter some land near Sha Tau Kok owned by Venturous Ltd (Venturous). The asking price proposed by Venturous is acceptable to Peter and the land appears to be suitable except that it is currently occupied by Tyson, a tenant. Tyson uses the land for storage of used cars. Alan informed Peter that, according to Venturous, the tenancy agreement between Venturous and Tyson was made orally and was for two years expiring on 30 June 2020. However, when Peter visited the land to inspect it last week, Tyson told Peter that the oral tenancy was for three years expiring on 30 June 2021 and that when granting him the tenancy, Venturous had promised in a letter that Tyson could have a further five years if he wished to do so. A land search, however, does not reveal any record of Tysons interest as claimed. Explain whether Ponderland will not be able to take possession of the land for six years after 30 June 2020 (being the one remaining year of tenancy claimed by Tyson plus the 5-year optional further term which Tyson said was granted by Venturous).

(c) On the other hand, the land search register shows an Assignment of Rental Income received by Venturous in respect of leasing out the land in favor of a finance company called Easy Credit Ltd. for the due repayment of a loan in the sum of HK$1 million. The Assignment of Rental Income is dated 1 October 2018 and was registered on 29 October 2018. Furthermore, the register also shows two charging orders (both nisi and absolute). One is in favor of the Bank of East Asia for a judgement debt of HK$1.2 million owed by Venturous; this charging order was registered in December 2014. The other is in favor of the HSBC for a judgment debt of HK$ 1.5 million owed by Venturous; this charging order was registered in November 2019. Explain whether Ponderland will be able to purchase the land free from any of those interests.