JOIN FORTUNE DEVELOPMENT LTD v. YAU TAI WAI, DAVID

DCDT3207/2006

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

DISTRAINT CASE NO. 3207 OF 2006

DECISION and COSTS  ORDER

1.  The plaintiff is the landlord and the defendant is the tenant of Shop 8, Ground Floor, Sunshine Plaza, 628 Sai Sha Road, Ma On Shan, New Territories (hereinafter called “the premises”).

2.  The plaintiff claims that the defendant owes $27,513.40, being arrears of rent for the period 1 May 2006 to 30 June 2006 at the rate of $13,756, exclusive of rates, payable in advance on the first day of each month.  A warrant of distress was issued on 29 June 2006 in respect of the arrears.

3.  According to the bailiff’s records, the warrant of distress was executed on 11 July 2006.  On that occasion, the bailiff, Mr Chau Kwok-yau, arrived at the premises with Mr Cheng Sai-wan, a representative of the plaintiff.   He observed that an employment agency was in operation at the premises.  After the bailiff revealed his identity and explained the purpose of his visit to a male adult at the premises, who identified himself as a Mr Chan, the bailiff proceeded to execute the warrant of distress.  Goods and chattels were seized (hereinafter called “the goods”) and marked on an inventory list (hereinafter called “the inventory”).  A copy of the inventory was given to Mr Chan and also to Mr Cheng.

4.  On the same day the Bailiff’s Office wrote to the plaintiff to advise that the warrant of distress was executed and that the goods seized would be auctioned on 18 July 2006.  It was intended that the advertisement would be placed in a newspaper for the auction on 17 July 2006. 

5.  On 12 July 2006, the claimant wrote to the Bailiff’s Office claiming that all of the goods seized during the execution of the warrant of distress belonged to her company.  On the same day the claimant lodged a statutory declaration stating that: (a) all of the goods belonged to her company, QQ Michelle Employment; and (b) she rented the premises from the tenant at a month rental of $15,000.  The claimant produced five invoices from Super-8 Computer Company Limited, with two invoices dated 15 August 2004 for a LCD monitor and a computer system, respectively; one invoice dated 6 June 2005 for a computer set; one invoice dated 2 December 2005 for a LCD monitor; and one invoice dated 5 March 2006 for a computer set, (collectively “the invoices”).  All of these invoices were affixed with a “PAID” chop.  However, none of the invoices identified the purchaser. 

6.  On the following day, i.e., 13 July 2006, the bailiff, Chim Fung-ling, accompanied the claimant to the premises to identify the goods as claimed.  The bailiff informed the plaintiff via telephone of the claimant’s claim.

7.  On 14 July 2006, the plaintiff wrote to the Bailiff’s Office to confirm that it would dispute the claimant’s claim and urged the Bailiff’s Office to issue an interpleader summons as soon as possible pursuant to section 95 of the Landlord and Tenant (Consolidation) Ordinance, Cap.7 (hereinafter called “the Ordinance”).  The bailiff issued the interpleader summons on the same day. 

8.  At the hearing before me today, the bailiff, Mr Chau, the plaintiff’s representative, Mr Cheng, and the claimant gave evidence.  Without objection from the plaintiff, the claimant further submitted the following documents to court, namely, her Business Registration Certificate for the period from 28 June 2006 to 27 June 2007 in the name of QQ Michelle Employment at the premises, an annual licence to operate an employment agency issued on 28 June 2006 in favour of the claimant for operating QQ Michelle Employment at the premises (hereinafter called “the licence”) and a certified true copy of an invoice from Konica Minolta Business Solutions (HK) Limited, dated 23 November 2005 addressed to QQ Michelle Co for a photocopier.

9.  The claimant also does not object to the plaintiff’s production of the Tenancy Agreement between the plaintiff and the defendant, dated 31 December 2004 (hereinafter called “the Tenancy Agreement”), which provides, inter alia, that the user of the premises be restricted to the operation of an employment agency and that the defendant shall not sublet the premises. 

10.  There is no dispute that an employment agency business was carried out at the premises.  Since the premises are a ground floor shop, the user is consistent with the nature of the premises as well as the express user in the Tenancy Agreement.  In my view, as is apparent from the inventory, the goods seized at the premises on 11 July 2006 are the sort of goods and chattels one would expect to find in shop premises.

11.  The bailiff, Mr Chau, gave evidence that at about 11:35 am on 11 July 2006, he attended the premises with Mr Cheng, and noticed the characters “雪兒僱傭” on the glass at the doorway.  Upon entry he saw the bespectacled man who identified himself as Mr Chan.  When asked as to whether he knew the defendant, Mr Chan said that he did not know but he confirmed that the shop was the premises.  The bailiff explained his purpose of the execution of the warrant of distress and began to seize the goods.  Mr Chan did not say that the goods belonged to any other person and only asked what he was to do.  The bailiff, Mr Chau, explained that all outstanding rent, commission, costs and security guard fees should be paid to court.

12.  The bailiff, Mr Chau, confirmed that the Business Registration Certificate was posted to the left of the doorway of the premises but he did not consider it had any implication on his execution of the warrant of distress.  He did not notice any licence next to the Business Registration Certificate. 

13.  The claimant was not present at the time of the execution of the warrant of distress.  She said that she operated QQ Michelle Employment at the premises.  She only visited the premises about four times each month and Mr Chan Hin-tak ran the business.  She agreed that the name of the company at the doorway of the premises might not have the alphabets, “QQ” on 11 July 2006.  She said that the alphabets “QQ” were made on printer paper and posted to the glass, so they might have worn off.  She said that the Business Registration Certificate was posted to the left of the doorway and the licence was placed in a clear plastic folder right next to the Business Registration Certificate.  However, the claimant visited the premises only about a week before 11 July 2006 and did not return to the premises after the execution of the warrant of distress.  She asked the staff to fax to her the relevant documents for dealing with the bailiff and making the present claim.  It is a requirement, as stated on the licence, that it must be displayed in a conspicuous position at the premises. 

14.  Mr Cheng confirmed he accompanied the bailiff to attend the premises on 11 July 2006.  But whilst the bailiff was executing the warrant of distress he was busy liaising with staff of the management office to make a report.  He did not notice either the Business Registration Certificate or the licence.

15.  Mr Cheng claimed that when the claimant called him subsequently, he asked her for documentary evidence of her alleged sub-tenancy and payment of rent to the defendant but she said she had no such evidence.  However, the claimant said that she had a bank deposit voucher which confirmed the deposit of rent to the defendant for July 2006, which was shown to the staff at the Bailiff’s Office.  But in the urgency of making the declaration she did not know whether the bailiff had photocopied such document and she did not bring it with her to court today.  She also denied the conversation as alleged by Mr Cheng.  She said that Mr Cheng, in a short conversation, only asked her to bring documents to the bailiff and the court to prove her ownership of the goods.  She also claimed to have other documents for the goods which she had not been able to locate in a short time.

16.  Mr Chan Tin-lun, who represented the plaintiff today, raised a query as to why the glass door of the premises did not refer to QQ Michelle Employment but only “雪兒僱傭”, as stated by the bailiff, particularly bearing in mind that: (a) the Tenancy Agreement provided that the defendant was to use the premises as an employment agency; and (b) the Business Registration Certificate and the licence, as produced by the claimant to the court, are only very recently issued.  He therefore casted suspicion on the claimant’s assertions.

17.  I find that the bailiff gave clear and straightforward evidence, which I accept.  On 11 July 2006, he noted the presence of the Business Registration Certificate but not the licence.  If the licence was, as alleged by the claimant, placed right next to the Business Registration Certificate, the bailiff, Mr Chau, could not have missed it.  I accept that the licence stated that it should be displayed at the place of business but I am not persuaded that this was done so as alleged on 11 July 2006.

18.  It is also strange that Mr Chan did not alert the bailiff as to who his “boss” was  when the bailiff specifically asked about the defendant.  Further, the claimant’s assertion that the licence must have been displayed is not reliable.  She was at the premises about a week before 11 July 2006 and had not been back afterwards.  Plainly she does not really know what the situation was on 11 July 2006.  I find Mr Cheng to be a frank and reliable witness and believe his version of the telephone conversation with the claimant.  It is logical for the landlord’s representative, on having sight of the claimant’s declaration, to ask for evidence of the alleged sub-tenancy.  Further, the claimant knew that proof of the sub-tenancy was pertinent, as seen from her reference to such allegation of sub-tenancy in her declaration.  The deposit voucher was allegedly available yet she did not bring it to court when she carefully brought other further documents to court today.  I am not persuaded that she had shown the deposit voucher to the bailiff.

19.  I find as a fact that the licence was not posted next to the Business Registration Certificate at the premises as alleged by the claimant on 11 July 2006.  The Business Registration Certificate does not state who the proprietor was.  As the bailiff, Mr Chau, said, it did not affect his perception that the goods were apparent in the possession of the defendant.  In this respect I also refer to Wharf Properties Ltd v XS Fashion Ltd t/a as “XS mix & match” & Another DCDT 4747 & 4728 of 2002, unreported, 12 August 2002, where Deputy Judge Tong also the view that mere production of the Business Registration Certificate was not cogent evidence that could displace the prima facie evidence of the bailiff’s eyes.

20.  I find that the bailiff has complied with section 87 of the Ordinance by seizing movable property found at the premises in the apparent possession of the defendant.

21.  However, the claimant claimed that she is or her company is the owner of the goods and the company is a sub-tenant of the premises.  In respect of the sub-tenancy it is only a bare assertion.  The claimant did not produce any sub-tenancy agreement, any evidence of rental payment to the defendant or any rent receipt.  There is also no evidence of payment of rates, utilities or management fees.  In short, these assertions are bare assertions.  As regards the alleged sub-tenancy, there is also no suggestion that this fact was in any way brought to the attention of the bailiff at the time of the execution of the warrant of distress.

22.  It is unnecessary for the bailiff to be apprised of all necessary evidence at the time when the seizure was made since the bailiff may enter premises at any time (see Fort Crown Investments Ltd v Tam Virginia V. t/a Star Light International Agency & Trading Services (Defendant) and Nepal International Group Limited (Claimant) CACV 173 & 174 of 2005, unreported, 5 January 2006).  The bailiff is also not required to go into detailed inquiry on the spot (see Lu Shang Chang v Kin Group Ltd [1995] 3 HKC 709).  It is a question of fact whether the claimant was in apparent possession of the goods and chattels thereat.  In the circumstances I find there is nothing to rebut the evidence of the bailiff’s eyes to put him on notice that a third party would claim all of the goods on the premises at the time of the execution of the warrant of distress and thus the goods were liable to seizure. 

23.  As regards the alleged ownership of the goods, whilst I accept the invoices are likely to be referable to some or all of Items 7, 8, 16, 20, 24 and 32 of the inventory, the invoices did not reveal the identity of the buyer and hence the owner of these items, although I accept that the invoice from Minolta referred to QQ Michelle Company.  Further, the claimant only makes a bare assertion in relation to the ownership of the remaining 27 items of the goods in the inventory.  I am not persuaded by the claimant’s claim of ownership of all of the goods.

24.  But even if I am wrong and the claimant is in fact the true owner of the goods, I still find it as an insufficient answer to the seizure under the warrant of distress.  In Fuleekoo Company Ltd v Spiral Tubes International Limited [1986] HKC 269, it was held that  ownership of the goods and chattels seized of itself would not cause the discretion to be exercised in favour of the claimant.  It is, however, a factor to be considered and must be weighed against the rights of the landlord.  All the attendant circumstances should be considered by a judge before coming to his decision and was to be noted that he could impose such terms as he thought.

25.  Here the plaintiff clearly acted promptly and there can be no suggestion that it had allowed arrears to accrue to a point when it would be unfair to exercise the discretion in its favour.  The Tenancy Agreement disallowed sub-tenancy and the user was restricted to an employment agency, which was precisely the user at the time of the execution of the warrant of distress.  As I have found, the goods were in apparent possession of the defendant.  There is no suggestion that Mr Chan, who was present at the premises at the time of the execution of the warrant of distress, said or did anything to alert the bailiff that the goods belonged to the claimant or her company.

26.  After considering all the circumstances and relevant factors, I decline to exercise my discretion in favour of the claimant.  If the goods of a stranger were on the premises and lawfully distrained by the landlord for the rent due, then the redress of the owner of the goods was to seek reimbursement of the value from the person from whom the rent was due (see Xipho Development Co. Ltd. v CHM Holdings Co. Ltd. CACV 112 of 1996, unreported, 13 November 1996).  In the circumstances, the claimant’s claim is dismissed.

(Submissions on costs)

27.  Since the claimant’s claim is dismissed, costs should follow event and the claimant should pay the plaintiff’s costs of the application, to be taxed if not agreed, and extra security guard fees of $9,840 to the plaintiff.