DCCJ 5373/2019
[2020] HKDC 309
IN THE DISTRICT COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
CIVIL ACTION NO 5373 OF 2019
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BETWEEN
MODEST INTERNATIONAL LIMITED
Plaintiff
and
GRANDEX (HONG KONG) LIMITED
1st Defendant
YANG HUNG INVESTMENT DEVELOPMENT LIMITED
2nd Defendant
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Before: His Honour Judge Leung in Chambers
Date of Hearing: 4 August 2020
Date of Judgment: 12 August 2020
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JUDGMENT
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1. The plaintiff claims as the owner of two sets of fitness training equipment originally placed at the office premises that its associated company used to own. The premises was sold to the 2nd defendant in 2019, but the equipment remain to be removed from the premises. The plaintiff seeks to recover the equipment from the defendants, and applies for summary judgment.
Background
2. The following relevant facts, as evidenced by contemporaneous documents, could not be disputed.
3. Modest Holding Limited, an affiliate of the plaintiff, used to own the office premises on 16th Floor, King Kong Commercial Centre at No 9 Des Voeux Road West (“the Premises”) through shareholdings in the 1st defendant. By a sale and purchase agreement dated 6 June 2019 (“the S&P Agreement”), Modest Holding Limited sold the Premises to the 2nd defendant by way of transfer of shares in the 1st defendant. Completion was fixed at 29 August 2019 or such other date mutually agreed in writing by the parties. Upon the sale, the 1st defendant became owned and controlled by the 2nd defendant.
4. Of the S&P Agreement, there was the following provision:-
“5.2 At Completion, the Vendor shall deliver or cause to be delivered to the Purchaser:-
(n) … in the following conditions:-
(C) in respect of [the Premises], with vacant possession (for the avoidance of doubt all furniture and electrical equipment and appliances and the additional split-type air –conditioners which do not form part of the central air conditioning system and computer serves therein shall not be held/delivered to [Grandex] or the Purchaser)…”
5. On 28 August 2019, various electrical fixtures and fittings at the Premises were also sold, apparently to the decoration contractor engaged by or on behalf of the 2nd defendant. The WhatsApp communication referred to below shows that the contractor would enter and work on the Premises upon completion.
6. At all material times, the plaintiff was, and still is, the owner of two sets of fitness training equipment, namely, (i) a treadmill and (ii) a cross trainer (“the Equipment”) [1] , which it placed at the Premises for the use of the staff working there. The Equipment did not form part of the items sold under the further agreement mentioned in the preceding paragraph. There is no dispute that the Equipment should be removed from the Premises on or before completion.
7. The liaison in respect of the removal of the Equipment from the Premises is evidenced by the contemporaneous WhatsApp communication between Liu Kwok Fai (“Liu”), director of the plaintiff, and the estate agents as the go-between between the parties, as well as the correspondence between the parties’ solicitors.
8. There is no dispute that the Equipment were expected, or actually required as a matter between the parties to the S&P Agreement, to be removed from the Premises on or before completion date, 29 August 2019. However, as explained in the solicitors’ correspondence and by Liu, due to their size, the Equipment have to be dismantled by professional contractor before they could be moved out of the Premises.
9. In the afternoon of 29 August, ie, the completion date, Liu informed Allan Chan of the estate agent (“Chan”) that the mover could not move the Equipment out on the day and another specialist mover had to be engaged. Liu requested Chan to ask a Mr Yip (“Yip”) on 2nd defendant’s side if the Equipment could be moved out before the end of the following week. Chan promised to try.
10. On 30 August (Friday), Liu informed Chan as well as Keane Leung of the estate agent (“Leung”) of his arrangement with the specialist mover to remove the Equipment on 2 September (the following Monday). Liu asked Chan to seek instruction from Yip for his confirmation or else any rescheduling with the specialist mover would take at least a week. Chan represented that he would discuss with Yip in the same afternoon. Liu chased Chan for a reply later that day.
11. On the same day, the plaintiff also instructed solicitors, HY Leung & Co (“HYL”), to write to the solicitors for the defendants, ST Poon & Wong (“STPW”), stating its request to remove the Equipment from the Premises on 2 September.
12. On 2 September, Liu chased Chan for Yip’s confirmation of the date for his removal of the Equipment. Chan again promised to try. Liu also proposed to talk to Yip directly on this. However, on the same day, STPW replied to HYL, stating that the 2nd defendant had no obligation to maintain the Equipment at the Premises after completion and that it should dispose of them. In other words, the 2nd defendant refused to let the plaintiff remove the Equipment on 2 September and threatened to dispose of them.
13. The above did not deter Liu from continuing to liaise through Chan. On 4 September, Liu chased Chan for the result of latter’s discussion with Yip about the removal of the Equipment.
14. On 5 September, the plaintiff, through HYL, proposed to STPW to remove the Equipment from the Premises in the morning of 16 September or any alternative date and time convenient to the defendants that might be proposed. STPW were requested to reply before 10 September.
15. On 6 September, Liu asked Chan to help persuade Yip to let them remove the Equipment on 16 September. He again asked Chan if he could talk to Yip directly. However, by letter of the same date, STPW replied by reiterating to HYL their client’s rights to deal with anything in the Premises after completion. In other words, the 2nd defendant again refused to let the plaintiff remove the Equipment on 16 September.
16. On 7 September, Liu repeated and explained the above request directly to Yip by WhatsApp and sought the latter’s understanding of the circumstances and agreement. There is no sign of reply to that from Yip.
17. In view of the stance maintained by the 2nd defendant, the plaintiff commenced the present action on 3 October 2019. It seeks the return of the Equipment or alternatively their value in the sum of HK$184,180.33, and damages for detinue or conversion.
The defence and counterclaim
18. According to the pleading and affirmation in opposition, the defence is that upon Liu’s request to remove the Equipment after the completion date, Liu was informed through Chan (on the telephone) that rental or mesne profits would have to be paid to the 2nd defendant as condition for acceding to the request. However, no agreement on that was reached. The plaintiff is said to have since abandoned the Equipment, and wrongfully neglected or refused to remove the same from the Premises, notwithstanding the 2nd defendant’s requests since the date of completion until the present. In its affirmation, the defendants added that reasonable opportunity had been given to the plaintiff to remove the Equipment.
19. The defendants put forward a counterclaim for breach of the S&P Agreement, further or alternatively, nuisance or annoyance. The alleged nuisance is premised on the alleged wrongful occupation of the Premises by the Equipment since the completion date, and hence interference with the use, occupation and enjoyment of the part of the Premises so occupied by the Equipment. The defendants claim mesne profits as well as damages for alleged inconvenience and discomfort to be assessed.
20. In reply, the plaintiff denies the alleged abandonment of the Equipment, and reiterated that it was the 2nd defendant (and the defendants after completion) which have repeatedly refused to allow it to remove the Equipment and thereby detaining the same. It denies, and verified by its affirmation, having ever been informed by Chan of the alleged condition of payment of rental or mesne profits for the removal after the completion date. Insofar as the counterclaim on the basis of the S&P Agreement is concerned, the plaintiff denies that, as it is not a party to the agreement.
The principle
21. The principle governing summary judgment is trite. Whilst it is the burden of the plaintiff to prove his claim, the defendant has the burden to raise triable issues in defence by condescending upon particulars, or alternatively to demonstrate that there exists some other reason why the case ought to proceed to try: see O14, r3(1), Rules of the District Court, Cap 336H; Hong Kong Civil Procedure 2020 (Vol.1) at §§14/4/2-14/4/4.
Whether there is bona fide and credible defence
22. The plaintiff’s ownership and entitlement to possess the Equipment are beyond dispute. The defendants must be taken to have accepted that; otherwise they would not have been in a position to put forward the counterclaim on the basis that the plaintiff has allegedly abandoned its properties in the Premises. Notwithstanding the contention through solicitors back in September 2019 that it had the right to dispose of the Equipment, the 2nd defendant claims no actual property right over the Equipment. Nor do the defendants now.
23. The defendants’ case that the plaintiff has abandoned and wrongfully neglected or refused to remove the Equipment since the completion date up to the present is directly contradicted by the contemporaneous evidence summarised above. It is abundantly clear from the WhatsApp correspondence and the letters between the solicitors summarized above that the plaintiff has repeatedly requested for permission to remove the Equipment from the Premises after the completion date, first on 2 September and then on 16 September.
24. Not only were the requests by the plaintiff to remove the Equipment categorically refused, but the 2nd defendant did so on the basis of its alleged right over the disposal of the Equipment. The plaintiff also proposed any alternative date and time convenient to the defendants could be named for the removal, but the 2nd defendant did not reply to that.
25. Yet when it came to its pleaded case in the present action, the 2nd defendant (and after completion, the defendants) somehow turned the above facts around to allege that it was against its will that the Equipment remained, and it was the plaintiff which has neglected or refused to remove the Equipment or simply abandoned the Equipment.
26. In view of the above, the case of Wong Shuen Shuen Susan v Chan Chak Kau & Ors , HCA 2302/2013 (26 March 2019) relied on Mr Cheng for the defendants on abandonment of property must be distinguishable from the present case.
27. Mr Cheng relied on the terms of the S&P Agreement. The fact that the plaintiff, as the vendor, was obliged to give vacant possession of the Premises to 2nd defendant as a matter of the S&P Agreement between them is irrelevant. The plaintiff, albeit affiliated with the vendor, was a third party to the S&P Agreement. The plaintiff, as the owner of the Equipment, is entitled to seek to retrieve its property from the defendants as a matter of a bailment relationship between them, voluntary or otherwise.
28. The 2nd defendant made it abundantly clear to the plaintiff that the latter would not be allowed to enter the Premises to remove the Equipment. Whether or not it has offered or invited the plaintiff to offer payment of rent or mesne profits as condition for the proposed arrangement is beside the point. More importantly, contrary to its allegation, the contemporaneous WhatsApp messages between Liu and Chan do not evidence that the 2nd defendant had made such invitation or offer or, even assuming that it had done so, that Chan had ever relayed the same on its behalf to Liu.
29. The situation should be clear as a matter of fact. If necessary, Clerk & Lindsell on Torts (22nd ed) at §17-23 has this to say:-
“… There is some old authority that where goods have been placed by the owner on the defendant’s property the defendant does not commit conversion by merely refusing to allow the owner entry to collect them, provided he does nothing else inconsistent with the owner’s rights. But this must be open to some doubt, since otherwise the defendant would be entitled in effect to deprive the owner of the use of his property indefinitely without any right of redress. The better position, it is submitted, is that there should be liability here, with the additional possibility of an injunction to compel the defendant to allow collection.”
30. In court, Mr Cheng suggested the possibility that the WhatsApp messages disclosed and referred to above may not be complete. He also submitted that his client ought to be given the opportunity of trial where he could cross-examine the estate agents involved regarding how they act as the go-between in relaying the parties’ requests and demands at the material time.
31. I cannot accept the above submission. When asked, Mr Cheng accepted the well-established principle that it is the burden of the defendant to condescend upon particulars and to raise triable issues by evidence. In respect of the possibilities raised by counsel, no evidence has been adduced to contradict the plaintiff’s case. In fact, not even contrary assertion was made by the defendants.
32. In the circumstances, the defence is hardly bona fide and credible.
33. The plaintiff claims for the value of the Equipment or damages in the event that the defendants default in returning the Equipment. For such purpose, the only evidence relied on by the plaintiff is an invoice apparently from the supplier of the Equipment dated back in 2015. The figures in the invoice do not add up to amount pleaded. In any event, the value of the Equipment to be compensated cannot be measured by its purchase price back in 2015. Nor can such purchase price in 2015 cast light on the damages in terms of cost of replacement of the Equipment now.
34. In the circumstances, the plaintiff is entitled to damages to be assessed, in the event of default of the defendants in returning the Equipment. When asked in court, Mr Chow appearing for the plaintiff accepted that.
The counterclaim
35. When the factual basis of the alleged wrongful refusal of the plaintiff to remove them collapses, the foundation of the counterclaim for nuisance and annoyance as a result of the Equipment remaining against the defendants’ will falls away. In court, Mr Cheng accepted that.
36. The only particular of nuisance or annoyance pleaded under the counterclaim took the form of inability to use the part of the Premises occupied by the Equipment. In the absence of valid and credible basis for the 2nd defendant to assert its stance in the letters from its solicitors, which prevented the removal of the Equipment from the Premises on 2 September 2019 at the earliest, the 2nd defendant does not have any basis for claiming for any loss or damage occasioned by the existence of the Equipment in the Premises beyond the period between the completion date (30 August 2019), which was a Friday, and 2 September 2019, which was the following Monday.
37. However, there is no credible basis for believing that material loss and damage arose during that weekend because of the existence of the Equipment in the Premises. No assertion was made at all about that. Nor is there evidence. The consequence of the Equipment remaining in the Premises after 2 September 2019, as I find above, was self-induced and not attributable to the plaintiff.
38. The counterclaim for breach of the S&P Agreement also does not get off the ground, when the plaintiff was never the contracting party with the 2nd defendant.
39. The counterclaim which is premised on the allegations made in defence of the claim must be dismissed. The counterclaim which is premised on the other contentions is also liable to be struck out for being frivolous, scandalous, vexatious or otherwise an abuse of process. Mr Chow in his written submissions did address the sustainability of the counterclaim, if the claim succeeds, whereas Mr Cheng did not. The latter was given the opportunity to make submission on this in court, but he made no substantive point.
40. Whilst the plaintiff has not taken out a summons for striking out the counterclaim, this court has power to do so on its own motion pursuant to O 18, r 19(1) of the Rules of the District Court, Cap 336H. In the circumstances of this case, I should exercise such power to strike out the counterclaim.
Disposition and costs
41. For the above reasons, I enter judgment in favour of the plaintiff whereby the defendants shall return or cause to be returned the Equipment to the plaintiff within 14 days, failing which the defendants shall pay damages to the plaintiff to be assessed. The counterclaim is dismissed or, insofar as necessary, struck out.
42. Costs should follow the event, so that the plaintiff shall have its costs of this action, including the costs of claim and defending the counterclaim as well as any costs reserved. For the avoidance of doubt, I certify the engagement of counsel. In the absence of application within 14 days to vary, this nisi costs order shall become absolute without further order.
( Simon Leung )
District Judge
Mr Leonard Chow, instructed by HY Leung & Co LLP, for the plaintiff
Mr Sky Cheng, instructed by ST Poon & Wong, for the 1st and the 2nd defendants
[1] Identified in the photograph attached to the letter from the solicitors for Modest International to the solicitors for Yang Hung dated 30 August 2019.