BEST GRADE LTD v. YES WORLD LTD

DCDT1449/2010

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

DISTRAINT CASE NO. 1449 OF 2010

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BETWEEN

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D E C I S I O N

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1.  Today I deal with two summonses.  The first one is the bailiff’s summons asking for interpleader relief.  The second one is the 2nd claimant’s inter-partes summons asking for various orders, including return and release of the seized goods and chattels - for simplicity sake I just refer to the whole lot as “the goods” - and damages and loss arising out of the execution. 

2.  The first issue is whether the goods were in the apparent possession of the defendant.  There was strong evidence that they were.  The defendant was operating an eatery and the goods were utensils.  The definition of “apparent possession” must be a common sense and simple one so that the bailiff can easily determine what to seize and what not to seize.  The bailiff will not be in a position to determine at the spot complicated factual issues.  There was some suggestion on the part of the defendant that a protest by the 2nd claimant or anyone at the spot would possibly challenge this notion of apparent possession.  If that is the defendant’s submission I refuse to accept it. 

3.  Where the goods were in the apparent possession of the defendant I would have to exercise my discretion as to whom the goods should be ordered to return.  The defendant’s case was that there was an outright sale agreement in writing between the defendant and the 2nd claimant.  Under this agreement the 2nd claimant was to pay $200,000 to purchase the goods in question from the defendant.  The plaintiff does not challenge such evidence. 

4.  What worries the plaintiff is the defendant’s case that actually the defendant was to lease back the goods for his use.  Further, upon paying a certain sum, the defendant would be given back the property to the goods.  The exact number of instalments - except that those were monthly instalments - was not given in the defendant’s case, nor did the defendant give any information as to the ending time of such lease agreement whereby the defendant would be given back the property to the goods.  At this juncture there is the outstanding issue of how a lease could be converted into a buyback agreement without any consideration.  Those were matters not explained by the 2nd claimant.      

5.  Despite the aforesaid, the crux of the defendant’s case might well be subject to severe criticism.  It was because if there was really that buyback agreement the defendant would, at some future stage, be reverted the property to the goods.  There was evidence produced by the defendant to the effect that a sum of $28,000 had already been paid by the defendant to the 2nd claimant pursuant to this so-called “buyback agreement”.  Of course the proper way to call this agreement should be the “lease and buyback agreement”.  The defendant did not give any apportionment as to which part was the lease fee or which part was the buyback fee.  Actually even if only a part of that or even a small part of it would be the buyback fee, that would be best in the defendant certain proprietary interest.  If that is the right way to consider the matter there is nothing wrong with the plaintiff seizing goods, a part of whose property belongs to the defendant. 

6.  Even if the defendant could prove entire ownership, that might not necessarily be conclusive as against the plaintiff, let alone a failure on the part of the defendant to prove entire ownership -- let alone a failure on the part of the 2nd claimant to prove ownership.  I am sorry, I should not say defendant altogether.  So every party is the claimant, the 2nd claimant.  Okay, I will put it again.  Even if the 2nd claimant could prove entire ownership, that might not necessarily be a conclusive factor for the return of the goods to the 2nd claimant.  Let alone the present scenario where the 2nd claimant was not even able to prove entire ownership.  So for the two summonses I have to deal with today I order that the goods be to the plaintiff.  I dismiss the 2nd claimant’s summons with -- well, the parties shall address me on costs.

(Submissions re costs)

7.  I order costs of both summonses (i.e. application and submission) to be to the plaintiff, with certificate for counsel on an equal sharing basis between the 1st and 2nd claimants.  I just want to give a brief explanation.  The cost of the plaintiff dealing with the 2nd claimant’s inter-partes summons is actually de minimis.  

(Submission re fees)

8.  Newspaper advertisement fees in the sum of $2,850 and security guard fees at the daily rate of $1,344 (i.e. $672 x 2) commencing from 26 April, 2010 to 20 May, 2010 to be borne on an equal sharing basis between 1st and 2nd claimants.