YIP LUNG KONG v. HO SHING AND ANOTHER

Distraint No. 1590 of 1993

HEADNOTE

Bailiff's interpleader - distress for rent - third parties' goods in tenant's apparent possession - not there for "public trade" purpose - distraint lawful - still discretion to return goods to third parties - returned on terms, applying Fuleeko Co. Ltd. v. Wayfoong Credit Ltd. Civil Appeal Nos. 31 & 32 of 1986, 16th May 1986 (unreported).

IN THE DISTRICT COURT OF HONG KONG

CIVIL JURISDICTION

DISTRAINT NO. 1590 OF 1993

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JUDGMENT

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1. This matter comes before me by way of a bailiffs interpleader summons taken out in these distraint proceedings brought by the plaintiff landlord against the defendant tenant. Two claimants, each being a person laying claim to some of the goods seized by the bailiff by way of distraint, have been brought in by that summons. Before me, the matter was fought out as between the landlord and the claimants.

2. The goods claimed by each claimant consist of marble. As described in the bailiff's affirmation, the goods claimed by the 1st claimant are:-

3. With the exception of the 5 pieces of Imperial Red, the 1st claimant's ownership of those goods is accepted by the landlord. And, on the 1st claimant's evidence, which I accept, I find that he owns those 5 pieces also.

4. It is accepted by the landlord that the 2nd claimant owns all the goods which he claims, such goods being described in the bailiff's affirmation as "One lot of Marble Tiles (Approx. 1,000 pieces)."

5. Identification of the goods will present no difficulty in practice for they have been separated into two lots, one consisting of those claimed by the 1st claimant and the other consisting of those claimed by the 2nd claimant.

6. The Warrant of Distress directed to the bailiff reads:-

"I hereby direct you to distrain the goods and chattels on the premises and in apparent possession of Tse Shek To of All Those Lot Nos.2551 and 2269 in Demarcation District No.111, Yau Uk Tsuen, Pat Heung, Yuen Long, New Territories, Hong Kong for the sum of HK$24,000.00 (DOLLARS TWENTY-FOUR THOUSAND ONLY) being the amount of 4 months' rent due to the Plaintiff Yip Lung Kong for the same due on the 1st day of April 1993, according to the provisions of the Landlord and Tenant (Consolidation) Ordinance, Cap.7 (Part III).

Before proceeding to distrain under this warrant, you shall demand payment of the amount endorsed hereon."

7. Those are the premises; and that is the amount due by way of arrears of rent.

8. What the tenant did at those premises was to run a marble works. Essentially, the works consist of an open space with a few rudimentary structures in the nature of sheds. One can see all of that from the photographs put in evidence.

9. The first question is whether the goods were in the tenant's apparent possession, the claimants not conceding that they were. I am satisfied that the goods were in the tenant's apparent possession. They consist of marble; and they were on the premises which he occupied as a marble works.

10. That brings me to the second question, which arises by reason of the claimants' reliance upon section 88 of the Landlord and Tenant Consolidation Ordinance Cap.7, in so far as it provides that a bailiff shall not seize:-

"goods delivered to a person or firm exercising a public trade, to be carried, wrought, worked up, or managed in the way of the trade or employ of such person or firm."

11. At this stage, I turn to how the claimants' goods came to be on the tenant's premises. That is relevant to the second question and also to the third question to which I will come in due course.

12. In evidence, the 1st claimant told me that:-

"In or about May, June or July of 1991, as I have insufficient space to store my marble stock, Tse Shek To or his wife told me they had space to store marble for me and they could store them for me. A place was then assigned to me and it was stipulated that the rental for each month was $4,000.00 and the marble had been stored there up to now."

13. In his affirmation dated 18th June 1993, the 2nd claimant says this:-

"As I had no suitable place to store the large number of Indonesia Cream Marble and Marble Tiles, the Defendant agreed with me that all the Indonesia Cream Marbles and Marble Tiles could be stored in his place of No.111 Au Uk Chuen, Pat Heung, Yuen Long, New Territories, being the property in question. The Defendant also agreed that he would sell the marble on my behalf and would pay me money when any of the marble being sold."

14. He expanded upon that in his affirmation of 23rd June 1993 in which he said this:-

"Sometime after the two invoices were issued I made enquiries of both East Asia Marble Company and the other marble company in Canton Road as to whether they had premises available for the storage of marble. I asked Madam Tam Yuk Bing whom I understood to be the wife of the Defendant whether they had such facilities available. She informed me that they had a working place available at Yau Uk Tsuen, Yuen Long, New Territories (the premises which form the subject matter of these proceedings) and that my marble could be stored at those premises without charge. As I was paying rent for the storage of my marble up to that point, I considered that this was a better arrangement on the understanding that they would endeavour to sell my marble and would then pay me the sale proceeds. Accordingly, I instructed a transportation company to move the remaining marble from Hung Uk Tsuen to No.111 Yau Uk Tsuen, Pat Heung, Yuen Long, New Territories."

15. Both claimants' accounts are somewhat short on detail. But, such as they are, I have no reason to disbelieve them; and I accept them.

16. What the tenant was doing for the claimants was not, on the evidence before me, done in the way of a public trade carried on by him. As Judge O'Connor said in The Hong Kong Rubber Manufactory Ltd. v. Great Eastern Cotton Merchants [1968] DCLR 8 at p.10:-

"The word "public" means every trade or employ carried on generally for the benefit of any persons who choose to avail themselves of it as distinct from a special employment by one or particular individuals."

17. In regard to what the tenant was doing for the claimants, there is no evidence before me of a trade carried on generally for the benefit of persons who choose to avail themselves of it. The evidence is of only two particular instances, one for each claimant.

18. A number of points arise in this case including the application of the principle laid down by the Court of Appeal in Fuleeko Co. Ltd. v. Wayfoong Credit Ltd., Civil Appeal Nos. 31 & 32 of 1986, 16th May 1986 (unreported). No case decided at first instance since that decision of the Court of Appeal has been drawn to my attention, so the present case may be of some interest as an application of the principle laid down by the Court of Appeal. I will come to such application in due course.

19. In Muspratt v. Gregory (1836) 1 M.8 W.633, Alderson B. said:-

"The instances found in the books, of the horse in the smith's shop; of the cloth sent to the tailor; of the materials sent to the weaver; of the goods sent to the factory; of the beast sent to the carcass butcher; are all cases of chattels delivered to be dealt with by the third person in the way of his trade, under circumstances in which his trade cannot be carried on at that place unless the goods are so delivered."

20. What the evidence before me suggests is this. As a public trader, the tenant was in trade to work his own marble, not to store other people's marble or act as a selling agent for the same. So the delivery of other people's marble to his works was not necessary to his public trade.

21. The second question must be resolved against the claimants. So the seizure was lawful.

22. This brings me to the third question. It involves the exercise of a discretion as best I can on such evidence as I have. The question is whether I ought, in the exercise of my discretion, to order in relation to each claimant that his marble be returned to him and, if I so order, whether I should impose any and, if so, what terms.

23. I am guided by the decision of the Court of Appeal in Fuleeko Co. Ltd v. Wayfoong Credit Ltd (supra). Delivering the judgment of the Court, Silke J.A. said (at page 2) that: "The issue which was argued was whether or not the trial judge did have a discretion to return lawfully seized goods to their owners". The Court held that such discretion existed, saying (at page 11):-

"We accept that ownership of itself would not cause the discretion to be exercised in favour of a claimant. It is obviously a factor to be considered and must be weighed against the rights of the landlord. Indeed all the attendant circumstances should be considered by a judge before coming to his decision and it is to be noted that he can impose such terms as he thinks fit."

24. As we have seen, the rent in arrears is $24,000.00. When he distrained on 25th May 1993, the bailiff seized the tenant's chattels as well as the claimants' marble. In the necessarily rough and ready valuation which he made at the time of distraint, the bailiff put a value of $4,000.00 on the tenant's marble and a value of $15,960.00 on the tenant's chattels, giving $19,960.00 in all. It is true that he refers to 800 pieces of marble and the evidence suggests more. But I do not think, in all the circumstances, that the bailiff was considering anything other than the entirety of the claimants' marble. None of the parties have suggested that he was considering anything other than that.

25. The tenant's chattels have been sold by public auction. Net of expenses, they have realised only $4,790.00. Even the gross sale proceeds came to only $6,200.00.

26. Of course, the only party really to blame is the tenant who did not pay his rent. As far as the innocent parties are concerned, the position is this. The claimants' contribution to the present situation is simply that they left their goods in the tenant's apparent possession, which could have given a misleadingly healthy picture of his finances. And the landlord's contribution to the present situation is that he allowed rent to fall into four months' arrears, which increased the extent to which the claimants' goods were liable to be applied in distraint for rent.

27. Paragraph 2 of the bailiff's affirmation reads as follows:-

"After the seizure, the 1st Claimant Mr. Ho Shing and the 2nd Claimant Mr. Lee Shui Sang lodged claims respectively with the Bailiffs' Office. The 1st Claimant claimed approximately half of Bailiff's inventory item 13 and the 2nd Claimant claimed approximately another half of Bailiff's inventory item 13."

28. Item 13 is the marble distrained upon. As I have said, the marble has been separated into two lots, one claimed by the 1st claimant and the other by the 2nd claimant. On the evidence which I have, the best I can do is to treat each lot as being of equal value. There is some evidence to that effect. There is certainly no reliable evidence upon which I can find that one is worth more than the other.

29. All things considered, I think that the appropriate course for me to take, exercising my discretion as best I can on what I have, is to order the return to each claimant of his lot of marble on these terms: (i) that he collects his marble at his own expense; (ii) that he does so within 7 days of today or such extended period as the landlord and bailiff may agree or the Court may order and (iii) that he pays to the landlord the sum of $2,000.00.

30. I shall now hear the parties on the question of costs.