BRAND FARRAR BUXBAUM LLP v. SAMUEL-ROZENBAUM DIAMOND LTD. AND OTHERS

HCA 5191/1998

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 5191 OF 1998

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J U D G M E N T

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1. The background to the matters before me is the claim made by the plaintiff ("Judgment Creditor") in this action against the defendants Samuel-Rozenbaum Diamond Limited and Samuel-Rozenbaum Diamond (1992) Limited ("the Judgment Debtors"). The Judgment Creditor obtained judgment in respect of legal services rendered to the Judgment Debtors between September 1995 and December 1997. The action was initially defended with a defence filed and served but on 18 March 2000 the Judgment Creditor obtained a default judgment in the sum of US$102,278.40 with interest .

2. On 14 January 2002 a writ of fieri facias was issued directing the Bailiff to seize the Judgment Debtors' goods, chattels and other property in execution of the said judgment. The execution took place on 27 February 2002 at two locations. One was at a jewellery exhibition at the Hong Kong Convention and Exhibition Centre ("the Convention Centre") and the other was at the offices of the Claimant at Unit 1302, 13/F, Chinachem Cameron Centre, 42-44 Cameron Road, Tsimshatsui, Kowloon ("the office premises").

3. At the jewellery exhibition the Bailiff Ms. Chan Pui Kuen ("Ms. Chan") seized ten lots of diamonds. At the time of the seizure the Claimant protested that the diamonds belonged to it and not to the Judgment Debtors and should not be seized. The Judgment Creditor and their solicitors undertook to indemnify the Bailiff and the Bailiff seized the diamonds. At the office premises Mr. Li Ka To ("Mr. Li") another Bailiff also seized furniture and office equipment.

4. Because of the rival claims of the Judgment Creditor and the Claimant the Bailiff took out an Interpleader Summons on 4 March 2002. Directions were given by Master C. B. Chan on 22 March 2002 .

5. The substantive hearing of the Interpleader Summons was before Master S. Wong on 9 April 2002. At that hearing some of the deponents were cross-examined. The Master dismissed the Claimant's claim to or in respect of the goods and chattels seized by the Bailiff and further ordered that the writ of fieri facias be proceeded with. He also ordered that the furniture and office equipment be returned to the Claimant on condition that the Claimant pays HK$13,470 to the Judgment Creditor or its solicitors.

6. The Claimant appealed against the order of Master S. Wong. The matter came before me on 23 May 2002. At that hearing the Claimant applied for leave to rely on fresh evidence on the appeal. After hearing arguments I granted leave to the Claimant to rely on the fresh evidence. By my order of 23 May 2002 the appeal was allowed and an issue was ordered to be tried namely, whether the Claimant was the owner or was otherwise entitled to the goods and chattels as at the date of the seizure on 27th February 2002 ("the Issue"). Save that the order in relation to the furniture and office equipment was to remain in force upon the Judgment Creditor's undertaking that it would repay the said sum to the Claimant if the Issue would be determined in favour of the Claimant, the Master's order was set aside. His ruling that the burden of proof of the ownership of the goods and chattels seized by the Bailiff be on the Claimant was also set aside. Directions were also given for the filing of further evidence.

7. The trial of the Issue was fixed for hearing on 28 and 29 November 2002. On 14 November 2002 the solicitors for the Judgment Creditor wrote to the solicitors for the Claimant informing them that the Judgment Creditor was not maintaining its claim to the goods and chattels seized under the writ of fieri facias but that it wished to be heard on the question of costs. The Claimant's solicitors responded that at the trial of the Issue they would seek relief from the court as set out in the list enclosed with the letter.

8. At the outset of the hearing before me on 28 November 2002 Mr. Smith SC leading Mr. Maullerett, for the Claimant, asked for the relief as follows:

(1) An order be made on the Interpleader Summons that the Claimant is entitled to all the goods and chattels seized by the Bailiff on 27th February 2002 and that all the said goods and chattels be released to the Claimant forthwith.

(2) The Bailiff do repay to the Claimant the sum of HK$60,000 forthwith, which was paid by the Claimant to the Bailiff pursuant to the order of Master S. Wong dated 9th April 2002.

(3) The Plaintiff do repay to the Claimant the sum of HK$13,470 forthwith, which was paid by the Claimant to the Plaintiff pursuant to my order of 23rd May 2002.

(4) Application made by the Bailiff for relief under O.17 R.3 (i.e. a protection order) be dismissed.

(5) Costs of the Claimant of and incidental to the Interpleader Summons, together with the costs of the Claimant of and incidental to the hearing before Master S. Wong herein on 9th April 2002, be paid by the Plaintiff to the Claimant on the highest possible basis as the Court deems fit.

(6) Costs of the Bailiff of and incidental to the Interpleader Summons be paid by the Plaintiff to the Bailiff on such basis as the Court deems fit."

9. Mr. Graham for the Judgment Creditor agreed that the Claimant was entitled to the relief sought under (1) and (3) above and accordingly, I made an order in terms of the relief sought under (1) and (3) above. The rest of the relief sought was disputed.

Application for protection orders

10. Mr. Lam on behalf of the Bailiffs Ms. Chan and Mr. Li sought protection orders in respect of the execution of the writ of fieri facias on 27 February 2002. Ms. Chan was the Bailiff who levied execution at the jewellery exhibition at the Convention Centre and Mr. Li was the Bailiff who levied execution at the office premises.

11. It is not disputed that the Court has jurisdiction to grant a protection order under 0.17, r.8 of the RHC which provides as follows:

“ Subject to the foregoing rules of this Order, the Court may in or for the purposes of any interpleader proceedings make such order as to costs or any other matter as it thinks just."

12. As stated in 17/8/3 of the Hong Kong Civil Procedure 2002 Vol. 1 a protection order in favour of a Bailiff who has interpleaded ordering that no action may be brought against him is ordinarily made. It is important to bear this in mind.

13. As the Claimant is entitled to the goods seized, it is clear that the execution was wrongful amounting to a trespass to the Claimant's goods. Although this would give rise to a claim by the Claimant against the Bailiff it is important to bear in mind that a Bailiff has a unique common law defence. This is available to Bailiffs or other executing officers in the execution of their duties.

14. The unique common law defence was stated by Suffiad J. in Fu Lok Man James v. Chief Bailiff of the High Court [1998] 2 HKC 1 @ 15 as follows:

“ Common law protection

A Bailiff very often finds himself in the position, when levying execution, that the goods are claimed by a third party. In such a situation, if the Bailiff withdraws and it turns out that the goods were indeed the execution debtor's, he may be liable for breaches of his duties in the execution. On the other hand, if he seizes the goods and it turns out to be in fact belonging to the Claimant, he may be liable to an action by the Claimant. The common law therefore has provided for a unique defence to Bailiffs or other executing officers in such situations that if the Bailiff or executing officer has only made an honest mistake in executing the process of the court and in all the circumstances no 'real grievance' or 'substantial grievance' has been caused to a Claimant beyond the mere entry and seizure of the goods, then the Bailiff or executing officer should be protected from an action for damages. It would be otherwise if the Bailiff or executing officer were guilty of insolent or oppressive conduct in excess of his duty and not justified by the writ of execution (see Smith v. Critchfield (1885) 14 QBD 873 and also Neumann v. Bakeaway Ltd. [1983] 1 WLR 1016). "

(my emphasis).

15. Mr. Lam submitted that the proper approach of the Court in deciding whether a protection order should be made was whether or not the Claimant could show that it was fairly arguable that he can defeat the common law defence open to the Bailiff.

16. Mr. Lam relied on Observer Ltd. v. Gordon [1983] 1 WLR 1008. Glidewell J. said at 1011 as follows:

“ First of all, what is the proper approach of the court to an application on behalf of the sheriff that the court should order 'no action' be brought? The court, in this sense, means the master in the first instance and, on appeal, the judge. In my view, one can properly draw the analogy of Order 14 proceedings in reverse, i.e. to be allowed to proceed with his action it is for the claimant to show that he has a real chance of defeating both defences available to the sheriff. If he shows this, a "no action" order should not be made and the claimant should be allowed to continue with his action".

17. At page 1012, Glidewell J. said that he proposed to adopt "fairly arguable" as the proper test.

18. I accept Mr. Lam's submission. In my judgment the proper approach to adopt is whether the Claimant can show that it has a fairly arguable case that he can defeat the Bailiff's unique common law defence. The Claimant has to show that it has a fairly arguable case of a 'real' or substantial 'grievance' caused to it beyond the mere entry and seizure of the goods.

19. And in dealing with 'substantial grievance' Rogers J.A. (as he then was) said in the Court of Appeal in the Fu Lok Man James case [1999] 3 HKC 742 @ 747:

“ It is accepted by both sides that an action against a Bailiff is only maintainable if the plaintiff has suffered a substantial grievance. It is unnecessary for the purposes of this case to explore the breadth of the concept of substantial grievance. For the purposes of the present case, it is not disputed that the plaintiff would have suffered a substantial grievance if he has suffered a substantial financial loss in terms of damages recoverable in law. Our attention has been drawn in this respect to the case of Neumann v. Bakeaway Ltd. [1983] 1 WLR 1016."

20. The Claimant initially opposed the making of protection orders for both of the Bailiffs. However, Mr. Smith in the course of his submissions informed me that he could not oppose a protection order in favour of Mr. Li in respect of the execution process at the office premises. That being so, I see no reason why I should not grant a protection order to Mr. Li.

21. Although the evidence filed on behalf of the Claimant was to the effect that Ms. Chan in the execution process was guilty of oppressive or insolent conduct, Mr. Smith in the course of his submissions, if I may say so very properly and correctly, abandoned such allegations and did not rely on the same. Mr. Smith relied solely on the fact that the Claimant had actual financial loss amounting to a substantial grievance, namely, loss resulting in an award of more than nominal damages. This was the only basis on which it was argued that the Claimant had a real or substantial grievance.

22. As the allegations of oppressive or insolent conduct on the part of the Bailiff were abandoned, the only matter to consider is whether the Claimant has shown that it has a fairly arguable case that he has suffered actual financial loss resulting in an award of more than nominal damages.

23. The writ of fieri facias directed the Bailiff to seize the goods, chattels and other property of the Judgment Debtors at the office premises. By letter dated 7 February 2002 from the solicitors for the Judgment Creditor to the Chief Bailiff instructions were given that the writ be executed at the office premises as well as at the jewellery exhibition at "Booths 2C24 and 2C26 of Samuel Rozenbaum".

24. Ms. Chan was accompanied by Mr. Wong Chi Kwong ("Mr. Wong") a legal executive of the Claimant's solicitors at the time of the execution at the jewellery exhibition. Mr. Wong was instructed by his principals to accompany Ms. Chan. The booths that they were led to by a security guard at the Convention Centre had a logo and name appearing on the entrance and inside as follows "Samuel-Rozenbaum Israeli Diamond Manufacturers."

25. Ms. Chan identified herself to the two foreigners there, namely Mr. Hadad and Mr. Rozenbaum. She explained that she intended to levy execution and seize the property there. Mr. Hadad claimed that the diamonds on display at the booths belonged to the Claimant, a Hong Kong company, and which had no relation with the Judgment Debtors whatsoever. The brochure at the booths, which was available to the public, gave the office addresses of "Samuel-Rozenbaum". It had the heading "Samuel-Rozenbaum, Israeli Diamond Manufacturers". The Head office was said to be in Israel with an address at Maccabi Diamond Exchange Building, Suite 840, Ramat-Gan 52520, Israel ("the Israeli address"). That is the same address as that of the Judgment Debtors as stated in the writ of summons in this action and as given by Mr. Payne, the former solicitor for the Judgment Debtors, in para. 4 of his first affidavit. This was also confirmed by Mr. Samuel in his first affirmation when he confirmed that the contents of Mr. Payne's said affidavit were true and correct.

26. Apart from the brochure at the booths there were also business cards placed there. Ms. Chan noticed the name 'Samuel-Rozenbaum' and that the Israeli address which was the address of the Head Office matched the address of the Judgment Debtors. The address of the 'Hong Kong Office' was the same as the office premises.

27. The Claimant's name was neither mentioned in the brochure nor in business cards placed at the booths. It was also pointed to me that the exhibitor was simply described as "Samuel-Rozenbaum" in the website for the jewellery exhibition. The Claimant was not mentioned as the exhibitor.

28. Both Mr. Hadad and Mr. Rozenbaum told Ms. Chan that there were no goods and chattels at the booths which belonged to the Judgment Debtors. She asked for the production of their Business Registration certificate but was told that it was in the office premises. Ms. Chan also said that although Mr. Hadad and Mr. Rozenbaum alleged that none of the goods at the booths belonged to the Judgment Debtors, they were not able to produce documentary evidence in support.

29. She then asked Mr. Wong to take further instructions which he did. She was informed that the Judgment Creditor was certain that the Judgment Debtors' goods were at the booths and that the Judgment Creditor and its solicitors offered to indemnify the Bailiff against all liabilities arising from the seizure. She reported the matter back to her superior and it was decided not to proceed with the execution until the indemnity and the Business Registration certificate reached the Bailiff's office. These were later received by the Bailiff's office. After speaking with her superior over the telephone she started the seizure.

30. She believed that it was not necessary to seize all the diamonds placed in the show case. She said that Mr. Hadad opened the showcase and requested her not to seize the raw diamonds there. He took out some golden bracelets from another shelf and asked her to seize them instead. As she had some doubts on the value of the golden bracelets she did not accede to his request. Mr. Hadad then took out some other diamonds and asked her to seize them in substitution of those placed in the showcase. Ms. Chan finally agreed to seize some diamonds from the showcase and some from those taken out by Mr. Hadad from the other shelf. This has not been disputed by the last affirmation of Mr. Rozenbaum made on 27 November 2002 in reply.

31. An inventory of the diamonds seized was prepared after she ascertained the unit price of the diamonds from Mr. Hadad and Mr. Rozenbaum. List A was prepared. At their request she added a note that Mr. Hadad claimed that the listed items did not belong to the Judgment Debtors but to the Claimant and that item nos. 3 and 6 of the listed items had been sold to a customer who would have to go to buy them elsewhere. He also claimed "big damage" had been caused to the Claimant.

32. The question to consider is whether there is a fairly arguable case that the Claimant has suffered actual financial loss resulting in an award of more than nominal damages. Mr. Smith submitted that the Claimant could show this in two ways:

(1) loss which flowed directly from the fact of the diamonds being seized ; and

(2) loss of sales arising out of the fact that there was a disruption of business at the time of seizure.

33. The first can be said to be direct loss and the second consequential loss. It is necessary to examine these.

34. As to direct loss, it is said that the diamonds in List A have been locked up for 9 months during which period no sales could be made for those diamonds. The Claimant is a trader in diamonds. It is also said that there is specific evidence in respect of two items, namely, item nos. 3 and 6 in List A. The evidence does show that at the time of the execution the Claimant stated that these had been sold to a customer who would have to go elsewhere to buy the same. This was recorded in List A.

35. It is obvious that Ms Chan was in an invidious position. The brochure and the business cards at the booths at the jewellery exhibition gave the name "Samuel-Rozenbaum, Israeli Diamond Manufacturers". The address of the Head office was the same address as that of the Judgment Debtors namely, the Israeli address and the office premises were described as the Hong Kong office. The Judgment Creditor through its solicitors said that the Judgment Debtors' diamonds were at the booths but Mr. Hadad and Mr. Rozenbaum alleged that none of the diamonds at the booths belonged to the Judgment Debtors but that they belonged to the claimant. They were, however, unable to provide any documentary evidence in support. Ms Chan took instructions from her superior and after her superior received an indemnity from the Judgment Creditor and its solicitors he instructed her to proceed with the execution which she did. She was in an invidious position. If she failed to seize the diamonds she might well have been subject to complaint from the Judgment Creditor. She took the only reasonable course open to her namely, to seize the diamonds in List A on 27 February 2002. Shortly thereafter on 4th March 2002 the Bailiff took out the Interpleader Summons. The matter was thus left to the court to decide as a matter of judicial process. It seems to me that although the execution was wrongful Ms. Chan made an honest mistake in the execution of her duties.

36. It cannot be said that Ms. Chan has deprived the claimant of the diamonds in List A for the last 9 months. She promptly took out the Interpleader Summons and the matter was thus left to the court to decide as a matter of judicial process. I fail to see how Ms. Chan can be blamed for keeping the Claimant out its goods for 9 months.

37. There is in any event no merit in the complaint that because the Claimant was deprived of the diamonds for 9 months it has suffered loss of sales. There is no evidence at all that the diamonds have diminished in value during that period of time or that they have somehow become unsaleable.

38. It is also said that the Claimant has lost the sale of item nos. 3 and 6 in List A because of the seizure and that is direct loss flowing from the tortious act. However, these items can be sold elsewhere. There is no evidence at all that any of the items in List A have diminished in value or are unsaleable. As regards items nos. 3 and 6 on List A, Mr. Rozenbaum said that the Claimant has exposed itself to a potential claim by its customers for failing to sell those diamonds (para. 7 of his third affirmation). That, however, is a bare assertion with no particulars or supporting documents provided. The Claimant has not even been able to produce a letter threatening such a claim from its customers who remain unidentified. This so-called potential claim is in my view fanciful.

39. I fail to see how there can be anything more than an award of nominal damages in any claim against Ms. Chan in respect of the seizure of the diamonds. The Claimant fails to show a fairly arguable case on the first ground of direct loss.

40. I turn to consequential loss. It is said that there is a claim for consequential loss of sales arising out of the fact that there was a disruption of business on the day of the execution which deterred customers from making purchases on that day.

41. The Claimant's evidence is to the effect that it only made US$17,102.58 of sales on 27 February 2002 which was the first day of the jewellery exhibition. The exhibition lasted from 27 February to 2 March 2002. On the three days following the execution the Claimant made US$937,595.12 of sales, roughly at US$312,530 per day. The Claimant's case is that the loss of sales on the day of the execution was about US$295,427 (i.e. US$312,530 less US$17,102.58).

42. It is however important to see the way the Claimant put its case on the evidence. Para 20 of the first affirmation of Mr. Rozenbaum states as follows:

“ On the day of seizure, the Claimant only made US$17,102.58 of sales. A copy of the invoices for that day is now produced and shown to me marked "AYR-7". The amount of diamonds and jewellery sold on that day was considerably less than those on previous occasions and indeed less that those on the days following the day of seizure. A copy of the invoices for the transactions at the 2002 Exhibition from 28th February 2002 to 2nd March 2002 are now produced and shown to me collectively marked "AYR-8". Altogether, for the three days after the seizure, the Claimant made US$937,595.12 of sales, roughly at US$312,530 per day. These invoices evidence sales by the Claimant as principal to customers of the Claimant. The invoices were issued by the Claimant as seller. The reason for the reduction in sales on the day of seizure is simple. The high handed manner in which the seizure was effected had deterred a large number of potential customers from doing business with the Claimant on that day. The exhibitions which the Claimant had participated had always provided the Claimant with an excellent medium to promote sales. The first day of the 2002 Exhibition was, however, completely ruined by the seizure." (my emphasis).

43. Thus it can be readily seen that according to the Claimant "the high handed manner in which the seizure was effected had deterred a large number of potential customers" and this was the reason for the reduction in sales on the day. That being the reason, with the abandonment by Mr. Smith of the allegations of insolent or oppressive conduct on the part of Ms. Chan the complaint of loss of sales on that day is no longer sustainable against Ms. Chan.

44. It must be obvious that in almost all cases of execution of process there must be some inconvenience and annoyance caused. That in itself is not sufficient to deprive the Bailiff of a protection order.

45. I do not think that it is sufficient to simply state that for the first day of the exhibition only two sales were concluded whereas for subsequent days many more transactions were conducted and therefore an inference should be drawn that the Claimant has lost substantial sales on the first day of the exhibition which was caused by the seizure of the goods by the Bailiff. The evidence of Mr. Sherman and the third affidavit of Mr. Rozenbaum makes the assertion that the seizure ruined the Claimant's business for that day. Although it is asserted that during the time that Ms. Chan was carrying out the execution process potential customers were scared away from the booth there is no evidence to show that they would indeed have made any purchases on that occasion. It was after all only the first day of the exhibition. There is no evidence to show that these persons did not subsequently return to make purchases. It is in my view pure speculation to suggest that potential customers were scared away and therefore the Claimant has suffered substantial financial loss because of lost sales. It is clear that the actual execution process lasted shortly over two hours. Ms. Chan arrived at about 12.30 pm at the Convention Centre and together with a security guard met Mr. Wong at the lobby. They proceeded to the booths. Ms. Chan identified herself to Mr. Hadad and Mr. Rozenbaum and they spoke. She deals with this in her affirmation. At some point she waited outside the booths to wait for the indemnity and the Business Registration certificate to arrive at the Bailiff's office. She could not have been engaged in conversation in the booths for very long before withdrawing to outside the booths. At about 1.30 pm she was instructed to proceed with the execution which she did. The whole process lasted until 3.30 pm and she left the booths with the seized diamonds. Thus the execution process lasted slightly over two hours. There were still about 21/2 hours to go before the end of the first day's exhibition.

46. As was pointed out by Mr. Lam, the Claimant's own evidence shows that Madam Minh, a Vietnamese lady, was negotiating with the Claimant's staff for the purchase of some diamonds when Ms. Chan arrived at the booths. On seeing the Bailiff she stopped negotiations and left the booths. However, according to the Claimant she did subsequently return and carried on with her negotiations on 1 March 2002 and concluded a sale. On the Claimant's own evidence a particular potential customer who was actively in negotiations with the Claimant at the time of execution did subsequently return and concluded a sale. Rather than sustaining a loss in respect of Madam Minh's transaction, the Claimant was able to conclude the sale to her.

47. Mr. Smith relied on Brewer v. Dew (1843) 11 M & W 625 as authority in support of his contention that consequential loss can be claimed. However, the facts there were very different. The facts of that case as set out in the declaration were that the defendants broke and entered two dwelling houses belonging to the plaintiff and they continued staying there making a great noise and disturbance for the space of ten days and greatly disturbed the plaintiff and his family in the possession and enjoyment of the said dwelling house. With force and arms they took and seized goods and chattels in the dwelling houses and in certain parts used as shops by the plaintiff in the way of his trade and business of a bookseller and which said goods were part of the plaintiff's stock in trade and converted and disposed of the same to their own use under a false and unfounded claim that the defendants were then entitled to seize and take possession of the said goods and chattels to enforce payment of the alleged debt. The plaintiff was greatly annoyed, prejudiced, injured and disturbed in carrying on and conducting his trade and business and was believed and considered by others including customers of the plaintiff to be incapable of carrying on his business and to be insolvent and incapable of paying his just debts. Divers persons residing in certain rooms in the dwelling houses were induced to believe that the plaintiff was in needy and embarrassed circumstances and that the defendants were entitled to seize the goods for monies due and left and ceased to reside as lodgers or boarders. The Court considered that vindictive damages could be given. Brewer v. Dew is clearly distinguishable on its facts.

48. As stated in para. 1439 of McGregor on Damages 16th Edn., Brewer v. Dew appears to have been interpreted as a case of exemplary damages in Owen & Smith (trading as Nuagin Car Service) v. Reo Motors (Britain) Limited 151 LT 27.

49. It was made clear in Owen & Smith that exemplary damages may be awarded for trespass to goods due to the manner of the trespass. Scrutton L.J. said @ 277:

“ I have no doubt myself that a judge or jury may give punitive damages in view of the nature of the trespass, and that they may do so in trespass to goods or land. The example usually given is that of a harmless wanderer where the damages are nominal. If he makes contemptuous gestures in the course of his trespass, the judge may give damages for the nature of the trespass."

50. And in the same case Maugham L.J. said @ 278:

“ In the first place it seems to me clear upon the authorities up to the House of Lords that there may be exemplary damages given for trespass to goods arising out of the manner of the taking, just as every student knows that there may be damages for breaking into a man's close even though no damage was done there. A malicious motive, an arrogant or insolent manner are things which justify exemplary damages being given by judge or jury. The cases seem to show that the same rule applies as to a trespass to goods ............................................................................................................................................................ But the case of Brewer v. Dew (1843, 11 M. & W. 625 is an authority that the jury may, in a case upon a claim for trespass to goods, where the seizure of the goods was made under a false pretence of a legal claim, the plaintiff being thereby annoyed and disturbed in the carrying on of his business, give vindictive damages beyond the value of the goods."

51. Mr. Lam also referred me to Interoven Stove Co Ltd v. Hibbard & others [1936] All E R 263 where Owen & Smith was applied. It was held that where there was an illegal distress which was a trespass to goods and even though no actual damage be proved the court was entitled to give substantial damages if the circumstances justified it. The circumstances there were that the plaintiff was treated in a very high-handed manner.

52. As stated in para. 1439 of McGregor on Damages, Lord Devlin in Rookes v. Barnard [1964] AC 1129 @1229 has interpreted the award in Owen & Smith as being one of compensatory damages rather than exemplary damages.

53. It is also stated at para. 14-113 in Clerk & Lindsell on Torts 18th Edn. that aggravated damages may be awarded for the circumstances of a conversion, citing Owen & Smith.

54. It seems to me to be clear on the authorities that aggravated damages may be awarded for the circumstances or nature of a conversion or trespass to goods. I accept Mr. Lam's submission that in the cases where it was held that such damages may be awarded the circumstances and the nature of the tort were such that insolent or oppressive conduct, such as high-handed action, was involved. As those allegations have been abandoned the claim for consequential loss against Ms. Chan is in my judgment not fairly arguable.

55. The fact that the Judgment Creditor and its solicitors provided an indemnity to the Bailiff is no bar to the making of a protection order although it is something to be taken into account. In the circumstances it was reasonable for the Bailiff to seek extra protection in the indemnity given as a precautionary measure. That should not prevent the Court from making a protection order. Ms. Chan has acted reasonably and has made an honest mistake. In my judgment a protection order should also be made in favour of Ms. Chan.

Costs

56. The Judgment Creditor having conceded that the Claimant was entitled to the goods and chattels seized by the Bailiff on 27 February 2002 and that the same be released to the Claimant forthwith it would appear that costs should follow the event. However, Mr. Graham argues for a different order namely, that the Claimant should be deprived of its costs.

57. There is no doubt that costs should follow the event except when it appears to the Court that in the circumstances of the case some other order should be made as to the whole or any part of the costs (O.62, r.3 R.H.C.).

58. Mr. Graham did not seek to disturb any earlier orders for costs which had already been made. As was pointed out, three costs orders have already been made in favour of the Judgment Creditor to be paid by the Claimant forthwith namely:

(1) on 17 April 2002 by Master Rimsky Yuen in respect of an application to discharge an ex parte order for stay of execution of Master S. Wong's order of 9 April 2002;

(2) on 26 April 2002 by Ma J. (as he then was) in respect of an application by the Claimant for the continuation of an interim stay of execution of the said order of Master S. Wong granted ex parte by Hartmann J. The costs were awarded on an indemnity basis.

(3) on 23 May 2002 by my order in respect of the costs of the application to adduce fresh evidence on the appeal from the said order of Master S. Wong and for the costs of the hearing before me.

59. The costs in issue before me are:

(1) the costs of a directions hearing before Master C.B. Chan on 22 March 2002 which were reserved; and

(2) the costs of the hearing before Master S. Wong on 9 April 2002 which by my order of 23 May 2002 were ordered to be reserved to the Judge dealing with the Issue.

(3) the costs of the trial of the Issue.

60. The Bailiff also seeks its costs of and occasioned by the execution of the writ of fieri facias on 27 February 2002 and the Interpleader Summons including its costs at the hearings as follows:

(a) before Master C. B. Chan on 22 March 2002;

(b) before Master S. Wong on 9 April 2002;

(c) before Ma J. on 26 April 2002;

(d) before me on 23 May 2002;

(e) before me at the hearing commencing on 28 November 2002.

61. It was Mr. Graham's contention that the Claimant had put forward false and contradictory evidence as to the Claimant's entitlement to the diamonds that were seized. The evidence of the corporate structure of what was loosely described as the Samuel-Rozenbaum Group was unclear and confusing. It was said that one of companies, namely Samuel-Rozenbaum Diamond Limited, one of the Judgment Debtors was actually non-existent. It was also said that the other Judgment Debtor Samuel-Rozenbaum (1992) Limited ceased business at the time that another company namely, Samuel-Rozenbaum Diamond (1999) Limited was formed presumably with a view of evading the liabilities of the former. Mr. Graham submitted that the Group which included the Claimant displayed a low standard of commercial morality.

62. I have considered all of Mr. Graham's submissions. However, I am unable to accept that the Claimant should be deprived of its costs.

63. Mr. Smith correctly emphasized that the Judgment Creditor's case has all along, until the concession made by letter dated 14 November 2002, been on the basis that the corporate veil should be pierced and hence the goods and chattels at the office premises and at the Convention Centre on 27 February 2002 were liable to be seized in execution of the judgment against the Judgment Debtors. That this is so is in my view clear from the first affidavit of Mr. Buxbaum in particular paras. 28 and 29. It is also clear from the Skeleton Submissions of then Counsel for the Judgment Creditor at the hearing before Master S. Wong where it is stated in para. 15:

“ The [Judgment Debtors] are in fact the alter ego of the exhibitor of the diamonds on List A, the Samuel-Rozenbaum group; thus the [Judgment Creditor] sought execution against the diamonds".

64. The stance that the corporate veil should be pierced and that the diamonds could be seized in execution was maintained right up to the time of the letter of 14 November 2002.

65. The fresh evidence filed pursuant to my order of 23 May 2002 clearly established with supporting documentation that all the diamonds at the Convention Centre were supplied to the Claimant by Samuel-Rozenbaum (1999) Limited. The Judgment Creditor was unable to pursue to trial its case that the corporate veil should be pierced and made the concession by letter dated 14 November 2002. That being so, it seems to me that having started out with an allegation that the corporate veil should be pierced, which the Judgment Creditor was unable to pursue successfully to the end, it ought to pay the costs of the Interpleader Proceedings and the trial of the issue. In my view costs should follow the event.

66. As regards the hearing before Master S, Wong, it must be remembered that the Master had ruled that the burden of proof rested with the Claimant and that the Claimant had failed to discharge the burden of proof that it owned the diamonds. It is, of course, true that the invoices and sale documents in respect of the diamonds seized were only produced by the Claimant later in the fresh evidence filed pursuant to the leave granted on 23 May 2002. That evidence showed that all the diamonds seized on 27 February 2002 were sold to the Claimant by Samuel-Rozenbaum (1999) Ltd. Although Mr. Hadad did not mention this entity in the proceedings before Master S. Wong, he was adamant that the diamonds belonged to the Claimant and did not belong to and were not supplied by the Judgment Debtors or either of them.

67. It seems to me that the Master was in error in ruling that the burden of proof was on the Claimant. The diamonds were never in the possession of the Judgment Debtors but were in the possession of the Claimant. By my order of 23 May 2002 the Master's ruling on the burden of proof being on the Claimant was set aside.

68. In his Judgment dated 15 October 2002 on the Judgment Creditor's application for security of costs at page 10, Ma J. also held in effect that the burden of proof rested with the Judgment Creditor.

69. The Judgment Creditor is unable to discharge the burden of proof that it was entitled to levy execution on the goods in the possession of the Claimant in respect of the judgment entered against the Judgment Debtors. I am not persuaded that the usual order as to costs should not be made even in respect of the hearing before Master S. Wong.

70. The Claimant asks for indemnity costs. It is said that the issue of the writ of fieri facias and the execution process was an abuse of process and therefore indemnity costs should be ordered. Although the Judgment Creditor has been unable to persist in its allegation that the corporate veil of the Claimant should be pierced I do not consider that there has been an abuse of process of the Court. The obscure way in which the Samuel-Rozenbaum Group operated might well have led the Judgment Creditor to allege that the corporate veil should be pierced. I am not persuaded that the Judgment Creditor was guilty of an abuse of process so as to justify an order for indemnity costs.

71. It seems to me that the Judgment Creditor should also pay the Bailiff's costs of and occasioned by the execution of the writ of fieri facies on 27 February 2002, the Claimant's claim to the goods and chattels seized by the Bailiff on 27 February 2002 and the Interpleader Summons including the hearings on 22 March 2002, 9 April 2002 and 23 May 2002. These are to be taxed on a party and party basis. As regards the hearing on 26 April 2002 before Ma J., Mr. Maurellet accepted that the Claimant should pay the Bailiff's costs. Such costs are to be on an indemnity basis which was the basis for the costs order made by Ma J in favour of the Judgment Creditor against the Claimant.

72. As the Bailiff has succeeded in the application for protection orders for Ms. Chan and Mr. Li such costs should be borne by the Claimant. The Judgment Creditor who supported the Bailiff's application is also entitled to its costs.

The HK$60,000

73. There was also the issue of the HK$60,000 ordered by Master C. B. Chan to be paid by the Claimant as security. It is reasonably clear to me from the attendance note of the Judgment Creditor's solicitors that the said sum was ordered to be paid because the Claimant had broken the tape sealing off the safe without the prior consent of the Bailiff. I appreciate that at the hearing before Master S. Wong he ruled, if I may say so correctly, that the contents of the safe were not seized. Despite this it is obvious that the Claimant ought not to have broken the tape sealing off the safe without the prior consent of the Bailiff and this may well have been contumelious conduct. It was for this reason that Master C. B. Chan ordered security for the Bailiff's costs inclusive of guard fees. In my view in the circumstances the Claimant should pay for the guard fees incurred which I have been told amounted to HK$21,850. The balance of HK$38,150 should be returned to the Claimant.

Conclusion

74. To sum up, I make the following orders that:

(1) No action may be brought against Mr. Li and Ms. Chan in respect of the execution process on 27 February 2002;

(2) The Bailiff do repay to the Claimant the sum of HK$38,150;

(3) The Claimant do pay the Bailiff and the Judgment Creditor their costs in the application for protection orders for Ms. Chan and Mr. Li. I would indicate that this application took up about half the time before me for the assistance of the taxing master;

(4) The costs of the Claimant of and incidental to the Interpleader Summons, together with the costs of the Claimant of and incidental to the hearing before Master C.B. Chan on 22 March 2002 and before Master S. Wong on 9 April 2002 be paid by the Judgment Creditor to the Claimant.

(5) The Claimant's costs of the trial of the Issue and of the hearing before me on 28, 29 November and 2 December 2002, save for the time spent on the application for the said protection orders, be paid by the Judgment Creditor to the Claimant;

(6) The Bailiff's costs of and occasioned by the execution of the writ of fieri facias on 27 February 2002 and the Interpleader Summons including its costs at the hearings before Master C.B. Chan on 22 March 2002, before Master Wong on 9 April 2002 and before me on 23 May 2002 be paid by the Judgment Creditor.

(7) The Bailiff's costs of the hearing before Ma J. on 26 April 2002 be paid by the Claimant such costs to be taxed on an indemnity basis.

(8) The Bailiff's costs of the hearing before me on 28, 29 November and 2 December 2002, save for the time spent on the application for the said protection orders, be paid by the Judgment Creditor.

(9) Save for the costs order under (7) above, all the costs orders are for taxation on a party and party basis.