FULEEKOO COMPANY LIMITED v. SPIRAL TUBES INTERNATIONAL LIMITED AND OTHERS

IN THE COURT OF APPEAL

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JUDGMENT

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Kempster, J.A.:

1. On or about 22nd January of this year and pursuant to section 81 of the Landlord and Tenant (Consolidation) Ordinance Fuleekoo Co. Ltd. (hereinafter called "the plaintiffs") applied to the Victoria District Court for a warrant to distrain the goods and chattels of Spiral Tubes International Ltd (hereinafter called "the defendants") on land situated at Kwu Wan, Lamma Island, in respect of arrears of rent running from 15th April 1985.

2. On 24th January a warrant duly issued and on 17th February goods found on the land were seized by the bailiff. Claims to ownership of these goods having been made by the defendants on behalf of a number of parties the bailiff issued an interpleader summons which was heard by Judge Gall in Chambers at the Victoria District Court on 13th March. He dismissed the claims of certain claimants on the footing that they had not satisfied him that the defendants were "exercising a public trade" when the goods respectively claimed were delivered to them so as to bring such goods within the parameters of section 99(g) of the ordinance; also finding that he was then left with no discretion to order the return to the true Owners of goods lawfully seized. Allowing an appeal and remitting the matter to the judge this Court held that section 96(2) in fact conferred such a discretion and also that ownership alone would not be a sufficient ground to warrant the exercise of the Court's discretion to order the return of goods to an applicant.

3. Judge Gall duly reconsidered the claims respectively made by Nederhorst Foundation Engineering (HK) Ltd. and Gammon (Hong Kong) Ltd. (hereinafter called "the claimants") to goods seized and exercised his discretion to order the return of such goods to them without condition. Against that order and pursuant to the leave of the judge the plaintiffs who, naturally enough, wish to sell these goods in order to recoup the arrears of rent owing by the defendants, appeal to us yet again. There are ten grounds of appeal but in the final analysis Mr. Chan, who appears for the plaintiffs and recognises that we are here invited to overrule the exercise of discretion, relies on his tenth ground which summarises the rest and reads:

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The exercise of the discretion of the learned judge is against the weight of evidence before him, and is not just and equitable in all the circumstances of the case."

If the exercise of discretion is to be attacked an appellant must demonstrate either a mistake of law, a disregard of principle, a misapprehension as to the facts, failure to take into account relevant matters, reliance on matters that were irrelevant or an unjust outcome. The judge below appreciated and stated in terms that it was not enough for him to find that the respective claimants owned the goods which are the subject matter of dispute. As regards Nederhorst the goods - steel tubes - had been furnished to the defendants on 29th June 1985 for fabrication into piles for foundation works and as regards Gammon deposited with the defendants on 21st April 1985, by which date rent was already in arrear, with a view to sale to third parties.

4. What in the end caused the Judge so to exercise his discretion as to order the return of these goods to the respective claimants, free of conditions, was that:

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the landlord permitted the arrears of rent to accrue to a point where the imposition of a condition payment for the return of the goods would be a disproportionate burden upon the claimants.

Although ostensibly then dealing with the question of conditions it is reasonably apparent that these arrears of rent influenced the exercise of his discretion as a whole. It is said in this context that section 79 of the ordinance allows a landlord to wait for some 12 months before seeking to distrain for arrears. But that privilege does not, in our view, suffice to bar a judge from taking into account a landlord's delay when exercising his discretion; particularly when neither plaintiffs nor claimants are blameworthy and both are liable to suffer loss as a result of the financial failure of third parties; here the defendants. It is manifest that the effect of the order is harsh to the plaintiffs who now will not be able to distrain the steel. But an order in the opposite sense would be harsh to the claimants who would lose their property in circumstances which they could not readily have anticipated. A fine balance existed between Nederhorst, who had reason strongly to doubt the financial viability of the defendants on the one hand and the plaintiffs, who had even greater reason to think that the defendants were not good for the money, on the other. Gammon had no grounds for disquiet. Mr. Barlow, on behalf of the claimants, has submitted that by allowing the defendants the time they did the plaintiffs were essentially the authors of their own misfortune.

5. When the balance is so finely poised it is the more difficult for an appellate court to find that the exercise of discretion produces an unjust outcome or is vulnerable under any of the heads ere have outlined.. In the premises we have no option but to dismiss this appeal.