YUKIU INVESTMENTS LTD v. REGAL JOINT LTD

DCDT 8421 / 2004

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

DISTRAINT CASE NO. DCDT 8421 OF 2004

D E C I S I O N

1. This is an interpleader summons taken out by the bailiff after the execution of a warrant of distress on 24 January 2005.  Goods and chattels (“the Chattels”) have been seized during execution and an auction has been arranged to take place on 31 January 2005.  Now the Claimant applies for return of the Chattels to it as owner.

2. By a tenancy agreement dated 26 September 2000, (“the 1^st Tenancy Agreement”), the Plaintiff as landlord let the premises situated at Whole of 1^st Floor Ocean Building, 80 Shanghai Street, Jordan, Kowloon (“the Premises”) to the Defendant as tenant.  After the 1^st Tenancy Agreement expired, the Defendant continued to rent the Premises under another tenancy agreement dated 30 September 2004 (“the 2^nd Tenancy Agreement”) for another 3 years upto 30 September 2007.

3. At the commencement of the action herein, the Defendant was indebted to the Plaintiff in the sum of HK$151,206.00 being arrears of rent for the Premises for two months, November and December 2004 under the 2^nd Tenancy Agreement.

4. Mr. Law, one of the directors of the Claimant appears in person at the hearing on behalf of the Claimant.  There has not been any affidavit from the Claimant filed under Order 17 rule 3(6) of the Rules of the District Court.  He makes his application in reliance on a declaration made by him on behalf of the Claimant on 28 January 2005.  He declared that the Chattels belong to the Claimant.  Nothing further is said in the declaration.  Attached to the said declaration is a pile of invoices.

5. I have to first decide whether the Chattels were in the apparent possession of the Defendant.  The Defendant was named as the sole tenant in the 1^st and 2^nd Tenancy Agreement.  User of the Premises as stipulated in Schedule IV is “Restricted to use as an educational institution and its ancillary office only…” By clause 3 under section IV of the two Agreements, the Defendant has agreed “not to assign underlet transfer or otherwise part with the possession of the Premises or any part thereof either by way of subletting lending sharing or other means whereby any organization company firm or person not a party to this agreement obtains the use or possession of the Premises or any part thereof.”  In the circumstances, the Defendant was prima facie in occupation of the Premises.  The Chattels were ordinary furniture which were commonly found in a school office and classrooms, which suit the user of the Premises as stipulated in Schedule IV.  The bailiff in adopting the “evidence of his own eye” test, was entitled to treat the Chattels in the apparent possession of the Defendant.

6. The second issue is to see whether the Claimant has established that it is the true owner.  From evidence set out above, I would say no.  From evidence before me, I find that the Claimant has failed to establish that it is the true owner of Chattels.  There was only one bare assertion in the statutory declaration saying that the Chattel belong to the Claimant.  Such bare assertion was contradicted by a letter of the Claimant to the bailiff on even date purported to be a notice of its claim served on the bailiff under Order 17 rule 2, it says that the Chattels belong to the “tenant” A1 College O/B Victory 2000 Limited.  No weight could be attached to the content of the said declaration.

7. Mr. Law also tries to connect the invoices with the Chattels but he could only point out one item and that was no. 216 in the bailiff’s inventory.  It says “two mounted projectors, including two “EIKI mini projectors LC-SM1.  He refers the court to an invoice no. I-0305057 dated 11 September 2003.  In that invoice the Description of the goods is said to be 1 EK-LC-SM4.  The address for delivery is a unit in Wusung Street.  Mr. Leung says that the goods were purchased before the company had moved into the Premises.  I do not find that Mr. Law has successfully connected the invoice with the bailiff’s inventory.  The mode number is different, the delivery address was not at the Premises.  For other items in the inventory, he says he could not correlate them with the invoices because the invoices were not complete.

8. Further there is no evidence at all to show the relationship between the Claimant and the Premises or the Defendant.  There is no evidence before me to say that the Claimant was a tenant or occupier or licensee or user at the Premises.  There is no evidence before me to say why the Chattels were kept in the apparent possession of the Defendant at the Premises at the time of the execution of the warrant of distress.

9. From the company search produced by the Plaintiff, I note that the directors and shareholders of the Defendant are Wealth 2000 Limited and the Claimant, with each of them holding 50% of the shares of the Defendant.  This however could not prove that the Claimant is the truthful owner of the Chattels.  I do not see how the Claimant is related to Victory 2000 Limited although the two have common directors.  The Claimant, a separate legal entity, cannot claim to be the true owner on behalf of another incorporated company.

10. The burden of proof on ownership is on the Claimant.

“ “Where the applicant for relief is the bailiff, who (as is usually the case) has seized under a writ of execution goods in the possession of the judgment debtor, the claimant is generally made plaintiff, and the execution creditor defendant, in the issue (Chase v. Goble (1841) 2M. & G. 930, per Tindal C.J. at 935).  In such a case the burden of proof is on the claimant to prove his title to the goods or to the possession thereof at the time of seizure……”  para. 17/5/11 of Hong Kong Civil Procedure 2004”

11. For aforesaid reasons, I am not satisfied that the Claimant has proved its title to the Chattels or to the possession thereof at the time of seizure.

12. In the present case, as the Claimant has failed to establish its ownership on the Chattels, I see no need for me to exercise my discretion by to balancing the ownership with the legitimate interest of the landlord.

13. For reasons set out above, I dismiss the claim of the Claimant with costs including the security guard’s costs, to be taxed, if not agreed.