CAYMAN CO LTD v. VIOLET BOOKS CO LTD

DCDT 5588/2005

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

DISTRAINT CASE NO. 5588 OF 2005

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DECISION

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1.  The Plaintiff (“P”) leased premises to Defendant (“D”) for a term of 3 years from 1st April 2004 at a monthly rental of $36,000 for D to trade as a book shop.  On or about 23rd August 2005 D received a letter from the Buildings Department stating that the outer glass wall was not in compliance with fire regulations.  D blames P for the defect and says it would not have leased the premises had it known the same.  P did not shirk responsibility.  It engaged an Authorised Person to assess the situation, dealing with the Government itself.  However D stopped paying rent since 1st August 2005. P applied for the present Warrant of Distress on the 21st September 2005.  Two days later P issued a Writ in DCCJ 4677/2005, seeking inter alia re-possession and rent in arrears.  Today D seeks the Warrant of Distress to be discharged or that distraint be stayed until further order of this Court.

2.  The issues inside the Writ will in due course be determined by this Court.  For today’s application, however, D says once a Writ is issued, all rights of recovery under a Warrant are extinguished for whatever period of tenancy, relying on the legal principle that termination of a lease will strip the tenant of his status as a tenant: see Woodfall’s Law of Landlord and Tenant  Volume 1 at paragraph 9.006.  In Serjeant  v  Nash, Field & Co and Another [1903] KB 304 at pages 313 and 314, Stirling LJ said “The question … is whether the issue of the writ and service…is a determination of the lease… The lease was forfeited and gone from the time when the writ was served, and that consequently there was no right of distress against the (tenant)”.

3.  The dates involved in the Warrant of Distress and the Writ are crucial to today’s application.  It is not disputed that when the Warrant was applied for, i.e. 21st September 2005, D’s tenancy was still subsisting.  P says a subsequent Writ should not retrospectively extinguish any then existing right.

4.  In my view the present Warrant in no way goes against the common law principle, because (using Stirling LJ’s words) the right of distress would only be extinguished from the time the writ was served.  But on the 21st September 2005, the Writ had not been issued, let alone served.  I do not accept the crucial date of the Warrant to be when the Warrant was served, i.e. after the date of the Writ, so that the Warrant became invalid, because if the bailiff was slow then P suffers through no fault of its own.  If the Warrant had been issued after the date of the Writ, the Warrant would be unlawful.  Furthermore I do not accept D’s argument that once a Writ is issued, it can retrospectively extinguish all rights of distress, because Cap.7 s.102 gives a right to distrain by the words “as if such term or lease had not been ended or determined”, i.e. what Stirling LJ referred to as a “determination” by force of law under a Writ, does not render the Warrant invalid, provided of course a tenant is still in possession.  While a statute overrides common law, there is in any event no contradiction here, because Stirling LJ did not oust a retrospective claim, only a parallel claim.  The Warrant is therefore valid as at 21st September 2005, rent being overdue since 1st August.  Any risk of “double dipping” regarding rent due for August and September 2005 will be removed when the main action is tried in future.

5.  For the above reasons the Defendant’s application today is dismissed.  There will be costs to the Plaintiff for today’s application, to be taxed if not agreed.