SHUI ON CENTRE CO LTD v. BPB (HK) LTD

DCDT638/2006

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

DISTRAINT NO. 638 OF 2006

J U D G M E N T

1.  The plaintiff is the landlord and the defendant is the tenant.  The plaintiff applied ex parte under the Landlord and Tenant Ordinance for a distraint order.

2.  On the day of execution, the defendant paid into court a sum of money equals the amount of the alleged outstanding rent to prevent the bailiff from executing a distraint order.  The sum of money was accepted by the court, and as a result, the bailiff stopped executing the order.  No inventory of the property was made.

3.  The defendant now applies to discharge the distraint order, seeking an injunction to restrain the account department of the District Court from releasing the money to the plaintiff, an injunction to restrain the plaintiff from applying for another distraint order and consolidation of these distraint proceedings with another District Court action between the parties.

4.  One of the grounds relied on by the defendant is that the plaintiff has committed material non-disclosure when making the ex parte application for distraint order.  Mr Tam, who represented the defendant, drew my attention to an authority pertaining to the duty of full and frank disclosure by application of a Mareva injunction or Anton Piller order.

5.  One of the disclosures concerned is the existence of another District Court action in relation to the parties’ dispute on management fees and rent.  The outstanding fees concerned in that action were between the period of April 2005 to October 2005 whereas the outstanding rent concerned for the present application was between November 2005 and January 2006.

6.  It is not disputed by Mr Tam that even if the defendant were to succeed in the District Court action, the defendant still owes the plaintiff at least around $128,000 and the total alleged outstanding rent for the present distraint application is $132,575.

7.  I consider this ground lack of merit in that the present outstanding rent is unrelated to the money in dispute in the District Court action.  Although there is a relief sought in the District Court action to restrain the plaintiff from taking out distress application, there is no interim injunction sought by the defendant in this regard.  There is nothing barring the plaintiff from taking out the application.

8.  It would be better if the plaintiff informed the court the whole background when making the application, but the non-disclosure is not material enough to render it dischargeable.  The standard of disclosure to be applied for a distress application shall not be as high as that of an Anton Piller order or a Mareva injunction because there is a prescribed mode of application for discharge for a distress order under the Landlord and Tenant Ordinance, which is within 5 days of execution and before the property being sold.

9.  Another alleged non-disclosure is that there is a change of shareholding of the defendant; and Messrs Leung & Wan, the solicitors occupying the subject property, was merely a licensee without having ownership of the goods involved.  I consider this fact immaterial in that it is admitted that the goods subject to the present distress order were owned by the defendant. 

10.  Taking into account also the fact that there is no dispute as to the existence of the outstanding rent in an amount close to the alleged one, I consider that the distress order ought not to be discharged.

11.  The sum paid in by the defendant was allegedly on condition that it should not be paid out to the plaintiff.  I agree with Mr Sham, counsel for the plaintiff, that this does not change the nature of the payment-in.  The payment-in is for the purpose of preventing the bailiff from executing the distress order and the only way for such payment to serve this purpose is to have the money paid to satisfy the outstanding rent.  The defendant can only stop the court from paying out if the defendant can satisfy the court that the distress order ought to be discharged, which the defendant has now failed.

12.  Paragraph 3 of the summons is misconceived.  Mr Tam even cannot answer to this court what the defendant’s cause of action is and cannot explain why no interim injunction has been applied for in the main action.

13.  In the circumstances, the defendant’s summons be dismissed with costs to the plaintiff, to be taxed if not agreed, with certificate of counsel.