GOOD HOME SUPERMARKET CO LTD v. HSU CHIEN FENG t/a MAN FUNG CONSUMER HOUSEHOLD PRODUCTS CO

DCDT8112/2004

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

DISTRAINT ACTION NO. 8112 OF 2004

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REASONS FOR DECISION

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Background

1.  The Plaintiff was the former registered owner and landlord of premises known as Factory Flats A & B, Ground Floor, Kam Mow Industrial Building, No.44 Belcher’s Street, Hong Kong (“Premises”).

2.  The Defendant was the tenant of the Premises and carried on a retail business of selling household products thereat. He dealt with the Plaintiff’s director Mr Cheung Yuk Chuen (“Mr Cheung”) on tenancy matters in respect of the Premises.

3.  The Defendant became the tenant of the Premises on/about 22^nd October 2001 for 3 months from 22^nd October 2001 to 22^nd January 2002 at the monthly rental of HK$40,000.00 (“1^st TA”) and upon the expiry of the 1^st TA in January 2002, he rented the Premises on a long term basis. Consequently, the parties entered into a tenancy agreement prepared by the Plaintiff’s solicitors in January 2002 whereby the Plaintiff let the Premises to the Defendant for a term of two years from 7^th February 2002 to 6^th February 2004 at the monthly rental of HK$55,000.00 for the first year and HK$60,000.00 for the second year (“2^nd TA”). By a supplemental agreement dated 6^th August 2002, the parties agreed to reduce the monthly rent from HK$55,000.00 to HK$50,000.00 for the period from 7^th August 2002 to 6^th February 2003 (“1^st SA”).

Rent reduction

4.  The Defendant claimed that in early January 2003 business was bad, so he gave notice to the Plaintiff on 12^th January 2003 that he would terminate the tenancy at the Premises on 7^th April 2003 (“Notice”). The Plaintiff asked the Defendant to continue with the tenancy at a reduced monthly rent, to which the Defendant agreed and the Notice was cancelled. The monthly rent was reduced to HK$47,000.00 for the period from 7^th April 2003 to 6^th February 2004 as evidenced by a second supplemental agreement (“2^nd SA”).

5.  Mr Cheung disagreed with the above assertion. He claimed that in early 2003 the Defendant told him business was poor due to SARS and asked for a reduction of the monthly rent from HK$60,000.00 to HK$47.000.00 for the residual term from 7^th March 2003 to 6^th February 2004, to which Mr Cheung agreed because he appreciated the difficulties at that time.

Subject tenancy agreement

6.  In/about December 2003, the tenancy of the Premises was due to be renewed. On 19^th December 2003, the parties signed a third tenancy agreement (“3^rd TA”) at the offices of the Plaintiff’s solicitors (“Office”). The 3^rd TA stated that the tenancy term was from 7^th February 2004 to 6^th February 2006 at a monthly rent of HK$75,000.00 from 7^th February 2004 to 6^th February 2005 and HK$85,000.00 from 7^th February 2005 to 6^th February 2006.

Alleged collateral agreement

7.  According to the Defendant, he told the Plaintiff he was unable to pay such high rent, but Mr Cheung told him the 3^rd TA was a mere formality and they had previously agreed to reduce the monthly rent to HK$47,000.00. So on such basis the parties executed the 3^rd TA as well as a collateral agreement similar to the 1^st and 2^nd SA to confirm the reduction of the monthly rent of the Premises to HK$47,000.00 for the period from 7^th February to 6^th August 2004 (“3^rd SA”). When the Defendant queried over the period stated in the 3^rd SA, Mr Cheung assured the Defendant inter alia that he only had to pay HK$47,000.00 per month and the parties would execute another agreement in August 2004. Mr Cheung explained to the Plaintiff that he wanted to document a higher rental yield to show the potential buyer of the Premises. The Defendant agreed to accommodate the Plaintiff since the latter agreed the actual monthly rent payable was HK$47,000.00.

8.  On the other hand, Mr Cheung denied the above assertions. He claimed that when the tenancy was due to be renewed in/about December 2003, there was repaid growth in the economy (in particular for retail business) resulting in rapid increase in rental levels, so the parties agreed on the monthly rent stated in the 3^rd TA. But after executing the 3^rd TA at the Office, in the absence of the solicitor, the Defendant requested for rent reduction. Mr Cheung initially refused in light of the rising trend of the rental market, but the Defendant kept pressing by saying that his business had not fully recovered. Mr Cheung reluctantly agreed to a reduction of the monthly rent to HK$47,000.00 for 6 months from 7^th February to 6^th August 2004, which the Defendant accepted. The parties therefore signed the 3^rd SA dated 7^th February 2004. The Defendant never asked to sign any further collateral agreement in August 2004.

Payment of rent under the 3^rd TA

9.  The Defendant paid HK$47,000.00 per month to the Plaintiff from 7^th February to 6^th October 2004. The Plaintiff issued 8 monthly rental receipts for HK$47,000.00 each to the Defendant. On/about 9^th or 10^th September 2004, when Mr Cheung came to the Premises to collect the rent, he told the Defendant he had sold the Premises to a third party (“Buyer”).

10.  Mr Cheung claimed he was under the mistaken impression that the rental reduction period would last until 6^th September 2004, so he inadvertently gave the Defendant a rental receipt for HK$47,000.00 for the rental period from 7^th August to 6^th September 2004 when the Defendant paid such sum to him. Mr Cheung further claimed he informed the Defendant the monthly rent was restored to HK$75,000.00 when the Defendant tendered the rent of HK$47,000.00 on/about 10^th September 2004. When Mr Cheung asked the Defendant to take a look at the 3^rd SA, the Defendant kept quiet. Mr Cheung issued the rent receipt for HK$47,000.00 because the Defendant did tender such sum, but Mr Cheung demanded for payment of the balance sum of HK$28,000.00 (“September Balance Sum”).

11.  On the other hand, the Defendant denied the above assertions. He pointed out he all along paid the agreed rent at HK$47,000.00 per month and the Plaintiff never demanded any September Balance Sum until he received the letter from the Buyer’s solicitors dated 1^st December 2004 (see below). The Defendant claimed he asked Mr Cheung to inform the Buyer the actual/reduced monthly rent was HK$47,000.00.

Demand for rent

12.  On 20^th September 2004, Mr Cheung wrote to the Defendant demanding payment of the September Balance Sum. The Defendant claimed he never received such letter.

13.  Mr Cheung claimed that on/about 10^th October 2004 he telephoned the Defendant to verbally demand for payment of the Outstanding Rent (see below), but the Defendant said he would not pay pending clarification of (a) the Buyer’s stance and (b) the benefits which the Buyer would offer.

14.  On 8^th November 2004, the Plaintiff’s solicitors wrote to the Defendant to demand for payment of inter alia the September Balance Sum and the arrears of rent of HK$150,000.00 for the period from 7^th October to 6^th December 2004 (“Plaintiff’s Demand Letter”).

Distraint action

15.  On the Plaintiff’s application, H H Judge M Yuen issued a warrant of distress on 24^th November 2004 (“Warrant”) directing the Bailiff to distrain the goods and chattels on the Premises and in the apparent possession of the Defendant (“Goods”) for the sum of HK$103,000.00 (“Outstanding Rent”) being the September Balance Sum (HK$28,000.00) and outstanding arrears of rent from 7^th October to 6^th November 2004 (HK$75,000.00) at HK$75,000.00 per month.

16.  Mr Cheung claimed by that time he was still under the impression the reduction in monthly rent would expire on 6^th September 2004. He only discovered otherwise when he retrieved his records after the Defendant decided to apply to discharge the Warrant (see below).

Sale of the Premises

17.  According to the land search records, the Plaintiff sold the Premises to the Buyer on 1^st December 2004.

18.  On/about 2^nd December 2004, the Defendant received a letter from the Buyer’s solicitors dated 1^st December 2004 saying that the Premises had been assigned to the Buyer on 1^st December 2004 and that the Defendant had failed to pay the rent under the 3^rd TA as requested in the Plaintiff’s Demand Letter. The Buyer’s solicitors demanded inter alia for payment of all arrears of rent for the period from 7^th September to 1^st December 2004 and thereafter to pay future rent from 2^nd December 2004 onwards to the Buyer.

Execution of the Warrant and the aftermath

19.  The Bailiff executed the Warrant on 8^th December 2004 and seized the Goods. On 9^th December 2004, the Defendant paid the sum of HK$47,000.00 as rent for the period from 7^th October to 6^th November 2004 to the Bailiff. 

20.  On the same day the Defendant applied by summons (a) to discharge the Warrant (“Relief”), (b) for the release of the Goods to the Defendant and (c) for the removal of the watchman/security guard at the Premises (“1^st Summons”).

21.  At the ex parte hearing on 9^th December 2004, H H Judge Muttrie granted leave to the Defendant to file the 1^st Summons forthwith even after 5pm on that day and adjourned the 1^st Summons for inter partes argument. The learned judge also ordered that upon payment into court of the sum of HK$84,600.00 by the Defendant, (a) the Warrant be suspended until further order, (b) the two security guards do vacate from the Premises and (c) the Goods be released to the Defendant.

22.  On 10^th December 2004, the Defendant paid the sum of HK$84,600.00 into court (“Court Sum”) pursuant to the Order of H H Judge Muttrie.

23.  At the adjourned inter partes hearing of the 1^st Summons before myself on 13^th December 2004, counsel for both parties confirmed that no action shall be taken against the Bailiff in respect of the Warrant. The application for the Relief under the 1^st Summons was adjourned sine die with liberty by either party to restore. At the hearing, counsel for the Plaintiff informed the court that the Plaintiff would issue a writ of summons against the Defendant to claim for inter alia the alleged Outstanding Rent (“Writ”).

24.  The Plaintiff did not issue the Writ.

25.  On 26^th April 2005, the Defendant’s solicitors wrote to the Plaintiff’s solicitors (a) noting the Plaintiff’s failure to issue the Writ, (b) pointing out the Plaintiff could no longer distrain for the Outstanding Rent after the Premises were assigned to the Buyer and (c) inviting the Plaintiff to discharge the Warrant by consent.

26.  On 6^th May 2005, the Defendant’s solicitors wrote to the Plaintiff’s solicitors proposing to attend the District Court on 10^th May 2005 to restore the hearing of the application for the Relief in the 1^st Summons.

27.  On 7^th June 2005, the Plaintiff’s solicitors replied that the matter should proceed by Writ instead of restoring the 1^st Summons, but it was held in abeyance in the hope the parties could come to some form of settlement to save costs. The Plaintiff’s solicitors further pointed out that the Plaintiff’s right to distrain for all arrears of rent due to the Plaintiff by the Defendant was reserved in the agreement for sale and purchase of the Premises. The Plaintiff’s solicitors said that if the Defendant intended to pursue the Relief, the Plaintiff would issue the Writ forthwith.

28.  The parties attempted negotiations, so the application for the Relief in the 1^st Summons was not restored for hearing. But eventually no settlement was reached.

29.  On 15 September 2005, the Defendant’s solicitors wrote to the Plaintiff’s solicitors saying that unless the dispute was settled within 14 days, the Plaintiff should issue the Writ within 21 days from the date of such letter, failing which the Defendant would restore the hearing of the application for the Relief in the 1^st Summons or seek further directions from the court.

30.  On 19^th March 2006, Mr Cheung applied to deregister the Plaintiff pursuant to section 291AA of the Companies Ordinance Cap.32 (“CO”).

31.  On 27^th March 2006, the District Court wrote to the Defendant’s solicitors enquiring whether any court directions had been made for payment out of the Court Sum.

32.  The Plaintiff was deregistered and dissolved on 21^st July 2006.

33.  On 8^th August 2006, the Defendant’s solicitors wrote to the Plaintiff’s solicitors saying that since the Plaintiff failed to issue the Writ for nearly 1½ years, the Defendant would apply for payment out of the Court Sum. They also invited the Plaintiff to agree to the same by consent.

34.  On 19^th August 2006, the Plaintiff’s solicitors replied that they were trying to get instructions from the Plaintiff.

35.  On 13^th September 2006, the Plaintiff’s solicitors ceased to act pursuant to the Order of H H Deputy Judge E Lin. The relevant court order was served on the Defendant’s solicitors.

36.  On 9^th October 2006, the District Court wrote to the Defendant’s solicitors enquiring about the disposal of the Court Sum.

37.  On 13^th October 2006, the Defendant issued a summons (“2^nd Summons”) seeking the following reliefs :

(a) the Relief, ie the Warrant be discharged;

(b) the Court Sum be paid out to the Defendant together with interest accrued thereon (if any); and

(c) costs of and incidental to the distraint proceedings be to the Defendant to be taxed if not agreed.

38.  On 1^st November 2006, well knowing that the Plaintiff was dissolved, the Defendant’s solicitors served the 2^nd Summons and the Defendant’s third affirmation on the Plaintiff’s former registered office as well as its last known or usual address.

Mr Cheung

39.  Mr Cheung wrote to the Court on 7^th November 2006 to explain inter alia that the Plaintiff had been deregistered and enquired whether he ought to attend the hearing of the 2^nd Summons and/or whether he was entitled to represent the former Plaintiff company. I informed Mr Cheung via my clerk that the court was not in a position to give legal advice, but caused my clerk to forward a copy of Mr Cheung’s letter to the Defendant’s solicitors.

40.  Mr Cheung attended the hearing before me. As there was no dispute that the Plaintiff was dissolved, I did not allow Mr Cheung to address the court on behalf of the dissolved Plaintiff.

Notice of Intention to Proceed

41.  Ms Chung, counsel for the Defendant, acknowledged that the 2^nd Summons was an inter partes summons and, apart from the application by the Plaintiff’s solicitors to cease to act, the last step in the proceedings was made in 2004. Plainly more than a year has elapsed “since the last proceeding in a cause or matter”. The application by the Plaintiff’s solicitors to cease to act cannot be regarded as a “proceeding” in the present “cause or matter”. However, the Defendant, as the party desiring to proceed by way of the inter partes 2^nd Summons, did not give any Notice of Intention to Proceed to the other party.

42.  Ms Chung was unable to give any explanation save to point out that the Plaintiff had been dissolved and it would be pointless to serve the Notice of Intention to Proceed on the Plaintiff. However, such argument did not sit well with the fact that the Defendant elected to issue and pursue the 2^nd Summons on an inter partes basis and to serve the 2^nd Summons and supporting affirmation on the Plaintiff’s former registered office as well as last known or usual address.

Duplication of the Relief in the 1^st and 2^nd Summons

43.  As acknowledged in paragraph 3(1) of the Defendant’s third affirmation, the Relief claimed in the 2^nd Summons duplicates the outstanding application for the same Relief under the 1^st Summons (which was only adjourned sine die but not yet finally disposed of). Yet there is no application in the 2^nd Summons for withdrawal of the application for the Relief in the 1^st Summons. I asked Ms Chung the basis for seeking the Relief in the 2^nd Summons when the application for the same Relief in the 1^st Summons was still outstanding.

44.  Ms Chung at first argued that the 1^st Summons was different in that the Plaintiff was an existing registered company at the time when the 1^st Summons was issued, but by the time the 2^nd Summons was issued the Plaintiff had been deregistered and dissolved. Yet such argument again did not sit well with the fact that the 2^nd Summons (like the 1^st Summons) was issued on an inter partes basis against the Plaintiff and served as aforesaid.

45.  Ms Chung next argued that the Relief sought in both the 1^st and 2^nd Summons should be heard together. However, she was unable to provide any legal justification on why a litigant should be allowed to issue multiple applications/claims over the same subject matter and/or relief. The court is concerned not only with the fairness of such approach, but also with the potential prejudice to the opposite party, including the matter of costs arising out of the duplication of proceedings.

46.  In the end, Ms Chung asked for leave to withdraw the application for the Relief in the 1^st Summons and applied to amend the 2^nd Summons to such effect accordingly.

Inter partes application

47.  At the hearing I enquired why the 2^nd Summons was issued inter partes against the Plaintiff and served on its former registered office and its usual or last known address when it had been deregistered and dissolved.

48.  Ms Chung was unable to explain why the Defendant elected to proceed in an inter partes manner when it was his stance that the Plaintiff had ceased to exist and as such could no longer maintain the Warrant or its claim for the Outstanding Rent. She was also unable to explain the relevancy of the Plaintiff’s former registered office and other address for the purpose of service of the 2^nd Summons and the third affirmation of the Defendant.

49.  Since the Defendant had elected to proceed in an inter partes manner, one option was for him as “a person who feels aggrieved by the deregistration” to apply to reinstate the deregistered Plaintiff pursuant to section 291AB of the CO (see In re Active System Trading Limited HCMP173/2003, Tang J (as he then was) (unreported, 25^th May 2004) and In re Sun Honest Development (China) Limited HCCW1275/2004, Kwan J (unreported, 21^st February 2005)) in order to have a viable opposite party. However, the Defendant did not make any such application under section 291AB of the CO and Ms Chung confirmed the company search records revealed that up to the time of the hearing before me the Plaintiff had not been reinstated.

50.  Again, given that the Defendant had elected to proceed on an inter partes basis, I raised with Ms Chung whether it would be necessary to notify/serve the government instead. Section 292(1) of the CO provided inter alia as follows :

“Where a company is dissolved, all property and rights whatsoever vested in or held on trust for the company immediately before its dissolution …… shall be deemed to be bona vacantia and shall accordingly belong to the Government, and shall vest and may be deal with in the same manner as other bona vacantia accruing to the Government.” (my emphasis)

51.  Ms Chung argued that since Mr Cheung had in his application for deregistration of the Plaintiff declared inter alia that the Plaintiff had no outstanding “liabilities”, it meant the Plaintiff had no “claim” or “right of claim” in the present distraint proceedings. Ms Chung explained this was because a “claim” or “right of claim” necessarily begat “liabilities”. It is difficult to understand how a claim or right of claim necessarily begets liabilities. In any event, since no decision was rendered on the merits or on the issue of costs in relation to the 1^st Summons when Mr Cheung applied for deregistration of the Plaintiff, there was then no crystallised liability on the part of the Plaintiff as yet vis-à-vis the present distraint proceedings.

52.  Ms Chung did not directly address the issue whether the Plaintiff’s claim for the Outstanding Rent or payment out of the Court Sum based on inter alia the valid execution of the Warrant was a “right” within the meaning of section 292 of the CO. But it clearly transpired that no application had been made to the government in relation to the present distraint proceedings.

53.  At the hearing, Ms Chung submitted that the 2^nd Summons should proceed on an ex parte basis and applied to amend the 2^nd Summons accordingly. She referred to Hong Kong Civil Procedure 2006 Vol.1 para.15/7/14 at p.235, which drew a distinction between a company that was dissolved following a court winding-up and a company dissolved by an administrative dissolution and went on to say as follows :

“A company that has ceased to exist is not entitled to maintain any cause of action …… (M. H. Smith (Plant Hire) Ltd v Mainwaring [1986] 2 Lloyd’s Rep. 244).”

54.  Ms Chung did not refer me to the full judgment of the case cited in Hong Kong Civil Procedure 2006, but a quick review of that case shows that it dealt with the situation of a dissolution following the winding-up of the plaintiff company instead of an administrative dissolution. In my view, had there been any doubt as to the Defendant’s contention that the Plaintiff could no longer maintain any claim for the Outstanding Rent so that a bona fide dispute might be raised, I would not have entertained the Defendant’s application to convert the 2^nd Summons to an ex parte summons and would have required the Defendant to address fully on the implications of sections 291AB and 292 of the CO.

Prayer for costs

55.  In the 2^nd Summons, the Defendant asked for “costs of and incidental to this distraint action be to the Defendant to be taxed if not agreed”. When I enquired as to the identity of the paying party for such costs claimed by the Defendant, Ms Chung submitted that if the Plaintiff were dissolved, the Defendant would not claim for costs, but if the Plaintiff were not dissolved, the Defendant would claim for costs.

56.  Such submission is a masterly example of sidestepping the issue. There is no shred of suggestion before me that the Plaintiff was not dissolved. Indeed, the Defendant premised its case on the basis that the Plaintiff was dissolved. However, since there is no other opposite party to the present proceedings apart from the Plaintiff (which had been dissolved), presumably the Defendant intended the Plaintiff to be the paying party for the costs relief sought in the 2^nd Summons. It is quite inexplicable how the Defendant could maintain a claim for costs against an entity that, according to the Defendant, was no longer in existence.

57.  In the end, Ms Chung informed the court the Defendant would not seek any relief for costs against the Plaintiff in respect of the whole of the present distraint proceedings. Had it been otherwise, I would not have entertained the Defendant’s application to convert the 2^nd Summons to an ex parte summons.

Grounds relied on by the Defendant

58.  Ms Chung’s written submissions canvassed in detail the history of the distraint proceedings and the factual background. I set out these matters in the earlier part of these Reasons for Decision mainly to highlight the presence of various factual disputes between the parties.

59.  At first, Ms Chung maintained that the Defendant would rely on the argument that there was no rent due under the Warrant. However, it was plain from Ms Chung’s written submissions that such argument was premised on the Defendant’s affirmation evidence which were disputed by Mr Cheung in his affirmations. I expressed doubt as to whether I can resolve factual disputes between the parties on (as Ms Chung then contended) an ex parte application. Ms Chung then confirmed the Defendant would not rely on such argument.

60.  Secondly, Ms Chung conceded that although the Plaintiff’s failure to issue the Writ was part of the factual background, the Defendant would not rely on such ground to discharge the Warrant. Such approach must be correct because irrespective of whether the Writ was issued or not, the court would still have to be satisfied that it was appropriate to discharge the Warrant. Further, whether the Plaintiff delayed in issuing the Writ had no substantial bearing on the matter since on 13^th December 2004 I granted leave to either party to restore the application for the Relief in the 1^st Summons. I note the Defendant also did not apply to restore the 1^st Summons for argument/determination.

61.  In the circumstances, the Defendant only relied on the following grounds in his application for the Relief :

(a) the Plaintiff was not entitled to execute the Warrant on 8^th December 2004 or to claim for the Outstanding Rent since it had assigned the Premises to the Buyer on 1^st December 2004 (Woodfall on Landlord & Tenant, para.9.019 at pp.9/10 – 9/11); and

(b) the Plaintiff was deregistered and dissolved on 21^st July 2006.

Decision

62.  It is plain that the Plaintiff had been deregistered and dissolved. I find it is inappropriate for the Defendant to issue and serve the 2^nd Summons against the Plaintiff when he plainly knew it had been dissolved. But inexplicably the Defendant made the application on an inter partes basis. Therefore the key question is whether the Defendant should be allowed to proceed on an ex parte basis.

63.  I also find it inappropriate for the Defendant to seek the same Relief in the 1^st and 2^nd Summons respectively, especially when the 1^st Summons is still outstanding and not yet disposed of. It is an abuse of process to issue multiple applications on the same subject matter and for the same relief, which may lend itself to a striking out application either by the opposite party (if any) or by the court on its own motion. In the circumstances, I consider it appropriate to grant leave for the Defendant to withdraw the application for the Relief in the 1^st Summons. But in “restoring” the inter partes 1^st Summons for such disposal of the application for the Relief therein, is it necessary for notice of such intended disposal of the 1^st Summons be served? This again turns on the key question of whether the Defendant should be allowed to proceed on an ex parte basis.

64.  In my view, an important consideration is the reliefs sought by the Defendant in the 2^nd Summons. If the Plaintiff had no hope of any success in defending the Plaintiff’s contentions, there seems to be little practical purpose in deferring the matter for the Defendant to explore whether the Plaintiff should be reinstated under section 291AB of the CO or whether the government should be notified/served pursuant to section 292 of the CO. Indeed, it would only lead to further delay and add to costs with no useful purpose served.

65.  I note that the Defendant originally maintained its application for costs against the Plaintiff in the 2^nd Summons. Plainly such claim should not be dealt with on an ex parte basis. Had the Defendant pursued such claim, it would have to be adjourned for him to apply under section 291AB of the CO to reinstate the Plaintiff in order to maintain such claim. Since the Defendant did not indicate any intention to reinstate the Plaintiff, it is appropriate to grant leave to the Defendant to abandon the costs relief sought in the 2^nd Summons.

66.  Once the aforesaid costs claim against the Plaintiff is out of the way, should the Defendant be allowed to proceed ex parte? As explained above, if there is any possibility of a bona fide dispute between the parties, the Defendant would have to fully justify why the Relief sought should not be determined inter partes, ie upon reinstating the Plaintiff under section 291AB of the CO or upon notifying/serving the government pursuant to section 292 of the CO. I bear in mind the Defendant has not carried out either of these steps.

67.  I also bear in mind that in an application for discharge of a warrant of distress under section 93 of the Landlord and Tenant (Consolidation) Ordinance Cap.7 (“LTO”), the onus is on the tenant as the applicant to establish the distress was wrongful (see Liu Chi Cheung v Tsang Wai Choi [1958] DCLR 165).

68.  However, I am satisfied that the Plaintiff had no hope of maintaining its claim for the Outstanding Rent after it had assigned the Premises to the Buyer. Ms Chung did not cite any local authorities, but such proposition is endorsed in section 31 of the Conveyancing and Property Ordinance Cap.219 and in the judgments of Master Sweeney and A Cheung J in Oriental Solution Investment Ltd v Sin Ka Wing [1999] 4 HKC 135 and Elegant Profit Ltd v Chung Lai Sang & anor [2006] HKLRD 156 respectively.

69.  I note the Plaintiff’s former solicitors claimed that the Plaintiff’s right to distrain for all arrears of rent due to the Plaintiff by the Defendant was reserved in the sale and purchase agreement in respect of the sale of the Premises to the Buyer (see paragraph 27 above). No copy of such agreement was produced to the court. But A Cheung J has succinctly dealt with such argument in the Elegant Profit Ltd case at p.169 as follows :

“…… Whilst an express reservation of the right to sue for arrears of rent that had already accrued would not give the original landlord a title to sue for the same ……, a specific covenant in the assignment by the assignee to, as it were, lend his name to the assignor to bring such an action (subject to a suitable indemnity) would easily overcome the difficulty – such a covenant may be specifically enforced if the assignee should subsequently be unwilling to allow his name to be used in the recovery action.”

70.  Here, the Buyer did not lend its name to the Plaintiff to bring the present distraint proceedings or to claim for the Outstanding Rent. In the circumstances, the Plaintiff was plainly not entitled to claim for the Outstanding Rent.

71.  In light of the aforesaid, was the Plaintiff entitled to execute the Warrant on 8^th December 2004 after it had assigned the Premises to the Buyer on 1^st December 2004? In my view, the answer is plainly in the negative. Section 81 of the LTO provides that “any person claiming to be entitled to arrears of rent …… may apply for a warrant”.

72.  In the present proceedings, although the Plaintiff was entitled to apply for the Warrant at the time it was issued, it was no longer entitled to execute the Warrant. There is no defence at all to the Defendant’s application to discharge the Warrant pursuant to section 93 of the LTO. That being the case, there is no reason not to deal with the matter on an ex parte basis without further delay or costs.

73.  In the circumstances, I granted the following orders at the hearing :

(a) leave be granted to the Defendant to amend the 2^nd Summons as per the handwritten draft submitted to the court (ie to reflect the amendments referred to above);

(b) the Defendant do file the Amended 2^nd Summons within 3 days from the date thereof;

(c) leave be granted to the Defendant to dispense with the filing and service of the Notice of Intention to Proceed;

(d) leave be granted to the Defendant to withdraw the 1^st Summons with no order as to costs;

(e) the Warrant be discharged;

(f) the Court Sum (HK$84,860.00) paid into court on 10^th December 2004 pursuant to the Order of H H Judge Muttrie dated 9^th December 2004 be paid out to the Defendant together with any interest accrued thereon; and

(g) there be no order as to costs of and incidental to these distraint proceedings, including those of the 1^st and 2^nd Summons and the Amended 2^nd Summons.

Representation: