EGERIA INVESTMENT LTD v. YULIAN (CHINA) DEVELOPMENT CO LTD AND ANOTHER

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

DISTRAINT NO. 8874 OF 2000

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JUDGMENT

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1. This is a trial resulting from the issuance of an interpleader summons which relates to the goods seized by the bailiff during a distraint proceedings.

2. The bailiff testified in the trial about the execution of the warrant. As he is an independent party in the proceedings, I accept him to be an honest and truthful witness, and it appears to me that the bailiff has executed the warrant in a responsible manner. Based on his evidence, the goods seized by the bailiff were apparently in the possession of the tenant, and so it was proper for him to seize the goods during the execution of the warrant.

3. The Claimants claim that they were the owners of the goods seized, and those goods were placed in the tenant's premises to be sold on a consignment basis.

4. Firstly, Miss Tsang for the Claimants claimed that there were actually labels put on the goods to show the identity of the true owners of the goods concerned. This allegation was disputed by the bailiff and the representative of the Plaintiff's solicitors who attended the execution. The bailiff testified in the trial that no label was placed in conspicuous places on the goods. As the bailiff is an independent witness and there is no supporting evidence produced by the Claimants to substantiate the attachment of the label, I do not accept that labels have indeed been placed in conspicuous places on the goods to show the identity of their true owners. In such case, I do not accept that the Claimants have done enough to protect their rights.

5. The next thing that the Claimants are relying on is the consignment arrangement. According to decided case law, if the goods are in the apparent possession of the tenant, those goods are liable to be seized in a distraint proceedings. The court has a discretion to return the goods to their truthful owners, but ownership is only one of the factors that should be considered by the court.

6. In the present case, I am not satisfied that the Claimants have done enough to protect their rights. They had not placed labels in conspicuous places on the goods to show that the goods were to be sold on a consignment basis or to show the identity of the true owners. Indeed, this is one of the commercial risks that the Claimants have to bear. They placed the goods in the hands of the tenant and it may be quite possible that the tenant may be selling the goods without accounting the proceeds to them. If the tenant becomes insolvent, it is also possible that the Claimants cannot get back the proceeds of the sale of the goods. In such case, the Claimants were taking a commercial risk by placing the goods in the trust and in the hands of the tenant to be sold on a consignment basis, and so I am of the view that they are not justified in the present case to claim back the goods. Indeed, the landlord can always rely on the goods in the shops as some kind of security for the payment of rent, and this is the rationale behind the whole concept of "apparent possession".

7. Based on the aforesaid, I find that the goods were in the apparent possession of the tenant and I exercise my discretion in the manner that the goods should not be returned to the Claimants in the present case. These are the reasons I give in relation to the present application.