XCHRX LEE WAI PING TINA v. OLYMPIC MARK CO. LTD.

HCMP 5921/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 5921 OF 2000

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D E C I S I O N

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1. This is an application by private receivers, by which I mean receivers who had been appointed out of court. Under section 298A of the Companies Ordinance, receivers appointed out of court may apply to the court for directions regarding the performance of their functions as receivers and this is such an application.

2. The receivers here have been appointed under a legal charge given by Olympic Mark Company Limited ("the Company") who had charged a property known as Workshop No.A3, 6/F, Block A, Texaco Road Industrial Centre, Nos.256-264, Texaco Road, Tsuen Wan, New Territories, the charge having been given to the Sin Hua Trust Savings and Commercial Bank Limited ("the Bank").

3. Under the legal charge made in September 1990, the Bank had the power of sale of the property in the event of default. Under clause 9 of the legal charge, the lender's power of sale may be exercised by any receivers appointed by the Bank.

4. In the present case, the Bank appointed the receivers in August 2000. There was then a lapse of time when the receivers' appointment was terminated but they were then re-appointed in November 2000 to deal with the sale of the property.

5. In September 2000, the receivers had inspected the property and posted a notice at the entrance requiring the occupants to remove the chattels inside. On 6 September 2000, the receivers caused certain photographs to be taken inside the premises which showed that there were some machinery and some cartons, some neatly stacked and some seemingly abandoned. In the office area of the premises, various files and papers had been scattered on the floor and the electricity supply to the entire premises had been disconnected. Certainly, the impression that is given by the photographs is that the previous occupants of the premises had abandoned the premises and the chattels inside.

6. This is supported by a letter written by the Company on 1 August 2000 to the Bank to the effect that the Company was willing to abandon the title to the property and a set of keys for the premises was enclosed with this letter.

7. The conclusion that one draws therefore from the condition of the property and the chattels found inside and the letter of 1 August 2000 is that the Company had abandoned the chattels.

8. Accordingly, the receivers have applied for liberty to deal with the chattels found inside the property because, for the purposes of sale of the property with vacant possession, it is necessary to dispose of all these chattels.

9. There is a valuation report commissioned by the receivers which indicates that the total value of the chattels found inside the property is about $1,000. As far as the machinery is concerned, it would appear that certain parts of the machinery were missing and that therefore they were not functional. Accordingly, the valuers are of the opinion that the current open market value of the chattels is in the region of only $1,000. The receivers have received a quote in relation to the expenses of a sale of the chattels by way of auction or private treaty, and they have been informed that the expenses would be at least $2,000. Accordingly, they are now asking for an order that the chattels may be discarded.

10. In my view, given the circumstances set out above, the receivers would be entitled to discard the chattels found in the property so as to properly perform their function of selling the property pursuant to the legal charge. The Company has not appeared today despite an order for substituted service.

11. Accordingly, I would make an order that the receivers of the Company, the Applicant in these proceedings, be at liberty to discard or otherwise dispose of all chattels, machinery, furniture and documents found in the property known as Workshop No.A3, 6/F, Block A, Texaco Road Industrial Centre, Nos.256-264, Texaco Road, Tsuen Wan, New Territories.