JET FORCE INVESTMENT LTD v. OCEAN FIRST (ASIA) LTD

DCDT 1769/2009

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

DISTRAINT CASE NO. 1769 OF 2009

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REASONS FOR DECISION

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The issue for the summons

1. The Plaintiff was the landlord of a premises (“the Premises”).  The Defendant was its tenant.  The Defendant used it as an amusement game centre.  Up to the end of March 2009, the Defendant had defaulted in payment of rent for HK$125,000.  The Plaintiff obtained a warrant of distress under Landlord and Tenant (Consolidation) Ordinance, Cap 7 (“the Ordinance”).  In execution of the warrant of distress, the bailiff seized various items of property in the Premises.  He drew up an Inventory of the seized items.   

2. The Plaintiff and the Claimant had a conflicting claim to the items.  The bailiff took out the present summons for a determination as to whether the items, or which items, shall be to the Plaintiff or to the Claimant.

Common grounds

3. The Plaintiff and the Claimant both accept that the existing documents and exhibits before us do suffice to dispose of the present summons. 

4. The Claimant accepts that the seized items were in the apparent possession of the Defendant at the material time. 

The Plaintiff’s case

5. On 25 March 2009, the court issued a warrant of distress directing the bailiff to distrain the goods on the Premises (namely Shop A on Ground Floor and whole of the Basement, Radio City, No. 505 Hennessy Road, Hong Kong) and in the apparent possession of the Defendant for the sum of HK$125,000 being the month’s rent for March 2009 due to the Plaintiff from the Defendant. 

6. On 21 April 2009, in execution of the warrant of distress, the bailiff seized goods on the Premises and prepared an Inventory.  The Claimant by a letter dated 24 April 2009 notified the bailiff of its (the Claimant’s) intention to recover items nos. 1 – 17 on the basis that they belonged to the Claimant.

7. At the present summons, the Plaintiff concedes that item no. 17 shall be to the Claimant.  That leaves items nos. 1 – 16 (“the Items”) for my determination. 

The Claimant’s case

8. On behalf of the Claimant, Koh Yui Yu Shirley (“Koh”) made an affirmation dated 24 April 2009.  Koh referred to an agreement dated 1 February 2008 between the Claimant and the Defendant (“the Agreement”).  The Claimant owned the Items, which were amusement game machines.  The Defendant ran the Premises as an amusement game centre.  It was agreed that the Claimant would consign the Items to the Defendant’s Premises on revenue sharing basis commencing from 1 February 2008.  The Agreement was subsisting at the material time. 

9. There were appended to her affirmation the Agreement and documents in proof of the Claimant’s ownership.  Apart from ownership, there are no attending circumstances to support its claim.

The law

Distrainable items

10. Section 87 of the Landlord and Tenant (Consolidation) Ordinance, Cap. 7 (“the Ordinance”), provides that:

87.              In pursuance of a warrant, a bailiff shall seize the movable property found in or upon the house or premises mentioned in the warrant, and in theapparent possession of the person from whom the rent is claimed (hereinafter called the debtor), or such part thereof as may, in the bailiff's judgment, be sufficient to cover the amount of the rent, together with the costs of the distress.

11. Section 88 of the Ordinance provides that:

          A bailiff shall not seize-

(a) things in actual use, in the hands of a person at the time of seizure; or
(b) tools and implements not in use, where there is other movable property in or upon the house or premises sufficient to cover the amount of the rent and costs; or
(c) goods of a temporary guest at an inn; or
(d) goods of a lodger at a furnished lodging-house; or
(e) the debtor's necessary wearing apparel; or
(f) goods in the custody of the law; or
(g) goods delivered to a person or firm exercising a public trade, to be carried, wrought, worked up, or managed in the way of the trade or employ of such person or firm.

The owner’s redress

12. In Xipho Development Co Ltd v CHM Holdings Co Ltd [1997] HKLRD 36, Litton VP reviewed the authorities and regarded that the owner’s redress would be against the lessee.  He said:

In its origin, the common law rule heavily favoured the landlord. A landlord was entitled to seize and distrain for arrears of rent all goods and chattels found on the tenant's premises. The question of ownership was, generally speaking, irrelevant to the right of distress. As Buckley LJ said in In re Button, ex parte Haviside [1907] 2 KB 180 at 189-90:

"Where the goods of a stranger on the premises of a lessee are distrained for rent, and the stranger is obliged to pay the rent to redeem them, he may maintain assumpsit against the lessee: Exall v. Partridge 8TR 308."  (39 J – 40 A)

The relevance of ownership

13. In Fuleekoo Co Ltd v spiral Tubes International Ltd [1986] HKC 269, Silke JA said:

We accept that ownership of itself would not cause the discretion to be exercised in favour of a claimant. It is obviously a factor to be considered and must be weighed against the rights of the landlord. Indeed all the attendant circumstances should be considered by a judge before coming to his decision and it is to be noted that he can impose such terms as he thinks fit.  (at para. 33)

This Court’s findings

The Claimant’s argument based on section 91 of the Ordinance

14. Mr. Wong, counsel for the Claimant, refers (in para. 11 of his submissions) to the Inventory prepared by the bailiff, K.Y. Chau on 21 April 2009.  Chau stated that one office of the Premises was locked.  Mr. Wong refers to section 91 of the Ordinance.  It provides that:

A bailiff or officer appointed to execute a warrant may break open inner doors.

He queries why the bailiff, who had the right to break into the said office, made no attempt to break into the said office.  There might well be other goods liable to seizure.

15. I do not see how that is relevant to the present summons, which only concerns whether the Items were distrainable, not whether there were other items distrainable in the Premises so that the bailiff might have seized those other items instead of the Items. 

The Claimant’s argument based on ownership

16. It remains a finding of fact in each case but it has been rather difficult for a claimant to succeed on the sole basis of ownership.  Fuleekoo Co Ltd (supra) and Xipho Development (supra) are but examples.  In the absence of other attending circumstances, the Claimant’s case here is no exception. 

Conclusion

17. I order that items nos. 1 – 16 in the Inventory shall be to the Plaintiff whereas item no. 17 shall be to the Defendant.  Costs usually follow the event.  The Claimant shall pay the costs leading up to and of the present summons to the bailiff on the one hand, and the costs of the present summons to the Plaintiff with certificate for counsel on the other hand.  This costs order nisi shall become absolute after 14 days from today.