Read the full judgment text of DCDT 007912/2001 on BabelCite. This District Court judgment was delivered on 8 March 2002 before Sham Siu-man (Deputy District Judge).
Distraint – interpleader summons – Landlord and Tenant (Consolidation) Ordinance ss.87 and 88 – bailiff's seizure of goods from Chinese restaurant premises for arrears of rent – claims by business suppliers on 'sale or return' basis – claim by director for personal computer – claims by shareholders under alleged shareholders' loan agreement – whether seized goods belonged to claimants or defendant – apparent possession of tenant – whether distress lawful – guardiand and possession of goods and chattels under s.87, the bailiff need only be satisfied that the seized movables were in the apparent possession of the tenant and not within the s.88 exceptions. On the facts, the restaurant goods were consistent with the defendant's user and were in its apparent possession, so the distress was lawful. As to the 'sale or return' arrangement alleged by Group A suppliers, the court found the arrangement highly implausible: it was unrealistic that suppliers could guess the types and quantities of food ingredients needed without orders, or would take the trouble to retrieve unsold stock. The court concluded the arrangement was invented to recover unpaid goods already sold, and that title had passed to the defendant. As to the C17 computer, although C17 was a director/shareholder and produced an invoice, the court found the placement and shared use of the computer at the restaurant pointed to purchase on behalf of the defendant for its business. As to the Group C shareholders' loan agreement, the court had grave doubts given that 12 of the 25 claimants were directors who declared in the audited 'Report of Directors' (period ended 31/3/2000) that they had no material interest in any significant contract with the company, directly contradicting the alleged loan. The auditor's report also recorded the shareholders' loan as HK$2,705,000, well below the alleged HK$4.4 million, undermining the claimants' case. The court was not satisfied that the goods belonged to any of the shareholder claimants. All 36 claims (3rd to 6th, 8th, 16th, 17th, 19th to 46th, 48th) were dismissed and the bailiff was granted leave to sell. Guarding fees of HK$960 per day from 1 March 2002 to the date of decision were ordered against the unsuccessful claimants jointly and severally, with costs of the application to the plaintiff, with certificate for counsel, on a joint-and-several basis, as an order nisi to become absolute 14 days after handing down.
Legal issues: Whether Group A business suppliers had a 'sale or return' arrangement preserving their ownership of seized goods · Whether C17's computer belonged to him personally or to the defendant · Whether Group C shareholders had a valid loan agreement giving them ownership of seized chattels · Lawfulness of the distress exercised by the bailiff
Outcome: All claims by the 36 pursuing claimants (3rd to 6th, 8th, 16th, 17th, 19th to 46th, 48th) were dismissed. The bailiff was granted leave to proceed with the sale of the seized goods.