Shui on Centre Co Ltd v. Bpb (HK) Ltd

DCDT 638/2006

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

DISTRAINT CASE NO. 638 OF 2006

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BETWEEN

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Coram: Deputy District Judge S. T. Poon in Chambers

Date  of Hearing: 5^th July 2006

Date of Handing Down Decision: 7^th July 2006

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DECISION

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1.This is an application for leave to appeal on my decision made on 27^th April 2006, inter alia, refusing to set aside a warrant of distress against the Defendant (“my decision”).

2.The Defendant is the tenant of a commercial premises owned by the Plaintiff.  There were some disputes between the parties relating to the management fees of the premises and the Defendant ceased to pay rent and took out an action against the Plaintiff seeking refund of management fees.  In that action the Plaintiff counterclaimed for arrears of rent and vacant possession by way of forfeiture.

3.The relief for forfeiture was later on abandoned after my decision.

4.Before the determination of the above dispute the Plaintiff applied ex-parte under the Landlord and Tenant (Consolidation) Ordinance Cap. 7 for a warrant of distress for arrears of rent in a period after the Plaintiff had claimed forfeiture.

5.The crux of the Defendant’s proposed grounds of appeal is that by claiming forfeiture against the Defendant, the Plaintiff has elected to determine the lease or the lease was determined.  It follows that the Plaintiff has no rights or locus standi (as put by Miss Ho, counsel for the Defendant) to apply for a warrant of distress.  

6.Unfortunately, this argument has not been raised by the solicitors representing the Defendant at the hearing before me resulting in my decision.

7.For the purpose of the present application I am not to determine whether the Defendant will succeed on appeal but whether it has a realistic prospect of succeeding before the Court of Appeal.  Smith v Cosworth Casting Processes Limited [1997] 1 WLR 1538

8.It is settled law that by service of a writ claiming forfeiture against the tenant the landlord has elected to determine the lease.  Wong Wan Leung & others v. Secretary for Transport [2001] 1 HKLRD 427.  However, the legal authorities did not go so far as to saying that the lease is terminated upon the Landlord’s issuance and service of the writ. See p.436 per Litton LPJ citing Ivory Gate Ltd v Spetale [1998] 2 EGLR 43

9.Therefore, it does not necessarily follow that the landlord has no locus standi to exercise his rights under the lease after service of a writ seeking forfeiture.

10.Mr. Sham, counsel for the Plaintiff, was right in submitting that there is no direct authority before me saying that the landlord has no right to apply for a warrant of distress after service of a writ claiming forfeiture. (Perhaps except in Cayman Company Ltd v Violet Books Company Ltd DCDT 5588/2005 where Deputy District Judge Lam said that “If the Warrant had been issued after the date of the Writ, the Warrant would be unlawful” without explaining the reasons behind very much in detail)

11.However, Miss Ho submitted that the state of the lease is at least uncertain before the court finally determines whether there is a valid ground for forfeiture and hence, the Plaintiff was unable to satisfy the court that he was entitled to apply for a warrant of distress at the time when the ex-parte application was made.

12.Miss Ho’s submission is not without force.  In considering whether to grant a warrant of distress, the court has to be satisfied that there are indeed arrears of rent and it is for the landlord to prove to the court that there are.  If the state of the lease after the claim for forfeiture were uncertain, it would be at least questionable whether the landlord can satisfactorily prove to the court that there are arrears of rent, given the fact that the landlord himself maintained a different position in the action where he elected to terminate the lease.

13.Mr. Sham argued that the abandonment of the relief for forfeiture related the parties’ position back and made it certain that the Plaintiff had the right to receive rent at the material times.

14.With respect, I am of the view that the abandonment of the forfeiture relief is irrelevant for the purpose of the present hearing.  The application before me was to set aside the warrant of distress made by Deputy District Judge Casewell.  What I should consider in making my decision was whether the warrant shall be set aside on the day of the hearing, and it is against that decision that the Defendant is now seeking leave to appeal.  What the Court of Appeal would consider is whether, based on the available materials and facts before me on the day of the hearing, the warrant should be set aside.  A subsequent act of the Plaintiff, albeit changed the factual situation from then, is not a consideration.

15.I am satisfied that the Defendant has a realistic prospect of success in the appeal and leave to appeal is granted.

16.Costs of this application be in the cause of the appeal, with certificate of counsel.

Mr. Walker Sham instructed by Messrs Vincent T. K. Cheung, Yap & Co. for the Plaintiff.

Miss Ho Wai Yang instructed by Messrs. Leung & Wan for the Defendant.