RE HANG FUNG JEWELLERY CO LTD

RE HANG FUNG JEWELLERY CO LTD

The Court held the cargo receipt constituted an attornment effecting constructive delivery and thereby completed a valid pledge in favour of the Bank over the 40 identified gold bars; although the cargo receipt would otherwise be an assurance of chattels (and thus a bill of sale), it fell within the statutory exception as a document used in the ordinary course of business as proof of possession or control of goods and therefore did not require registration; accordingly the pledge was valid and the Bank was entitled to apply the proceeds of sale to discharge the indebtedness. The Pledge and Trust Receipt, registered in time, preserved the pledge's efficacy and was not void.

Citation
RE HANG FUNG JEWELLERY CO LTD
Parties
Applicant / Provisional Liquidators: Provisional Liquidators of Hang Fung Jewellery Company Limited; Company (in Liquidation) / Subject Company: Hang Fung Jewellery Company Limited; Claimant / Chargee / Pledgee: The Bank (unnamed in judgment); Supplier: Heraeus Limited
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
2 December 2009
Case Number
HCCW503/2008
Procedural Posture
Interlocutory Application in Liquidation Concerning Ownership and Priority of Charged Goods / Chambers Hearing and Decision on Summons
Outcome
Held for the Bank: valid pledge existed over 40 gold bars (H54801–H54840); cargo receipt exempt from registration; Bank entitled to apply proceeds to discharge indebtedness; costs orders made.
Legal Topics
Pledge, Attornment, Trust Receipt, Bill of Sale Registration, Statutory Exception for Business Documents, Equitable Charge, Avoidance of Dispositions, Floating Charge Vs Fixed Charge
Source Language
EN
Company Law Insolvency Law Secured Transactions Property Law Commercial Law Pledge Attornment Trust Receipt +5 more

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Parties

Provisional Liquidators of Hang Fung Jewellery Company Limited

Applicant / Provisional Liquidators

Hang Fung Jewellery Company Limited

Company (in Liquidation) / Subject Company

The Bank (unnamed in judgment)

Claimant / Chargee / Pledgee

Heraeus Limited

Supplier

Procedural Posture

Interlocutory Application in Liquidation Concerning Ownership and Priority of Charged Goods / Chambers Hearing and Decision on Summons

Legal Issues

  1. 1 Whether constructive delivery by attornment (cargo receipt) completed a pledge
  2. 2 Whether the agreement for pledge required registration under Companies Ordinance (Cap.32) and Bills of Sale Ordinance (Cap.20)
  3. 3 Whether the cargo receipt constituted a bill of sale requiring registration

Ratio Decidendi

The Court held the cargo receipt constituted an attornment effecting constructive delivery and thereby completed a valid pledge in favour of the Bank over the 40 identified gold bars; although the cargo receipt would otherwise be an assurance of chattels (and thus a bill of sale), it fell within the statutory exception as a document used in the ordinary course of business as proof of possession or control of goods and therefore did not require registration; accordingly the pledge was valid and the Bank was entitled to apply the proceeds of sale to discharge the indebtedness. The Pledge and Trust Receipt, registered in time, preserved the pledge's efficacy and was not void.

Court Disposition

Held for the Bank: valid pledge existed over 40 gold bars (H54801–H54840); cargo receipt exempt from registration; Bank entitled to apply proceeds to discharge indebtedness; costs orders made.

Orders

  • Order nisi that the Bank's costs in this application are to be paid out of the assets of the Company
  • The provisional liquidators' costs in respect of this application are to be costs in the liquidation