Lee Hun Hoe CJ (Borneo):

We dismissed the appeal and stated we would give our reasons later. We do so now.

The plaintiff (now respondent) is the landlord of a warehouse No. 174, Harper Street, Klang which was rented to the defendant at a monthly rental of RM8,000. On 25 October 1984, as the defendant was in arrears of rental for 7 months, the respondent obtained a Warrant of Distress distraining the defendant's good lying in the warehouse. On 20 December 1984, acting on the Warrant of Distress the bailiff seized the said goods and fixed 17 January 1985 for the auction of the same. However on the day of the auction the applicant, Hong Leong Finance Bhd. (now appellant) and other claimants managed to get the auction postponed to enable them to file the necessary applications for the release of the goods.

The appellant was the owner of some of the machines distrained which were leased to the defendant pursuant to four lease agreements. The defendant defaulted in payment of the instalments of the rental. By a letter dated 8 June 1984 the appellant terminated the agreements and asked the defendant "to deliver the goods back to us forthwith failing which we shall effect repossession." From the time of the receipt of the letter till 20 December 1984 no positive step was taken by either the defendant to deliver or the appellant to repossess the goods.

The respondent, relying on s. 12 of the Distress Act 1951 (the Act), resisted the application. The learned Judge dismissed the application in chambers. After hearing further arguments in open Court she confirmed her decision. The whole dispute seems to rest on the interpretation of ss. 10 and 12 of the Act. The material part reads:

12. Section 10 shall not apply-

(a) ... to goods in the possession, order, or disposition of such tenant by the consent and permission of the true owner under such circumstances that such tenant is the reputed owner thereof;

The material part of s. 10 provides:

10 (1) Where any movable property of-

...

(c) any other person whatsoever not being a tenant of the premises or of any part thereof, and not having any beneficial interest in any tenancy of the premises or of any part thereof, has been seized under a warrant of distress issued to recover arrears of rent due to a superior landlord by his immediate tenant, such ... other person aforesaid may apply to a Judge to discharge or suspend the warrant, or to release a distrained article ...

It was argued that the Court should order the release of the goods if s. 10 applies. On the other hand, it was said no such order of release should be made as s. 10 was excluded by s. 12. The contention of the appellant, both here and in the Court below, is that the landlord must show three things:

(a) that the goods were in the possession of the tenant;

(b) that the goods were there under such circumstances that the tenant was the reputed owner of the goods;

(c) that both the first and second limbs apply.

She said if any of the three limbs was not proved then the goods must be released to the true owner.

Further, the appellant says in interpreting s. 12(a) of the Act, it is necessary to look at s. 48 of the Bankruptcy Act, particularly s. 48(b)(iii) which is similar in substance to s. 12(a). For this reason the appellant cited Times Furnishing Company Ltd., v. Hutchings & Anor. [1938] 1 KB 775 where Humphreys J said at p. 784:

... For that proposition he relied on a series of cases which, I think, without exception, were bankruptcy cases. It appears to be the fact that since the reign of James I all the Bankruptcy Acts have had in them a provision which is, so far as is material, identical in language with that used in s. 4, sub-s.1, of the law of Distress Amendment Act, 1908 ...

In re Fox [1948] Ch 407 was also cited. There a builder was adjudicated bankrupt. Certain building materials were lying in the builder's yard and on the site. The trustee in bankruptcy claimed that all the materials had vested in him under