Commercial Law-

Alan owned a motor bike which he drives as part of his job delivering pizzas and Chinese food for restaurants and online food delivery companies.

On 1st September 2021, being short of cash, Alan had no option but to borrow money from David a pawnbroker. David was prepared to loan Alan HK$10,000, but required Alan to give the motor bike over as security for the loan. The loan was a short term one, repayable on 1 October 2021. Alan planned to redeem the motor bike from the proceeds of a card game he was participating in with friends on 15st September 2021.

Unfortunately, things don't go to plan. Alan was unable to raise the cash to repay the loan from any source. He also owed other debts and, being unable to work, needed to find a way to recover his motor bike so that he could resume work and repay his debts.

Knowing David to be a reasonable person, Alan asked David if he would allow him to have the motor bike back on a temporary basis, as this would help him repay the loan sooner. David sees some sense in this, and Alan and David came to an arrangement. On 16th September 2021 they agreed that:

(1) the time for repayment of the loan is extended until 30th November 2021, interest continuing to accrue on the outstanding balance at 10% per month.

(2) Alan would be allowed to collect the motor bike at or after 9am each morning solely, for the purposes of using it to perform delivery services.

(3) The motor bike would be returned to David each evening before 6pm.

(4) Alan was responsible to maintaining the motor bike, petrol, tax and insurance.

(5) If the balance of the loan was not repaid on or before the due date, David would have the

right to sell the motor bike.

(6) David would also have immediate right to sell the motor bike and demand repayment of the outstanding balance of the loan in the event that Alan failed to return the motor bike to David on or before 6pm on any evening.

The arrangement initially worked well. On 1st November, however, the motor bike broke down at 11.30am while Alan was driving to meet some friends in Sha Tin for lunch. One of Alan's friends, Paul, knew someone local who can fix motor bikes quite cheaply. Paul dropped Alan at the restaurant in his van and then took the motor bike to Quickfix Backstreet garage in Sha Tin to have it repaired.

Paul called Alan at 1pm to say that the repairs were very minor- really just maintenance. The charges were only hk$1000 as the mechanic was a friend of Paul's. Following the lunch, Alan arrived at the garage at 6pm, and was shocked to be told that the garage required him to pay HK$5000 to release the motor bike. Alan had used the garage before (for repairs to his mother's car) and had paid with a cheque (for HK$4000) which was dishonoured by the bank for lack of funds. Alan had not read the letters which had been sent to him by the garage.

(1) Advise Alan whether he has any right to claim the return of the motor bike from the garage. Would have to pay the garage? How much?

(2) Advise David whether he has a right to claim the return of the motor bike from Alan/ and or the garage. Would he have to pay the garage's charges?

Quickfix Backstreet garage is owned and managed by Dennis, and is in the business of repairing cars and motor bikes. It also sells second- hand vehicles and has a modest showroom at the front of its premises, with a repair yard at the back. The day after the repairs to the motor bike were completed a customer, John, admires the bike and offers to buy it from Dennis for HK$20,000 - in cash. Dennis accepts the offer as Alan had told him that he could not settle the outstanding garage bills.

(3) Is the sale of the motor bike to John subject to any security interests?

(Jurisdiction:HK/UK)

Many thanks!:)