EGO FINANCE LTD v. LAI KA WAH

DCCJ 3955/2018

[2018] HKDC 1432

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 3955 OF 2018

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DECISION

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1.  This is the defendant’s appeal against the order of Master Catherine Cheng made on 30 October 2018 pursuant to O 83A r 4 of the Rules of the District Court.

Background

2.  In this action, the plaintiff as the lender has extended a loan of $30,000 to the defendant under an agreement dated 16 March 2018 (“Agreement”).  It was agreed that the defendant would repay the said sum of $30,000 together with interest thereon at the rate of 42% per annum in 12 instalments of $3,107 payable on the 15^th of each month commencing from 15 April 2018.  In the event of default by the defendant, the whole outstanding balance as at the date of such default shall then be due and payable forthwith. 

3.  The defendant was in default of payment on 15 July 2018.  The plaintiff commenced the present action for the repayment of the entire outstanding balance together with interest and costs. 

4.  The Writ of Summons indorsed with a Statement of Claim was issued on 6 September 2018.  The Writ of Summons was served on the defendant by way of prepaid registered post at his usual or last known address.

5.  No notice of intention to defend having been filed by the defendant, on 2 October 2018 the plaintiff issued an inter-partes summons for a judgment to be entered pursuant to O 83A, r 4 against the defendant for a principal sum of $26,040.30, contractual interest and default interest, and costs.  The plaintiff’s summons was served on the defendant by way of prepaid ordinary post on 4 October 2018.

6.  The Affirmation of Kong Man Lok was filed in support of the plaintiff’s summons which revised the outstanding balance after taking into account a partial repayment of $3,107 made by the defendant on 7 September 2018 as follows:-

Particulars	Outstanding principal (HK$)	Interest rate per annum	Daily interest
Amount	$22,991.35	42%	$26.45

7.  The Affirmation of Kong Man Lok was served on the defendant by way of prepaid ordinary post on 12 October 2018. 

8.  Subsequent to the plaintiff’s filing of the Affirmation of Kong Man Lok, it was discovered that the defendant had made another partial repayment of $19,000 on 12 September 2018.  Therefore, on 22 October 2018 the plaintiff prepared the 2^nd Affirmation of Kong Man Lok to update the outstanding principal under the Agreement and the daily interest on the outstanding balance as follows:-

Particulars	Outstanding principal (HK$)	Interest rate per annum	Daily interest
Amount	$4,123.63	42%	$4.74

9.  The 2^nd Affirmation of Kong Man Lok was served on the defendant at his usual or last known address by way of prepaid ordinary post on 22 October 2018. 

10.  The hearing of the plaintiff’s summons was set down before Master Catherine Cheng on 30 October 2018.  Despite the lack of any notice of intention to defend or defence having been filed, the defendant attended the hearing before Master in person. 

11.  At the hearing, the defendant confirmed his receipt of the Writ of Summons, the inter-partes summons, and the Affirmation of Kong Man Lok.  However, he told the Master that he did not receive the 2^nd Affirmation of Kong Man Lok. 

12.  The Master then granted a short adjournment for the defendant to consider the 2^nd Affirmation of Kong Man Lok.  After the adjournment, the defendant told the Master that he did not dispute the outstanding principal in the sum of $4,123.63.

13.  Eventually, the Master granted an order that the defendant do pay the plaintiff (i) the sum of $4,313.23 (being $4,123.63 plus interest on that sum from 13 September 2018 to 22 October 2018) together with interest on $4,123.63 at the rate of 42% per annum from 23 October 2018 until full payment and (ii) costs of this action on a party-and-party basis, summarily assessed at $10,500.

14.  By a Notice of Appeal filed on 30 October 2018, the defendant appealed against the Master’s order.

The defendant’s affirmation

15.  In addition to the Notice of Appeal, the defendant also filed an affirmation on the same day exhibiting certain payment records and correspondence with the plaintiff’s solicitors that took place prior to 12 October 2018.

16.  O 58 r 1(5) of the Rules of the District Court provides that no further evidence (other than evidence as to matters which have occurred after the date on which the judgment, order or decision was given or made) may be received on the hearing of an appeal from master except on special grounds.  Therefore, the court had to consider whether the affirmation filed by the defendant was further evidence within the meaning of the rule and if there were any special grounds.

17.  At the hearing of the appeal on 9 November 2018, the parties confirmed that the defendant did not file his affirmation prior to the hearing on 30 October 2018.  However, it was common ground that the defendant did raise the matters mentioned in his affirmation before the Master.  Therefore, strictly speaking the defendant’s evidence was not new in the sense that it had never come before the court.  While the defendant ought to have filed an affirmation setting out his objection and evidence before the hearing on 30 October 2018, as the defendant was acting in person, I exercised my discretion and allowed the belated filing of his affirmation.  In any event, as I will explain below, the defendant’s evidence does not assist his appeal.

The defendant’s appeal

18.  In gist, the defendant contended that he had requested the plaintiff and its solicitors on divers occasions for an official statement of account (結算書) issued by the plaintiff so that he could settle the outstanding balance under the Agreement.  In this connection, the defendant exhibited in his affirmation a number of letters and email correspondence between the parties and his loan repayment records since April 2018.

19.  The defendant argued that had the plaintiff and its solicitors paid heed to his requests, the hearing on 30 October 2018 would not have been necessary and he would not have to bear the plaintiff’s legal costs of $10,500.

20.  I do not think this is a valid excuse for the defendant’s failure to settle the outstanding balance under the Agreement.  The Statement of Claim (which the defendant received) had set out clearly the amount of outstanding principal, the contractual interest rate, and the daily interest being accrued on the outstanding principal.  There was nothing unclear in the pleading which prevented the defendant from settling the outstanding balance in full (had he wished to do so).

21.  As it turned out, after service of the Statement of Claim, the defendant only made a partial payment of $19,000 on 12 September 2018, which was still some $4,000 short of the total outstanding balance at the time.

22.  The plaintiff has also filed and served two affirmations updating the outstanding balance and the daily interest being accrued.  The defendant has received the Affirmation of Kong Man Lok.  As for the 2^nd Affirmation of Kong Man Lok, the affirmation was posted to the defendant in the same manner as the first affirmation and it was never returned through the dead letter service.  I find the defendant’s assertion that he never received the 2^nd Affirmation unconvincing.  In my view, the defendant could well have referred to the information in the two affirmations to ascertain the amount of his outstanding liability.

23.  In any event, it is not the defendant’s case that he did not have sufficient information or he was unable to calculate the outstanding balance as a matter of arithmetic.  Rather, the defendant’s complaint is that the only document that he could rely upon for a complete discharge of his liability is a formal statement of account (結算書) issued by the plaintiff.  In other words, he considered the plaintiff’s court documents unreliable and even if he had fully settled the outstanding balance as per those documents, the plaintiff could still pursue him for further payments.  The defendant argued that as he never received the statement of account, he was entitled not to settle the outstanding balance.

24.  At the hearing, I asked the defendant on what legal and/or factual basis he made such an assertion.  The defendant said that he had seen a letter from the plaintiff’s solicitors saying that the plaintiff could sue for further sums even upon full repayment.  When I asked the defendant to identify or locate such a letter, he was unable to do so.  There is no basis for the defendant to make that assertion and it must be rejected.

25.  In the course of the appeal hearing, the defendant also alleged that the plaintiff’s calculation of the outstanding principal sum was wrong.  I gave time to the defendant so that he could go through the records and identify the mistake.  However, in the end the defendant was unable to identify any mistake and he confirmed his acceptance that the sum of $4,123.63 (as stated in the 2^nd Affirmation of Kong Man Lok) as correct. 

26.  In the premises, I do not think the defendant has any justification for his failure to discharge the outstanding balance in full.  In the absence of any notice of intention to defend or defence having been filed by the defendant, the plaintiff was entitled to apply for and obtain a judgment to be entered under O 83A r 4.  The Master cannot be faulted for having made the order as she did on 30 October 2018.  The defendant’s appeal must be dismissed. 

Conclusion

27.  The defendant’s appeal be dismissed.  There be a costs order nisi that the defendant should pay the plaintiff’s costs of and incidental to the appeal, to be taxed if not agreed. 

28.  The above costs order nisi shall become absolute after 14 days from the date hereof unless any party shall apply to vary it within this 14 day period. 

29.  As most of the documents in this case (including the defendant’s correspondence with the plaintiff and its solicitors) are in English, this decision is prepared in English for the purpose of consistency. However, if the defendant requires this decision to be interpreted to him, he can make an appointment with my clerk for further arrangements to be made.