PACIFIC ACE FINANCE LTD v. DELAY, GILDA H. AND ANOTHER

DCCJ 3298 & 3299/2018
(Heard Together)

[2023] HKDC 611

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 3298 OF 2018

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IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 3299 OF 2018

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DECISION

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Introduction

1.  By an Order 58 Notice of Appeal filed by Ms Gilda H Delay (“Ms Delay”), the 1^st defendant in DCCJ 3298/2018 (“the 3298 Action”), Ms Delay appealed against the order of Master Roberta Chan made on 20 January 2023 refusing to summarily dismiss the 3298 Action, and ordering Ms Delay to pay costs (“the 3298 Appeal”).

2.  By another Order 58 Notice of Appeal filed by Ms Delay, who in addition to being the 1^st defendant in the 3298 Action was also the 2^nd defendant in DCCJ 3299/2018 (“the 3299 Action”), Ms Delay appealed against a separate order of Master Roberta Chan made on 20 January 2023 refusing to summarily dismiss the 3299 Action, and ordering Ms Delay to pay costs (“the 3299 Appeal”).

3.  Since the arguments vis-à-vis these appeals were similar, they were heard together by me at a single hearing on 3 May 2023. Pacific Ace Finance Limited (“P”), the common respondent and a money lender under the Money Lenders Ordinance (Cap 163) (“the MLO”), was represented by Ms Eva Lo of King & Company Solicitors, while Ms Delay represented herself and addressed me directly.

4.  In gist, Ms Delay argued the two actions should be summarily dismissed by me, and/or should have been summarily dismissed by Master Roberta Chan, whilst Ms Lo argued otherwise.

5.  At the end of the oral hearing on 3 May 2023, I reserved my decision and indicated I would carefully think about the parties’ arguments and hand down my written decision within 3 months.

6.  This is my written decision for both appeals.

Ms Delay’s Arguments

7.  Ms Delay lodged comprehensive written submissions prior to the hearing and supplemented them by way of further oral submissions. In summary, her arguments were:-

(1)  For the 3298 Action, P’s claim was only for HK$7,574 plus interests and costs, whilst for the 3299 Action, P’s claim was only for HK$8,250 plus interests and costs. Ms Delay argued, here and below, that for a claim to be handled by the District Court, and not the Small Claims Tribunal (“SCT”), the amount in question must be over HK$75,000 but below HK$3 million. Ms Delay then argued that P, by starting its two actions in the District Court instead of the SCT, knowing it should never have done so, was abusing the judicial process of the District Court (“the Venue Argument”).

(2)  By Ms Delay’s calculation, she was charged interests at the rate of 191% per annum, which was “illegal” under Section 24 of the MLO. P also, suggested Ms Delay, committed “numerous indictable criminal offences” by reason of, inter alia, Sections 24 and 71 of the Crimes Ordinance (Cap 200) and if this Court were to allow P’s two actions to proceed, we would be “condoning” P’s terrible acts (“the Illegality Argument”).

(3)  Ms Delay had been ordered to pay costs for standing up to defend her fundamental legal rights, and this was just “unjust and unfair” (“the Unfairness Argument”).

Ms Lo’s Arguments

8.  Ms Lo responded to Ms Delay’s arguments comprehensively. In summary, Ms Lo suggested that:-

(1)  The Venue Argument was wrong. P’s two actions were obviously caught by §1(c) of the Schedule to the Small Claims Tribunal Ordinance (Cap 338) (“the SCTO”). The SCT had no jurisdiction to deal with P’s actions at all, and P could not have brought them in the SCT. The actions were correctly brought in the District Court.

(2)  The Illegality Argument was also wrong. By Ms Lo’s calculation, P charged interests at the rates of 28.8% per annum (for the 3298 Action) and 30% per annum (for the 3299 Action) respectively, which was lawful. P did not commit any crime. At the very least, P’s assertions of criminality gave rise to “disputed facts to be tried”, and the two actions should proceed to full-blown trials in the normal manner.

(3)  The Unfairness Argument was wrong too. Ms Delay’s dismissal applications in both actions were attempts to delay P’s claims against her. Master Roberta Chan had “considered all circumstances including those which were not even raised” by Ms Delay herself and reached the correct conclusion. The 3298 Appeal and the 3299 Appeal should both be dismissed with costs.

My View

9.  As HHJ Jonathan Wong had correctly pointed out in Chiu Kei Leung v Chui Deon Yau Han [2023] 1 HKLRD 1375 [2023] HKDC 134 at §3.15, the District Court, just like the Court of First Instance, has a general case management power to dismiss a civil action summarily, at the court’s own initiative or at the invitation of a party. Whether such a power should or should not be used in a case depends on the facts of that particular case and the arguments raised by the parties. Since dismissing a civil action is a drastic step, I should be cautious in my consideration.

10.  For each of the appeals here, whilst I am sympathetic towards Ms Delay, and I understand her frustration, I agree with Ms Lo the appeal should be dismissed. Both actions should be allowed to proceed. I shall state my reasons for so holding and demonstrate to Ms Delay that I have brought an independent mind to my judicial function, exactly as I had said I would during the oral hearing on 3 May 2023.

The Venue Argument

11.  In my view, the Venue Argument was indeed misconceived.

12.  It is not, and it has never been, the law that for a claim to be handled by the District Court and not the SCT the amount in question must be over HK$75,000 but below HK$3 million. The District Court handles disputes worth substantially less than HK$75,000 all the time, and this is as prescribed by law.

13.  For example, in Shiu Hon Po v Tam Siu Ping (DCCJ 31/2006, HHJ HC Wong, 10 May 2013), a defamation case, the claim was assessed to be worth just HK$7,620 (§77). It was, however, correctly commenced in the District Court. Similarly, in Max Surplus Finance Limited v Yip Yuk Chor [2018] HKDC 388, a licensed money lender case, the claim was only worth HK$8,000 plus interests (§57). It was also correctly commenced in the District Court.

14.  This situation is largely a result of the Schedule to the SCTO, which says the SCT “shall not have jurisdiction” to determine any action in respect of defamation or a maintenance agreement within the meaning of Section 14 of the Matrimonial Proceedings and Property Ordinance (Cap 192) (“the MPPO”), or any action by a money lender licensed under the MLO for the recovery of any money lent, etc.

15.  Since P’s claims, in both actions, were caught by the Schedule to the SCTO as “any action by a money lender licensed under the MLO for the recovery of any money lent”, P could never have commenced its claims in the SCT, and its claims were correctly commenced in the District Court under Section 32 of the District Court Ordinance (Cap 336).

16.  One may argue while the exclusion of defamation and MPPO cases from the SCT, irrespective of the monetary values of such claims, is understandable, the blanket exclusion of money lender cases from the SCT is bizarre. Indeed, one would have thought a much better policy would be to grant to the SCT a general jurisdiction to handle money lender cases and leaving it to the SCT to decide for itself whether to exercise its power under Section 7 of the SCTO to transfer some of such cases to the District Court, or the Court of First Instance. In Max Surplus (§59), DDJ Jonathan Chang also noticed the undesirability of forcing parties to a money lender dispute to litigate at wholly disproportionate legal costs in the District Court and suggested legislative reform. However, as I had said to Ms Delay on 3 May 2023, the District Court is bound by statutory provisions like everyone else. Given the clear wording of the Schedule to the SCTO, there is no room for Ms Delay’s argument on venue. P did not abuse the judicial process of the District Court by picking the District Court as the litigation venue, since P could not have brought the actions in the SCT.

17.  If I could borrow the very wise words of HHJ Andrew SY Li in Cheung Ka Man v Wong Yu Huen [2023] HKDC 370 (§151), we are all under the law and “nobody is above it”. Unless and until the Schedule to the SCTO is revised by LegCo, my judicial duty is to respect, enforce, and give full effect to it as it stands.

18.  For completeness, I should add that Ms Delay had suggested to me, at the oral hearing on 3 May 2023, that she did not know about the Schedule to the SCTO. I assumed that to be true, but that is neither here nor there. The Venue Argument was raised by Ms Delay herself. The duty was obviously on Ms Delay herself to research it properly, before deciding to raise it. No person forced her to raise the Venue Argument. I appreciate Ms Delay was a litigant-in-person, but that was also her own choice. There were plenty of fully qualified litigation lawyers in Hong Kong who would be willing to take up cases on a pro bono basis. The Duty Lawyer Service also had a “Free Legal Advice Scheme” which Ms Delay could have used without having to pay anything. The SCTO, inclusive of its Schedule, was available for free download on the Internet and it would show up on Google Search. While I am sympathetic towards Ms Delay her suggestion that she did not know about the Schedule to the SCTO counts for very little. I shall come back to this point towards the end of this decision.

The Illegality Argument

19.  In my view, the Illegality Argument was also misconceived.

20.  Firstly, there was no Order 33 Summons before either Master Roberta Chan or myself asking us to determine the interest rates in question as preliminary issues. My duty should not be to examine all relevant facts, do the arithmetic, and make a binding determination on the rates. My duty is to simply examine whether P’s pleaded cases on the rates are arguable so that the actions should be allowed to proceed to trial. The short answer is yes, P’s pleaded cases on the rates are indeed arguable so that the actions should be allowed to proceed. It was not good enough for Ms Delay to say she found an alternative calculation which could be correct. The burden was on Ms Delay to demonstrate to this court why P’s pleaded cases were so unarguable, or demonstrably false, that these actions should not even be allowed to proceed to trial, and this she has failed to do.

21.  Secondly, neither Ms Delay nor Ms Lo had ever addressed me on the case law on the MLO, for example on what was said by Chu JA in Easy Fortune Property Limited v Yung Chun Him [2019] HKCA 1055. For Ms Delay, I assumed that was because she was unaware there were judicial authorities on how to do the calculations. For Ms Lo, my understanding is that she only received Ms Delay’s “191% per annum” calculation after the start of the hearing on 3 May 2023, and Ms Delay’s previous submissions only referred to a range of rates (“180% to 200%”) without explaining why the rates would be a range, or how the suggested range was arrived at. This being the situation, and since there will in any case be a traditional trial on the whole matter (see below), the best way forward would be for the dispute on the calculation of rates to be resolved as part of the future trial.

22.  Thirdly, Ms Delay’s illegality assertions went way beyond the offences created by the MLO and were serious. Whilst serious allegations may of course be true (indeed our criminal courts properly convict people of very serious crimes from time to time), there is a huge difference between attempting to decide on the truthfulness of serious allegations “on paper” (which can be difficult) and attempting to do so “after trial” (which would usually be easier, and more reliable). In Si Wing On Andrew v Cheng Sau Wai [2023] 2 HKLRD 187 [2023] HKDC 309, DDJ George Lam refused to enter judgment summarily even though there were admissible criminal convictions supporting it. Allowing parties to a civil claim to proceed to a trial does not mean the court is “condoning” the alleged criminal activities. It simply means a decision has been made that the allegations and counter-allegations should be examined in a more traditional manner, with live oral evidence being given under oath and subject to the counter-party’s cross-examination. The aim is never to bury, but to better ventilate, such serious allegations.

23.  In fact, at the oral hearing on 3 May 2023, I specifically asked Ms Delay whether in her view, attempting to decide on the truthfulness of serious allegations “on paper”, or requiring factual witnesses to walk into the witness box to be cross-examined, would be the better option, and Ms Delay said she thought requiring factual witnesses to walk into the witness box to be cross-examined would be better. On the facts of the two actions before me, I agree with this specific comment. Ms Lo, speaking on behalf of P, was perfectly content to allow both actions to proceed to trial “as they were” without striking out anything. The proper ventilation of allegations in a traditional full-blown trial being something favoured by both P and Ms Delay, these two actions should proceed to trial.

24.  Finally, it must be said the Illegality Argument was wrong for an even more important reason. Even if P was guilty of criminal offences, and I am making no ruling one way or the other, that does not necessarily mean P would then lose literally all of its legal entitlements. As the saying goes, in a commendable legal system, even Satan himself would be entitled to a fair, secular, trial.

25.  Indeed, at present, the law on criminality and its impact vis-a-vis civil claims is as explained in Monat Investment Limited v Lau Chi Kan Kenith [2023] HKCA 479, where the Court of Appeal explicitly disowned Tinsley v Milligan [1994] 1 AC 340 and applied Patel v Mirza [2017] AC 467 instead. In Patel, Lord Toulson JSC of the UKSC summarized the legal position (at §120) as follows:-

“The essential rationale of the illegality doctrine is that it would be contrary to the public interest to enforce a claim if to do so would be harmful to the integrity of the legal system (or, possibly, certain aspects of public morality, the boundaries of which have never been made entirely clear and which do not arise for consideration in this case). In assessing whether the public interest would be harmed in that way, it is necessary (a) to consider the underlying purpose of the prohibition which has been transgressed and whether that purpose will be enhanced by denial of the claim, (b) to consider any other relevant public policy on which the denial of the claim may have an impact, and (c) to consider whether denial of the claim would be a proportionate response to the illegality, bearing in mind that punishment is a matter for the criminal courts…” (Emphasis added)

26.  As we can see from the above, the Illegality Argument framed by Ms Delay was with respect too simplistic. I do not blame Ms Delay, as she was not represented by lawyers. I must, however, set out the quotation above to illustrate to Ms Delay that our laws do recognize and entertain the possibility that a litigant may well be guilty of some criminal offences, but still be allowed to claim certain civil remedies, as we need to bear in mind punishment for criminal behaviour is a matter for the criminal courts. By allowing the two cases before me to go to trial, I am not “condoning” any of the alleged criminal acts. I am simply deciding Ms Delay’s allegations, be they true or false, do not lead to the conclusion that P should be deprived of a traditional full-blown trial, where all allegations and submissions can be examined by this Court in a much more comprehensive manner.

The Unfairness Argument

27.  In my view, the Unfairness Argument was misconceived too.

28.  The award of costs in District Court civil actions is governed by Order 62 of the Rules of the District Court (Cap 336H) (“RDC”), which is substantially the same as Order 62 of the Rules of the High Court (Cap 4A). The most important principle is that a judicial officer has a wide discretion on matters concerning costs, but the discretion must be exercised judicially. See, eg, HKCP 2023, §62/2/6. Usually, a judicial officer would start from the assumption that “costs should follow the event”, which is to say the losing party should pay for the legal costs incurred by the winning party, not because there is such a rule, but because in the vast majority of scenarios that would be the fair, just and most appropriate order.

29.  In our present case, Ms Delay voluntarily took out summonses and argued for the summary dismissal of the two actions. No person forced her to take such steps. The taking of such steps was a voluntary choice on the part of Ms Delay. The arguments Ms Delay had chosen to put forward were without merits, but P was forced to pay extra money to its lawyers in order to deal with them. Ms Delay then lost her arguments in front of Master Roberta Chan. Master Roberta Chan, in the exercise of her wide discretion, started from the usual assumption that “costs should follow the event”, and ordered costs against Ms Delay. For each set of costs, Master Roberta Chan then made a most generous 50% reduction. The entire process was within the norm and no valid reason to disturb Master Roberta Chan’s costs orders had been put forward by Ms Delay. While Ms Delay had said she was just “standing up to defend her fundamental legal rights”, in a civil action that is actually neither here nor there. No litigant has any legal right to be made the perpetual winner of all applications irrespective of the substance of her arguments. If the “legal rights” referred to the rights to have access to the courts, then in a typical civil action all parties would be exercising them in the exact same way, and that would be neither here nor there also because the legal costs incurred must still be paid by “someone”, and a suggestion that all parties were exercising their legal rights does not tell us who, then, should pay for the legal costs incurred.

30.  In my view, in the circumstances of these two actions, Master Roberta Chan was quite entitled to order costs against Ms Delay in the way as she did, and I can see no reason to change her costs orders, or to say they were in any way unjust or unfair. Master Roberta Chan’s costs orders were designed to compensate P for having to spend extra legal costs dealing with Ms Delay’s summary dismissal applications. Clearly, had Ms Delay refrained from taking out such applications in the first place, such costs orders could have been avoided. This may sound very harsh, but Ms Delay, by choosing to take out risky applications in court in the manner as she did, created her own predicament. In fact, if I were Master Roberta Chan, and I was invited to deal with Ms Delay’s applications at first instance, I would have made the exact same orders.

31.  I should take this opportunity to remind Ms Delay, and indeed all litigants, that litigation is an inherently risky activity. Those who would like to know more about litigation risks should consult their own lawyers, and read what was said by the late Mr Justice Lightman in “Litigation: The Last Resort” (2004) New Law Journal 185, a copy of which can be found in the High Court Library.

Appeal Costs

32.  Having carefully considered all rules in Order 62 of the RDC, and all material authorities on such rules, in the exercise of my discretion, I take the view that for both appeals, costs should indeed follow the event. Ms Delay chose to appeal but lost her arguments. P was forced to pay extra money to its lawyers to deal with these appeals. I should and do order costs against Ms Delay, for each of these appeals, as I consider this to be fair, just and most appropriate, all things considered.

Disposition

33.  By reason of the above, the order I make in the 3298 Appeal is as follows:-

(1)  The appeal brought against the order of Master Roberta Chan be dismissed.

(2)  Costs of the appeal be paid by Ms Delay to P forthwith, to be taxed if not agreed.

34.  By reason of the above, the order I make in the 3299 Appeal is as follows:-

(1)  The appeal brought against the order of Master Roberta Chan be dismissed.

(2)  Costs of the appeal be paid by Ms Delay to P forthwith, to be taxed if not agreed.

Final Remarks

35.  As HHJ Mimmie Chan once said in Federal Express Pacific Inc v Tung Sau Kam trading as Tin Shun Company (DCCJ 6675/2003, 17 March 2008, §39), it is “very unfortunate” when litigants in person attempt to deal with litigation issues without legal advisers, or without the benefit of sound legal advice. The present case is another example of this. I hope Ms Delay would be able to take sound legal advice from pro bono lawyers, possibly through the “Free Legal Advice Scheme” run by the Duty Lawyer Service, as soon as possible, though this is, of course, a matter for her.

36.  I do thank Ms Delay and Ms Lo for their able assistance.