TODAY IS FINANCE LTD v. TSE MAN NGAI

HCA 493/2022

[2023] HKCFI 2856

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 493 OF 2022

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D E C I S I O N

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1.  The Plaintiff, a licensed money lender, by this action claims against the Defendant for the recovery of the outstanding sums plus interest of 3 loans made to the Defendant conveniently referred to by the parties as “the 2006 Loan”, “the 2106 Loan” and “the 2203 Loan” (together “the 3 Loans”).

2.  On 2 June 2023, Master Rita So gave the Defendant unconditional leave to defend upon the Plaintiff’s application for summary judgment by its summons dated 10 August 2022[1]. The Plaintiff now appeals against that decision.

3.  It is trite that this appeal will be conducted by way of a re-hearing. Equally trite are the principles applicable to an application for summary judgment, which need not be repeated here. Suffice it to mention that particularly relevant is that the burden is on the Defendant to condescend into particulars regarding her defence case and regarding the allegations supporting the same, and that her allegations of fact would have to be shown to be at least believable.

The Plaintiff’s case

4.  The Plaintiff’s case is strict forward and largely undisputed. To explain why and how the loan amounts were split and applied and to meet the Defendant’s allegations, the Plaintiff also alluded to 2 other loans made by the Plaintiff to the Defendant and some other matters, which are also not disputed. The Plaintiff’s case and these matters can be summarized as follows.

5.  By a long email sent on 29 May 2020 to the Plaintiff[2] (“D’s 1^st Email”), the Defendant applied for a loan in the amount of HK$1,800,000 from the Plaintiff to repay certain debts listed therein.

6.  On 10 June 2020, the parties entered into 2 loan agreements. One with the Plaintiff’s reference no. 202006-0123 for a sum of HK$1,500,000 with interest at 30% per annum (“the 2006 Loan”), which is the first of the 3 Loans. The other with the Plaintiff’s reference no. 202006-0124 for a sum of HK$300,000 with interest at 36% per annum (“the 124 Loan”).

7.  The 2006 Loan was to be repaid by 12 monthly instalments, the 1^st to 11^th of which were for the repayment of interest at HK$37,500 each and the 12^th instalment for the repayment of the principal and interest totalling HK$1,537,500. The 1^st instalment was payable on 10 July 2020 and the 12^th on or before 10 June 2021.

8.  The 2006 Loan amount was paid to and applied for the Defendant as instructed by the Defendant’s letter dated 10 June 2020[3]. HK$1,330,000 of the HK$1,500,000 loan amount was paid to Messrs Cheung & Choy for the repayment of the 6 debts listed in that letter. Letters, cheques and a completion statement[4] were produced by the Plaintiff showing the settlement of all these debts and related legal expenses totalling to HK$1,315,877.88 and the balance of HK$14,122.12 (HK$1,500,000 – HK$1,330,000) was paid to the Defendant by Messrs Cheung & Choy’s cheque dated 27 July 2020. The balance of the 2006 Loan amount, HK$170,000 (HK$1,500,000 – HK$1,330,000) was paid to the Defendant by Messrs Cheung & Choy’s cheque to the Defendant as payee dated 10 June 2020[5].

9.  The 124 Loan amount of HK$300,000 was paid to the Defendant by Messrs Cheung & Choy’s cheque to the Defendant as payee dated 10 June 2020[6].

10.  The actual receipts of the HK$170,000 under the 2006 Loan and the HK$300,000 under the 124 Loan are disputed by the Defendant.

11.  On 7 January 2021, the Defendant sent another email to the Plaintiff[7] (“D’s 2^nd Email”) saying that the Hong Kong Housing Authority (“HKHA”) could only approve her mortgage loan application in about 4 months’ time and sought another loan in the amount of HK$300,000. By a loan agreement with the Plaintiff’s reference no. 202101-0134 entered into between the parties, the Plaintiff lent another HK$300,000 to the Defendant (“the 134 Loan”).

12.  On 7 June 2021, the Defendant sent another email to the Plaintiff[8] (“D’s 3^rd Email”) saying that her application for HKHA’s approval could only be completed in August or September 2021 and sought another loan in the amount of HK$300,000. By a loan agreement with the Plaintiff’s reference no. 202106-0145 entered into between the parties on 10 June 2021, the Plaintiff lent another HK$300,000 to the Defendant (“the 2106 Loan”), which is the second of the 3 Loans. The 2106 Loan amount of HK$300,000 was paid to the Defendant by the Plaintiff’s cheque to the Defendant as payee dated 10 June 2021.

13.  On 2 March 2022, the Defendant sent another longer email to the Plaintiff[9] (“D’s 4^th Email”). In it, she applied for a loan from the Plaintiff in the amount of HK$3,200,000 to repay all her outstanding loans then owed to the Plaintiff, so far as the principals were concerned, in the total amount of HK$2,400,000. On 4 March 2022, the parties entered into a loan agreement with the Plaintiff’s reference no. 202203-0149 whereby the Plaintiff granted to the Defendant a loan of HK$1,200,000 (“the 2203 Loan”) and not the loan of HK$3,200,000 applied for by D’s 4^th Email.

14.  As instructed by the Defendant’s letter dated 4 March 2022[10], of the HK$1,200,000 2203 Loan amount, HK$309,000 was applied to repay the outstanding principal and interest of the 124 Loan and HK$309,000 was applied to repay the outstanding principal and interest of the 134 Loan. These 2 loans were thereby completely repaid. The balance of HK$582,000 (HK$1,200,000 – HK$309,000 – HK$309,000) was paid to the Defendant by the Plaintiff’s cheque to the Defendant as payee dated 4 March 2022[11].

15.  The actual receipt of the HK$582,000 is disputed by the Defendant.

16.  By a written confirmation dated 16 March 2022[12], the respective last monthly repayments of the 2006 and 2106 Loans (paying the respective principal and last monthly interest instalment) were extended to 10 December 2022 on the agreement that the Defendant would pay interest on these 2 loans by monthly instalments on the 10^th day of each calendar month.

17.  It is common ground that the Defendant has been paying all the monthly instalments in respect of the 3 Loans.

18.  In mid-April 2022, the Plaintiff discovered that the Defendant had acted in breach of Clause 5(k) of the agreement for the 2006 Loan, and the Clause 6(k) of the agreement for the 2106 Loan, which clauses were identical. These 2 clauses essentially provided that it would be an event of default entitling the Plaintiff to demand immediate repayment of the principal and all outstanding interest if the Defendant should enter into any loan or credit arrangement without the Plaintiff’s consent with a 3^rd party after the signing of the respective loan agreements.

19.  In her Amended Defence, the Defendant admitted that these 2 clauses were part of the 2006 Loan agreement and 2106 Loan agreement and that she had entered into a loan agreement with Mei Lik Ko Finance Limited on 13 January 2022 and another loan agreement with Asia Money Limited on 18 January 2022[13].

20.  The Defendant denied such amounted to a breach on the basis that the 3 Loans are illegal and unenforceable[14].

21.  It is the Plaintiff’s case that these 2 loan agreements with 3^rd parties were entered into by the Defendant in January 2022 without its consent and that they have not been made known to the Plaintiff or reported in the application form of the 2203 Loan[15], thus constituted an event of default under Clause 6(c) of the 2203 Loan agreement which provided that it was an event of default “if any of the representation, warranty, undertaking or statement made by the Borrower, or any related document is not complied with or is found to have been incorrect in any respect”.

22.  This was denied by the Defendant on the same basis that the 3 Loans are illegal and unenforceable[16].

23.  On 21 April 2022, the Plaintiff issued a letter before action by its solicitors demanding immediate repayment of the principals and interest of the 3 Loans from the Defendant, which demand was unmet. The Plaintiff commenced this action on 29 April 2022.

The Defence case

24.  Acting in person, the Defendant filed a short Defence and Counterclaim in Chinese on 1 August 2022.

25.  The matters raised in this short Defence were (a) she did not know the meaning of the clauses in the loan agreements, (b) these clauses have not been mentioned by the Plaintiff to her at the time of the signing of the agreements, (c) she has paid 5 instalments in advance on the date of the signing of the agreement (without specifying which), (d) she knew she could not borrow from a 3^rd party, but she understood that the 3^rd party meant an intermediary and not another finance company, and (e) it was unreasonable for the Plaintiff to sue on these clauses.

26.  In her Counterclaim, she said she was not given approval by HKHA because the Plaintiff registered the loan agreements with the Land Registry and that she has been repaying only the interest to the Plaintiff who continued to lend her money. She questioned the Plaintiff’s business practice and counterclaimed HK$200,000[17].

27.  The Defendant filed in person 2 affirmations in Chinese in opposition to the Plaintiff’s summary judgment application – a short one filed on 26 September 2022 (“D’s 1^st Aff”) and another 7-page one filed on 14 November 2022 (“D’s 2^nd Aff”).

28.  Since 24 February 2023, the Defendant has been legally represented. The Defendant has not sought to file any supplemental affirmation or has not produced any further document after being so legally represented.

29.  The factual allegations raised in D’s 2^nd Aff by way of defence, and essentially repeated in the Amended Defence and Counterclaim are:

a.  The 2006 Loan and the 2106 Loan were obtained through an intermediary called 康宏企業(國際)有限公司 (“the Intermediary”)[18];

b.  Regarding the 2006 Loan and the 124 Loan and on 10 June 2020, after being handed a HK$170,000 cash cheque being the balance of the 2006 Loan amount (after HK$1,330,000 was used for the repayment of her previous debts) and another HK$300,000 cash cheque being the 124 Loan amount, she cashed the HK$300,000 cheque in Hang Seng Bank Mongkok branch and handed HK$187,500 to one Philip Lee as the fee for the Intermediary and she deposited HK$112,500 into the bank account of the Plaintiff (“Exhibit 3” was produced to show this deposit). She then went with one Mr Cheung of the Plaintiff to Hang Seng Bank at Great Eagle Centre Wanchai and cashed the HK$170,000 cheque and the entire sum was returned to Mr Cheung (actual words in Chinese: “提取現金後全數交還職員張生”).

c.  Regarding the 2106 Loan and on 10 June 2021, “equally on the same day, the staff of Today Is Finance Limited requested and took from me handling fee HK$28,000 outside the door of Hang Seng Bank Mongkok Branch” (actual words in Chinese “同樣地當日，今是職員在恒生銀行(旺角分行)門口向我索取手續費HKD28,000”).

d.  Regarding the 2203 Loan and on 4 March 2022, after receiving the HK$582,000 cheque from the Plaintiff, she went to Hang Seng Bank in Central to cash it, and then she took the cash and met a staff of the Plaintiff on the Ground Floor of Chung Kiu Commercial Building in Mongkok and handed HK$390,000 in cash to him.

30.  In the Amended Defence, and relying on the allegations set out in the preceding paragraph, the Defendant pleaded that:

a.  The 3 Loans were in breach of section 18(2) of the Money Lenders Ordinance (“MLO”) in that the amount of the principal, the rate of interest, and the place of the negotiation and completion of the agreements were not correctly set out in the notes or memoranda;

b.  The 2006 Loan and 2203 Loan were in breach of section 24(2) of MLO in that their rates of interest exceed 48%;

c.  The 3 Loans were extortionate transactions within the meaning of section 25(2) of the MLO and are liable to be re-opened;

d.  The 2006 Loan was in breach of section 27 of the MLO and the amount of HK$187,500 paid to the Intermediary is liable to be set off; and

e.  The 3 Loans are illegal and unenforceable.

Discussion

31.  It was emphasized to me by Mr Tam, counsel for the Plaintiff, which I accept, that I should evaluate the Defendant’s allegations against her background that she worked as a “financial planning officer” (理財策劃主任) in a major insurance company (according to her in D’s 1^st Email), and against the acumen that was shown by what she wrote in the afore-mentioned emails.

32.  I begin with one of the main factual disputes between the parties as to whether the 2006 Loan and the 2106 Loan were obtained by the Defendant from the Plaintiff through the Intermediary.

33.  In paragraph 6 of the affirmation of Cheung Siu Fai filed on 14 October 2022 on behalf of the Plaintiff (“Cheung’s 1^st Aff”), Cheung affirmed very clearly that “the Defendant first approached the Plaintiff for a personal loan by [D’s 1^st Email]” which email was then exhibited.

34.  In D’s 2^nd Aff, which was filed a month after Cheung’s 1^st Aff and though it was expressly stated to be providing supplemental evidence about the collection of fee by the Intermediary, the Defendant did not give any particulars at all about how, when, and by whom of the Intermediary she was first approached, whether there was any telephone conversations or messages exchanged and so on. In short, save the barest of assertion that she paid on 20 June 2020 HK$187,500 to one Philip Lee as fee of the Intermediary, there was a complete lacuna in her evidence. The only piece of documentary evidence she proffered, allegedly related, was a photocopy of one-side only of apparently a calling card showing merely the name of one 康宏企業(國際)有限公司[19].

35.  Moreover, she did not say a word in D’s 2^nd Aff about the Plaintiff’s evidence that it was first approached by the Defendant by D’s 1^st Email, or about D’s 1^st Email itself. Such silence is particularly conspicuous when one examines the contents of D’s 1^st Email.

36.  D’s 1^st Email was evidently sent by the Defendant to the Plaintiff’s email account bearing the name todayisfinance01@gmail.com. In it, the Defendant set out remarkably succinctly but thoroughly all information one would expect a lender would require, including her name, her HKID card number, her age, her job position, monthly income, marital status, husband’s name, his job title, his monthly income, name and age of her child, address and size and other details of the property owned, its value estimated by HSBC and Hang Seng Bank, its estimated value before payment of premium, and the details and information regarding her outstanding debts etc, and ended with her Transunion credit score.

37.  Moreover, it was expressly requested in D’s 1^st Email that the total loan amount of HK$1,800,000 be split into 2 loans of which HK$1,500,000 be registered in the Land Registry (actual words in Chinese; “其中150萬元註上填土廳”) and with interest at 30% per annum, and the remaining HK$300,000 be made a personal loan with interest at 36% per annum.

38.  In D’s 1^st Email, there was no hint or any mention about the Intermediary or any intermediary.

39.  Contrary to her present allegation, on a form and an answer to questionnaire in relation to the application of the 2006 Loan both confirmed as true by the Defendant’s signature[20], she stated that she learned about the Plaintiff through the internet (actual words in Chinese: “網上”).

40.  The introduction through the Intermediary and the alleged payment of fee to it in the amount of HK$187,500, which was not a small amount, should have been matters, if true, that she would have little difficulty in recalling. However, they were not mentioned at all in the Defence filed on 1 August 2022. Yet, 3 months’ later, she affirmed to them in D’s 2^nd Aff. No explanation of why there was such a dramatic change, or recalling of memory, was proffered to the court.

41.  Based on the above evidence, I have no hesitation to conclude that the Defendant’s allegation that the 2006 Loan and 2106 Loan was introduced by the Intermediary is not believable. With it, and together with the matters discussed below which show that other allegations made by the Defendant are not believable, I also find that her allegation that she has paid HK$187,500 to the Intermediary on 10 June 2020 not believable.

42.  Importantly, she affirmed in D’s 2^nd Aff that the alleged deposit on 10 June 2020 of HK$112,500 into a bank account of the Plaintiff was shown by Exhibit 3. Exhibit 3[21] is a deposit slip showing the deposit by cash of HK$112,500 into the Plaintiff’s account. However, on closer examination, the slip in fact was dated 10 June 2021 and not 2020, as she affirmed. At the hearing, when this was pointed out, Ms Chan has nothing to say for the Defendant save that she confirmed that the date of Exhibit 3 was indeed 10 June 2021. Thus, Exhibit 3 in fact does not support the Defendant’s allegation at all.

43.  Not only that, according to the Plaintiff’s records and case, HK$112,500 was deposited by the Defendant as payment of 3 monthly instalments under the 2006 Loan due respectively on 10 June, 10 July and 10 August 2020 at HK$37,500 each. And they were so paid on the date the 2106 Loan was granted and loan amount paid to the Defendant pursuant to what the Defendant promised in D’s 3^rd Email as a matter for the Plaintiff to consider regarding whether to grant the 2106 Loan (which the Plaintiff did on 10 June 2021), thus: “如貴公司批核到給本人的時候，本人會馬上將6月11日供款繳交，亦會預繳7月及8月給貴公司”. Thus, the date, the amount and what the Defendant said in D’s 3^rd Email together show that Exhibit 3 was related to this promised payment. I so find. It follows that I find the Defendant’s allegation that on 20 June 2020 she deposited part of the 2006 Loan amount in the sum of HK$112,500 into the Plaintiff’s bank account is entirely untrue, if not actually an allegation made up by her altogether.

44.  Further, regarding the sum of HK$187,500, the Plaintiff’s records and case are that HK$187,500 has been paid by the Defendant on 11 January 2021 as payment of 5 monthly instalments of the 2006 Loan respectively due on 10^th of January, February, March, April and May 2021 pursuant to a similar promise made by the Defendant in D’s 2^nd Email sent to apply for the 134 Loan. There, she said “我希望向貴公司申請多一個30萬貸款，而這30萬做到給本人我會先交了今期的供款及預繳多四期給貴公司的，希望貴公司能幫幫忙，謝謝！”.

45.  For the below-mentioned reasons, I do not find believable the Defendant’s allegations (a) that on 20 June 2020 she handed over to one Mr Cheung of the Plaintiff HK$170,000 after she cashed the cheque of the same amount, (2) on 10 June 2021, she handed HK$28,000 of the 2106 Loan amount to a staff of the Plaintiff as handling fee, and (3) on 4 March 2022, she handed over HK$390,000 of the balance of HK$582,000 to a staff of the Plaintiff :

a.  According to the Defendant’s story, on 20 June 2020, she had handed over a total of HK$470,000 from the 2006 Loan and the 124 Loan to the Intermediary and the Plaintiff, that would have been over 26% of the total loan amount of HK$1,800,000. If such payments were demanded on the day the cheques were handed to her, it should have come as a very bad surprise for her, and it would be difficult to understand, and she did not explain at all, why she was so compliant at the time. If she had been told earlier, it is hard to picture, and the Defendant did not explain, why she would be accepting such a bad deal to pay off existing debts instead of continuing to repay the existing ones or instead of seeking out other loans with better terms.

b.  More tellingly, had it been true, it is most highly improbable and unbelievable, with her experience and knowledge as a financial planner, that she would continue to apply with the Plaintiff time and again for the 3 subsequent loans (the 134 Loan, the 2106 Loan and the 2203 Loan) and applying for them in such nice tone and manner as in D’s 2^nd, 3^rd and 4^th Emails. Again, there was no explanation proffered.

c.  In the circumstances of the 2203 Loan, HK$390,000 out of the balance of HK$582,000 was a large amount of money. Paying it over to the plaintiff without any specific reason (as none was said in D’s 2^nd Aff) must have been difficult, if not painful, for the Defendant. Again, it is hard to understand why she would be so compliant if the demand for such payment was made only at the time, or why she had not sought a better deal if she had been informed of the payment earlier. She did not proffer any explanation whatsoever. Indeed, nothing more was said by the Defendant save the barest of assertion that this amount was paid over.

d.  Yet, all of these alleged payments of such substantial sums to the Intermediary and to the Plaintiff were not even mentioned in the Defence and D’s 1^st Aff. I find such omission in the circumstances most unusual and unbelievable. No explanation whatsoever was proffered by the Defendant as to why they were not even mentioned as aforesaid.

46.  Considering all the matters alluded to above and in the round, I come to the conclusion that the Defendant’s factual allegations as set out in paragraph 29 above are not at all believable.

47.  As the breaches of the MLO alleged by the Defendant all premised upon her such allegations of fact, which I concluded are not believable, I also conclude that there are no triable issues regarding these alleged breaches.

Disposal

48.  In the premises, I allow the Plaintiff’s appeal and set aside the order of the Master dated 2 June 2023 granting unconditional leave to defend and her order as to costs. I give judgment to the Plaintiff as claimed.

49.  At the close of the hearing, the Plaintiff produced a summary of calculations setting out the outstanding principals owed in respect of the 3 Loans and also calculating out the interest at the respective contractual rates up to the date of this hearing, namely 31 October 2023, and invited the court to enter judgment accordingly. The sums are not disputed by the Defendant.

50.  Accordingly, I order that final judgment be entered against the Defendant for:

(1)  The sum of HK$2,101,290, and interest on the principal sum of HK$1,498,959 at the rate of 30% per annum from 1 November 2023 until full payment;

(2)  The sum of HK$441,030, and interest on the principal sum of HK$299,323 at the rate of 36% per annum from 1 November 2023 until full payment; and

(3)  The sum of HK$1,583,044, and interest on the principal sum of HK$1,199,335 at the rate of 24% per annum from 1 November 2023 until full payment.

51.  It is not disputed that the agreements for the 3 Loans provided that the Plaintiff’s legal costs be paid on an indemnity basis. Thus, I also order on nisi basis that the costs of the Plaintiff’s action, excluding the costs of the Counterclaim but including the costs of the Plaintiff’s application for summary judgment before the Master and of this appeal, be paid by the Defendant to the Plaintiff on indemnity basis, to be taxed if not agreed. This costs order nisi will become absolute within 14 days unless an application to vary is made within that period.

52.  Lastly, I thank Mr Tam, Mr To and Ms Chan for their assistance.