WONG SUK WAI v. CHAU YUK KIN

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J U D G M E N T

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Cons, V.-P.:

1. This is an appeal against the decision of Mrs. Bokhary sitting as a Deputy Judge of the District Court given on the 31st August whereby she found the Defendant liable for the unpaid balance of two promissory notes to a total of $33,412.

2. The reasons for the judge's decision were placed on the record on the 20th September. They comprised a detailed resume of the proceedings, the evidence and the amplification of the brief reasons she had given at the time. Those reasons were brief. She said -

"    Having heard the evidence, I find both DW1 and DW2 to be both unimpressive witnesses. I do nto find on the evidence before me that they have repaid the two amounts in full under the two Promissory Notes as alleged by them.

    I find that the Plaintiff has proved her case against the Defendant as claimed."

3. The written Defence nut in to the particulars Claim as simple and alleges 1. that the first promissory note had been paid in full; and 2. that the second promissory note had been discharged by the acceptance of $50,000 in full settlement of the $52,000 for which it was written.

4. On the 30th September the Defendant applied to the judge for leave to appeal and for a stay of execution pending appeal. Athough he had appeared in person at the trial he was then represented by counsel. There seems to have been some confusion as to the form the application took. We understand from Mr. Chan, who appears today for the Defendant as he did then, that be was merely asking for leave to appeal and a stay of execution; he was not applying for a review, which is possible in the District Court by virtue of Section 53 of the District Court Ordinance. On the other hand the judge seams to have accepted it as an informal application for a review by which he was asking her to reopen the case by virtue of Section 25(1) of the Money Lenders Ordinance Cap. 163. This allows a judge to reopen any case of loan, whether made by a money lender or not, when proceedings are taken for the recovery of the loan or the enforement of a security in its respect and there is evidence which satisfies the Court that the transaction was extortionate.

5. As a result the judge went fully into the maters that she thought had been raised. She was inclined first of all to think that the section had no application to the claim before her, because the allegedly extortionate interest arose not from the promissory notes themselves, which were expressly free of interest, but from subsequent agreements which had, as it were, been grafted on to give the Defendant further time to repay. But in any event, she took the view that in the circumstances the interest agreed was not extortionate.

6. She then refused both the applications for leave to appeal and for a stay of execution. Leave to appeal however was given by a single judge of this Court on the 21st October. In pursuance thereof Mr. Chan has addressed us today and seeks an order for retrial.

7. Only three witnesses gave evidence before the judge below. There ws the plaintiff, who described herself as a business woman aged 56. It was she who was entitled to the benefit of the promissory notes. The view that the judge formed of her was that -

"... although she was at times a bit confused with dates and figures, I found the Plaintiff to be a truthful and reliable witness."

The witnesses on the other side were the Defendant, who had executed the promissory notes in question, and his sister. The Defendant described himself as a hair salon business partner and his sister as a hair stylist. It would seem that they were in business together.

8. The judge, as is already apparent from her initial reasons, took a very different view of their evidence. In her susbequently recorded reasons, she said -

"Having seen and heard them giving evidence, I found both the Defendant and his sister totally unreliable witnesses."

9. It was not denied below that three payments totalling $135,000 had earlier been made by the Plaintiff to the Defendant. These were on the 7th October, 17th November and the 1st December 1986. $85,000 were agreed to be personal loans and $50,000 was by way of capital investment in the business run by the Defendant and his sister. The judge accepted that a further $25,000 had been lent on the 15th December, although this had been denied by the Defendant, in order to assist the Defendant in renting business premises.

10. The Plaintiff's connection with the business was short-lived. On the 16th January she decided to withdraw. An agreement was then come to with the Defendant that he would re-purchase her share of $50,000.

11. By the 10th March some $24,900 had been repaid towards the money owing. Just before that date unpleasantness arose between the parties which led, I think, first to a visit to a police station and then to a firm of solictors recommended by the Defendant's sister. It was there that the promissory notes upon which the Plaintiff utimately sued were drawn up and signed. The first related to the personal loans, the second to those connected with the business, althugh there was some adjustment between them, in particular as to a sum of $2,500, which was for reasons which are not too readily apparent.

12. I have also myself found some difficulty in following the figures through the evidence, but that is of no moment because the notes themselves were not disputed. What was disputed, was whether the full amount of those notes had been repaid.

13. In the course of his evidence the Defandant made three allegations. Firstly, he said that of the first promissory note some $600 and of the second some $2,500 represented interest pavable to the Defendant but included as capital in the promissory notes. Secondly, that the repayment of $24,900 that I have already mentioned, was not paid prior to the promissory notes but was in reduction of the sums due upon them. Both allegations were rejected by the judge.

14. The third concerned a repayment of $20,000 which was admitted to have been made; but whereas the Defendant alleged that it was in repayment of the promissory notes, the judge found it to have been unrelated, being instead concerned with a separate loan made to assist against a distraining landlord.

15. The Notice of Appeal originally contained eight grounds, of which two have been abandoned this morning leaving only six to be considered. I do not propose to set the grounds out as they are set out in the Notice that is, at length. It is sufficient to say that several of them depend upon a reference to the Money lenders Ordinance. They raise slightly different points but, as I understand the argument, they are all premised upon a submission that subsequent to the promissory notes the Plaintiff and the Defendant came to a further agreement by which the promissory notes were discharged in consideration of the Defendant's entering into a new agreement with the Plaintiff to repay the balance then outstanding on the promissory notes together with interest. It is then challenged that the interest was extortionate and the judge ought at least to have reopened the matter and considered whether this new agreement should be set aside.

16. This is a suggestion which, as is apparent from my earlier outline, was not mentioned in the written Defence, was not raised at all by the Defendant in his conduct of the case below, and to a certain extent is inconsistent with his evidence. For myself I am unable to read the occurence of anything of that kind, or even the hint of such an occurence in the evidence that was given below, and with the greatest respect to counsel it seems to me no more than an ultra intellectual interpretation imposed by him ex post facto. For my part I would in no way allow it be introduced at this stage of the proceedings. The grounds of appeal that depend upon it will then naturally fail.

17. As a second best approach on the Money Lenders Ordinance, Mr. Chan has suggested that there was insufficient evidence before the judge, and likewise before us, upon which the discretion to reopen the subsequent and admitted agreement as to interest could properly be exercised, and that therefore a retrial should be ordered.

18. The evidence as to interest generally I find to some extent confusing, although it is clear that the Plaintiff did accept that she was charging or agreeing to charge 5% per month. Otherwise if anything, and if so how much, was ever actually paid, is a matter upon which I would prefer to express no opinion. It may be that if there were a full investigation-and I would put it no higher than may be',-it might he found that that transaction did warrant reopening. Although the judge dealt with it to some extent when the application for leave to appeal was made, it was, as she rightly first thought, an avenue not open to her upon pleadings which related only to the promissory notes. I see no reason for it to be introduced now as a form of counterclaim. If the Defendant is confident that he will succeed in this respect, he may bring his own action⁽¹⁾.

19. The remaining grounds of appeal, Nos. 3 and 4, are challenges to the factual findings of the judge. It is very seldom that challenges of this kind succeed on appeal, particularly when, as in the present instance, the findings depend to a great extent upon the judge's personal assessment of the witnesses. It is sufficient to say that for my part I find nothing said by Mr. Chan or included in his Notice of Appeal which inclines me to interfere with her decisions.

20. The final ground of appeal, which alleged the failure by the judge to give such assistance as she should have done to a litigant in person, was also premised upon the submission which I outlined earlier. With the failure of that submission this ground of appeal lapses automatically.

21. For these reasons I would dismiss the appeal.

Hunter, J.A.

22. I agree. The case as presented in the court below was a claim under two promissory notes for the payment of the outstanding balance of the capital payable under those notes. On the case presented to the judge below nothing triggered or opened up a court's obligations under Sections 24 and 25 of the Money Lenders Ordinance. I can see for my part no substance int he criticisms which have been directed at the judge for her failure to exercise any pawer under such Ordinance and so I likewise see no substance in the grounds of appeal which on various bases complained of money lending defences not having been notice.

23. I also agree the appeal should fail.

Macdougall, J.A.

24. For the reasons given by my Lords I to would dismiss the appeal.