HCMP002721/1989
IN THE SUPREME COURT OF HONG KONG
HIGH COURT
MISCELLANEOUS PROCEEDINGS NO. 2721 OF 1989
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BETWEEN
LO KWAI YING trading as EVERGLORY MONEY LENDING COMPANY
Applicant
AND
ATTORNEY GENERAL
Respondent
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Coram: Full Bench (Hon. Mayo and Nazareth, JJ.) in court
Date of Hearing: 4 January 1991
Date of Delivery of Judgment: 18 January 1991
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JUDGMENT
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1. The Appellant is appealing against the Decision of a Licensing Court dated 1st September 1989 refusing to renew her moneylending licence.
2. She had been operating as a moneylender since November 1985.
3. Pursuant to the provisions contained in the Moneylenders Ordinance, Cap. 163, the Commissioner of Police wrote to her on the 16th November 1988 and advised her that he would be opposing the renewal of her licence and he set out some reasons for his opposition. His letter was couched in these terms:
" Notice
(In accordance with Section 9(4) of the Money Lenders Ordinance, Cap. 163)
I refer to your application for renewal of Money Lenders Licence dated 12 September 1988.
Please be informed that on the hearing of the application at the Licensing Court, I will raise objection on the following grounds:
"On 18 October 1988, the licensee of Ever Glory Money Lending Company Madam LO Kwai-ying and her employee Mr. Fok Sai-ho have both been bound over at Central Magistracy at $500 HK each to the keep the peace for six months.
The incident arose out of an assault by LO and Fok on Mr. TANG Kwong-hon on 11 March 1988 because TANG had failed to repay monthly installments on time to money lent by Ever Glory Money Lending Company. Both LO and FOK were eventually charged with "Common Assault". The assault was witnessed by three Police Officers.
When this incident happened, the Police intended to wait until Madam LO was convicted so that there is no dispute about her violent benaviour when making an application for revocation of her money lender licence.
However, when the case came to Court, the witnesses have arrived late so that the prosecution was pressed by the magistrate to 'offer no evidence'. The magistrate then bound over Madam LO and Mr. Fok to keep the peace for six months at $500 HK each.
As Madam LO has shown that she is ready to use force to ensure repayment of debts, and has done so together with her employee Mr. FOK, I consider that she is no longer a fit and proper person to carry on the business of money lending. (Section 11(b) (a) of Cap. 163).
Between July and August 1988, several search warrants were executed on the company by District Anti-Triad Unit of Central Police District. Madam LO Kwai-ying and three employees of the company have been arrested and put on Police bail for enquirles and legal advice until the end of November 1988 for provable charges of 'Lending Money at an Excessive Interest Rate'. One of the arrested employee is Mr. KWONG Kam-biu who is Madam LO's husband. He was convicted of five counts of 'Accepting security for a loan' on 8 May 1984 and was fined $2,000 HK on each count at North Kowloon Magistracy. His involvement in his wife's firm was not previously known to Police.
Among all the 137 loan agreements seized from the company, 69 of them have just been calculated my an accountant in the Commercial Crime Bureau. He calculates that 64 loan agreements were in excess of 60% interest per annum while 5 loan agreements were charged between 48-60% per annum. The investigation of the remaining loan agreements are still going on.
In view of the above, it is against the public interest to renew the money lender's licence to madam LO. (Section 11(5)(g) of Cap. 163)."
I would also inform the Licensing Court that Madam LO has been convicted of 'Bookmaking' on 6 November 1978 and was.fined $60,000 HK at Central Magistracy. The Licensing Court has been informed of this conviction on her renewal application for money lender's licence in May 1985 but has decided to give her a chance."
4. The Appellant's application for the renewal of the licence was heard on the 31st August 1989 by Mr. Banks, the Chairman of the Licensing Court and 2 lay Assessors.
5. On the 28th September, it delivered its decision in this form:
"This is an application for renewal of a Money Lender Licence which is objected to by the Commissioner of Police.
The tests to be applied are firstly whether the Tribunal consider the applicant to be a fit and proper person to hold such a licence and secondly in all the circumstances would the grant of such a licence not be contrary to the public interest.
In considering the evidence particularly of the applicant the tribunal concluded that the applicant was at times evasive and was not at all times truthful in her explanations.
Clearly there have been breaches of the Money Lender's Ordinance by the applicant.
In all the circumstances the tribunal have concluded that the applicant is not a fit and proper person to continue holding a Money Lenders Licence.
The application for renewal is refused."
6. The Court supplemented this Decision by a statement of further reasons dated the 16th October 1989. For the purposes of this appeal, it is helpful to refer to the Court's findings of fact:
"
l.
Although the Applicant must be regarded as innocent of any criminal assault in respect of her customer TANG Kwong-hon the circumstances in which the Applicant made contact with TANG Kwong-hon on 11/3/89 we found to be highly irregular.
2.
Every loan made by the Applicant was well in excess of 48%. In fact up to February 1988 loans made by the Applicant were charged in excess of 60%.
3.
On the Applicant's own admission up to February 1989 she had retained bank savings books and/or deposit account books. We found that up to February 1988 such bank books were held by the Applicant as security for loans."
7. The main ground of this appeal is that the Licensing Court adopted the wrong standard of proof concerning evidence which was before the Court. Specifically, Mr. Kwong for the Appellant referred to a passage in the transcript of the proceedings which recorded the Chairman as stating "The overall standard of proof required for this objection to succeed 1 rule is the civil standard on a balance of probabilities".
8. Mr. Kwong accepted that the court could, by virtue of the provisions contained in S.10 B of the Ordinance, receive in evidence material which may be inadmissable in civil or criminal proceedings but he argued that the section did not impinge upon questions such as the standard of proof which had to be adopted in relation to any evidence which was before the Court.
9. He placed reliance upon various passages he cited to us from the dissenting speeches in Blyth v. Blyth [1966] A.C. 643.
10. He went on to argue that where reference was made in the Ordinance to the Court being satisfied in respect of certain matters this was not the same thing as adopting the civil standard of proof as the Court could not be "satisfied" if a reasonable doubt remained.
11. Mr. Kwong placed particular reliance upon a passage in the speech of Lord Morris at p.659 of the case which reads:
"My Lords, the word "satisfied" is a clear and simple one and one that is well understood. I would hope that interpretation or explanation of the word would be unnecessary. It needs no addition. From it there should be on subtraction. The courts must not strengthen it: nor must they weaken it. Nor would I think it desirable that any kind of gloss should be put upon it. When Parliament has ordained that a court must be satisfied only Parliament can prescribe a lesser requirement. No one, whether he be judge or juror, would in fact be "satisfied" if he was in a state of reasonable doubt. It may be, however, that in some sets of circumstances and in regard to some issues the stage of being satisfied (and so eliminating reasonable doubt) is much more easily reached than in others. The measure of what is a "reasonable" doubt will also vary with the circumstances. But the standard of proof has been laid down by Parliament when it directs that a court must be "satisfied." In Bater v. Bater (in which case all three Lords Justices agreed that where a court had to be satisfied in regard to an allegation of cruelty, it was no misdirection to state that the petitioner must prove her case beyond reasonable doubt) Bucknill L.J. said:
"I do not understand how a court can be satisfied that a charge has been proved (and the statute requires that the court shall be satisfied before pronouncing a decree) if, at the end of the case, it has a reasonable doubt in its mind whether the case has been proved. To be satisfied and at the same time to have a reasonable doubt seems to me to be an impossible state of mind." "
12. Two matters have to be borne in mind in considering this passage. The first is that Lord Morris was dissenting from the majority decision and the second is that the issues ventilated in Blyth v. Blyth were of a specialized character and caution should be exercised in applying the principles referred to in an overall context.
13. The House of Lords considered this topic in some detail in Khawaja v. Secretary of State for the Home Department [1983] 2 WLR 321. Lord Scarman had this to say on p.344:
"The law is less certain as to the standard of proof. The choice is commonly thought to be between proof beyond reasonable doubt, as in criminal cases, and the civil standard of the balance of probabilities: and there is distinguished authority for the view that in habeas corpus proceedings the standard is beyond reasonable doubt, since liberty is at stake. This appears to have been the view of Lord Atkin (Eshugbayi Eleko v. Government of Nigeria [1931] A.C. 662, 670), and certainly was the view of Lord Parker C.J. (Reg. v. Governor of Brixton Prison, Ex parte Ansan [1969] Q. B. 222). But there is a line of authority which casts doubt upon their view. The Court of Appeal has held that the standard of proof of criminal offences in civil proceedings is that of the balance of probabilities: Hornal v. Neuberger Products Ltd. [1957] 1 Q.B. 247. As judicial review whether under the modern statutory procedure or section 3 of the Habeas Corpus Act 1816 is a civil proceeding, it would appear to be right, if Hornal's case was correctly decided, to apply the civil standard of proof. My Lords, I have come to the conclusion that the choice between the two standards is not one of any great moment. It is largely a matter of words. There is no need to import into this branch of the civil law the formula used for the guidance of juries in criminal cases. The civil standard as interpreted and applied by the civil courts will meet the ends of justice.
The issue has been discussed in a number of cases. In Bater v. Bater [1951] P. 35, the trial judge had said that the petitioner, who alleged cruelty by her husband, must prove her case beyond reasonable doubt. This was held by the court of Appeal not to be a misdirection. But Denning L.J. observed that, had the judge said the case required to be proved with the same strictness as a crime in a criminal court, that would have been a misdirection. He put it thus, at pp. 36-37:
"The difference of opinion which has been evoked about the standard of proof in recent cases may well turn out to be more a matter of words than anything else. It is of course true that by our law a higher standard of proof is require in criminal cases than in civil cases. But this is subject to the qualification that there is no absolute standard in either case."
And a little later he added, at p.37:
"So also in civil cases, the case may be proved by a preponderance of probability, but there may be degrees of probability within that standard. The degree depends on the subject-matter. A civil court, when considering a charge of fraud, will naturally require for itself a higher degree of probability than that which it would require when asking if neligence is established. It does not adopt so high a degree as a criminal court, even when it is considering a charge of criminal nature; but still it does require a degree of probability which is commensurate with the occasion."
It is clear that all three members of the court (Bucknill, Somervell and Denning L.JJ.) found difficulty in distinguising between the two standards. If a court has to be satisfied, now can it at the same time entertain a reasonable doubt (Bucknill L.J. at p.36).
In Hornal v. Neuberger Products Ltd. [1957] 1 Q.B. 247, the Court of Appeal had to consider the standard of proof where fraud is alleged in civil proceedings. The court held that the standard was the balance of probabilities. But, since the degree of probability required to tip the balance will vary according to the nature and gravity of the issue, "no real mischief results from an acceptance of the fact that there is some difference of approach in civil actions ...the very elements of gravity become a part of the whole range of circumstances which have to be weighed in the scale when deciding as to the balance of probabilities:" per Morris L.J., at p.266. A notable application of the principle that civil courts apply the balance of probabilities is to be found in the will case in which Ungoed-Thomas J. had to decide whether the wife had feloniously killed her husband: In re Dellow's Will Trusts [1964] 1 W.L.R.451. He held the crime proven upon the balance of probabilities. Hornal's case was approved by this House in the divorce case, Blyth v. Blyth [1966] A.C. 643. Lord Denning picked up what he had said in Bater v. Bater [1951] P.35 and Hornal's case and concluded, at p.669 that:
"so far as the grounds for divorce are concerned, the case, like any civil case, may be proved by a preponderance of probability, but the degree of probability depends on the subject-matter. In proportion as the offence is grave, so ought he proof to be clear." "
14. We have no doubt that this passage contains a correct statement of the law on the various standards of proof which have application and the inter-relationship between them. It should also be noted that the Court of Appeal in Hong Kong have accepted this in Tai Hing Cotton Mill v. Liu Chong Hing Bank and others [1984] H.K.L.R.45 and in Attorney General v. Tsui Kwok Leung unreported being Civil Appeal 7/90.
15. We have accordingly come to the conclusion that the Chairman correctly stated the law in the passage we have earlier cited.
16. That then leaves effectively 2 other grounds of appeal which were argued before us.
17. The first was the complaint that the Court appeared to have failed to give the Appellant credit for the fact that when the various schedules for repayment of loans were prepared she had been acting upon advice which she had received from a firm of Accountants who had prepared the schedules. We do not see any validity in this complaint. There does not appear to be any evidence as to what instructions were given to the Accountants when they prepared the schedules. Indeed it would appear from the latest debit note submitted by the Accountants that their services were confined to the preparation of the calculation of the figures. The primary responsibility for ensuring that excessive rates of interest were not charged lay squarely on the Appellant's shoulders.
18. We would add that where a moneylender invariably charges interest at a rate in excess of 48% but under the legal maximum of 60% it is open to a Licencing Court to conclude that the moneylender is charging excessive rates of interest. This may be a factor which would be weighed in the balance in determining the suitability of the Applicant to have a licence granted to him. We can see no reason to criticize a court for coming to such a conclusion. This also appears to be borne out by the provisions contained in Section 25(3) of the Ordinance.
19. It is not disputed that the interest payable on loans was always in excess of 48% and on several occasions exceeded 60%. The interest on 2 of the amounts outstanding was of the order of 67%.
20. We do not see how the court could be faulted in making a finding of fact that it was the practice of the Appellant to charge excessive rates of interest.
21. The second matter complained of related to the practice of the Appellant of keeping customers' Bank Savings Books and Deposit Account Boons. Two such Books were found by the Police amongst the Appellants belongings. Mr. Kwong submitted that when the Appellants' attention had been drawn to the fact that moneylenders were not permitted to take such books as security she had returned Books which had been lodged with her to her customers. We do not think that the Appellant can be given much credit for this. It is obvious that the books should not have been taken in the first place and it was perfectly open to the Court to believe or disbelieve any explanations tendered to them by the Appellant. It would appear that the court did not form a particularly favourable impression of the Appellant and we have to bear in mind the fact that the members of the Court had the advantage of observing her as a witness. This is an advantage which we did not have.
22. In the final analysis it is evident from S.11 of the Ordinance that the burden of proof of satisfying the Court that a licence should be granted lay upon the Appellant. It is clear from the reasons given by the court that the Appellant failed to discharge this burden.
23. We have coma to the conclusion that none of the grounds of appeal which have been advanced are meritorious and we would accordingly dismiss the appeal. We would also make an order nisi that the respondent must have his costs.
(Simon Mayo)
(G.P. Nazareth)
Judge of the High Court
Judge of the High Court
Representation:
Mr. Jimmy Kwong (William Sin & So) for Applicant
Mr. David Logan (A.G. 's Chambers) for Respondent