NEW FINANCE LTD v. LO SIU KONG

HCA 2761/2015

[2025] HKCFI 566

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2761 OF 2015

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JUDGMENT

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INTRODUCTION

1.  This is a rather extraordinary case, even in a money lending context. The Defendant borrowed HK$1,800,000 from the Plaintiff as a licensed money lender. But on the day when the sum of HK$1,800,000 (“the Loan”) was paid over to the Defendant by way of three cash cheques, the only amount that was deposited into the Defendant’s Bank of China account was a mere HK$345,500.

2.  There is also no dispute that the Defendant was defrauded by a money lending intermediary, New Horizons Wealth Holding Limited (“New Horizons”). Three individuals from New Horizons were involved in this fraud, namely, Anson Chan, Carson Chan and Stephen Wong. They were respectively held out as senior manager, director and assistant of New Horizons. The Defendant had reported the fraud to the Police. However, these culprits have since absconded and nowhere to be found. New Horizons was also closed down and no staff are contactable.

3.  The Plaintiff is the money lender which New Horizons, together with one Sit Tsz Wai Edward (“Mr Sit”), an independent intermediary or an agent of the Plaintiff and one Mr Neo Chung, probably another intermediary, through whom the Loan was arranged.

4.  Another disquieting feature in this case is that the Plaintiff as a money lender approved the Loan with interest payment of about HK$54,000 per month with the principal repayable after 12 months, with full knowledge that the Defendant was only earning about HK$14,031 per month with an existing debt of over HK$500,000 from the information provided by Mr Sit to the Plaintiff.

5.  The Plaintiff’s case is that this is a simple and straightforward case as it is undisputed that the Defendant has signed a loan agreement dated 4 August 2015 (the “Loan Agreement”) and has defaulted in making repayments. Hence, the Plaintiff is entitled to enforce the Loan Agreement.

6.  At the start of the trial, this Court was informed that the Plaintiff would waive the interest of the Loan for the period from 14 July 2017 to 19 August 2020. The Plaintiff also accepts that there has been an unjustified delay in prosecution of this action from 18 July 2017 to 5 December 2019.

7.  I note that although the Plaintiff commenced this action on 25 November 2015, not much progress was made until after the re-re-amendments of the Statement of Claim on 25 September 2020. It took about 9 years for this action to be tried.

8.  The Defendant’s case in essence is that the Plaintiff was in collusion with New Horizons in defrauding the Defendant.

9.  I agree with the Plaintiff that the main issues to be resolved in this trial are as follows:

(1)  Whether the Defendant can establish, on a balance of probabilities, that the Plaintiff and New Horizons as intermediaries acted in collusion with the Plaintiff to charge the Defendant costs, charges or expenses or other payments in procuring or obtaining the Loan under the Loan Agreement contrary to Sections 2(1), 27(3) and (4) of the Money Lenders Ordinance, Cap.163 (the “Ordinance”).

(2)  What is the “deemed principal” or “the amount actually lent” to the Defendant by the Plaintiff for the purpose of calculating the effective interest rate (“ERI”) of the Loan?

(3)  Whether the ERI of the Loan was more than 60% p.a. contrary to section 24(1) of the Ordinance thus rendering the Loan Agreement unlawful and unenforceable pursuant to Section 24(2) of the Ordinance?

(4)  Finally, if the answer to Issue (3) above is in the negative, whether the Defendant is entitled to re-open the transaction under Section 25 of the Ordinance, or to set-off the monies so paid against the Loan under Section 27(4) of the Ordinance.

10.  I am of the view that the single most important factual issue in this case is whether the Plaintiff acted in collusion with New Horizons in defrauding the Defendant. If the answer is yes, then on the facts of the present case, the Loan is unlawful. I cannot see how this Court can lend its hands to enforce the Loan Agreement. If the answer is no, then the Plaintiff is entitled to enforce the Loan according to its terms.

THE DEFENDANT’S CASE

11.  The Defendant was born in Hong Kong in 1962. He graduated from the Hong Kong Metropolitan University (formerly known as Open University of Hong Kong). From 1986 to 2008, he worked as a quality controller in a factory, and he worked as a ward assistant for the Hospital Authority since September 2009. His monthly salary was HK$14,031 in June 2015 and HK$19,225 in February 2021.

12.  In 1990, his parents purchased a home ownership flat at Flat G, 14/F., Block 3, Carado Garden, Nos. 20-30 (No. 24) Tin Sam Street, Shatin, New Territories, Hong Kong (the “Property”) in the joint names of the Defendant and his mother.

13.  The Defendant paid off the mortgage in 2001. In 2005, the Defendant’s mother assigned all her rights and interest in the Property to the Defendant. The Defendant presently resides in the Property.

14.  In 2008, the Defendant suffered financial losses in his investment in shares which led him to incur credit card debts of up to HK$300,000 to HK$400,000. In June 2015, his debt amounted to about HK$610,000 and he had to repay about HK$42,000 per month.

15.  On 20 July 2015, the Defendant received a cold call from a Mr Kao claiming to be a staff of Australian and New Zealand Banking Group Limited (“ANZ Bank”) who procured the Defendant to be in contact with New Horizons.

16.  In a telephone conversation between the Defendant and Mr Kao on 22 July 2015, the Defendant was told that ANZ Bank would not grant him a low interest loan but a friend of Mr Kao (who turned out to be Anson Chan of New Horizons) would be able to help him.

17.  On 23 July 2015, one Mr Stephen Wong, an employee of New Horizons, sent the Defendant the name card of Anson Chan by WhatsApp who then called the Defendant minutes afterwards. During this telephone conversation, Anson Chan inquired about the Defendant’s indebtedness and made an appointment to meet the Defendant on 27 July 2015.

18.  On 24 July 2015, the Defendant received Anson Chan’s WhatsApp message, giving him the date, time and the address of New Horizons and documents that the Defendant was required to bring with him.

19.  On 27 July 2015 at around 2 pm, the Defendant attended the office of New Horizons. The Defendant met Anson Chan who gave the Defendant his name card and they had a brief discussion about a proposed loan. The Defendant was then brought to see one Carson Chan afterwards who was introduced by Anson Chan as his boss.

20.  Carson Chan represented to the Defendant that they could assist the Defendant to borrow about HK$1,000,000 from a bank at an interest rate of about 1.11% per annum, repayable at about HK$7,000 per month to clear the Defendant’s then outstanding debts and the remainder sum would be provided to the Defendant for his own use.

21.  However, Carson Chan told the Defendant that in order to enable the bank to approve such a loan, the Defendant had to first obtain a loan of HK$1,500,000 (subsequently revised to HK$1,800,000) from a finance company associated or connected with the lending bank. The Defendant signed an authorization agreement with New Horizons agreeing to pay HK$35,000 as consultant/agent fee. After the meeting, the Defendant was asked to wait for news from New Horizons.

22.  On 28 July 2015, Carson Chan called the Defendant, asking him to send documents related to the Defendant’s application to the Government for a loan of HK$32,560 to renovate the Property in 2011. The Defendant sent the loan documents to Carson Chan as requested on the same date.

23.  On 30 July 2015, Carson Chan called the Defendant, asking to inspect the Property to verify whether the Property was owned by the Defendant and whether he resided there. Carson Chan also requested the Defendant to attend the office of New Horizons the following day with the title deeds of the Property and the business registration certificate of Kam Kong Trading Co. Ltd (“Kam Kong”), a company set up by the Defendant but never commenced business. To the former request, the Defendant declined but sent photographs of the Property to Carson Chan via WhatsApp that evening; and to the latter, the Defendant sent photographs of the business registration of Kam Kong to Carson Chan via WhatsApp that evening.

24.  On the following day, 31 July 2015, at the request of Carson Chan, the Defendant met Carson Chan at the office of New Horizons. He did bring along with him the title deeds of the Property, but he refused to pass the same to Carson Chan.

25.  On 3 August 2015 at around 1 pm, the Defendant met Carson Chan at New Horizon’s office and was told that there was only one finance company agreeable to lend money to the Defendant, but the loan had to be HK$1,800,000. The Defendant was persuaded to accept the reason that an additional HK$300,000 did not make any difference as the arrangements would be the same. Believing that Carson Chan would eventually apply for a low interest loan within two months to clear his credit card debts, the Defendant agreed.

26.  After the meeting, at around 3 pm, the Defendant left the office of New Horizons with Carson Chan and went to the office of the Plaintiff. They took a taxi and arrived at Workingberg Commercial Building in Marble Road, North Point where Carson Chan met two males which the Defendant had no knowledge of. One of them introduced himself as a staff of the Plaintiff, and the other as a staff of a law firm. After this, Carson Chan waited at the entrance of the building and the two males took the Defendant to the Plaintiff’s office upstairs.

27.  According to Ms Hon Chau Ying (“Ms Hon”), one of the Plaintiff’s witnesses who worked for the Plaintiff at the material time and handled the signing of the loan documents with the Defendant, the Defendant was introduced by Mr Sit, an agent or independent intermediary of the Plaintiff. The Chinese term used is “中介人”.

28.  According to Ms Hon, Mr Sit had been working as an agent or independent intermediary “中介人” for many years. According to her boss, Mr Tsui Fuk Loi, Mr Sit would be paid one month’s interest of the loan as his fee or commission after the borrower had paid 6 months’ interest to the Plaintiff, but there was no written agreement between Mr Sit and the Plaintiff to that effect.

29.  Significantly, on 2 August 2015, Mr Sit sent Ms Hon an email, forwarding no less than nine documents relating to the loan. Most of them were supplied by the Defendant to New Horizons. Such documents include a table containing the Defendant’s personal particulars, land search record of the Property, copy of the Defendant’s ID card, the Defendant's salary tax return, the Defendant's profit tax return, the Defendant's TransUnion report, the Defendant's salary tax computation, the demand for Government Rents/Rates for the Property and the Defendant’s Hang Seng Bank passport.

30.  I am of the view that this shows that, prima facie, Mr Sit was in contact with the fraudsters in New Horizons and acted in concert with them, whether together with one Mr Neo Chung or not.

31.  According to Mr Sit’s evidence, he received a referral for a loan of HK$1,800,000 from Mr Neo Chung on 1 August 2015, who emailed the Defendant’s information for the loan application to him, and he forwarded the same to Ms Hon.

32.  It is obvious that Mr Neo Chung was related to the fraudsters of New Horizons otherwise he could not possibly have passed on the Defendant’s documents to Mr Sit. Mr Sit’s evidence is that Mr Neo Chung was just another “中介人”.

33.  According to the Defendant, the first time he met the two males was after he and Carson Chan had got off the taxi to go to the Plaintiff’s office. They were perfect strangers to him. One of them introduced himself as a staff of the finance company and the other as a staff of a law firm. It is obvious that Mr Sit was one of the two strangers. He was there to meet Carson Chan of New Horizons and to bring the Defendant to the Plaintiff’s office. The other stranger might be Mr Neo Chung or a staff of a law firm. The Defendant could not recollect. The key fact is that the Defendant did not have any encounter with Mr Neo Chung before.

34.  I do not accept Mr Sit’s evidence that he had no idea who Carson Chan was, and he was only dealing with Mr Neo Chung. It defies common sense that Mr Sit would not make an inquiry as to the identity of Carson Chan. It was him who brought the Defendant to meet Mr Sit. If they did not require any introduction, it would only mean that they had known each other previously and they knew what they were doing at the material time.

35.  When they arrived at the Plaintiff’s office, Mr Sit and the other male pushed open the door. The three of them met Ms Hon of the Plaintiff and the Defendant was taken by Ms Hon to sign the loan documents.

36.  It is the Defendant’s case that he was tricked by Carson Chan into borrowing the loan, he was accompanied by Mr Sit, a “中介人” of the Plaintiff and another unknown male to the Plaintiff’s office and then to meet one Mr Cheung of Messrs Pauline Wong & Co., Solicitors. All of them took an active part in facilitating the conclusion of the Loan. It is submitted that they all acted as the Plaintiff’s agents in the legal sense, and not merely as intermediaries who acted as a letter box for the Plaintiff by passing information or documents of the Defendant to the Plaintiff.

37.  It is Ms Hon’s evidence that there was no interaction between the Defendant and Mr Sit except when the Defendant indicated to Mr Sit that he did not agree to sign the Early Repayment Agreement (in which the Defendant was required to pay at least 6 months’ interest), Mr Sit responded that it was up to the Defendant and the Plaintiff to agree on the terms of the Loan Agreement. The Defendant’s recollection, however, is that when he raised objections, both Mr Sit and the other unknown male said to the Defendant and Ms Hon that “everything had been discussed, and 2 months OK”. Upon this nothing was further said by Ms Hon.

38.  The meeting with Ms Hon was concluded after the Defendant had stayed in the Plaintiff’s office for about 15 minutes. The three of them then left and were joined by Carson Chan downstairs and the four of them then took a taxi to the office of Messrs Pauline Wong & Co., Solicitors.

39.  On the way, Carson Chan told the Defendant that if he was asked about the proceeds of the Loan to be split into three cheques, all he had to say was yes. Mr Sit was in the taxi at the material time and his evidence is that he thought Carson Chan was just another client of Mr Neo Chung.

40.  After they had got off the taxi and arrived at Langham Place in Mong Kok at about 3:50 p.m., Carson Chan asked the Defendant whether he had brought along the original title deeds of the Property. The Defendant said he had but stressed that he would not hand over the same to the law firm. Upon hearing that, Mr Sit and the other unknown male made a number of phone calls before they told Carson Chan and the Defendant that it would not be necessary to provide the title deeds to the law firm.

41.  It is the Defendant’s case that the original plot was to try to tie the Loan to the Property by way of a mortgage and it was the Property that they were really targeting. Upon the Defendant’s refusal to hand over the title deeds, they had to get approval to make last minutes changes to the legal documents to be signed. The most likely recipient of this piece of information that the original plot had to be aborted was either Ms Hon or her superior. Hence, it is obvious that Mr Sit was the contractual agent of the Plaintiff and the Plaintiff was actively involved.

42.  When they arrived at the office of Messrs Pauline Wong & Co., Solicitors, again, Carson Chan waited downstairs, Mr Sit and the other unknown male, might be Mr Neo Chung, went into the said law office with the Defendant. According to the Defendant, the three of them were brought into a conference room. After a few minutes, a Mr Cheung of Messrs Pauline Wong & Co., Solicitors came and took the Defendant to a separate room.

43.  However, it is Mr Cheung’s evidence that the Defendant came alone. It is his evidence that “the defendant entered into our law firm alone by himself, when I opened the door, he did produce my card, saying that he was looking for Mr Cheung to sign contract and take cheques…”.

44.  It is the Defendant’s case that he had nothing to do with how the proceeds of the Loan were to be split into three cheques, let alone cash cheques.

45.  It is Ms Hon’s evidence that it was Mr Sit who told her that the Defendant wanted the Loan to be paid in three cheques (and nothing was said whether these were cash or crossed cheques). She passed on the information to Mr Cheung again without mentioning whether the cheques were to be cash or crossed cheques.

46.  Mr Cheung’s evidence is that it was the Defendant who told him that he wanted cash cheques. This will be further discussed below.

47.  The Defendant’s evidence is that he was told by Mr Sit and the other unknown male when they were in the elevator to the office of Messrs Pauline Wong & Co., Solicitors that he should be quick in dealing with the loan documents and should not ask any questions as they were in a hurry to attend the bank to cash out the cheques, indicating that they well knew that cash cheques would be issued.

48.  Mr Cheung of Messrs Pauline Wong & Co., Solicitors claimed to have explained the documents to be signed to the Defendant in detail. This was contradicted by the Defendant who said he was only briefly told the basic terms of the Loan Agreement.

49.  After the loan documents were signed, the Defendant was given three cash cheques in the respective sums of HK$600,000, HK$1,040,000 and HK$160,000. The Defendant then left the room and was led by Mr Cheung to the conference room to meet up with Mr Sit and the other unknown male. The Defendant then left the office of Messrs Pauline Wong & Co., Solicitors with Mr Sit and the other unknown male. The whole visit to the law firm last for about 15 minutes.

50.  After leaving the office of Messrs Pauline Wong & Co., Solicitors, the three of them were then joined by Carson Chan downstairs.

51.  The Defendant was escorted to the Yaumatei branch of Public Bank Limited to cash two of the cheques in the sums of HK$600,000 and HK$160,000 respectively because he was instructed by Carson Chan that it was late and the bank would not have sufficient cash to pay the cheque for HK$1,040,000 and the Defendant had to wait for him to make other arrangements.

52.  Carson Chan also told the Defendant that out of those two cheques, a sum of HK$180,000 would be for the handling fee of the Loan application charged by the finance company, namely the Plaintiff, and HK$19,000 would be legal fee (which Carson Chan subsequently informed the Defendant that he had to pay a further sum of HK$9,500 being half of the said legal fee of HK$19,000 despite he had already handed over a sum of HK$199,000 inclusive of the HK$19,000 legal fee to the male alleging to be a staff of the finance company, namely, the Plaintiff, on 4 August 2015 (either Mr Sit or the other unknown male). It was only at that time that the Defendant knew that he had to pay for the handling fee and legal fee.

53.  The Defendant was instructed to enter the Yaumatei branch of Public Bank Limited alone to cash the two cheques and asked the bank teller to put HK$200,000 and HK$560,000 into two separate bags.

54.  When Carson Chan asked the Defendant to hand over to Mr Sit and the other unknown male the sum of HK$199,000 for payment of HK$180,000 as handling fee for the loan application and HK$19,000 as legal fee, the Defendant handed over the bag containing HK$200,000 to the male who represented to be a staff of the Plaintiff, namely, Mr Sit who counted the money and returned HK$1,000 to the Defendant.

55.  Thereafter, the Defendant returned to the office of New Horizons with Carson Chan and handed the sum of HK$560,000 to him as instructed. As such, a total sum of HK$759,000 was handed over the fraudsters on the same day of the completion of the Loan and soon after the said sum was cashed.

56.  On 6 August 2015, the Defendant was told by Carson Chan that Anson Chan would accompany him to the bank to cash the HK$1,040,000 cash cheque and thereafter finalize the transaction back at the office of New Horizons. Accordingly, the Defendant went to the bank but failed to find Anson Chan there. He went into the bank to cash the cheque himself. When he was in the bank, Anson Chan called him and said that he would wait for the Defendant outside the bank. After the Defendant had cashed the cheque, he and Anson Chan returned to the office of New Horizons but Carson Chan was not there.

57.  On 11 October 2015, the Defendant believes that he was cheated and attended Tin Sum Police Station to lodge a formal complaint under reference no. TSRN 15021932.

58.  Out of the HK$1,040,000 cashed from the bank, Anson Chan asked the Defendant to hand over HK$694,500 to him, leaving the sum of HK$345,500 for the Defendant’s own use. The Defendant further paid back the HK$1,000 which was returned to him when he handed HK$200,000 to Mr Sit and the other unknown male on 4 August 2015. On the same day, the Defendant deposited HK$345,500 into his own Bank of China account.

59.  The sum of HK$345,000 was calculated on the following basis: HK$300,000 for the Defendant’s own use, plus HK$90,000 for the Defendant to pay the first two interest instalment payments for the originally planned loan of HK$1,500,000 at the interest rate of 36% per annum; and minus HK$35,000 as consultancy fee to New Horizons; and HK$9,500 as half of the legal fee, and all remaining sum from the loan of HK$1,800,000 had to be held by New Horizons as pledge or security for the subsequent loan application with a bank.

60.  Mr Ho for the Defendant informed this Court that the Defendant did not intend to trouble the Court with breaches of all the pleaded sections of the Ordinance (namely, Sections 18, 21, 22, 24, 25, 27 and 29) but seeks to rely on the following pleaded grounds:

(1)  The principal amount (the amount actually lent as defined under Section 2(1) of the Ordinance) was not HK$1,800,000, but HK$345,500.

(2)  It was unlawful for the Plaintiff and/or its then solicitors, Messrs Pauline Wong & Co., to charge and/or recover and/or receive, the sum of HK$199,000 comprising of HK$180,000 and HK$19,000 as handling fee of the loan application and legal fee respectively, and the same should be set off against the amount actually lent to the Defendant.

(3)  It was unlawful for the Plaintiff to act in collusion with New Horizons, to charge and/or recover and/or receive the sums of HK$560,000 and HK$695,500 on account of any such “costs, charges or expenses” and “remuneration or reward” from the Defendant for the purpose of procuring or obtaining the Loan for the Defendant, and the same was liable to be set off against the amount actually lent to the Defendant.

(4)  The aggregate sum of HK$1,454,000 being costs, charges or expenses illegally received from the Defendant should be regarded as interest, on top of the contractual interest of HK$648,000.

(5)  The effective rate of interest of the Loan Agreement exceeded 60% per annum. In such premises, the Defendant denies that the Plaintiff is entitled to claim against him any principal, interest, costs (whether on fill indemnity basis or at all) and/or other relief. The Defendant also avers that the Loan Agreement is illegal and unenforceable, and the Plaintiff’s claims should be dismissed with costs.

61.  The Defendant will only rely on the other defences raised under Sections 2(1), 24(1) and (2), 25 and 27(3) and (4) governing the unenforceability of the Loan Agreement, if it is necessary to do so.

THE PLAINTIFF’S CASE

62.  The Plaintiff’s case, in a nutshell, is that Mr Sit was an independent referral agent and it has no knowledge of Mr Sit’s conduct. It is not in collusion with Mr Sit and/or New Horizons. The Defendant might well have been defrauded by New Horizon and probably by Mr Sit, but that has nothing to do with the Plaintiff. The Defendant bears the burden of proof to establish that the Plaintiff was in collusion with Mr Sit and/or New Horizons.

63.  It is said that the Plaintiff had had a working relationship with one Hong Kong Finance Consultants Holding Limited from where the Plaintiff struck acquaintance with Mr Sit. In 2014, Mr Sit became an independent debt referral agent and worked in his personal capacity.

64.  On 1 August 2015, Mr Sit received a call from Mr Neo Chung, enquiring whether Mr Sit could hunt for a money lender for a potential borrower. Mr Neo Chung also sent Mr Sit documents in respect of the Defendant and he later relayed the Defendant’s documents to various moneylenders, including the Plaintiff.

65.  On 2 August 2015, the Plaintiff received an email from Mr Sit enclosing the Defendant’s documents.

66.  Mr Sit informed the Plaintiff that the Defendant was in need of funds to pay off his existing debts estimated at over HK$500,000 and that the Defendant was desirous to have some extra money to conduct businesses.

67.  Following an evaluation of the Defendant’s property and his financial capability and means to repay, the Plaintiff, on 3 August 2015, approved a loan of HK$1,800,000 to the Defendant, repayable by 12 monthly instalments at a rate of 36% per annum. It was in the opinion of the Plaintiff that the Loan fell within the financial capability of the Defendant to repay. The Plaintiff thus informed Mr Sit of the approval. Mr Sit then relayed the message to Mr Neo Chung.

68.  It is also said that Mr Neo Chung apprised Mr Sit that the Defendant requested the Loan to be released in three separate cheques, being HK$1,040,000, HK$600,000 and HK$160,000 respectively.

69.  On 4 August 2015, Mr Sit and Mr Neo Chung (whom the Plaintiff never met before and was unacquainted with) accompanied the Defendant to the Plaintiff’s office and was greeted by Ms Hon, an employee of the Plaintiff.

70.  Ms Hon then explained the Loan to the Defendant in detail in respect of the terms of the Loan encompassed in the Chinese Loan Agreement, the Chinese Repayment Schedule, the Chinese Early Settlement Agreement, the Chinese Acknowledgment of Receipt and the Authorization letter. Ms Hon then ensured that the Defendant perused each and every document mentioned above, and that the Defendant comprehended each and every single provision contained therein, and that the Defendant appended his signature thereon following his perusal.

71.  The Defendant was unwilling to execute the Chinese Early Settlement Agreement. However, Ms Hon verbally assured the Defendant that the requirement to pay a total of six-monthly instalments would be waived in the event of an early settlement of the Loan provided the Defendant repaid the Loan in a timely manner. The Defendant then executed the Chinese Early Settlement Agreement.

72.  The Plaintiff’s case is that the Defendant then attended the office of Messrs Pauline Wong & Co., Solicitors, on his own. Again, Mr Cheung then ensured that the Defendant perused and understood each and every provision of the English version of the Loan Agreement.

73.  Mr Cheung, pursuant to the Plaintiff’s instructions, then confirmed with the Defendant that the Loan was to be paid by way of three uncrossed cash cheques in the sums of HK$1,040,000, HK$600,000 and HK$160,000 respectively. The Defendant agreed.

74.  The Defendant paid two monthly instalments to the Plaintiff on 27 August 2015 and 25 September 2015.

75.  Following the Defendant’s failure to make full and/or punctual repayment of the 3^rd instalment, the Plaintiff on 5 November 2015, issued a demand letter to the Defendant.

76.  The Defendant then paid a sum of HK$54,373 on 12 November 2015. No further payments were made thereafter.

77.  At no time had the Plaintiff armed with any knowledge of New Horizons or any personnel associated with the entity. Further, at no time had the Plaintiff, Mr Sit or Messrs Pauline Wong & Co., ever charged the Defendant any fees.

LEGAL PRINCIPLES - COLLUSION

78.  As in the case of conspiracy, one seldom has direct evidence of collusion. What the court needs to be satisfied is that, from the evidence, the parties were acting in concert and playing the same game. The court is entitled to rely on overt acts of the parties involved and established facts to draw inferences to make a finding of collusion.

79.  In HKSAR v Wong Kwok Wai (2013) HKCFAR 191, Tang PJ at §11 said:

“ 11. I agree. On such a charge, the question to ask and answer is whether the persons who are said to have acted in collusion were playing the same game. It should not be made more complicated.” (Emphasis added.)

80.  Bokhary NPJ at §§6-8 said:

“ 6. The conviction was based on two irresistible inferences: firstly, that all the persons and companies who dealt with the borrower were acting in concert and, secondly, that the applicant was colluding with a money lender in the making of the demand for $3,600.

7. It was open to the Magistrate to conclude, as he in effect did, that the demand was part of a dishonest and surreptitious enterprise which was meant to – and did – extract money from the borrower.

8. The points of law said on the applicant’s behalf to arise go to the meaning of collusion. No such point really arises. It is plain in the circumstances that the applicant and the moneylender were acting in concert and surreptitiously in a dishonest enterprise to extract money from a victim. Whatever else may or may not be within the meaning of “collusion” under s.29(10), the applicant and the moneylender’s conduct certainly is fairly and squarely within that meaning.” (Emphasis added.)

81.  In Famous Zone Electronics Ltd v Hongkong and Shanghai Banking Corp Ltd [1998] 3 HKC 723, Sakhrani J. at 727F-G said:

“ It is plain that collusion as used in O 17 does not necessarily connote anything sinister on the part of the applicant. In Mureietta v South American etc Co Ltd (1893) 62 LJQB 396 it was held that collusion in the sense in which it is used in the Order does not necessarily involve anything morally wrong. As Wills J said at 397:

Colluding may be said to be an equivalent for playing the same game.”

82.  In Ever-Long Finance Ltd v Yeung Wah Leung [2017] 1 HKLRD 500, Deputy Judge Simon Ho at §§86-93 said:

“ 86. The word “collusion” under s.27(3) and (4) of MLO would no doubt need to be construed in its own statutory context against the whole of the Ordinance with its objective and intent in mind. One key purpose of MLO is clearly to protect the borrower from having to borrow money from others at excessive or extortionate interest rates. If one lends or offers to lend at an effective rate of interest exceeding 60% per annum (as specified in s.24) would commit an offence, and the loan agreement together with any collateral security would become illegal and unenforceable irrespective of whether the lender is a money lender or not. Section 25 is also enacted to protect a borrower from being subject to an extortionate loan transaction. Under s.25(2)(a), a transaction is extortionate if it requires the debtor or his relative to make payment which are grossly exorbitant. Under s.25(3), a loan transaction with effective rate of interest exceeding 48% per annum is also presumed to be extortionate. Under s.25(1)(b), the court if satisfied there is evidence of the transaction being extortionate, may reopen the transaction to do justice between the parties having regard to all the circumstances.

87. The long title of the Ordinance also expressly provides that:

‘ To provide for the control and regulation of money lenders and money-lending transactions, the appointment of a Registrar of Money Lenders and the licensing of persons carrying on business as money lenders; to provide protection and relief against excessive interest rates and extortionate stipulations in respect of loans; to provide for offences and for matters connected with or incidental to the foregoing; and to repeal the Money-lenders Ordinance 1911’ (Emphasis supplied.)

88. Given the above proper perspective, it is clear to me that the purpose and design of s.27(3) and (4) is chiefly to prevent the aforesaid statutory protection afforded to a borrower from being stripped away or otherwise compromised by not only the money lender but also by any other related persons as mentioned therein in receiving costs, charges, expenses (other than stamp duties or similar charges), remuneration or reward from the borrower in addition to the interest charged by the money lender. Just like interest, these various sums (irrespective of whatever label given) are essentially the borrower’s costs of borrowing from the money lender.

89. In this light, the “persons in collusion with the moneylender” as mentioned under s.27(3) and (4) should be construed in such manner so far as its literal meaning and statutory context permit to enable the aforesaid statutory protection being effectively implemented.

90. Coming back to the guiding test of “playing the same game” as expressed by Tang PJ in Wong Kwok Wai to decide whether the person concerned has acted in collusion with the money lender against the aforesaid statutory backdrop, such person would appear to be one who identifies its interests with the money lender’s rather than the borrower’s. In my view, to qualify as the collusion under s.27(3) and (4), it would be sufficient for such person and the money lender to co-operate with each other to do or abstain from doing some act(s) with a view to facilitate the conclusion of the loan transaction against the borrower’s interest or otherwise to his prejudice. I take this to be the essence of the term “collusion” as appeared in s.27(3) and (4) to meet with the statutory intent and purpose, and in accordance with the test of “playing the same game” as expressed by Tang PJ in Wong Kwok Wai.

91. Mr Lau contends that “collusion” here means “conspiracy”, and the defendant must demonstrate there had been a prior agreement between the moneylender and the financial intermediary (ie Hong Kong Construction in this case) to extract the consultancy fee from him. Mr Lau further submits that no evidence of such agreement can be discerned from Bonnie’s affirmation.

92. With respect, I do not accept such submission because “collusion” in the statutory context of the MLO is in my view a wider concept than “conspiracy”. Proving “Conspiracy” is one of the ways to prove “collusion”, but that should not be the only way. Trickery may take different forms and the collusion under s.27(3) and (4) should not be so narrowly construed as Mr Lau contends, otherwise it would unnecessarily hamper the effectiveness of s.27(3) and (4) in protecting the borrower under the statutory framework of MLO.

93. The conventional usage of “collusion” does not appear to be so confined as Mr Lau contends either. It seems to me that the natural and ordinary meaning of the term “collusion” under s.27(3) and (4) is broad enough to cover “co-operation between parties to deceive or otherwise to do harm to others”.”

83.  In Credit One Finance Ltd v Leong Wun Heng [2023] 3 HKLRD 136, Madam Justice Lisa Wong at §§75-76 said:

“ 75. I am inclined to accept that to show collusion under s.27, the moneylender should have knowledge of the existence of the relevant intermediary. As a matter of common sense and plain language, the word “collusion” (the wording used in s.27) and “cooperation” (the wording used by DDJ Ho in Ever-Long Finance and approved by the Court of Appeal in Gain Wealth and Skyline Credit) would require the moneylender and the intermediary to be aware of the existence of each other. DDJ C To’s statement at [7] in Gain Wealth Global Credit & Investment Ltd v Lam Hau Kay is concerned only with the flexible manners in which collusion may take place.

76. However, as confirmed by the Court of Appeal in Gain Wealth, it is unnecessary to show any conspiracy (between the moneylender and the intermediary) to extract payment from the borrower. There is also no need to show that the moneylender was involved in or even had knowledge of the fraud practised by the intermediary. Mr Lui did not seek to contend otherwise.”

84.  In Gain Wealth Global Credit & Investment Ltd v Chan Suk Fong [2020] 4 HKLRD 831, Kwan VP at §35 and 66 said:

“ 35. In deciding whether the defrauded monies would come within “costs, charges or expenses” or “remuneration or reward” of the plaintiff’s loan, we are inclined to think that the true nature or substance of the payments should be considered, and not with regard to the falsehood under the borrower or intending borrower was labouring under. Section 27(3) makes it unlawful, not just for the money lender to charge or receive the types of payment specified, but extends it to “any person acting… in collusion” with the money lender and s.27(4) provides that any money paid in contravention may be recovered from “such person or from the money lender”. In charging the defendant and receiving the payments from her, it could fairly be said that the object of the persons acting in collusion with the plaintiff was to receive their “remuneration or reward” in obtaining the loan for the defendant, or it could be said that the payments were the “costs” for obtaining the loan. For these provisions to be engaged, it is not necessary to find that the money lender was somehow involved in the fraud pertaining to these payments. Whatever the object of the plaintiff’s collusion might be as regards the defrauded monies is irrelevant…

…

66… Given that an intermediary was involved in the transaction and it must be expected that the intermediary would be remunerated out of the funds made available to the plaintiff, it seems to us a compelling inference can be drawn that the cash cheque was issued to facilitate payment of its proceeds to the intermediary at the earliest opportunity and it was not envisaged that such proceeds would go to the borrower, who was issued a separate cheque marked ‘account payee only’. ” (Emphasis added.)

APPROACH TO EVALUE EVIDENCE

85.  In Fung Sau Mui Janne v Fung Wing Tong, HCMP 798/2016, unreported, 3 October 2018, at §§13-14, I set out the proper approach as to the assessment of witnesses’ credibility. Basically, the court must determine whether a party’s case is inherently plausible or implausible; whether a party’s case is, in a material way, contradicted by other evidence (documentary or otherwise) which is undisputed or indisputable.

86.  I am of the view that inherent probabilities and consistency with contemporaneous documentary evidence are two important acid tests in assessing whether a party’s case is to be believed or not.

87.  Further, in EPI Environmental Technologies Inc & Another v Symphony Plastic Technologies plc & Another [2005] 1 WLR 3456, Peter Smith J at §74 said:

“ I add a few of my own precautions. (i) First, it is essential to evaluate a witness’s performance in the light of the entirety of his evidence. Witnesses can make mistakes, but those mistakes do not necessarily affect other parts of their evidence. (ii) Second, witnesses can regularly lie. However, lies themselves do not mean necessarily that the entirety of that witness’s evidence is rejected. A witness may lie in a stupid attempt to bolster a case, but the actual case nevertheless remains good irrespective of the lie….”

ANALYSIS OF EVIDENCE

88.  I accept that it will be sufficient for the Defendant to establish, on a balance of probabilities, that the Plaintiff was acting for or in collusion with New Horizons to procure the Defendant to enter into the Loan Agreement and extracted from him costs, charges or expenses, or remuneration or reward to his prejudice. In such case, the Plaintiff’s claim ought to be dismissed with costs to the Defendant as the “costs, charges or expenses” and “remuneration or rewards” which amounted to HK$1,454,000 which far exceeded the amount actually lent to the Defendant in the sum of HK$345,500. (See Skyline Credit Limited v Leung Hing Chung [2022] 4 HKLRD 561 at §§57-64 and Ocean Allied Finance Limited v Wong Man Lung and another [2024] HKCFI 1554, at §§91-94, per Lisa Wong J.)

89.  I have carefully considered the testimony of all the witnesses, including Mr Sit, Ms Hon and Mr Cheung for the Plaintiff and the Defendant himself. I am of the firm view that it is plain in the circumstances that the Plaintiff, Mr Sit and New Horizons acted in concert and surreptitiously in a dishonest enterprise to extract money from the Defendant as a vulnerable victim. This is one of the worst money lending cases that this Court has seen.

90.  I am of the view that the whole plot could not have happened without the participation of Mr Cheung of Messrs Pauline Wong & Co., Solicitors. Solicitors should be reminded that they should not lend their assistance to unscrupulous money lenders. For reasons to be set out below, I find Mr Cheung and the other two witnesses of the Plaintiff, Mr Sit and Ms Hon to be unreliable and dishonest witnesses. Some of their testimony simply defies belief.

91.  Take Mr Cheung’s evidence first. He is a staff of Messrs Pauline Wong & Co., Solicitors. Mr Cheung gave evidence that the Defendant went into the office of Messrs Pauline Wong & Co., Solicitors alone without anyone accompanying him. I have no hesitation to conclude that Mr Cheung lied to this Court. Under cross-examination, Mr Cheung’s evidence is that he could remember the Defendant did not go into the office of Messrs Pauline Wong & Co., Solicitors with other individuals because “不關係的人在場，不可以簽”.

92.  He even maintained that even of the Defendant was accompanied by his own lawyer or friends, his lawyer or friends could not enter the office of Messrs Pauline Wong & Co., Solicitors. When pressed about the absurdity of such a practice, he said that that is a policy of Messrs Pauline Wong & Co., Solicitors. If there is such a policy, this must be peculiar to Messrs Pauline Wong & Co., Solicitors. I find it unbelievable that the Defendant could not be accompanied by anyone to enter the office of Messrs Pauline Wong & Co., Solicitors.

93.  I find the Defendant’s evidence believable on this factual issue. I find that Mr Sit and the other unknown male escorted the Defendant into the office of Messrs Pauline Wong & Co., Solicitors. He was then brought to a separate room to sign the loan documents.

94.  I also find, on a balance of probabilities, that Mr Cheung knew Mr Sit perfectly well. This was not the first transaction that Mr Sit did with the Plaintiff. Mr Cheung knew who they were and why they were there, namely, to make sure that the Defendant did sign the relevant loan documents and obtain the three cash cheques to be cash-in in the same afternoon. Mr Cheung was not unfamiliar with this mode of operation. In fact, it is Mr Sit’s evidence that his role was to make sure that the Defendant complete the transaction. It is inherently improbable that the three of them simply waited outside Mr Cheung’s office.

95.  Secondly, Mr Cheung also co-operated with the Plaintiff to arrange three cash cheques to be issued. I accept Mr Ho’s submission that in order to dilute or defeat the compelling inference that the issuance of cash cheques to borrowers where intermediaries were involved in the transaction is that they were intended to enable the intermediaries to collect their remuneration or reward at the earliest opportunity immediately upon borrowers obtaining cash from the bank with the cash cheques, Mr Cheung gave evidence that he did ask the Defendant whether he wanted to have split cheques as cash or cross cheques and the Defendant said he wanted cash cheques.

96.  I find Mr Cheung’s evidence hardly credible as it is Ms Hon’s evidence that Mr Sit told her that the Defendant demanded the Loan to be split into three cheques in very specific amounts. Though it is not mentioned whether the said cheques should be cash or cross cheques, I find it hard to believe that as split cheques had to be prepared in advance and probably countersigned by the partners of Messrs Pauline Wong & Co., Solicitors, Ms Hon would not have informed the Plaintiff’s solicitors what kind of split cheques should be prepared and had to wait for the Defendant’s instructions on the spot after he arrived the office of Messrs Pauline Wong & Co., Solicitors.

97.  Indeed, under cross-examination, Mr Cheung admitted that he had prepared the cheques before the Defendant arrived the offices of Messrs Pauline Wong & Co., Solicitors. This completely contradicts his evidence that he asked the Defendant whether he liked to have cash or cross cheques after he arrived.

98.  I fully accept the Defendant’s evidence that he did not have a clear understanding as to what a cash cheque is. He was asked by Mr Sit and the other unknown male not to ask any questions as they were in a hurry to attend the bank to cash out the cheques, indicating that they well knew that cash cheques would be issued. In fact, cash cheques must be prepared. The arrangement was so that the Defendant would be escorted to cash in the cheques in the same afternoon. This was the design in the plan. Hence, the Defendant could not be given a choice as to what kind of cheques he liked at the material time. I accept the Defendant’s evidence that he was not being asked by Mr Cheung on whether he liked cash cheques or cross cheques.

99.  I find Mr Cheung deliberately lied on this issue to cover up the scheme to use cash cheques to cash out for the Plaintiff, Mr Sit and New Horizons. This mode of operation was familiar to Mr Cheung and he knowingly participated and lent assistance to it, no doubt on the specific instructions of the Plaintiff.

100.  I find that Messrs Pauline Wong & Co., Solicitors which issued the cash cheques knew that the Plaintiff, Mr Sit and New Horizons were acting in concert, playing the same game. It also participated in the same collusion as an agent of the Plaintiff.

101.  Thirdly, I find that Mr Cheung did not fully and properly explain each and every single provision of the loan documents to the Defendant as alleged. Mr Ho for the Defendant referred to Mr Cheung’s answers to Clauses 7(b) and (c) of the Loan Agreement. I accept that Mr Cheung’s explanation is nowhere close to the actual meaning of the provisions. In any event, the Defendant arrived at about 3:50 pm and the bank closed at about 4:30 pm. I find it hardly credible that Mr Cheung had spent enough time to go through the detailed provisions of the Loan Agreement with the Defendant.

102.  Fourthly, I also find that there is merit in Mr Ho’s submission that it is Mr Sit’s evidence that the referral he received was for a mortgage loan and the reason why he sent the application to the Plaintiff was because the Plaintiff only dealt with loans secured by properties. Otherwise, he would have sent the application to other money lenders. This is inconsistent with Mr Cheung’s evidence that his instructions were that this is only a simple loan application not secured by any properties. This is immediately contradicted by his evidence that he did ask the Defendant to produce the title deeds of the Property. When the Defendant refused, he called Mr Tsui, the boss of the Plaintiff, for further instructions and confirmation. This shows that Mr Tsui was also one of the participants behind the scene.

103.  Fifthly, I also find it incredible that Mr Cheung said he did not see the Defendant’s letter to the Plaintiff for the purpose of giving payment instructions to Messrs Pauline Wong & Co., Solicitors. In other words, he made a payment of HK$1,800,000 to the Defendant under the Loan Agreement without payment instructions.

104.  Sixthly, I find it incredible that despite that the Loan is a not a mortgage loan, Messrs Pauline Wong & Co., Solicitors assisted the Plaintiff to register the Loan Agreement with the Lands Registry knowing that it should not be done. No doubt, Messrs Pauline Wong & Co., Solicitors acted on the instructions of the Plaintiff.

105.  I also find Ms Hon of the Plaintiff very incredible. What struck me to be unreasonable is the Plaintiff, through Ms Hon, said that it had made an assessment of the Defendant's financial position and was convinced that he would be able to make a repayment of HK$54,000 per month with the principal repayable after 12 months, with full knowledge that the Defendant was only earning about HK$14,031 per month with an existing debt of over HK$500,000. This is astonishing given Ms Hon’s insistence that this is not a mortgage loan. There is no basis for such approval. The Defendant could have sold the Property any time he wanted. It is almost a certainty that the Defendant would default on the Loan. I find such approval of the Loan inexplicable unless the Plaintiff had other side deals with New Horizons and Mr Sit.

106.  Secondly, I do not accept Ms Hon’s evidence that she explained each and every provision of the loan documents to the Defendant. In fact, Ms Hon in her oral testimony admitted that she would not explain each provision of the loan documents to the Defendant but would allow the Defendant to read.

107.  I accept the Defendant’s evidence that he was not given enough time to read and digest the loan documents. For example, Clause 4 of the Loan Agreement expressly provides that if the Defendant fails to make repayments on time, the Plaintiff could sell the mortgage assets under the Loan Agreement. It appears that the Loan Agreement was adjusted from some templates prepared for mortgage loans.

108.  I accept the Defendant’s evidence that he was in the office of Messrs Pauline Wong & Co., Solicitors for about 15 minutes. It was deliberately designed in such a way that the Defendant was asked to sign documents within a short period of time and had to rush the bank to bank in the cash cheques.

109.  Thirdly, I am convinced that Ms Hon knew that the sum of HK$1,800,000 were to be split into three cash cheques. I did not believe Mr Sit only told Ms Hon to split cheques into three specific sums but not in cash cheques. The whole point was to cash in the cheques in that same afternoon.

110.  I fully agree with Madam Justice Lisa Wong’s observation in Ocean Allied Finance Limited v Wong Man Lung and another [2024] HKCFI 1554 at §85 that:

“ Any bona fide moneylender would, in the circumstances, be alerted to the risk of involvements of rogue intermediaries behind the scene.”

111.  I find that the Plaintiff not only was alerted to the risk but also facilitated and participated in the scheme to defraud the Defendant. There is not and cannot be any evidence as to what benefits the Plaintiff received from its participation in the scheme of fraud (other than the handling fee received by Mr Sit), but it defies belief that it participated in it without any benefit.

112.  Fourthly, Ms Hon arranged or gave instructions to Messrs Pauline Wong & Co., Solicitors to register the Loan Agreement. This is obviously improper. When she was questioned on this, she resorted to a company policy (rather like Mr Cheung). She said that she knew that as the Loan Agreement does not affect the Property, it should not be registered but then it was her company’s policy to do so. When pressed as to why the Plaintiff would adopt a policy to unfairly affect others’ property rights, she said she did not know. Mr Tsui, the boss of the Plaintiff did not come forward to give any evidence. I do not find Ms Hon’s evidence on this factual issue credible.

113.  Fifthly, I also accept Mr Ho’s other submissions in relation to Ms Hon’s credibility including her evidence in relation to the reason why Clause 1 of the Early Settlement Agreement was not deleted.

114.  Overall, I do not find Ms Hon to be credible.

115.  Similarly, I do not find Mr Sit to be credible. Mr Sit’s evidence is extraordinary. First, on his case, he would only be entitled to commission when the Defendant paid at least six instalments of interest under the Loan Agreement. That was his oral agreement with the Plaintiff. However, when the Defendant raised objection to the early repayment clause, Mr Sit’s evidence was that it was fine with him. Mr Sit knew that the Defendant was earning HK$14,000 odd per month at the material time and had outstanding credit card debt in the sum of about HK$500,000. On his evidence, he had no concerns about whether he would or would not be entitled to any commission under this referral. This simply defies common sense. I accept the Defendant's evidence that Mr Sit actually agreed to a term that once the Defendant had paid two months’ interest payment, he could pay off the principal without any penalty. This arrangement makes sure that Mr Sit would not get any commission from this transaction. On Mr Sit’s case, he was assisting in this transaction for free. I do not accept Mr Sit’s case at all. He was there for a financial reward, and he obtained the same from the loan of HK$1,800,000 in cooperation with the Plaintiff and New Horizons.

116.  Secondly, he was the one who escorted the Defendant to the office of the Plaintiff, to the office of Messrs Pauline Wong & Co., Solicitors and to the bank to make sure that cheques were split and cash in on the same afternoon. I do not for one moment accept his evidence that he did all this out of a sense of responsibility to make sure that the Defendant got paid. There is absolutely no need for him to escort the Defendant to the bank to cash in the cheques unless he was personally interested in the sums.

117.  Thirdly, I also accept the Defendant’s evidence that Mr Sit represented himself as a staff of the Plaintiff. I have no doubt that Mr Sit was an agent or intermediary used by the Plaintiff to solicit business including the use of split cash cheques with other intermediaries. It really does not matter that Mr Sit was not under the payroll of the Plaintiff and was an intermediary. On the facts, rather like an estate agent, Mr Sit performed the role as loan agent for the Plaintiff. Mr Sit accepted that he was a “中介人” of the Plaintiff.

118.  Fourthly, I do not believe that in 2015, Mr Sit was not aware of any misconduct or fraudulent schemes practiced by intermediaries.

119.  Fifthly, Mr Sit blatantly lied when he said that he did not cross-reference to others’ witness statements when he prepared his own. This was immediately contradicted by what he stated in paragraph 2 of his own witness statement. He was simply not inclined to tell the truth.

120.  Sixthly, under cross-examination, he said that he was not interested in the purpose of the Loan and did not make any inquiries on that. This is again contradicted by paragraphs 12 and 18 of his own witness statement.

121.  Seventhly, I also note that the email Mr Sit received from Mr Neo Chung shows an email address that indicates the email was forwarded from one “Big Chan” with the email address nhw0017@gmail.com. This appears to be an email address of New Horizons. Prima facie, this shows that Mr Sit knew about the existence of New Horizons, and in particular, Carson Chan.

122.  Eighthly, I do not find it believable that the Defendant said that he needed the Loan for business purposes. He never operated any business and was an employee at the material time.

123.  Ninthly, I am of the view that Mr Sit was in contact with the fraudsters in New Horizons and acted in concert with them. Mr Sit identified this unknown male as Mr Neo Chung, but the key fact is the Defendant did not have any encounter with Mr Neo Chung before. I do not accept Mr Sit’s evidence that he had no idea who Carson Chan was, and he was only dealing with Mr Neo Chung. It defies common sense that Mr Sit would not make an inquiry as to the identity of Carson Chan when it was him who brought the Defendant to meet Mr Sit. If they did not require any introduction, it would only mean that they had known each other previously and they knew what they were doing at the material time. They also went to the bank together in the same afternoon.

124.  It is submitted that according to Mr Sit’s evidence, his experience is that a stranger like this could be another client of Mr Neo Chung. This is totally incredible. It makes no sense for this another client to accompany the Defendant and him to go to the bank to cash in the cheques. Mr Sit just made this up. He could not have mistaken him as another customer of Mr Neo Chung.

125.  On the contrary, I find the Defendant to be an honest and credible witness. His evidence was coherent and sensible. It is true that he initially suspected that the fraudsters came from New Horizons and he was afraid to implicate the Plaintiff as he was afraid that the Plaintiff as a moneylender might take legal action against him. He was unrepresented at the time. He understandably thought that as he signed the Loan Agreement, he had to perform it. However, I accept his evidence that he thought that the Plaintiff, the Plaintiff’s agent, Mr Sit and New Horizons belonged to the same group.

126.  Further, the Defendant’s subjective belief is neither here nor there. The key question is whether the Plaintiff, Mr Sit and New Horizons played the same game to cheat the Defendant. I am of the view that the answer is yes on the facts of the present case. The fact that the Defendant innocently thought at some point in time that the Plaintiff was not involved is irrelevant.

127.  Additionally, it does not matter whether New Horizons had to obtain the Loan Agreement from the Defendant or that the Defendant could not recall the layout of the Plaintiff’s office and Messrs Pauline Wong & Co’s office or some other matters. I am of the view that these are neutral factors. It is perfectly legitimate for the Defendant not to recall events that happened about 10 years ago. I bear in mind that the Plaintiff contributed to the substantial delay in the progress of this case.

128.  It might well be for convenience that New Horizons tried to get a copy of the Loan Agreement from the Defendant. I do not agree that it can then be inferred that as New Horizons did not obtain the same from the Plaintiff, therefore they were not acting in collusion.

129.  Overall, on the evidence presented to this Court, I am of the view that the Plaintiff, through Mr Sit, Ms Hon and Mr Cheung, directly participated in the fraud with New Horizons to deceive the Defendant. They were members and partners acting in collusion for the purposes of Section 27(3) and (4) of the Ordinance. This unscrupulous practice is a new way of getting around the Ordinance by interposing intermediaries. It should be put to a stop as soon as possible.

130.  I accept the Defendant’s case and accordingly make the factual findings as requested by the Defendant as set out in paragraph 60 above.

DISPOSITION

131.  For all the reasons stated above, I am of the view that the Plaintiff’s claims should be dismissed. This is a case where the Defendant only obtained HK$345,000 as money actually lent. The “costs, charges or expenses” and “remuneration or reward” far exceeded the “amount actually lent.” I refer to Mr Ho’s calculations in his Closing Submissions. However, on any calculation, this far exceeds 60%. The ERI is a staggering 608.54%.

132.  In any event, as set out in Skyline Credit (CA), as long as the borrower can establish collusion, he or she will be entitled to the protection of the set-off relief under Section 27(4) of the Ordinance whether the defrauded monies can be linked to the moneylender or not. I find that the Defendant has, on a balance of probabilities, established, collusion amongst the Plaintiff, Mr Sit and New Horizons. The sum of HK$1,454,000 should be deducted from the contractual principal.

133.  Finally, I also dismiss the Plaintiff’s alternative claim for money had and received and unjust enrichment. As this Court said in Skyline Credit while it might be said that the borrower would be getting a windfall, the stark consequences of breaching Section 24 of the Ordinance is clearly a policy choice made specifically to deter any lending at such extortionate rate.

134.  Accordingly, I make the following orders:

(1)  The Plaintiff’s claims be dismissed;

(2)  The Plaintiff shall forthwith vacate, discharge and remove the registration of the Loan Agreement at the Land Registry at its own costs; and

(3)  I further make a costs order nisi that the Plaintiff shall bear the costs of this action, such costs to be taxed on a party to party basis if not agreed, while the Defendant’s costs shall be taxed in accordance with the Legal Aid Regulations (Cap.91A). This costs order nisi should be made absolute unless the parties take out a summons to vary the same within the next 14 days.

135.  Finally, I thank counsel for their able assistance to this Court.