TREASURE SPOT FINANCE CO LTD v. LI CHIK MING AND ANOTHER

HCA 5387/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 5387 OF 2001

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R U L I N G

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1.  I will give brief reasons for my ruling.  The trial took five days.  At the end of which, counsel on both sides made their final submissions and then the court reserved the judgment.  After that the court invited counsel to come back to deal with three matters.  One of which concerned the interpretation and effect of section 18 of the Money Lenders Ordinance in light of the fact that there did not seem to be any evidence by any of the witnesses about whether the note or memorandum under the three loans or whether a copy of the note or memorandum in relation to each of the three loans had been given to the borrowers at the time of their signing the same.

2.  When the matter resumed for argument yesterday, Mr Ng on behalf of the Plaintiff sought leave to file the supplemental witness statement of Mr Kenneth Woo who was one of the witnesses called to give evidence for the Plaintiff.  Mr Ng was doing that only on the basis of Miss Lee on behalf of the 1^st Defendant actually taking the illegality point under section 18 of the Money Lenders Ordinance.  Miss Lee then confirmed that she was indeed taking the illegality point.

3.  Counsel continued to argue the matter today.  I have noted all the authorities cited by counsel, it appears to me that the position is as follows.

4.  In a situation where a transaction is capable of being performed legally or illegally under section 18(1) of the Money Lenders Ordinance.  Then, it is for the 1^st Defendant to take a point on the pleadings in order for the issue to be raised.  This is notwithstanding the fact that neither party had addressed the court on the question of illegality and it was the court which first raised the matter and invited the parties to make further submissions.

5.  The position is clear under Order 18 rule 8, paragraph 1 of the Rules of the High Court, which reads as follows:

“A party must in any pleading subsequent to a statement of claim pleads specifically any matter, for example, performance, release, any relevant statute of limitation, fraud or anything showing illegality:

(a)        which he alleges make any claim or defence of the opposite party not maintainable; or

(b)       which if not specifically pleaded might take the opposite party by surprise; or

(c)        which raises issues of fact not arising out of the preceding pleading.”

6.  In my judgment, this rule under Order 18 covers the present situation.  If the 1^st Defendant wishes to plead a fact to support his allegation that there has been illegality under section 18 of the Money Lenders Ordinance in this case, the fact that a copy of the note or memorandum was not supplied to him at the time of signing the same, then the burden is on him to raise the matter on the pleadings. 

7.  In my view, there is no requirement under the Money Lenders Ordinance for the money lender to plead and prove that all the requirements under that Ordinance had been satisfied.  I have decided to allow Miss Lee on behalf of the 1^st Defendant to take the point of illegality under section 18 of the Money Lenders Ordinance simply because it is a point of illegality and the lateness is of no great significance in the context.  On the other hand, because the point has been taken so late and on the basis that there has been no pleading, Mr Ng on behalf of the Plaintiff must be allowed an opportunity to adduce evidence to deal with the point.  Therefore I have decided also to allow Mr Ng to put in the supplemental witness statement of Mr Kenneth Woo. 

8.  What follows from this is that presumably Miss Lee would wish to cross-examine Mr Woo on his latest evidence on the point of the supply of the copy of the note or memorandum at the time of signing.  Mr Ng has already made it clear that Mr Kenneth Woo will be available for cross-examination.  After that it will be up to Miss Lee to make an application to adduce further evidence in order to refute the evidence of Mr Kenneth Woo.  I will deal with any such application if and when it arises, but as matters stand at the moment, I would imagine that such an application will be favourably dealt with.

9.  My ruling is Miss Lee is permitted to raise the question of illegality under section 18 of the Money Lenders Ordinance and the supplemental witness statement of Mr Kenneth Woo will be admitted.