HARVESTER STOCK INVESTMENT CO v. KWAN SIU MAY

Action No. 11515/83

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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BETWEEN

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RULING

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1. This is an action between stockbroker and client. The stockbroker is claiming on the account and there is a substantial counterclaim by the client arising out of losses which it is said have been caused by the failure of the stockbroker to follow instructions.

2. It is an action which has been fixed for hearing today and for the succeeding 4 days and was so fixed some considerable time ago.

3. This morning, Mr. Ismail for the defendant has made an application to amend his defence and counterclaim to raise a defence that the plaintiff is not entitled to recover monies said to be due under its margin account with the defendant by reason of the operation of section 23 of the Money Lenders Ordinance and he has submitted his draft amendment which takes the form of an additional paragraph 11(b) to the defence. He points out that the point raised is essentially one of law or mixed law and fact and he says that the defence being available under the Money Lenders Ordinance it is something of which the court would take cognizance whether or not raised on the pleadings.

4. The application has been opposed by Mr. Mok for the plaintiff who says that on perusal of the Ordinance and without full argument, it is nevertheless apparent that there is no merit in the defence raised because the business of the plaintiff is principally that of stock-broking and therefore any loan which may have been made in the defendant's interest is an exempted loan within the schedule to the Money Lenders Ordinance. Then he takes the point, which is obvious, that the application is made very late and if it is to be allowed, he will need time to consider his position both with regard to the law and to any evidence which it may be necessary to call out of an abundance of caution to establish that this loan, if loan it was, comes within one of the exemptions.

5. Well, I have not heard matter fully argued, but I have formed the tentative view that there is unlikely to be much merit in the defence even if I allow it to be raised. Nevertheless, I am far from saying that the point is unarguable and I think I am prepared to go as far as to say that there is a respectable or reasonable argument which may be advanced along the lines of Mr. Ismail's amendment. And it is certainly a matter of some general importance in so far as it is likely to affect all those in Hong Kong engaged in stock-broking. And had it been pleaded originally, I do not think that I would have struck it out. Therefore, the question becomes one of discretion as to whether or not I should allow the application at this stage. I would be slow to refuse the application to amend so as to raise a substantial defence if that amendment can be allowed without prejudicing the other side. In the event, I have to decide to allow the amendment on terms: