LEE WANG INVESTMENT CO LTD v. LEUNG BOON SING

1983, No. 14024

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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JUDGMENT

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1. The Plaintiff, a licensed money lender, claims $208,122.40 and interest thereon under a promissory note for that sum and, or in the alternative, under a cheque for the like amount. The Defendant, a married woman, by her pleadings claims that she signed a blank promissory note and cheque, that the Plaintiff completed these wrongly and without authority, that she was not aware of the true nature and effect of a promissory note, that her signature to the promissory note and cheque were obtained by misrepresentation and duress, that the debt underlying the Plaintiff's claim was incurred not by her but by one Cheung Kah Siong (Mr. Cheung), that the promissory note and the cheque are accordingly void and of no effect, and that the amount claimed is therefore not due.

2. The Defendant was not represented by counsel at the hearing her former solicitors having been permitted to withdraw a week before. They had however filed a detailed and somewhat lengthy defence. Needless to say, the Defendant was afforded every assistance and indulgence by the Court. Besides, notwithstanding that the onus by and large lay upon the Defendant, she having, admitted to signing the promissory note and cheque, the Plaintiff's counsel Mr. Daniel Fung, to whom the Court is indebted, very fairly not only opted to begin by presenting the Plaintiff's entire case but also ventilated the matters which were for the Defendant to establish. As will be seen this case turns almost wholly upon the facts, and the Defendant proved well up to the task of presenting her version.

3. To proceed, then, to the facts, the Defendant is given to the purchase and sale of shares and sometimes to financing this by means of loans. In 1982 she bought and sold shares through Wong Fat Co, a firm of stockbrokers. There she got to know one Hung Kwong Ho (Mr. Hung) an employee of the firm. In May 1982 Mr. Hung joined another company, Lancaster Gate Ltd., a licensed money lender, and the Defendant took her business to that Co. In October, the Plaintiff Company commenced business as a licensed money lender, with Mr. Hung as one of its directors, and the Defendant's account was transferred to it from Lancaster Gate Ltd.

4. After Mr. Hung's departure from Wong Fat Co, the Defendant's purchases of shares were conducted through Onward Securities Company (Onward). Clients of the Plaintiff could obtain loans from it for the purchase of shares and the Plaintiff would put through the orders for purchase to Onward where necessary retaining the scrip as security. In addition clients were required to sign promissory notes, post-dated cheques, receipts and covering letters. The Defendant was well acquainted with all this and between November 1982 and September 1983 had signed quite a number of such documents which were produced by the Plaintiff as Exhibit P9.

5. In 1983, about April or May, the Defendant introduced Mr. Cheung to the Plaintiff as a friend who wanted to buy and sell shares. So far there is no conflict, but from this point the versions of the two parties begins to diverge. The Defendant says Mr. Hung told her he would not accept cheques from strangers and that in consequence her cheques were first used by Mr. Cheung for his share purchases with Mr. Cheung refunding the amounts to her. But she adds that in clay 1983 Mr. Cheung became acquainted with Mr. Hung and the latter then began accepting cheques from the former and dealing directly, although occasionally she would transmit messages for the purchase of shares and take delivery for Mr. Cheung.

6. We come now to the commencement of the transaction that has led to this action. According to the Defendant, on 16th June 1983, as a result of a telephone call from Mr. Cheung, she telephoned Mr. Hung and told him Mr. Cheung wanted to buy 50,000 Cheuug Kong shares. Mr dung told her to bring along a cheque and take delivery of the shares. She went to Mr. Cheung's office, obtained a cheque from him which he signed in blank as he did not know what the purchase price would be, and took it to Mr. Hung at the Plaintiff's office dung handed it over to his secretary to type in the payee's name and the amount. In doing so she made a mistake in the figures. As Mr. Cheung was not present to initial the correction, Mr. Hung asked the Defendant to tell Mr. Cheung to go to the bank on 18th June to initial the cheque. Mr. Hung handed to the Defendant scrip for 31,000 Cheung Kong shares, which she took to Mr. Cheung. The latter asked her why there were only 31,000 shares. She in turn asked Mr. Hung who told her there had been only partial delivery. She passed on the message to Mr. Cheung.

7. On 18th June Mr. Hung contacted her and told her he could not find Mr. Cheung and that Mr. Cheung's cheque had bounced. He asked her to find Mr. Cheung. On 19th June she found him. As a result of what he told her she got another cheque from him on 20th June, again signed in blank, which she took to Mr. Hung. To avoid any repetition of the earlier typing error by his secretary, Mr. Hung filled in the cheque in manuscript himself.

8. On 21st June Mr. Hung again contacted her and told her the second cheque had also bounced, that he could not locate Mr. Cheung and asked her to assist. Between 23rd and 27th June she found Mr. Cheung and as a result of what he told her she informed Mr. Hung that Mr. Cheung expected within a couple of weeks to come into some money following the transfer to him of a flat owned by his father. Also as a result of what Mr. Cheung told her she gave him a cheque in the expectation that he would deposit funds into her account by 4th July to enable the cheque to be met. The cheque, was to be paid to another investment company which was pressing Mr. Cheung.

9. On 4th July, no funds having been deposited, the cheque bounced. The Defendant looked for Mr. Cheung but could not find him. Very early on the morning of 6th July he telephoned her. As a result of what he told her, she came to believe that unless $190,000 could be found the other investment company would proceed against him for issuing dishonoured cheques, and that she might be involved. This made her very frightened and she telephoned Mr. Hung at his home about 6 a.m. to tell him about the matter and ask if he could lend her $190,000. He arranged to meet her at Maxim's Restaurant at 10 a.m. They met there and Mr. Cheung told her he could not lend her $190,000 and that she should ask her husband for that sum. She explained that she dared not because her husband disliked her buying shares and making loans to others.

10. Mr. Hung told her that Onward also wanted to pursue Mr. Cheung's dishonoured cheques. The Defendant asked what she should do. Mr. Hung gave her a bundle of documents and said that if the Defendant signed her name, he would show them to Onward and tell them there would be someone responsible for the dishonoured amount. He said he would merely show the documents to Onward and would not make the Defendant responsible for any amount. In that way Onward could be asked not to make any complaint to the Police. So the Defendant signed the documents. She did not read them clearly, all she knew was that they were blank documents.

11. On the afternoon of the same day Central Police Station telephoned her husband's office asking that the Defendant attend for an enquiry. On 11th July Mr. Hung informed her that Onward had made a complaint to the Police. That evening she, her husband, Mr. Hung and an employee of Onward attended at Central Police Station. Subsequently the Police said the matter should be pursued through civil action.

12. About a week later she asked Mr. Hung to return the signed blank documents. He first said he could not do so pending Police investigations; subsequently, after the police advised civil action, he said he could still not do so unless she returned the money. The Defendant said she did not owe any money as the shares were for Mr. Cheung. Mr. Hung said the Defendant had introduced Mr. Cheung, therefore she had to pay.

13. To turn to the Plaintiff's version of the matter, Mr. Hung denies that he dealt directly with Mr. Cheung. He says Mr. Cheung was only a customer through the Defendant, that he was not the plaintiff's client but rather the Defendant's client, and that he had told the Defendant that she would be solely responsible. Likewise he denies that the promissory note and cheque were signed at Maxim's Restaurant and that they were blank when signed.

14. His detailed version of these matters is as follows. In April or May 1983 the Defendant told him that she had a friend who would like to buy shares from him. He told the Defendant that the Company would not deal with persons unknown to the Company unless on every occasion that shares were bought the Defendant acted as full guarantor. The Defendant agreed. He trusted her, so he helped her out in share purchases. Later she asked whether she could obtain share certificates first and pay later. Mr. Hung discussed with Onward and they agreed. Thereafter she sometimes used her own cheques and sometimes those of Mr. Cheung. In that way he supposed Mr. Cheung could be regarded as a customer and client. But on the specific point of whom he regarded as the customer when the Defendant asked for the purchase of shares and paid with Mr. Cheung's cheques he answered that he would treat the Defendant as the customer and hold her responsible.

15. Under skilful cross-examination by the Defendant, Mr. Hung said he admitted Mr. Cheung was a customer through the Defendant, but maintained that Mr. Cheung was the Defendant's client and not his client. He had told her in the beginning that she would be solely responsible. He had no contact with Mr. Cheung and did not want contact with strangers. Pressed that he had informed Onward that Mr. Cheung was the buyer, Mr. Hung said that on every dealing through the Defendant, unless the Defendant told him the name of the buyer and what name should be inserted as the buyer he would treat the Defendant as the buyer and make the entry in her name. In the past when shares were bought and sold by the Defendant they were all hers and entered in her name unless she instructed Mr. Hung that they should be entered in any particular name. All the way along they were hers because he only trusted her.

16. As regards the specific purchase of the 50,000 Cheung Kong shares Mr. Hung says that on 16th June 1983 the Defendant arranged to buy them at $380,079. As on every occasion she had to pay in full. After purchasing she produced Mr. Cheung's first cheque (Exh. P13 at p.21 of the agreed bundle). She took delivery of scrip for 31,000 shares, the cheque then having not yet been dishonoured. When it was dishonoured, the Defendant was notified. She said she would come on the following day and give the Plaintiff another cheque. She did so; the cheque was again a blank one signed by Mr. Cheung. At the Defendant's request Mr. Hung filled it in. This cheque too was dishonoured, and the Plaintiff asked the Defendant to pay. She promised to do so. Because Onward had drawn money from the Plaintiff, the Plaintiff notified the Defendant that it would dispose of the 19,000 shares in its possession. It did so and realised $152,108.60.

17. On 25th June the Defendant paid $50,000 by cheque, on 27th June $40,000 by cheque and $20,000 in cash. Both cheques were honoured.

18. So the dispute is almost entirely a question of fact. There is virtually no independent evidence to support either side.

19. The Defendant did not call any witnesses but gave evidence herself. She proved an intelligent and able witness with an impressive grasp of the detail of all relevant matters. But in the end she left me in considerable doubt as to whether I should accept her evidence. She seemed entirely capable of having slanted it all to afford herself a defence, and also to have to every question a convenient answer supporting her case.

20. In three respects she resiled from the Defence filed on her behalf. The blank promissory note and cheque she testified were signed by her not in October 1983 as stated in paragraphs 2 and 3 of the Defence, but in July 1983. Under cross-examination she agreed that she did know the true nature and effect of a promissory note (and actually explained such effect) contrary to the statement in paragraph 10 of the Defence to the effect that she did not know. And as to the allegation of duress in paragraph 12 of the Defence, under cross-examination, she agreed that Mr. hung did not threaten her, but that she signed because she was afraid that her husband might get to know if Onward were not persuaded to refrain from action.

21. She also said her solicitors, a large and reputable firm, did not actually check her defence with her, only told her they would prepare a defence for her indicating the nature roughly, did not consult her before it was filed, and finally did not disclose to her the Plaintiff's list of documents. At the beginning of the trial she denied receiving letters from her solicitors although apparently addressed correctly.

22. More to the point she never explained why she took so active a part in the 50,000 share transaction, leaving Mr. Cheung wholly in the background. Asked why she should be running errands for him, she was prepared to say only that she was "considerably free" while he was not and so she helped him. Likewise, her concern and efforts when Mr. Cheung's two cheques bounced, seemed undue if, as she claims, the share purchase was entirely Mr. Cheung's. Mr. Cheung's relationship with the Defendant and his precise role in the transaction accordingly remain a mystery. The Defendant merely says he has now disappeared. Her only exhibit, Exhibit D1, a card recording the payment of $20,000, was she volunteered, inadvertently left with her by Cheung on the occasion he obtained from her the cheque to be met from funds he promised to deposit in her account on 4th July.

23. In her evidence and her skilful and resolute cross-examination of the Plaintiff's witnesses she demonstrated, considerable intelligence and determination, and, as I have said, a thorough grasp of the accounts, the working procedures of the money lending and stock broking firms involved, and of the documents concerned. I therefore find it highly improbable that she would have signed a whole bundle of blank documents including a promissory note she admittedly recognised as such, and a cheque.

24. Mr. Hung struck me as not being quite as sharp as the Defendant. At the end of his evidence he freely admitted to me that he regarded the Defendant as a friend, that he knew her husband and that he had met her in restaurants. He firmly denied the disputed allegations of the Defendant and was not shaken by her. He was corroborated by his secretary Miss Winnie Cheung, who testified that the Defendant signed the disputed documents in her presence on 23 September 1983 in the Plaintiff's offices and that they were complete, she having typed them, before the Defendant signed. Neither from his evidence nor his demeanour did I see any reason not to believe Mr. Hung.

25. In addition, the share purchase notes relating to the 50,000 shares, made out by Onward (Exhibit P15, pages 18-20 of the Plaintiff's bundle) dated 16th June all record the Defendant's name and not Mr. Cheung's. The Defendant did not explain why Mr. Hung should have given her name before the share payment cheques were dishonoured, but implied that as the companies were associated, the purchase notes could have been back dated. It is true that Onward and the Plaintiff do have some connection. From Exhibit D1, the visiting card of one K. P. Hung it would seem that he is the Managing Director of both companies.

26. Finally in denying that he took documents to be signed at Maxim's Restaurant Mr. Hung pointed out that the taking out of company premises of such documents was forbidden by the company as it was contrary to the Money Lender's Ordinance. He also said that the money Lender's Ordinance requires documents to be completed before clients sign. There is support for these views in sections 7(1) (b) and 18 of that Ordinance. I think therefore it is most unlikely that Mr. Hung would have taken a whole bundle of blank documents for signature at a restaurant.

27. Of course, if the Defendant's version is true, Mr. Hung would have an interest in recovering from the Defendant the losses that were unlikely to be recovered from Mr. Cheung, losses, moreover, for which he might be held accountable. Possibly employees of Onward might have co-operated in back dating purchase notes. And Mr. Hung's secretary out of concern for her job and loyalty to her boss and company might well be prepared to perjure herself. But I find such a conspiracy, for that is what it would have to be, so highly improbable that I reject that possibility.

28. It was agreed by both parties that the Plaintiff did not deal with strangers. No evidence was placed before me to show that the Plaintiff did accept Mr. Cheung as a client i.e. that he was in effect afforded loan facilities. There was only the bare statement of the Defendant that Mr. Hung and Mr. Cheung had begun dealing directly; they would have had to have done so extraordinarily quickly as the evidence is that, they were only introduced in April or May, some two to three months before the transaction of 16 July. I therefore find the Plaintiff's version of the disputed events far more credible, and that the balance of probabilities establish the Plaintiff's case and not the Defendant's. Such a Finding disposes of the issues in this action. But to put the matter beyond doubt I should record that the Defendant's defence in essence resolves itself, as submitted by Mr. Fung, into the following 3 points :-

29. So far as the first of these points is concerned, the Defendant's own evidence establishes that she had a pretty accurate idea of what a promissory note is; moreover, she specifically admitted that she knew that what she had signed was a promissory note. But, as I understood her, she seemed to be suggesting that she did not understand the true nature of a promissory note and thought she would only have to repay if she had in fact received money or been liable in the first place. Thus is really the issue of consideration under point (iii) and I shall deal with it there. So far as the plea of non-est factum is concerned it is clear from the dicta of the House of Lords in Saunders v. Anglia building Society (1917) AC 1004 that this has not been made out. I need only set out Viscount Dilhorne's words at p.1022 G-H:

"It will not suffice if the signer thought that in some respect it would have a different legal effect from what it has; nor will it suffice if in some respects it departs for what he thought it would contain. The difference, whether it be in kind or substance, must be such that the document signed is entirely - the word used by Byles J. - or fundamentally different from that which it was thought to be, so that it can be said that it was never the signer's intention to execute the document."

It is hardly necessary to add that having acknowledged that she had signed the promissory note, the onus of establishing her plea of non-est factum lies upon the Defendant and she has certainly not discharged this. In any event it is my finding that she signed a duly completed promissory note in the Plaintiff's office and not a blank one at Maxim's Restaurant.

30. To proceed to the second of the 3 points, the Defendant conceded that Mr. Hung did not threaten her and that in effect she signed because she thought that if she did not, there might be nothing to persuade Onward not to report her to the Police and thus her husband might get to know. As to misrepresentation, I have already rejected the Defendant's account of the signing of the documents. Besides, on this second point too, the onus lies upon the Defendant to establish misrepresentation and duress. Quite apart from my acceptance of the Plaintiff's version as being far the more probable, the Defendant's evidence does not in my view even being to establish a bare probability of misrepresentation.

31. Finally on the last of the 3 points (that there was no consideration for the promissory note and cheque ) my acceptance of the Plaintiff's version of the facts means that the Defendant did incur a debt to pay for the 50,000 Cheung Kong Shares. Under section 27(1) (b) of the Bills of Exchange Ordinance (Cap. 19), this antecedent liability is good consideration. Likewise forebearance is good consideration and in my finding the Defendant signed the promissory note along with the other associated documents to obtain the Plaintiff's forebearance for the duration of the note. Of course, on the Defendant's own version of the matter, which I do not accept, there would have been consideration in the purpose for which the promissory note and other documents were to be used i.e. to persuade Onward not to proceed. Finally and independently of the foregoing, under section 30 (1) read with section 95(1) of the Bills of Exchange Ordinance, since the Defendant's signature appears on the promissory note, she is prima facie deemed to have become a party thereto for valuable consideration. She has not rebutted that presumption.

32. So on the pleadings, I would have no difficulty in finding for the Plaintiff. But in her final address, the Defendant submitted that the promissory note was not made out in accordance with the law, in that there were no words printed on the form as to the rights of the borrower provided by law. She did not elaborate. Mr. Fung for the Plaintiff submitted that, it was not open to the Defendant on her pleadings to make such a submission.

33. Subsequently, in trying to ascertain what the Defendant or her advisers had in mind, it seemed to me that it was section 18 of the Money Lenders Ordinance. Having regard to the crucial effect that section could have on the outcome of the action and that neither party seemed to have addressed its application or effect, I recalled the parties. The Defendant merely confirmed that it was section 18(1) of the Money Lenders Ordinance that she had had in mind. The Plaintiff declined to instruct either its solicitors or counsel to appear, and instead was represented by Mr. Hung. He had nothing to say. Out of respect to the Court, Mr. Fung appeared, to assist the Court if possible. I permitted him to address the Court as amicus curiae. He drew attention to two points. First, that the Plaintiff's claim was founded not only upon the promissory note, but also in the alternative upon the contemporaneous cheque, which cheque might not be caught by section 18(1) of the Money Lenders Ordinance. And second, that paragraph 18/8/9 at page 270 of the Supreme Court Practice 1985 indicated that the Defendant should have specifically pleaded section 18(1), alternatively that the relevant factual background should be fully before the Court before the Court pronounces an agreement to be unenforceable.

34. Section 18 of the Honey Lenders Ordinance provides as follows:

35. As regards section 18(1) (a), I accept the evidence of Miss Winnie Cheung, the Plaintiff's fifth witness who testified that she did hand to the Defendant, immediately after the Defendant signed them, copies of the set of documents which included the promissory note. The documents between them, as far as I can see, suffiently set out the details required by section 18(2).

36. The question therefore is whether section 18(1)(a) was complied with, and if not whether that failure could be raised by the Defendant or acted upon by the Court despite the pleadings. There is no evidence whatsoever on record that the summary, which is prescribed in the Third Schedule to the Money Lenders Regulations, was included in or attached to the promissory note or cheque. On the contrary its absence from all the documents exhibited which on their face seem complete suggests that it was not. The probability must therefore be that it was not included or attached, and I so find.

37. Order 8 rule (1) of the Rules of the Supreme Court provides that -

38. Under its provisions, failure to comply with section 18(1) of the Money Lenders Ordinance is not illegal, but merely results in relevant agreements and securities being unenforceable. Nonetheless such failure would seem to fall squarely within each of paragraphs (a), (b) and (c). Is the Court therefore precluded from having regard to that failure?

39. In Re Robinson's Settlement, Gant v. Hobbs (1912) I Ch. 717, the Court of Appeal had to deal with the plaintiff's failure to plead the effect of section 2(1) (c) of the Money Lenders Act 1900, which rendered the agreement concerned void. Buckley L.J. pointed out that while the then Order XIX rule 15 provided that the defendant must by his pleading do various things, it names no consequence if he does not do those things. He added at pages 727 and 728 :

"It is not confined .... to a case where a statute is the thing to be pleaded; it applies to all cases of grounds of defence or reply which if not raised would be likely to take the opposite party by surprise or raise issues of fact not arising out of the pleadings. Where the Defendant ought to plead things of that sort, the rule does not say that if he does not, the Court shall adjudicate upon the matter as if a ground valid in law did not exist which does exist. If in the course of the proceedings it was proved that the deed sued upon was a forgery and the Defendant does not plead it or did not know it was a forgery, the Court would not give judgment upon the deed on the fooling that it was a valid deed. The effect of the rule is, I think, for reasons of practice and justice and convenience to require the Party to tell his opponent what he is coming to the Court to prove ..... The rule is not one which excludes from the consideration of the Court the relevant subject matter for decision simply on the ground that it is not pleaded. It leaves the Party in mercy and the Court will deal with him as is just."

40. Fletcher Moulton L. J. dealt with the matter in the following way at p.726:

"I would point out that these rules are meant to assist the administration of the judicial functions of the Court, and they are not meant to introduce rigid technicalities which would militate against full justice being done by the Court. They are there to protect litigants, and in cases where there is no wrong done, and nobody is taken by surprise or put at a disadvantage thereby, it is perfectly open to the Court either to grant amendment or to decline to enforce a strict obedience to these rules, more especially in the case of rules to the breach of which no penalty is affixed.

41. Re: Robinson's Settlement was cited with approval by the Court of Appeal in Pirie v. Richardson (1927) 1 K. B. 448. The substance of the foregoing passage from the judgment of Buckley L.J. being in particular cited by Romer J., as he then was and Lord Hanworth M. R. The latter went on to say (at p.453):

"It appears to me that that reading of Order XIX, r.15, which is binding on this Court, indicates that effect ought to be given to a matter which is brought to the attention of the Court even though it has not been so brought by all of the Defendants in their pleadings."

42. It should be noted that in that case there was no question of the Plaintiff being taken by surprise, since the defence from which two Defendants benefitted although they had not pleaded it, had been specifically pleaded by a third Defendant.

43. In cases of illegality, it is clear that regardless of any omission in the pleadings to raise that question, the Courts are entitled to have regard to and to act upon it. Indeed the Courts will not lend themselves to enforcement of frandulent and illegal contracts. Shell v. United Finance Ltd. (1963) 3 All. E R. 50. "I think that illegality, once brought to the attention of the Courts, overrides all questions of pleadings" for Donaldson J. (as he then was) in Belvoir Finance Co. v. Harold G. Cole & Co. (1969) 2 All. E. R. 904.

44. But what of cases like the present, which do not involve illegality, but where agreements are merely unenfoceble? Understandably, the Courts might be reluctant to take as firm a line, and certainly, authority is relatively sparse. But Pirie v. Richardson cited above was not a case of illegality. Now was Phillips v. Copping (1953) 1 K. B. 15 in which at p.21 Scrutton L.J. said "it is the duty of the Court when asked to give a judgment contrary to a statute, to take the point, Although the litigants may not take it." Here the statute clearly provides that "no agreement ..... shall be enforceable " if it is caught by section 18(1) (a), as the promissory note in this case is caught, in my finding. So from the aspect of the Rules of the Supreme Court and the practice and procedure of the courts, it would seem that regard can be had to the failure to comply with section 18(1) (a).

45. But to approach the problem from the effect of the Money Lenders Ordinance, section 18(1) provides in plain terms that no agreement caught by its terms shall be enforceable. It must be doubtful, to say the least, whether the plain meaning of section 18(1) can be displaced by rules of court which are subordinate legislation made section 54 of the Supreme Court Ordinance, or by established practice, if indeed that is the tenor of such practice or rules; express provision or necessary implication of the clearest sort would be required.

46. Presumably it was considerations of this sort that led Lord Meston in the Fifth Edition of his Law Relating To Money Lenders to comment upon the burden of proof in relation to section 6 of the Money Lenders Act 1927, which in material respects is virtually identical to section 18(1) and (2) of the Money Lenders Ordinance, in the following terms:

"As s. 6 renders it necessary that both the borrower and the moneylender should do certain things, it is material to inquire into the question of the burden of proof in regard to such things. It is submitted that there is no presumption that the requirements of s.6 have been fulfilled; in every case it must be proved by the person seeking to enforce the contract (who is usually the moneylender in the first instance) that the requirements of the above section have been fulfilled."

47. And in Parkfield Trust Ltd. v. Dent (1931) 2 K. D. 579, Swift J. took a similar view in holding that under section 6 in conjunction with section 10 of the Money Lenders Act 1927 (the latter being in material respects similar to section 25(3) of the Money Lenders Ordinance) even where the borrower does not appear to the writ or does not further defend the action, the onus is still on the Plaintiff moneylender to satisfy the Court on the requirements of sections 6 and 10.

48. In my finding not only has the Plaintiff failed to establish compliance with section 18(1)(b), but the evidence before me establishes a probability that no copy of the prescribed summary was included or attached to any of the Plaintiff's documents concerned, including the promissory note. It follows therefore that the promissory note is not enforceable.

49. As regards the associated cheque is, upon which paragraph 4 of the Amended Statement of Claim is founded, it is in my view clearly a security given to the moneylender in respect of the agreement or loan evidenced by the promissory note. It is therefore, under section 18(1), equally unenforceable.

50. It remains to be considered whether I should exercise my power under section 18(3) to declare the promissory note or cheque enforceable to any extent. In considering whether it would be inequitable that the note and cheque should be held not to be enforceable in terms of section 18(3), I am to have regard to all the circumstances. I consider that these include the object of the Money Lenders Ordinance, and that of the requirement for attachment or inclusion of the prescribed summary. The latter incidentally alerts borrowers to their right under the Money Lenders Ordinance at any time to repay their loans together with interest up to the date of repayment. Mr. Hung in this respect maintained that loans could not be repaid before the date the promissory notes fall due; indeed he said that the amount of interest for the entire period of the loan was deducted before the loan was paid to the borrower.

51. Furthermore the rate of interest was 54% p.a., which is in excess of the rate of 48% specified in section 25(3) and therefore presumed to be extortionate under section 25. The transaction could on that ground have been reopened under section 25.

52. But the ordinary consequence of such reopening would be to reduce the rate of interest to an equitable level where that was necessary. But as to the Courts' discretion under section 18(3) to enforce agreements and security rendered unenforceable by section 18(1), I have been neither referred to nor been able to discover any authority on the principles in accordance with which it is to be exercised. As I have said, I must have regard to all the circumstances and some of these I have already mentioned.

53. To proceed to others, although on the probabilities I have accepted the Plaintiff's version of material events, there are disquieting features of those events that must be material to the exercise of the power under section 18(3). The transactions involving Mr. Cheung could have been even better organised and documented by the Defendant to show clearly the respective positions and liabilities of the Defendant and Mr. Cheung. If that had been done the Defendant might not have got herself so deeply involved. Furthermore, it seems to me that the Plaintiff indulged in a degree of looseness and imprecision so as to be able to claim against both Mr. Cheung and the Defendant. When Mr. Cheung's second cheque was dishonoured, it was Mr. Cheung that "Mr. Hung first sought, and only turned to the Defendant when he could not be located.

54. I have no reason to doubt that Mr. Hung asked the Defendant to put business his way; Mr. Hung did not deny this. It is probable, as suggested by the Defendant, that this led to her transactions with the Plaintiff involving, Mr. Hung.

55. The Defendant's husband, who was known to Mr. Hung, is a dentist and it is not improbable that the Plaintiff considered that if the Defendant ultimately defaulted in the repayment of loans, he could be persuaded to pay.

56. Mr. Hung could not have been unaware of the pressure under which the Defendant was when she came to sign the promissory note and cheque. I also consider it relevant that the Defendant does not appear to be a particularly wealthy woman. Moreover although intelligent, she did not strike me as a prudent or mature woman. The Plaintiff seems to me to have been to ready to advance large sums for speculation.

57. Finally I consider that in rendering agreements and securities that contravene section 18(1) unenforceable, the Legislature must have intended that to be the ordinary consequence. That object would be undermined by overgenerous exercise of the power under section 18(1).

58. In all the circumstances, while I consider that it would be inequitable that the entire loan should be held to be unenforceable, I think it would be equally inequitable that it should be enforceable in its entirety. Bearing in mind all the foregoing matters I consider that the promissory note should be enforced only as to one half of the principal sum and not at all as to interest prior to judgment. There will accordingly be judgment for the Plaintiff in the sum of $104,061.20, with interest at prevailing rates from judgment till payment. In all the circumstances of this case, in particular the Plaintiff's failure to establish that the promissory note and cheque upon which it sued were enforceable under section 18(1) of the Money Lenders Ordinance, I make an order nisi that the Plaintiff is to have one half of its costs.