TSUEN FAT FINANCE CO. LTD. v. VIRAT KANAIYALAL MEHTA AND OTHERS

1994 No. MP 389

IN THE SUPREME COURT OF HONG KONG

APPELLATE JURISDICTION

______________

______________

JUDGMENT

______________

MAYOJ: This is the judgment of the Court. The appellant, who held a licence issued under the Money Lenders Ordinance, Cap. 163, is appealing against the decision of the Licensing Court, which refused their application for the renewal of their said licence.

2. The Licensing Court, which was presided over by a magistrate and two lay assessors, gave detailed reasons for their refusal. At the hearing before them, neither the second nor the third respondents had made any objection to the renewal of the appellant's licence. The opposition had come from the first respondent, whose company had borrowed moneys from the appellant by discounting a cheque drawn by a Jin Tai Ltd.

3. The appellant had obtained judgment in the sum of HK$65,912, together with costs. They had issued a writ of fi. fa. to enforce this judgment. This had not led to the payment of the judgment debt, because when the court bailiffs had attended at the judgment debtor's address the first respondent's daughter had claimed that the goods and chattels situate at the premises attended on had belonged to her.

4. The appellant had then given instructions to a firm of debt collectors called Dixon Credit Management Company to collect the debt.

5. The first respondent gave evidence before the court, and which was accepted, that Dixon had resorted to improper and illegal means of extracting payment of the moneys due from the appellant.

6. The first respondent's solicitors, Poon & Dissanayake, wrote to the appellant's solicitors, Messrs Chiu & Co. in these terms :

"...Action No. A1192 of 1993 :

We write with reference to the captioned action and to the Order made by Master Bokhary requiring our client to pay your client a sum of HK$65,912.00 on or before the 15th of August 1993.

We are instructed that on the 20th of August 1993, 4 men have forcibly entered our client's premises citing that they have been authorised by you to collect a sum of HK$170,000.00 on behalf of Tsun Fat Finance Company Limited. We are further instructed that the men have been unruly and thoroughly disruptive and have demanded immediate payment of the sum of HK$170,000.00, whereas the judgment sum is HK$65,912.00. We are further instructed that Mr. Virath Metha of our client had been threatened with bodily harm. Your personnel had left our client's premises only after the intervention of Police.

As you are aware through out it was Jin Tai Limited which has made the payments on behalf of our client. Your client too has accepted the said payments. In the circumstances in the absence of a payment your client should have informed our client of the same.

We are now instructed by our client to put you on notice that our client reserves its right to take whichever steps that may be necessary to recover any loss and damage caused by your authorised personnel.

We would be much obliged if you and/or your client would not resort to undesirable activities such as this to recover a debt owned (sic), when there are other legal methods available."

7. Mr. Wong of the appellant company admitted in his evidence before the court that he had knowledge of this letter and he had not taken steps either to investigate the complaints being made or to give instructions to Dixons to act in an orderly and lawful manner. The justification he gave for this was that he had discussed the matter with his solicitor, who had advised him that he need not concern himself with the mater as the original instructions to Dixons had required them to act within the law.

8. The other substantial complaint made against the appellant is that they demanded a sum of money greatly in excess of the amount they were legally entitled to. We have earlier referred to the amount of judgment debt of HK$65,912. In the letter of 26th August, the first respondent's solicitors state :

"We write further to our letter of 24th August 1993.

Our client has been visited by the personnel of Dixon Credit Management Company demanding that a sum of HK$173,421.41 which includes your legal fees in the sum of HK$52,285.00 be paid to them on behalf of Tsun Fat Finance Company Limited. However as on previous occasions there has been no letter of authorisation from the said Tsun Fat Finance Company authorising such payment.

As this is becoming a nuisance, we would be much obliged if you would reply the questions raised in our letter of 24th August 1993 without further delay."

9. No satisfactory response was ever forthcoming to this letter. In evidence Mr. Wong said that the appellant had not yet been able to obtain a taxation of the costs which had been ordered by the master and, this being the case, instructions had been given to Dixons to endeavour to recover the full amount of the solicitor's and own client costs which the appellant had been required to pay. These had amounted to $52,285. It is worth mentioning that when the taxation of the costs had been undertaken, the total of taxed costs amounted to less than $10,000.

10. What is clear is that the court had accepted the evidence of the first respondent in its entirety. It has also been critical of Mr. Wong as a witness, and was reluctant to accept as convincing the justification he had attempted to put forward for his conduct.

11. An attempt had been made to request Mr. Lam, the person dealing with the case in Dixons, to attend and give evidence. This had not been successful, as Mr. Lam claimed to have been too busy with other matters to attend. Neither the appellant nor the court had taken matters further. However, it is evident from the materiel before us that Mr. Lam did make a report to the police and he had denied the allegations made by the first respondent. The conclusions reached by the court were as follows :

"We are satisfied that he brought in Dixons because he anticipated that they would use pressure upon Mihir that went beyond anything the bailiffs or the threat of a winding up order or any other normal means the law makes available to a judgment creditor would achieve. We are satisfied that he was not concerned as to the niceties of what Dixons would do when he instructed them and that his failure to do anything about the serious allegations made against them shows that his written instructions to use only lawful means was entirely cosmetic.

In one answer Mr. Wong made it perfectly clear that he was aware that he could not expect to recover the entirety of what he had to pay his solicitors when his costs were taxed. In those circumstances he must have known there was no justification in asking Dixons to recover costs on that basis.

If this had stood on its own it might have been explicable as some kind of mistake. But looked at in the context of everything else that happened we feel certain that it was a deliberate attempt to increase the pressure on Mihir and an attempt to avoid loss in the legal proceedings.

Unless we are satisfied that the applicant company or any person controlling it is fit and proper to carry on a money lending business and that in all the circumstances the renewal of this licence is not contrary to the public interest we can not renew this licence.

We are bound to take into account the good record of this company over eleven years. We also note that Dixons has a respectable clientele. But we consider that the facts which we are satisfied are made in paragraphs 6-1 to 6-4 demonstrate that Mr. Wong, who was put forward as the director managing the applicant company, in his dealings with this matter, fell far below the standard of a fit and proper person to be associated with the business of money lending.

We also consider that it is in the public interest that people who are permitted to be money lenders must be scrupulous about the methods they employ even with loans that may be outside the scope of protection of the Ordinance. Mr. Wong was not scrupulous.

We are satisfied that a number of crucial facts were proved in this case. Even this was not the case, if we were left less than satisfied that those facts could be ruled out, we would still have come to the same conclusion.

In all the circumstances we unanimously refuse this application for renewal of a licence."

The grounds of appeal advanced before us were :

"(1) The Licensing Court erred in visiting the acts and omissions of Dixon Credit Management Company on the Appellant and therefore concluding that the Appellant (and its Directors) were not fit and proper persons within Section 11(5)(b) Money Lenders Ord Cap 163.

(2) The Licensing Court failed to apply the correct standard of proof and burden of proof.

(3) The Licensing Court failed to properly assess and consider the evidence called on behalf of the Appellant.

(4) The Licensing Court erred in law in interpreting 'fit and proper' within Section 11(5)(b) of the Ordinance.

(5) the Licensing Court erred in law and breached natural justice in concluding that Mr. Lam was guilty of the offence of criminal intimidation.

(6) Sub-Sections 10B(a), (d) and (e) Money Lenders Ord Cap 163 are repealed as being inconsistent with the Bill of Rights.

(7) The Licensing Court erred in all the circumstances in failing to renew or regrant the Appellant's licence."

12. During the course of an able submission before us, Mr. McCoy, who was representing the appellant, submitted that as the application was for renewal of a licence, the provisions contained in Sections 10A, 10B and 10C of the Ordinance had no application, as section 13 did not refer to these sections. This lacuna had only recently come to his attention. He applied for leave to amend his grounds of appeal to enable him to argue that the court had no power to informally determine its own procedure or to admit evidence which might otherwise be inadmissible in criminal or civil proceedings.

13. Mr. Mayne for the first respondent resisted this application as he had been taken by surprise.

14. We deferred making a ruling on this pending our being able to determine whether the appeal was likely to succeed, notwithstanding any additional grounds which may be lodged, to enable Mr. McCoy to argue the matters we have referred to.

15. In the event, this was not necessary. While we accept entirely the conclusions reached by the court, we do consider that the magnitude of the punishment imposed by the court is disproportionate to what is deserved.

16. It is necessary for a court to consider this question. Von Doussa J. had this to say in Nepeor Pty Ltd v. Liquor Licensing Commission in 1987 46 SASR 205, at page 221 :

"Although the learned judge expressed the view that he was not satisfied beyond reasonable doubt that the impersonation was deliberate, I think it is clear from the balance of the judgment that his Honour recognised that the civil onus was the appropriate one. On that basis, the deliberate conduct alleged was established and the question as to which party carried the onus of proof ceased to be relevant. In my view, it was correct for the learned judge to conclude, in the circumstances of this case, that such conduct would not disqualify Nepeor on the ground that the director was not a fit and proper person to hold a position of authority in the company. The misapprehension caused by the director's conduct was corrected by the director the same day. His Honour accepted that the incident may have been influenced by annoyance and frustration about the passage of the case, and by the tension which attends all litigation. He accepted the director's expression of contrition and regret. It was, as his Honour said, an isolated incident. The adverse significance of the conduct was far outweighed by other evidence as to the fitness of the director."

17. This is relevant to the instant case. The appellant has been in business for 11 years, and no previous complaint of any nature has been made against it. Mr. Wong is, subject to the observations we have made, a fit and proper person to be associated with the business of money lending. He has expressed regret and contrition for what has occurred. He is a man of hitherto impeccable character and he has performed public services.

18. Whilst we accept this was a deliberate piece of misconduct and not excused in any way, we do consider that the appellant will have suffered sufficient punishment if we now allow this appeal to the extent that we order that the appellant's licence can now be renewed.

19. In conclusion, we would request the Registrar of Money Lenders to give consideration to providing guidance to money lenders on the subject of which debt collectors might be used to assist them in recovering moneys. Also, thought should be given to amendments being effected to section 13 of the Ordinance so that the procedural law relating to applications for renewals of licences should be similar to that relating to original applications.

20. We will hear the parties on costs.

(Counsel make submissions on costs)

MAYOJ : Our decision is that the appellant will bear the costs of the first respondent and the second respondent, and the first respondent's costs will be taxed in accordance with the Legal Aid regulations. That is to cover the Legal Aid question here.