MAX SURPLUS FINANCE LTD v. YIP YUK CHOR

DCCJ 3309/2014

[2018] HKDC 388

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 3309 OF 2014

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JUDGMENT

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Introduction

1.  The plaintiff is a licensed money lender.  It brings this action to recover a loan of HK$8,000 (“Loan”) made to the defendant pursuant to a loan agreement dated 10 May 2006 (“Loan Agreement”).  The Loan Agreement provides that the Loan shall be repaid in 5 equal monthly instalments starting from 10 June 2006.  The plaintiff contends that save for 3 partial repayments made on 22 May 2010, 21 June 2010 and 4 August 2010 in the sums of HK$100, HK$100 and HK$200 respectively (“Repayments”), the defendant failed to repay the balance of the Loan which together with interest remains due and outstanding to date.

2.  The defendant admits that he has borrowed money from the plaintiff and has signed certain documents when the money was lent to him in 2006, but does not admit the authenticity of the Loan Agreement and puts the plaintiff to strict proof.

3.  The defendant further contends that the plaintiff’s claim was time-barred.  The plaintiff contends that time for the purpose of limitation has started to run afresh from the date of the last of the Repayments (4 August 2010) by operation of section 23(3) of the Limitation Ordinance (Cap 347) which provides, inter alia, as follows:-

“Where any right of action has accrued to recover any debt ... and the person liable … therefor … makes any payment in respect thereof, the right shall be deemed to have accrued on and not before the date of … the last payment.”

4.  The defendant denies making any of the Repayments.

5.  The agreed issues for my determination are as follows:-

(1) whether the defendant has borrowed the Loan from the plaintiff and has signed the Loan Agreement;

(2) whether the defendant has made the Repayments to the plaintiff; and

(3) whether the plaintiff’s claim was time-barred under the Limitation Ordinance.

Plaintiff’s evidence

6.  The plaintiff calls two witnesses: Mr Dominic Ng (吳競勳) (“Mr Ng”) and Mr Ip Chi Man (葉志文) (“Mr Ip”).

7.  Mr Ng joined the plaintiff as clerk in 2007 and became its manager in 2010.  He said another clerk called范昌明 signed the Loan Agreement on the plaintiff’s behalf as he could recognize his signature.  He did not witness the defendant signing the Loan Agreement.

8.  Mr Ng explained that the contract number MS-012218-02 in the Loan Agreement stands for the following: “MS” is the short form of the plaintiff’s name (Max Surplus); “012218” is the loan number; and “02” is the number of times the defendant has applied for a loan from the plaintiff – here, the second time.

9.  Mr Ng said that when the defendant defaulted in repayment on 10 June 2006, staff of the plaintiff’s debt collection department chase up the defendant and one of them was called Wing.  He said the plaintiff has computer records to show that Wing had called up the defendant.  However, the plaintiff has not disclosed any such computer records.  I therefore ordered the plaintiff to disclose all relevant documents to the defendant and file a confirmatory affirmation that it does not have any other relevant documents in its possession, custody or power.

10.  The plaintiff disclosed the following additional documents:-

(1) a loan agreement dated 23 December 2005 (contract number MS-012218-01) between the plaintiff and the defendant for the amount of HK$6,000 to be repaid in 5 equal monthly instalments starting from 23 January 2006 (“First Loan Agreement”);

(2) a loan application form with the defendant named as applicant for the amount of HK$10,000, setting out personal details of the defendant and his wife (“Loan Application Form”); and

(3) a printout from a computer database system called “Loan Management System” with the description “逾期名單跟進更新”, purporting to show entries of the plaintiff’s dealings with the defendant as regards the Loan and the Repayments (“Printout”).

11.  Mr Ho for the defendant did not object to the additional documents, subject to the plaintiff’s confirmation that they are the only other relevant documents in its possession, custody or power.

12.  Mr Ng explained that the Loan Application Form was not the plaintiff’s own form but one with another loan agency which referred the defendant to the plaintiff for the loan application.  He had no personal dealings with the application. 

13.  Mr Ng said that normally a loan applicant will supply a copy of bank statements, address proof and identity card to the plaintiff, and the plaintiff will only advance the loan upon verifying the information.  However, the plaintiff could not locate any such documents provided by the defendant.  He claimed the plaintiff had moved office.

14.  The First Loan Agreement was made before Mr Ng joined the plaintiff.  He could not identify who signed the agreement on behalf of the plaintiff.  He also did not witness the defendant’s signature.

15.  As to why the plaintiff took so long to take steps to recover the Loan from the defendant, Mr Ng said that at one stage the plaintiff’s administration was “very messy”, and it was after his promotion in 2010 as manager that the plaintiff would review the bad debt records and press for repayment from those who have defaulted in repayment.

16.  Mr Ng said that in 2010, the plaintiff has appointed a debt collecting company called Cheer Evaluation Accountancy Company (志誠資產評估管帳公司) (“Cheer Evaluation”) to recover long outstanding debts (呆壞賬) from borrowers including the Loan from the defendant.  He referred to two invoice payment lists issued by Cheer Evaluation to the plaintiff recording two entries against the defendant’s name and the contract number of the Loan Agreement, on 21 June 2010 for the sum of HK$100, and on 4 August 2010 for the sum of HK$200.  Mr Ng said these represent the defendant’s two repayments successfully procured by Cheer Evaluation, and for which the plaintiff had to pay (and did pay) Cheer Evaluation 30% as commission, as shown in the invoice payment lists and corroborated by bank payment records.  He could not locate any instruction letter sent to Cheer Evaluation.

17.  The Printout shows the following entries for the Repayments all purporting to have been entered into the system by Wing:-

(1) 24 May 2010: “客於22/5/2010入左$100供款”;

(2) 21 June 2010: “客入左$100還款，銀行編號05102”; and

(3) 5 August 2010: “客於8月4日存入$200還款，銀行編號03822”.

18.  There were entries in the plaintiff’s bank passbook showing that ATM deposits were made on 22 May 2010 (HK$100), 21 June 2010 (HK$100) (with bank reference number 05102000) and 4 August 2010 (HK$200) (with bank reference number 33822000), which tallied with the three entries in the Printout. 

19.  Mr Ng said that the plaintiff would give out a small card printed with its bank account number for its clients to deposit money, but the bank account has been cancelled.  The plaintiff could not produce a copy of the small card which Mr Ng said has been lost.

20.  In addition, I note two other entries in the Printout appear to support the plaintiff’s case.

21.  First, the Printout records an entry on 16 March 2010: “偉思退件 … 交大通追全數”. “大通” are the first two characters of the Chinese name “大通信貸管理資產評估公司” (DT Management And Asset Evaluation Company, “DT”).  There is an invoice issued by this company to the plaintiff with an entry naming the defendant as debtor and referring to the contract number of the Loan Agreement, which suggest that on 22 May 2010 a sum of HK$100 was paid to the plaintiff and 30% thereof (HK$30) was charged by DT as commission.  “大通” appeared to be the debt collecting company appointed before Cheer Evaluation to go after the defendant for repayment of the Loan.

22.  Second, the Printout records an entry on 1 June 2010: “大通退全部件，因公司結業 … 轉交志誠追全數”.  “志誠” are the first two characters of the Chinese name of Cheer Evaluation.  This entry suggests that Cheer Evaluation was appointed in place of “大通” (ie DT) (which had ceased business) to recover the Loan from the defendant.

23.  Mr Ng confirmed that the entries in the Printout were not made by him, and he only treated what were recorded in the entries as facts based only upon what appear on the Printout.  He admitted that he would not know whether the entries were true or accurate, and he could only trust his colleagues who had made them.  He said that at the material times the plaintiff had about 20,000 clients.

24.  Mr Ng said that Wing and also “Lidy” and “Christine” who all appeared to have made entries into the computer system as shown in the Printout are no longer working for the plaintiff.

25.  The plaintiff’s other witness is Mr Ip.  He was a freelance debt collecting agent engaged by Cheer Evaluation in about early June 2010 to chase after the defendant for repayment of the Loan.  He became a self-employed debt collecting agent since 2001 and he had worked for a number of different debt collecting companies over the years.  He had to chase after about 20 to 30 debtors each month.  All these debtors would have different background and debt repayment conditions.  He admitted that he did not deliberately remember any individual case.  He claimed that he had a particular recollection of the defendant, given he could not pronounce the middle character of his Chinese name (鋈) which is very unique, and he had also never gone after a debtor working at the offices of the Trade and Industry Department.

26.  In his witness statement, Mr Ip stated as follows:-

“本人多次致電被告人，催促他還款給原告人，被告人聲稱沒有錢還給原告人，本人則要求被告人「好好醜醜」都要入多少錢給原告人，因為本人受委託代原告人追數，要對原告人有交代，否則我不會放棄追討。”

27.  In his oral evidence, Mr Ip elaborated that he telephoned the defendant about 10 odd times over a few months and once every few days.  He said he telephoned the defendant at all three telephone numbers given in the Loan Application Form (mobile, home and office) but he could not recall how many times he called each number.   

28.  Mr Ip added that in addition to making repeated phone calls to the defendant, he also tried to locate the defendant at his home and office addresses but in vain.  During the home visit, he said that he left behind a letter with a telephone number, and the defendant did return call and gave him a contact number.  He could not recall whether the contact number was one of the three in the Loan Application Form. 

29.  Initially Mr Ip said that he had no recollection of what the defendant had said when he returned call.  But under cross-examination, Mr Ip said that the defendant told him that he would make repayment by bank deposit.  When asked what bank account he was referring to, Mr Ip said that it was the bank account number Cheer Evaluation got from the plaintiff and which Cheer Evaluation provided to the defendant.

30.  Mr Ip said that subsequently Cheer Evaluation told him that the defendant had made two repayments of HK$100 and HK$200 to the plaintiff.  He said that the two repayments on 21 June 2010 and 4 August 2010 listed in Cheer Evaluation’s invoice payment lists were repayments by the defendant upon his repeated chasers (我確認這兩筆還款，是經我向上述被告人多次追討後償還的).

31.  As regards the office visit, Mr Ip said that he approached the receptionist to locate the defendant but was told that there were too many staff in the office and could not find him.  He could not recall any other exchanges with the receptionist.

32.  When asked why he did not mention about his purported home and office visits to the defendant in his witness statement, Mr Ip said he did not appreciate that these were important matters.  He also needed time to recall the visits from memory and upon reviewing the documents supplied to him by the plaintiff.

Defendant’s evidence

33.  The defendant is the only witness for the defence.

34.  The defendant was an office assistant working at the Trade and Industry Department until his compulsory retirement in 2006 due to his over-borrowing and absence from duty.

35.  The defendant said that in about 2002, he borrowed money from a number of banks and finance companies due to his over-spending, and he faintly recalled that included the plaintiff (隱約記得包括原告人公司).  He could not recall how much money he had borrowed and what documents he had signed given the lapse of time.  In cross-examination, he said that as of 2006, his outstanding debts should be in the region of HK$200,000 to HK$300,000, from about 5 to 10 money lenders.

36.  In about early 2006, the defendant’s mobile phone number (which he had been using for 10 odd years) was cancelled by the mobile network service provider after he failed to pay his monthly service fee.  He also cancelled his home telephone number to avoid harassment from debt collecting companies.  He started using pre-paid mobile phone card with a new mobile phone number which he did not tell anyone except his supervisor at work and his wife.  He denied ever receiving any telephone calls from Cheer Evaluation, Mr Ip or anyone claiming to represent the plaintiff chasing him for repayment of the Loan.

37.  The defendant said that it was not his handwriting on the Loan Application Form, but he confirmed the information to be accurate save that he had ceased using the mobile and home telephone numbers since 2006 in circumstances set out above.

38.  The defendant said that he was not sure whether it was his signatures on the First Loan Agreement and Loan Agreement.  He also could not recall whether he had received the cheque for the Loan under the Loan Agreement.  He claimed that his memory was blurred.

39.  The defendant denied making any of the Repayments to the plaintiff.  He said it made no sense for him to pay HK$100 and HK$200 to the plaintiff in 2010 when he had failed to make any repayment since 2006.  He said that if he were to make any repayment, he would pay the instalment sum rather than the odd sums of HK$100 or HK$200, which no lender would treat as repayment in any event.

Whether the defendant signed the Loan Agreement

40.  I find that the defendant did sign the Loan Agreement:-

(1) Although the defendant in his oral evidence claimed that he was not sure whether he had signed the Loan Agreement and also said his memory was blurred, his defence did admit that he had borrowed money from the plaintiff and had signed certain documents when the money was lent to him by the plaintiff in 2006.

(2) The defendant did not challenge the authenticity of the Loan Application Form, the First Loan Agreement and the Loan Agreement.  In particular, the information in the Loan Application Form (which the defendant had confirmed as accurate) could not have been set out in the form without the defendant’s input.   

(3) These documents corroborated the plaintiff’s case that the defendant did approach the plaintiff for a loan on two occasions (reflected by the suffixes “01” and “02” to the contract numbers on the First Loan Agreement and the Loan Agreement).  The Loan Agreement also stated that part of the loan amount of HK$8,000 was to be applied to settle the outstanding loan amount under the First Loan Agreement (by reference to its contract number) in the sum of HK$1,350.

(4) The Printout recorded the defendant’s name and had specific reference to the contract number of the Loan Agreement.  It is unlikely for the plaintiff to enter the defendant’s details into its database if the defendant was not a borrower/debtor of the plaintiff.

41.  Mr Ho in his closing submissions argued that the plaintiff has failed to prove that the defendant did receive the loan amounts under the First Loan Agreement and the Loan Agreement. 

42.  The defendant did not advance a positive case that he had never received the two loans from the plaintiff.  He did not suggest any reason why he did not receive the two loans.  His defence admitted that he had borrowed money from the plaintiff in 2006.  He acknowledged in the Loan Agreement to have received a bank cheque for the Loan (less the repayment sum for the first loan under the First Loan Agreement).  I find that the defendant did receive the Loan from the plaintiff.

Whether the defendant made the Repayments

43.  I am not impressed with Mr Ip’s evidence:-

(1) His oral evidence referred to home and office visits to the defendant in addition to telephone calls.  All these were important work done by him to chase after the defendant for repayment of the Loan which he could not have been missed out from his witness statement.

(2) His oral evidence also referred to the defendant telling him over the telephone that he would make repayment by bank deposit.  Such an important promise was not mentioned in his witness statement.

(3) The above strikes me as him making up a story as he went along, and casts doubts over his credibility.

(4) It is also incredible for him to be able to recall details of his dealings with the defendant (let alone elaborate upon such details in oral evidence) having had to deal with so many different creditors and debtors over time.

(5) There was also no basis for him to claim that the two Repayments on 21 June 2010 and 4 August 2010 were repayments from the defendant which were procured by his repeated chasers.  It was not his evidence that the defendant had told him directly that he had made any repayment after their telephone discussion.  There was no basis for him to take credit.   

44.  In the premises, I find Mr Ip to be an unreliable witness and give no weight to both his written statement and oral evidence.

45.  Mr Ng had no personal knowledge of the Repayments.  His evidence therefore does not advance the plaintiff’s case much further.

46.  The plaintiff relies heavily on the documentary evidence, in particular the Printout and the invoices from DT and Cheer Evaluation, all making references to the Repayments by the defendant.  None of the makers of these documents gave evidence at trial, and their contents may also involve multiple hearsay.  In assessing the weight to be given to the documents, I bear in mind in particular the considerations set out under section 49(2) of the Evidence Ordinance (Cap 8).

47.  I accept the Printout as reliable evidence:-

(1) Mr Ng testified that the Printout was printed from the plaintiff’s computer database system directly without any changes.  The entries appear contemporaneous.

(2) It is inherently implausible for the plaintiff to make the entries without being told of the matters set out in the entries.  Specifically, the plaintiff would have been told by someone that the Repayments had been made before inputting the corresponding entries.

(3) The plaintiff’s bank passbook recorded deposits being made into the plaintiff’s account and corroborated the entries for the Repayments in the Printout.

(4) It was put to Mr Ng that the three entries showing the Repayments were unaccounted for payments shown in the plaintiff’s bank passbooks which were allocated to the defendant’s account as his repayments.  There is no evidential or sound basis for such a claim which, in any event, I reject as being wholly incredible.  As Mr Ng testified, which I accept, it simply made no sense for the plaintiff to randomly allocate different deposits as repayments by any particular client or clients.

(5) The entries relating to the Repayments tallied with the entries set out in the invoices issued by DT and Cheer Evaluation to the plaintiff, specifically referring to the defendant as the debtor who made the repayments and the contract number of the Loan Agreement.  I could see no plausible reason for DT and Cheer Evaluation to have made up false entries in their invoices (and directed them against the defendant specifically) just to get their commission from the plaintiff.

48.  The defendant’s claim that his mobile and home telephone numbers in the Loan Application Form had been cancelled in early 2006 is only his bare assertion.  He has produced no documentary evidence to support the purported cancellation.  His application to register a pre-paid mobile phone number with a new mobile network service provider only took place in 2013 and is in any event neither here nor there.

49.  As to the defendant’s claim that it was extraordinary for him to repay the odd sums of HK$100 and HK$200 only, this must be viewed in the context that the defendant admitted that he was in serious financial difficulties since 2006 by reason of his over-spending and had borrowed loans from various banks and finance institutions.  In such circumstances, there is plainly nothing abnormal for the defendant to only come up with meagre sums of money to repay the plaintiff upon being chased by debt collecting companies including DT and Cheer Evaluation.

50.  For the above reasons, I find, on a balance of probabilities, that the defendant did make the Repayments. 

Whether the plaintiff’s claim was time-barred

51.  Mr Ho argued in his closing submissions that the plaintiff would need to prove that the Repayments were made “in respect of” the Loan in order to satisfy section 23(3) of the Limitation Ordinance.

52.  In In re Footman Bower & Co Ltd [1961] 1 Ch 443 at 449, Buckley J held as follows:-

“Since the enactment of the Limitation Act 1939, the position is different, for section 23(4) [which is equivalent to section 23(3) of our Limitation Ordinance] now contains a statutory provision applicable to simple contract debts whereby any payment in respect of a debt will make time start to run afresh in respect of that debt. There is no longer need to establish a new promise to pay. In my judgment, however, one must still look at the act and intention of the debtor to see whether the payment is made in respect of the particular debt. Payment is in this subsection dealt with in close conjunction with acknowledgment. Just as an acknowledgment can only acquire that character by the act of the debtor or his agent, so also, I think, a payment can for the purposes of the subsection only acquire the characteristic of being made ‘in respect of’ the debt by the act of the debtor or his agent.”

53.  Mr Fong for the plaintiff referred me to Halsbury’s Laws of Hong Kong (2^nd ed) Volume 37 at [245.160] as follows:-

“… although the plaintiff must in all cases give some evidence that the payment relied on was made on account of some debt, the circumstances attending the payment, even without any direct evidence, may be such as to render it improbable that the payment could be made for any other purpose.”

54.  I find the above extract apposite.  There is no suggestion by the defendant, nor any evidence, that he had made the Repayments for any purpose other than as partial repayments of the Loan. 

55.  In any event, the circumstances upon which the Repayments were made, as reflected in the Printout, suggested that they were partial repayments for the Loans to fend off chasers from debt collectors.

56.  I find that the plaintiff’s claim was not time-barred.

Disposition

57.  I give judgment in favour of the plaintiff for the Loan in the sum of HK$8,000 against the defendant, with interest calculated from 4 August 2010 until the date of judgment at half of the contractual rate of 33.9% per annum as provided in the Loan Agreement, namely 16.95% per annum, and thereafter at judgment rate from the date of judgment until full payment by the defendant.  I only awarded half the contractual interest rate for the pre-judgment period to reflect the plaintiff’s delay in bringing the present claim against the defendant only in 2014.  It is in my view unfair to the defendant to have to pay interest at the full contractual rate when the plaintiff did not bring the claim diligently against him.

58.  There is no reason why costs should not follow the event.  I make a costs order nisi (to be made absolute in 14 days in the absence of any application by way of summons for variation) that the plaintiff will have the costs of this action (including all costs reserved, if any), to be taxed if not agreed.  I decline to grant a certificate for counsel in light of the size and complexity of the claim, but I wish to record my gratitude to Mr Fong for his assistance.  I also express gratitude to Mr Ho for arguing the case ably and admirably on behalf of the defendant.

59.  Finally, I note that this case was tried in the District Court despite the size of the claim, by reason of section 1(c) of the Schedule to the Small Claims Tribunal Ordinance (Cap 338) which provides that any action by a money lender for the recovery of any money lent falls outside the jurisdiction of the Small Claims Tribunal.  In my view, the time has come for legislative reform.  This case demonstrates that the legal costs involved in the action far exceeds and is wholly disproportionate to the size of the claim.