SO KWOK YAN & SO KWOK WAI trading as GLORIA KINDERGARTEN (NORFOLK EXTENSION) v. CHING HONG YUEN & OTHERS

HCSA 25/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

SMALL CLAIMS APPEAL NO. 25 OF 2000

(ON APPEAL FROM SMALL CLAIMS NOS. SCTC015492 & 017120 OF 2000)

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J U D G M E N T

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1. Mr. So Kwok Yan ["So"], one of the Appellants, was the proprietor of Gloria Kindergarten (Norfolk Extension) ["the Kindergarten"] in 1996 to 1997. For the school year 1997 to 1998, his brother Mr. So Kwok Wai, the other Appellant, became a partner in the Kindergarten. So was also the supervisor of the Kindergarten at all material times. The Respondents were parents of the children who studied in the Kindergarten during the school years of 1996 to 1997 and 1997 to 1998. They claimed that the Kindergarten had overcharged school fees and asked for repayment. The allegation of overcharge was based on Regulation 61(1) of the Education Regulations, Cap.279, which reads:

"... no supervisor, manager or teacher shall charge or accept payment of any money or any school fees whatsoever other than the inclusive fees as printed on the certificate issued under regulation 60A(1)(ii):

Provided that additional charges, moneys or fees (including entrance examination fees and pupil registration and withdrawal fees) may be charged if previously approved by the Director in writing and if such approval is kept exhibited together with the certificate kept exhibited under regulation 67."

The inclusive fee has to be stated in a certificate issued by the Director of Education under Regulation 60A and could not be changed without the written approval of the Director (see Regulation 65). Inclusive fee is defined under Section 3 of the Education Ordinance as the total sum of money charged in respect of the education of a pupil in a school. In a nutshell, Regulation 61 makes it illegal for a school and those responsible for the management thereof to charge a school fee in excess of the level approved by the Director of Education.

2. The inclusive fee approved by the Director of Education for the Kindergarten for the school year of 1996 to 1997 was $811.00 per pupil per month with 11 months in the school year. The Kindergarten actually charged $1,230.00 per pupil per month. For the school year of 1997 to 1998, the approved fee was $985.00 and the actual fee charged was $1,250.00 in respect of some pupils and $1,350.00 in respect of others. The Appellants admitted (as they had to in view of the evidence) that they had charged fees in excess of those approved by the Director of Education. However, they did not make any refund to the Respondents. They said they were entitled to keep the excess. Their main reason was that according to their case, the fees approved by the Director of Education were insufficient to meet the expenses of the Kindergarten. Even with the excess fees, the Kindergarten was running at a loss. Since the Respondents received good consideration for the excess fees, they should not be allowed to recover.

3. The Respondents commenced proceedings in the Small Claims Tribunal in SCTC Nos.15492 and 17120 of 2000 respectively. On 22 September 2000, the Adjudicator made an award in favour of the Respondents. This is an appeal against that award. Leave to appeal on points of law was granted on 12 February 2001.

The judgment of the Adjudicator

4. In a carefully prepared judgment written in Chinese, the Adjudicator set out her reasons for the award. In Paragraph 13 of her judgment, she identified the cause of action of the Respondent as money had and received. She said that the Respondents had to prove that the excess fees were paid and that such fees were paid without knowing that it was illegal for the Kindergarten to charge the same. She held that the purpose of Regulation 61 was to protect the interest of parents against excessive fees being charged (see Paragraph 19 of her judgment). Hence, the Respondents were within the class of person protected by this Regulation.

5. She found on the evidence before her that when So decided to charge the excess amounts, he clearly knew that it was against Regulation 61 and he committed the breach deliberately. (see Paragraph 22, ibid.) She also found as a fact that when the Respondents made those payments, they did not know that such fees were in contravention of Regulation 61. Had they known the truth, she found that they would not pay the excess amounts. She found that there was insufficient evidence to show that the Respondents could have notice of the Certificate issued by the Director of Education regarding the authorized fees and they could not be said to have any constructive notice of the same. She also found that the Appellants misled the Respondents on the proper level of fees in the Kindergarten's notices. She held that the Respondents were not in pari delicto. (Paragraph 26, ibid.)

6. Applying the principles set out in Kiriri Cotton v. Dewani [1960] AC 192, she held that the Respondents were entitled to recover the excess amounts. (Paragraphs 28 to 30, ibid.)

7. In respect of the defence of good consideration, she disbelieved the assertion of So that he did not receive any remuneration. She also found that So could not give a cogent account as to the expenses of the Kindergarten. She was not satisfied that good consideration were provided for the excess payments. (Paragraph 31, ibid.)

8. She further relied on Kleinworth Benson v. Lincoln City Council [1999] 2 AC 349 to hold that the excess amounts could be recovered on the basis of mistake of law even if the contract had been fully performed. (Paragraph 32, ibid.)

9. She held that in the circumstances it was equitable to allow the recovery by the Respondents of the excess amounts. (Paragraph 33, ibid.)

The Grounds of Appeal

10. An amended Form 9 was placed before me by Mr. Li, counsel for the Appellants when I heard the appeal. He told me the same was relied upon during the application for leave to appeal and leave was granted on the basis of that document. Mr. Li wished to further amend the Form 9 and a draft Re-amended Form 9 was handed to me on the second day of the hearing. Mr. Jat asked me to consider the document de bene esse and he submitted that some of the grounds set out in that document were not points of law.

11. Broadly speaking, the grounds set out in the draft Re-amended Form 9 can be divided into two parts:

procedural points: these are Grounds 1, 2, 3, 4;

substantive points : Grounds 5, 6 and 7.

The substantive merits

12. I propose to deal with the substantive points first. Ground 5 said as follows:

"the learned Adjudicator erred in law in making the award/order after having made the ruling that the contracts are not legally enforceable as the claimants' claims for alleged breach of the contracts are based on the validity and enforceablitiy of the contracts."

13. From my aforesaid analysis of the judgment, it is clear that the Adjudicator did not consider the claims of the Respondents as claims for breach of contracts. As I have said in Paragraph 4 above, she identified the cause of action as money had and received. Mr. Li advanced this ground on the basis of the claim as formulated in the Forms of Claim filed by the Respondents. But it is clear to me that the Adjudicator did not decide the case on the basis of breach of contract. In respect of how the case was formulated in the Forms of Claim and its discrepancy with the reasoning in the judgment, I shall come back to it when I deal with Ground 4 (see Paragraphs 46 and 47 below). Ground 5 simply could not stand as an independent ground. I think Mr. Li acknowledged the same when he said that Ground 5 was supplementary to Ground 4.

14. Ground 6 challenged the conferment of private right remedy for breach of Regulation 61. It further attacked the award on the basis that there was no evidence of damages suffered by the Respondents. However, it is clear to me that the Adjudicator did not decide the case on the basis of the tort of breach of statutory duty. Mr. Jat, counsel for the Respondents, confirmed that the Respondents did not rely on such cause of action. The right to claim for money had and received is a restitutionary claim independent from a tortious claim for breach of statutory duty.

15. Mr. Li argued that there should not be any kind of civil remedy including restitution when criminal sanction was attached to a contravention of a statute. This is a bold proposition and he cited no authority in support. The case of Kiriri Cotton v. Dewani [1960] AC 192 clearly showed that the claim in restitution is available even if there were criminal sanction for the unauthorized collection of monies. At p.194 of the report, the relevant statute (section 3(2)) of the Rent Restriction Ordinance) was set out and it was a criminal offence to contravene the same. Mr. Li submitted that the Privy Council did not discuss whether one could recover even when there was criminal sanction. I would be surprised if such a point escaped the attention of the members of the Board who decided that case. I have no doubt that Mr. Li was wrong. There is simply no sound reason in principle why a victim should be deprived of his ordinary civil remedies when a wrong committed against him also attracted criminal punishment under a statute which aimed at protecting him.

16. Ground 7(a)(i) is a pleading point. It again referred to the fact that the cause of action pleaded in the Forms of Claim was not money had and received. I shall come back to it in dealing with Ground 4.

17. Ground 7(a)(ii) is a repetition of the argument which I have dealt with in Paragraph 15 above.

18. Ground 7(b)(i) was added by way of proposed re-amendments to the Form 9. Since it was not in the Form 9 when leave to appeal was obtained, it is clear that no leave has been granted to the Appellants to rely on this point. It reads:

"the learned Adjudicator failed to consider as a matter of law whether the Claimants had made any mistake on their payments to the Defendants and/or failed to find that there is no evidence that the Claimants made the payment but for the mistake as it is not the Claimants' case that they made the payments in the mistaken belief that the amounts paid were as allowed under the Education Ordinance and Education Regulation."

19. In my judgment, whether the Claimants made the payments under any mistake is a question of fact. As stated in Paragraph 5 above, the Adjudicator made a finding on this in Paragraph 26 of her judgment. She found quite specifically that if the Respondents knew the truth, they would not have paid the excess amounts. I am also of the view that there were sufficient evidence before her to allow her to make such finding. Mr. Jat has helpfully identified the relevant evidence scattered at p.35 to 46 of the hearing bundle (which are p.32 to 43 of the transcript of the hearing before the Adjudicator) and also at p.60 J-M (p.57 of the transcript). I do not agree with Mr. Li's submission that such evidence did not show that the mistake was operative on the Respondents when they made the payments. Although Mr. Li called this a question of law, I consider that it is an attempt to dress up a challenge to a finding of facts. This is not permissible since Section 28(1)(a) of the Small Claims Tribunal Ordinance, Cap.338 only allows appeal on question of law alone. Further, Section 29(2)(b)(i) of that ordinance clearly provides that I do not have any power to reverse or vary any determination on questions of facts. Leave should not be granted for this ground of appeal and I would refuse leave to re-amend Ground 7(b)(i) accordingly.

20. Ground 7(b)(ii) and (iii), which was the original Ground 7(b)(i) and (ii), can be dealt with together. They are:

"(ii) the learned Adjudicator failed to consider adequately or at all the question as to whether no recovery should be made as there was no unjust enrichment on the part of the Defendants;

(iii) the learned Adjudicator failed to consider properly or at all the Defendant's evidence on the income from school fees and the audited expenditure as set out in paragraph 5 of the Defence which proves that the Defendant did not become unjustly enriched by the school fees collected."

21. Both grounds hinge on the lack of unjust enrichment on the part of the Defendants. As I see it, it is more accurate to analyse the legal position of the parties as follow.

(a) Since the collection of the excess amounts by the Appellants were in contravention of Regulation 61 and the parties were not in pari delicto, the Respondents have a prima facie right to seek restitution of the same on the authority of Kiriri Cotton v. Dewani [1960] AC 192. In that case, Lord Denning extended the principle set out in a case decided in 1828 by Littledale J (Hastelow v. Jackson):

"If two parties enter into an illegal contract, and money is paid upon it by one to the other, that may be recovered back before the execution of the contract, but not afterwards."

Lord Denning observed that such a claim was allowed on the basis of restitution (see p.203) and he said:

"But so soon as the illegal transaction has been fully executed and carried out the courts will not entertain a suit for recovery unless it appears that the parties were not in pari delicto."

Further, at p.204, His Lordship formulated the principle as follows:

"If there is something more in addition to a mistake of law --- if there is something in the defendant's conduct which shows that, of the two of them, he is the one primarily responsible for the mistake --- then it may be recovered back. Thus, if as between the two of them the duty of observing the law is placed on the shoulders of the one rather than the other --- it being imposed on him specifically for the protection of the other --- then they are not in pari delicto and the money can be recovered back...Likewise, if the responsibility for the mistake lies more on the one than the other --- because he has misled the other when he ought to know better --- then again they are not in pari delicto and the money can be recovered back."

On the facts of that case, the court held that the parties were not in pari delicto and therefore the victim could recover the excess payments.

(b) The Respondents also have a right of restitution on the basis of mistake of law since Kleinworth Benson v. Lincoln City Council [1999] 2 AC 349.

(c) Upon the contravention of Regulation 61, the parties not being in pari delicto and the mistake being established, there is no need for the Respondents to show further enrichment in the sense that they did not get value for money in terms of the excess payments.

(d) The Appellants might raise a defence to the restitutionary claim by pleading change of position. That defence was established by the House of Lords in Lipkin Gorman v. Karpnale [1991] 2 AC 549. Lord Goff explained this defence at p.577H to 581B. In the present context, the following dicta are relevant:

"In these circumstances, it is right that we should ask ourselves: why do we feel that it would be unjust to allow restitution in cases such as these? The answer must be that, where an innocent defendant's position is so changed that he will suffer an injustice if called upon to repay or to repay in full, the injustice of requiring him so to repay outweighs the injustice of denying the plaintiff restitution. ...In other words, bona fide change of position should of itself be a good defence in such cases as these." (p.579F to G , my emphasis)

"It is, of course, plain that the defence is not open to one who has changed his position in bad faith, as where the defendant has paid away the money with knowledge of the facts entitling the plaintiff to restitution; and it is commonly accepted that the defence should not be open to a wrongdoer." (p.580C to D)

"... the defence is available to a person whose position has so changed that it would be inequitable in all the circumstances to require him to make restitution, or alternatively to make restitution in full. I wish to stress however that the mere fact that the defendant has spent the money, in whole or in part, does not of itself render it inequitable that he should be called upon to repay, because the expenditure might in any event have been incurred by him in the ordinary course of things." (p.580F to G )

(e) The burden is on the Appellants to show that it is inequitable to order restitution by reason of their bona fide change of position.

22. On proper analysis, Grounds 7(b)(ii) and (iii) directed to the wrong issue. The question is not whether the Respondents have showed any unjust enrichment in terms of lack of value for money in respect of the excess fees. Rather it should be whether the Appellants have showed a good defence of bona fide change of position which rendered it inequitable to order restitution.

23. Although the Adjudicator did not refer to Lipkin Gorman in her judgment, she did address to the material issue and made relevant finding of facts pertinent on the question of the bona fide of the Appellants and whether it was equitable to order restitution (see Paragraphs 5, 7 and 9 above). On those findings, she could not be criticized as being wrong in law in ordering restitution. It is clear to me that there were ample evidence to justify the findings of the Adjudicator that the Appellants collected the excess fees with full knowledge that they should not do so. There was a proper avenue for appeal against the decision of the Director of Education regarding change of inclusive fees, yet the Appellants chose not to pursue the same. She also found that they misled the Respondents as to the fees chargeable. Her conclusions could not be faulted whether on law or on facts (and as stated in Paragraph 19 above, I should not entertain any appeal against her finding of facts).

24. Mr. Li placed strong reliance on audited statements of expenses produced to the Tribunal. He submitted that these were clear evidence that the excess fees were used for the expenses of the Kindergarten. In my judgment, the question whether the Respondents got good value for their money simply did not arise. On the findings as recited by me in Paragraph 23 above, the Appellants could not be said to be bona fide in their change of position even if there were any. The observation of Lord Goff at p.580C to D in Lipkin Gorman (cited by me in Paragraph 21(d) above) is particularly apposite.

25. Mr. Li referred to the case of Aratra Potato v. Taylor Joynson Garrett [1995] 4 All ER 695. That was a case where a solicitors firm was retained under an agreement which provided for "a 20% reduction from solicitor/client costs for any lost cases". The agreement was held to champertous and as such contrary to public policy. The client sought recovery of the fees paid. Garland J decided in a trial of preliminary issues that although the retainer was unenforceable, the client was not entitled to recover from the firm sums already paid. The relevant part of his judgment is at p.709j to 710e. Garland J did not find it an easy question (see p.709j) and seemed to base his decision on the principle where property or goods are transferred under an illegal transaction or a lease granted for an illegal or immoral purpose, the property will pass and an estate be created (p.710b). Mr. Li relied on the dicta of Garland J at p.710c to d:

"...where services have been rendered and paid for under an unenforceable contract in circumstances where it cannot be suggested that the payee has, apart from entering into the agreement, acted unconscionably towards the payer or been unjustly enriched at his expense, it is unreal to hold that the consideration, albeit one contrary to public policy, has wholly failed and that the plaintiff is entitled to recover the price of those services while retaining the benefit of them." (my emphasis)

26. Kiriri Cotton v. Dewani [1960] AC 192 was referred to by Garland J at p.708H but His Lordship did not deal with it at length, perhaps because the case before him did not concern with statutory prohibition designed to protect one party. I am of the view that Kiriri Cotton is more applicable to our case than Aratra Potato. Further, Garland J did not consider the matter from the perspective of change of position as a defence to a restitutionary claim. Still, from the sentence emphasized by me in the dicta cited above, it is clear that when it is established that the payee (as in the case of the Appellants) was not bona fide and was guilty of some wrong over and above the entering into the agreement, the position would be different. I therefore do not find the case to be of any assistance to the Appellants.

27. For those reasons, it is unnecessary to consider the submission of Mr. Li with regard to the Adjudicator's treatment of the certified statement of expenses. The defence of change of position was simply not available to the Appellants due to their mala fide. Be that as it may, given the failure of the Appellants to submit relevant supporting documents as observed by the Adjudicator at p.66 of the hearing bundle (p.63 of the Transcript) despite concerns raised by her, she was entitled to conclude that she was not satisfied with the account given by the Appellants as to the expenses. As Mr. Jat pointed out, we have no evidence as to whether those expenses were properly incurred and whether some of the items were excessive. The auditor's certificate only showed that those expenses were incurred. In the end, it has to be remembered that this is an appeal on points of law. The weighing of evidence and finding of facts are tasks performed by the Adjudicator. There cannot be any appeal as to that (again see Section 29(2)(b)(ii) of the Ordinance). Mr. Jat asked rhetorically what was said to be the wrong approach in law in this regard. In my judgment, this is in substance a challenge to the finding of facts by the Adjudicator. Ground 7(b)(ii) and (iii) are not proper grounds of appeal on points of law.

28. It follows from what I said that the Appellants did not have any merits in terms of substance.

Procedural grounds

29. Before I consider each of the procedural grounds relied on by Mr. Li, I wish to make some general observations. Whilst I accept that in appropriate case, a procedural error may constitute errors of law, it is trite law that not each and every procedural irregularity could be relied upon to vitiate the award of the Small Claims Tribunal. Under common law, there was a distinction between irregularity (which could be cured or waived) and fundamental defects (which render the proceedings a nullity) (see Hong Kong Civil Procedure, 2001, Para.2/1/1). In the context of the proceedings in the High Court, Order 2 removes that distinction and set out the governing rules and the court have the power to refuse to set aside irregular proceedings. An important but not conclusive factor is whether the opposite party has suffered prejudice as a result of the irregularity (see Hong Kong Civil Procedure, 2001, Para.2/1/5). Further Order 2 Rule 2 provides that application to set aside proceedings on the ground of irregularity must be made before any fresh step has been taken by the applicant after becoming aware of the irregularity. Failure to do so would constitute waiver.

30. Section 37 of the Small Claims Tribunal Ordinance, Cap.338 provides:

"Where no provision is made by this Ordinance or rules made under section 6, the practice and procedure in the tribunal shall be such as the tribunal may determine, either generally or in any particular proceeding."

No rule has been made with regard to procedural irregularity in the Small Claims Tribunal. There is also no provision governing the same in the principal ordinance. Although Order 2 is not directly applicable in the Small Claims Tribunal, I see no reason why these principles should not be applied by analogy. The purpose behind the setting up of the Small Claims Tribunal is to have speedy, economic determination of small claims in an informal setting (see Section 16 of the Ordinance). Given that, it is all the more necessary to ensure that insignificant procedural irregularity should not be seized upon by a litigant as sufficient ground for overturning unfavourable decision of the Tribunal which is perfectly sound on substantive merits. I do not need to decide whether the distinction between nullity and irregularity under the common law still applies to proceedings in Small Claims Tribunal since Mr. Li has not submitted to me that the irregularities relied upon by him rendered the proceedings a nullity. In any event, even if one were to apply the old law, I do not think the grounds relied upon by him could satisfy the test of classifying errors as rendering the proceedings a nullity.

31. Ground (1) challenged the re-opening of the claim in SCTC No.15492 of 2000. Due to some misunderstanding, a Notice of Discontinuance was filed in that case on 19 May 2000. That Notice was only signed by one of the claimant, Mr. Ching. In contrast, all five claimants signed the Form of Claim filed in SCTC No.15492 of 2000. At the hearing before the Adjudicator on 1 June 2000, the claimants applied for withdrawing the Notice and re-opening the case. It appears that the Notice was filed by reason of some confusion and misunderstanding as to whether a representative claim would be lodged by the Consumer Council on behalf of all claimants for repayment of excess school fees. The Notice of Discontinuance was filed mistakenly (perhaps due to misunderstanding in communication between the staff of the Tribunal and the claimants, see p.11E to G of hearing bundle) pending their consultation with the Consumer Council. However, it was clear that all along the Claimants in SCTC No.15492 of 2000 intended to pursue their claims. Hence when they were informed that the Consumer Council would not take part in the proceedings, application was made for withdrawal of the Notice. The Adjudicator asked Mr. So Kwok Wai (who represented himself as well as So on 1 June 2000) and he said quite fairly that he did not mind as it was only a misunderstanding in the procedures (see p.11A of the hearing bundle which is p.8. of the transcript). Against that background, the Adjudicator granted leave to the Claimants to withdraw the Notice of Discontinuance and allow the case to be re-opened.

32. Mr. Li submitted that such course was not open to the Adjudicator although in his oral submission before me, he accepted that the Adjudicator did have the power to permit the Notice of Discontinuance to be withdrawn. That concession by Mr. Li is, in my judgment, properly made. Even in the context of litigation in the High Court, an action could be revived after discontinuance (see Hong Kong Civil Procedure, 2001, Para.21/5/15). Further, in the High Court, it is only in specified cases that proceedings could be discontinued without leave (see Order 21 Rule 2). For cases outside the scope of Rule 2, a Notice of Discontinuance would not discontinue the action automatically. Leave of the court needs to be obtained. There is no equivalent of Order 21 Rule 2 in the Small Claims Tribunal Ordinance or Small Claims Tribunal (General) Rules. In those circumstances, the proceedings could not be discontinued without an order by the Tribunal. A notice of discontinuance filed in the Tribunal only served as an indication of a claimant's intention to discontinue. Discontinuance only takes effect when an order was made to that effect. In the present case, no order has been made by the Tribunal to discontinue the case.

33. At the hearing on 1 June 2000, the Adjudicator was able to ascertain that the Notice did not reflect the true intention of the claimants. Given that there was no objection from So, it is, in my judgment, her duty to allow the claimants to withdraw the Notice which would not have been filed in the first place but for some misunderstanding. Any refusal to exercise such power would be perverse. It would only force the claimants to file a fresh claim for the same subject matter (since a discontinuance would not bar them from starting a new case on the same claim) and this would only delay the matter and increase the costs and inconvenience of the parties.

34. Mr. Li mounted his attack by relying on Section 12 of the Small Claims Tribunal Ordinance, Cap.338. He submitted that since it was necessary for a claim to be filed, the Tribunal could not entertain a claim when a claim had been abandoned. His argument premised on the assumption that the filing of Notice of Discontinuance was equivalent to effective abandonment of the claim. From my analysis in Paragraph 32 above, it can be seen that such premise is wrong. Further, on the facts of the present case, given the finding of the Adjudicator that the Notice was filed on misunderstanding, it did not reflect the true intention of the claimants. The claimants in SCTC No.15492 of 2000 never intended to abandon their claims.

35. Mr. Li also relied on Section 27A (2)(a) of the Small Claims Tribunal Ordinance, Cap.338 in Ground 1(b) of his draft Re-amended Form 9. That subsection requires notice be given in the prescribed form to all parties before an adjudicator exercise his power to review any award or order made by him on his own motion. Mr. Li submitted that in the present case, before the Adjudicator exercised her power of review, she did not give the prescribed notice to the parties. In my judgment, this point is misconceived. As I said, the Adjudicator had not made any order in respect of discontinuance prior to 1 June 2000. There was nothing for her to review. Mr. Li was unable to direct me to any order or award in respect of which he said the Adjudicator exercised her power of review under Section 27A. She was only considering an application for leave to withdraw a Notice of Discontinuance. To be fair to Mr. Li, he might be misled by some of the thing said by the Adjudicator in the course of her consideration of this application. However, it is quite clear to me that at the end her order was to grant leave to the claimants to withdraw the Notice of Discontinuance (see p.11 I of the hearing bundle). I have no difficulty whatsoever in perceiving the real substance of the nature of the application before the Adjudicator. I therefore refuse to grant leave to re-amend Ground 1.

36. For these reasons, Ground (1) is without merit. Further, given the fact that So himself consented to the application when the matter was considered by the Adjudicator, even if there was any irregularity, it would have been waived by the Appellants. I cannot see any prejudice suffered by the Appellants as a result of the decision of the Adjudicator.

37. Ground (2) refers to the Adjudicator permitting or allowing a lawyer from the Consumer Council present at the hearing to give advice to the claimants or not stopping advice being given at the hearing. Aside from the issue of giving advice in the course of the proceedings, I do not think one can object to the presence of a lawyer from the Consumer Council at the hearing so long as he did not represent the claimants. The hearing was open to the public. Since the Consumer Council had received complaints regarding the collection of excessive fees by the Appellants, I see nothing wrong for them to send a representative to attend the hearing to find out more about the matter. The Adjudicator did not have any power to exclude any members of the public from attending the hearing unless the speech, behaviour or conducts of such person disrupted the proceedings. In any event, there is nothing to suggest that any complaint had been made by the Appellants to the Adjudicator about such matter. On this matter, the Adjudicator simply did not make any decision against which the Appellants could mount an appeal.

38. Section 19 of the Small Claims Tribunal Ordinance, Cap.338 was relied upon by Mr. Li. That section only restricts the right of audience, in Chinese "出庭發言的權利", not the right to consult lawyers. It is admitted by the Respondents that a legal counsel of the Consumer Legal Action Fund was present at the hearing. However, the Respondent said he was only present as an observer. The Respondents denied that the legal counsel had advised them during the hearing. The Appellants did not allege that the legal counsel represented the Respondents at the hearing. It is quite clear from a reading of the transcript that throughout the proceedings, the Respondents acted by themselves and the legal counsel did not take any part at any stage.

39. Mr. Li however argued that the Respondents had an unfair advantage by having the benefit of the advice of the legal counsel throughout the hearing. I must say that it is by no means clear that the Respondents had any advantage in terms of legal advice. My reading of the transcript certainly does not show that. To the contrary, it seems that the Appellants had placed an Advice by Mr. Li dated 29 March 2000 before the Tribunal. The said Advice set out legal arguments to support the Appellants' opposition to the claims. Although both sides placed affirmations before me, Section 29 (2)(b)(ii) enjoins me from receiving further evidence. This shows the limit set by the legislature as to how far one can pursue an appeal on procedural matters. If the alleged error is not demonstrable on the records, it could not be pursued by way of appeal.

40. Even if I am wrong on the effect of Section 29(2)(b)(ii) and for some reasons I could take into account of the affirmations, I still hold the view that the Appellants could not succeed. I am not satisfied that there was any unfairness to the Appellants. On this point, the transcript really speaks for itself and I can hardly see any grounds for complaints by the Appellants in this regard.

41. I also hold that as a matter of law, provided that a litigant conducts a case by himself or by a person who is not a counsel or a solicitor, Section 19 is not infringed and it does not matter whether he received any legal advice, whether in the course of hearing or otherwise. I do not agree that a distinction can be drawn between advice given outside the courtroom and those given in the courtroom as long as a litigant (or his lay representative) can still be properly said to be conducting his own case. Take the present case as an illustration, what the Appellants had done was tantamount to have Mr. Li's legal submissions handed to the Tribunal as part of their case. The fact that Mr. Li was not physically in the court room did not reduce the "inequality of arms" in terms of the quality of the respective legal submissions advanced by the parties. Although this should not be encouraged, I do not think Section 19 prevents such practice. Litigants are free to consult lawyers as they wish and this includes litigants to proceedings in the Small Claims Tribunal. Of course, it would be different if the lawyer present in the courtroom acts beyond being a passive adviser and in effect takes over the conduct of the case. An extreme example would be where the lawyer gives direction to the litigant on each and every step in the hearing and formulates each and every question to be put to witness. In that event, the adjudicator could properly find that in substance, the lawyer is exercising a right of audience and exclude him from the courtroom. There is no suggestion that this sort of things happened at the hearing before the Adjudicator. In my judgment, there was no infringement of Section 19. Ground 2 therefore fails.

42. Ground (3) attacked the refusal of the Adjudicator to transfer the proceedings to the District Court or the Court of First Instance. In essence, the argument of Mr. Li was that this case involved complicated issues of law and therefore should have been transferred. Although the Appellants did refer to the possibility of transfer in the last paragraph of their Defence, it was only couched as an alternative open to the Tribunal. It was therefore not put forward as a request for transfer. The Appellants were quite content with the matter being dealt with in the Tribunal until after all the evidence had been heard. No application had been made for transfer at the hearings on 1 June, 15 June, 21 June and 7 August 2000. It was only in the middle of closing submission on 8 August 2000 that Mr. So Kwok Wai made the application. Although he admitted that he was aware that the trial had proceeded, he said he thought he did not have the right to ask for a transfer before the trial started (see p.73 of the hearing bundle). The basis of his application was that a legal point was involved and he did not know how to argue it (p.74 of hearing bundle). The Respondents opposed the application. They argued that the Appellants had more than enough opportunity to consult their legal advisers and it would be unfair to them to delay the matter further.

43. At p.75 to 76 of the hearing bundle, the Adjudicator ruled against the application and gave reasons for the same. I would not repeat what had been said by the Adjudicator. In my judgment, she exercised her discretion properly and she had taken into account of all relevant matters. She had not misdirected herself on any question of law.

44. Mr. Li relied on the fact that the Adjudicator had referred the case of Kiriri Cotton v. Dewani [1960] AC 192 to the parties on 7 August 2000 and invited the Appellants to consult their lawyers. He submitted that this was a wrong approach because the Adjudicator should not expect the Appellants to deal with arguments of law. He said the only proper course was to transfer the matter to the District Court or the Court of First Instance to enable the legal issue to be argued with legal representation.

45. Whilst the course taken by the Adjudicator was unusual, I am satisfied that she acted quite properly and fairly in the circumstances of the case. The Appellants had not conducted their case in the Small Claims Tribunal in the usual manner. They had chosen to put before the Tribunal a counsel opinion which advanced legal arguments on their behalf. As I said in paragraph 41 above, such course is not to be encouraged but the law does not prevent the same. Given that background, the Adjudicator acted properly in referring a relevant authority to the Appellants since it seemed to have been overlooked in the counsel opinion. The purpose was to give the Appellants a chance to seek further advice from counsel if they deemed fit and an adjournment was granted to the Appellants in the afternoon of 7 August 2000 for that purpose. But for the submission of the counsel opinion, I do not think the Adjudicator would take such a course. Strictly speaking, I am of the view that even with the submission of counsel opinion, that course is unnecessary. However, I do not think the Adjudicator could be criticized for doing so. It was well within her discretion. Further, it would be wholly wrong to allow the Appellants to seize upon such opportunity to say that the case must be transferred. It is trite law that legal points could be dealt with in the Small Claims Tribunal even though the Tribunal may not receive adequate assistance from the parties. Otherwise, the Tribunal could not operate. In the present case, in considering the application for transfer, not only must the Tribunal have regard to the complexity of the legal issues involved, it must also take into account of the fact that the application was made at a very late stage and the importance of having speedy resolution of the dispute. If the Adjudicator considered that she was capable of deciding the legal issues even without much assistance from the parties, she was entitled to attach little weight to the point that legal issues have to be decided. As it turned out, the Adjudicator was more than competent in resolving the legal issues. As I have held in the previous section of my judgment, the Adjudicator reached the correct decision on the merits and gave a careful judgment in relation thereto. Her exercise of discretion in refusing to transfer the matter simply could not be faulted.

46. Ground (4) is a pleading point. It referred to the failure of the Adjudicator in considering the cause of action pleaded in the Forms of Claim was breach of contract. The Adjudicator actually decided the case on the basis of money had and received. In my judgment, this point is wholly misconceived. In the Small Claims Tribunal, the rules of pleadings have no application. Further, by reason of Section 16(2) and (3), the role of the Tribunal is inquisitorial rather than adversarial. This is akin to the role of the Labour Tribunal. The late Deputy Judge Jerome Chan (as he then was) has set out the duty of the Tribunal in such context in the case of Chan Suk Bing Angie v. Harbour Phoenix [1992] 2 HKC 459 and I see no need to repeat what he had said. The duty is to investigate all matters which the Tribunal may consider relevant even if it has not been raised by a party. (See also Jebsen v. Asia Furniture [1982] HKC 218) It follows that pleading point has no place in the Small Claims Tribunal. Otherwise, it would just defeat the whole purpose of the setting up of the Tribunal which aims at providing informal and non-technical means to litigants acting in person in respect of small claims.

47. Mr. Li argued that Section 13(d) of the Ordinance required the cause of action to be correctly identified. In my judgment, the section said nothing of that sort. It reads:

"A claim shall contain such particulars of the claim as are reasonably sufficient to inform the defendant of the ground for the claim and the manner in which the amount claimed by each claimant or person represented has been calculated."

Mr. Li submitted that "ground of claim" means the cause of action. Bearing in mind that a claim will normally be prepared by a litigant without the assistance of lawyers, it would be wholly wrong to require the claim to be formulated in terms of legal cause of action. In my judgment, it is sufficient if a litigant sets out the basic facts which he relies upon to advance his claim. In the present context, the basic facts were the payment of the excessive school fees by the Respondents and the failure of the Appellants to refund the same. These have been set out in the Forms of Claim. Provided that the basic facts have been set out, it does not matter that a wrong cause of action was relied upon in the Form of Claim. The Adjudicator is obliged under Section 16(3) to inquire into the matter and to ascertain the appropriate cause of action on such basic facts. I therefore hold that Ground (4) also fails.

48. From my aforesaid analysis, it could be seen that these so called procedural grounds were basically challenges to the exercise of the discretion by the Adjudicator. Ground (1) challenged the exercise of her discretion to allow the withdrawal of the Notice of Discontinuance. Ground (3) challenged the exercise of her discretion to refuse to transfer the case. Ground (4) challenged the exercise of her discretion under Section 16(3). Ground (2) is worse because there was no decision against which an appeal could be mounted. Although the Grounds alleged errors of law on the part of the Adjudicator, in substance the challenges were not based on errors of law. Insofar as law points are raised under those grounds, they are wholly misconceived and without merits.

Conclusions

49. I therefore reach the firm conclusion that this appeal has no merit and should be dismissed with costs. Mr. Jat has asked for costs on indemnity basis at the end of the hearing but I have not heard Mr. Li on that question. I would follow the suggestion of Mr. Jat to make an order nisi that the Appellants do pay the costs of the Respondents on party to party basis. I leave it to Mr. Jat to consider whether he would renew the application for indemnity costs before me in the light of my judgment on the merits.