HANG HING FINANCE LTD v. COMMISSIONER OF POLICE

HCMP 955/2017

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 955 OF 2017

(On appeal from Eastern Magistracy Miscellaneous Proceedings No.412 of 2016)

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D E C I S I O N

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Application

1.  Before the court is an application by Hang Hing Finance Limited, the above-named applicant, by summons issued on 25 April 2017 for leave to appeal out of time against an order made by Madam Cheung Tin Ngan June, magistrate sitting as the licensing court under s 13 of the Money Lenders Ordinance (Cap 163) (“MLO”), on 28 October 2016 dismissing the applicant’s application for renewal of its money lender’s licence (“Decision”) upon the objection of the Commissioner of Police.

Principles governing the grant or refusal of leave to appeal out of time

2.  The principles guiding the court in the exercise of its discretion to extend time for an appeal are well established.  The court does not follow “a rigid mechanistic approach” but considers all the circumstances, including in particular: (a) the length of the delay, (b) the reasons for the delay, (c) the chances of the appeal succeeding if an extension of time for appealing is granted, and (d) the degree of prejudice to the would-be respondent if the application for an extension is granted.  See, e.g. Chiu Sin-chung v Yu Yan-yan, Angela [1993] 1 HKLR 225, per Keith J (as he then was) at 227(37) – 228(29); Mobil Petroleum Co Inc v Registrar of Trade Marks [2001] 1 HKLRD 225; Nantong Angang Garments Ltd v Hellmann International Forwarders [2005] 4 HKC 86, per Le Pichon JA at [21]; and Leung Kwok Hung v President of Legislative Council [2008] 2 HKLRD 18, per Tang VP (as he then was) at [5]-[7].

3.  I shall consider each of the 4 factors identified as relevant to the grant or refusal of leave to appeal out of time.

Prejudice

4.  It appears to me that the respondent would not suffer any prejudice as a result of the applicant’s delay that cannot be compensated for by an appropriate order for costs if leave to appeal out of time should be granted.  However, the absence of prejudice to a would-be respondent is not per se a ground for extending the time: Chiu Sin-chung, supra, per Keith J (as he then was) at 228(23)-(24).

Length of delay

5.  Under s 16 of the MLO, any person aggrieved by a decision of a licensing court under, inter alia, s 13 may appeal to the Court of First Instance (“CFI”) and the decision of the CFI shall be final. 

6.  The procedure for the appeal to the CFI, being one that lies to the CFI by or under an enactment (i.e. the MLO), is regulated by Order 55 of the Rules of the High Court (Cap 4A).  Order 55 rule 3(1) requires an appeal to which Order 55 applies to be brought by originating motion.  Rule 4(2) further requires the notice of motion to be served, and the appeal entered, within 28 days after the date of the judgment, order, determination or other decision against which the appeal is brought.  Applying rule 4(2), the deadline for the service of a notice of the motion by the applicant expired on 25 November 2016.  Hence, by the time the applicant issued the summons for leave to appeal out of time, it was already 5 months late.  Such delay is, on any view, substantial.

Reasons for the delay

7.  The reason why the applicant took so long was that it initially adopted the wrong procedure.  On 7 November 2016, the applicant, not appreciating that the magistrate was not exercising any power conferred on her under the Magistrates Ordinance (Cap 227) (“MO”) when she heard the renewal application under s 13 of the MLO, lodged a notice of appeal with the CFI sitting in its criminal jurisdiction pursuant to s 113 of the MO.  On 12 December 2016, such appeal was assigned the case number “HCMA 665/2016”.

8.  On 16 December 2016, the Department of Justice (“DOJ”) wrote to Augustine C Y Tong & Co (“ACYT”), solicitors for the applicant, drawing their attention to s 16 of the MLO and Order 55 and inviting the applicant to either abandon the appeal under the MO or seek the court’s directions to have such appeal transferred to the civil jurisdiction of the CFI.  ACYT were provided with a copy of In re an application by CHM Finance (HK) Ltd for a Money Lender’s Licence [1990] 1 HKLR 248, which was concerned with the questions whether an appeal against the licensing court’s refusal to renew a money lender’s licence should be heard in the High Court or the Court of Appeal and, if the former, whether it should go to a single judge or 2 or more judges.  Yang CJ referred to Order 55 rule 2(a) of the then Rules of the Supreme Court in his judgment.

9.  ACYT did not agree.  On 20 December 2016, they sought directions for the Registrar of the High Court as to, inter alia, whether a “HCMP” number should be assigned to the appeal. Apparently, one of the matters bothering the applicant is that Order 55 rule 1(2)(b) provides that the Order shall not apply to an appeal under the MO.

10.  On 28 December 2016, ACYT, expressing confidence that they had used the correct procedure, filed grounds of appeal on behalf of the applicant.

11.  On 5 January 2017, Master Wong directed the DOJ to make submissions on ACYT’s letter dated 20 December 2016.  The DOJ did so on 10 January 2017.  In addition to In re an application by CHM Finance (HK) Ltd for a Money Lender’s Licence, supra, the DOJ also supported its view with reference to

(1)  Lo Kwai Ying trading as Everglory Money Lending Company v Attorney General, HCMP 272/1989, unreported, 18 January 1991, in which the then Full Bench of the High Court held that the standard of proof at a hearing before the licensing court is the civil standard, i.e. the balance of probabilities; and

(2)  Tsuen Fat Finance Co Ltd v V K Mehta, HCMP 384/1994, unreported, 3 May 1994, which was listed as a High Court Miscellaneous Proceedings.

12.  On 7 February 2017, the Master refused to assign a “HCMP” number to the appeal that was lodged by the applicant under s 113 of the MO and basically directed the applicant to see for itself what it should do in the circumstances including taking out a proper application before a judge.

13.  On 14 February 2017, the DOJ enquired with ACYT if the applicant would take out an application before a judge of the CFI to resolve the parties’ disagreement on the proper appeal procedure.  ACYT did not respond to this letter.  Instead, they filed perfect grounds of appeal on behalf of the applicant on 20 March 2017.

14.  In the meantime, on 22 March 2017, the DOJ wrote to the Registrar, inviting him to refer the appeal that was lodged by the applicant under s 113 of the MO to a single judge of the CFI for directions in order to resolve the dispute as to the proper procedure for appeal.

15.  On 5 April 2017, Madam Justice Anthea Pang directed that the applicant’s appeal under HCMA 665/2016 was wrongly initiated under the MO and should not be prosecuted with any further. 

16.  In light of Anthea Pang J’s direction, the applicant withdrew its appeal under HCMA 665/2016 on 25 April 2017, on which date it also filed the notice of motion in these proceedings and the present summons for leave to appeal out of time.

17.  I cannot accept the attempt by Mr Eddie Chan, counsel for the applicant, to justify the time taken by the applicant in commencing these proceedings with reference to the fact that the parties received Anthea Pang J’s direction only on 5 April 2017.  It is not the court’s function to give legal advice to the parties.  It is up to the parties themselves to work out the proper procedure to follow. 

18.  Despite the explanation offered, I remain puzzled as to how the error occurred.  Section 113 of the MO is plain and unambiguous in its terms.  It applies only to an appeal brought by a person aggrieved by “any conviction, order or determination of a magistrate in respect of or in connection with any offence” (emphasis added), which the Decision is clearly not.  Given that the application for renewal was heard by the magistrate sitting as the licensing court under s 13 of the MLO, one would have expected those acting for the applicant to look up the MLO for provisions for appeal.  Had this been done, it would been realised that the proposed appeal is not governed by s 113 of the MO, but s 16 of the MLO.  And given the civil nature of the Decision, it should have been natural for one to look to the Rules of the High Court for the detailed procedure to follow.  Order 55 is headed “Appeals to the High Court from court, tribunal or person: general” and, therefore, an obvious place to check.  Rule 1(1) sets out in plain terms that Order 55 applies to “every appeal which by or under any enactment lies to the [CFI] from any court, tribunal or person”, which the proposed appeal by the applicant clearly is.  

19.  And to make the matter worse for the applicant, its solicitors were alerted by the DOJ on 16 December 2016 that the proposed appeal should have brought under Order 55.  It is regretful that such advice was not heeded, resulting in considerable wastage of time and costs, including the court’s resources in considering the matter and giving directions.

20.  In short, I find the error as to the procedure for the commencement of the proposed appeal inexcusable.  See Secretary for Justice v The Hong Kong & Yaumati Ferry Co Ltd, CACV 819/2000, unreported, 2 February 2001, in which Le Pichon JA found the absence of explanation for how the plaintiff’s solicitors came to think that the time for filing the notice of appeal was 28 days rather than 14 days made the delay inexcusable.

21.  Given the substantial delay for which there is no excusable explanation, the applicant must demonstrate sufficient merits in its proposed appeal.

Merits of the proposed appeal

22.  Section 11 of the MLO applies to an application for renewal of a money lender’s licence under s 13, which means that the licensing court should not renew unless it is satisfied, inter alia, that the applicant is a fit and proper person to carry on business as a money lender and that in all the circumstances the renewal of the licence is not contrary to public interest: see s 11(5)(a) and (g).

23.  In this case, the licensing court found the applicant not a fit and proper person to carry on business as a money lender so that it would be contrary to the public interest to renew its money lender’s licence.

24.  This is a finding of primary fact.  An appellate court would not disturb a finding of primary fact unless it is shown to be plainly wrong in the sense that either (a) that there is no evidence to support it or (b) that it is contrary to documentary or other incontrovertible evidence that the judge overlooked.  It is not enough to show there is little evidence to support the finding or that it is contrary to the weight of the evidence, which is a matter for the trial judge.  See Ting Kwok Keung v Tam Dick Yuen (2002) 5 HKCFAR 337, per Bokhary PJ at [34]-[46], applied in, e.g. Tin Kwong International Enterprise Co Ltd v San Tung [2006] 2 HKLRD 185, per Woo VP at [13]-[14].

25.  As I understand it, the applicant is not saying that there was no evidence at all to support a finding that the applicant is not a fit and proper person to carry on business as a money lender so that it would be contrary to the public interest to renew its money lender’s licence or that the licensing court overlooked any documentary or other incontrovertible evidence to the contrary.  It appears to me that the applicant is simply repeating the same arguments that were advanced to the licensing court.  Its complaint is essentially that the licensing court attached wrong weights to the evidence before it.  This is plainly not enough.

26.  In this regard, in finding as aforesaid, the licensing court was influenced by the fact that the applicant charged interest in breach of section 24(1) of the MLO (which creates a criminal offence for lending at an effective rate of interest rate that exceeds 60% per annum) and further failed to correctly state the rate of interest charged in the note or memorandum of the loan agreement in breach of s 18(2)(i) in 2 transactions over a period of 3 months:

(1)  In the first transaction entered into on 12 March 2014, the applicant charged a sum of $4,798 as interest on the principal loan of $20,000 over a period of 6 months.  The rate of interest charged amounted to 82.25% which exceeded the 60% limit by 22.25% (or $1,044).

(2)  In the second transaction entered into on 15 May 2014, the applicant charged a sum of $2,396 as interest on the principal loan of $10,000 over a period of 6 months.  The rate of interest charged amounted to 82.13% which exceeded the 60% limit by 22.13% (or $516).

These transactions and that they were in breach of ss 18 and 24 of the MLO as aforesaid were admitted by the applicant.  See paragraphs 4, 5 and 10 of the licensing court’s Reasons for Decision dated 30 November 2016 (“Reasons”).

27.  The licensing court did not accede to the submission made on behalf of the applicant that the excesses were small in amounts comparing to the applicant’s annual turnover.  I can find no fault in this view.  The matter raised is one of principle.  The excesses were significant in percentage (22.25% and 22.13%).  They were compounded by the borrowers being misled that they were charged interest at a legal rate.  The amounts happened to be small only because the amounts of the loans were relatively modest.  See paragraph 14 of the Reasons.

28.  The licensing court further rejected the applicant’s claim that it charged excessive interest and misled the borrowers as to the rate of interest in these transactions, not deliberately but out of inadvertence due to the complexity of the statutory formula for the calculation of the true annual percentage rate of interest in Schedule 2 to the MLO.  To the contrary, it held the breaches to be deliberate.  This is a conclusion that the licensing court is entitled to reach on the evidence on the balance of probabilities.  The reference to what Lord Nicholls said in In re H (minors) (Sexual abuse: standard of proof) [1996] AC 563 at 586C-F, about the more serious the allegation the less likely it is, does not assist the applicant.  As stated in paragraphs 10 and 13 of the Reasons, the accurate computation of the true annual rate of interest in accordance with the statutory formula is the most important responsibility of a money lender which it has to undertake in every transaction and the applicant never explained how the “errors” came to be made.

29.  As for the licensing court’s alleged failure to give sufficient weight to the measures (in the forms of a computer software and internal control procedures) implemented by the applicant since January 2016 to prevent similar incidents and the supposed effectiveness of such measures (see paragraph 15 of the Reasons), the short answer is that the question of weight is a matter for the judge at first instance.

30.  For these reasons, I am not convinced that the licensing court erred, not to mention being plainly wrong.

Conclusion

31.  In view of the inexcusable substantial delay and the lack of merits of the proposed appeal and despite the absence of prejudice to the respondent, this is not a proper case for the grant of leave to appeal out of time.

Orders

32.  I dismiss the applicant’s summons dated 25 April 2017.  I also make an order nisi for the applicant to pay the respondent’s costs of and occasioned by such summons on a party and party basis to be taxed if not agreed.