EVER LONG FINANCE LTD v. CHAN PUI CHING REBECCA

DCCJ 2484/2014

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 2484 OF 2014

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DECISION

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Introduction

1. There are two applications: the defendant seeks leave to appeal against my decision handed down on 17 December 2014 (“the Decision”); and the plaintiff seeks leave to vary the costs order nisi of the Decision out of time, or alternatively, leave to appeal against the said costs order should its application be dismissed.

2. The plaintiff is a money lender holding a money lender licence under the Money Lender Ordinance, Cap 163 (“MLO”).  The defendant is its customer. I grant summary judgment to the plaintiff that the defendant shall pay the outstanding sum of mortgage loan advanced by the plaintiff in sum of $252,922, with costs.

3. I do not intend to repeat the dramatis personae and the facts of this case, I shall adopt the abbreviations used in the Decision herein.

Legal principles for leave to appeal

4. Leave to appeal shall not be granted unless the court is satisfied the appeal has a reasonable prospect of success or there is some other reason in the interest of justice why the appeal should be heard. (See section 63A(2) of the District Court Ordinance, Cap 336)

5. Reasonable prospect of success connotes the prospect of succeeding must be reasonable and more than fanciful, without having to be probable.  An applicant is required to show more than just an arguable case, but he does not have to demonstrate the appeal will probably succeed. Even if the court takes the view that there is a reasonable prospect of success, it still remains a discretion as to whether to grant leave, though the fact that there is, ex hypothesi, a reasonable prospect of success would heavily influence the court in exercising its discretion. (See commentary of Hong Kong Civil Procedure 2015, §59/2A/4)

The defendant’s application

6. Section 29(10) of MLO reads,

“Any money lender or his partner, employer, employee, principal or agent or any person acting for or in collusion with any money lender who charges, recovers or receives any sum as for or on account of any costs, charges or expenses (other than stamp duties or similar charges) referred to in section 27(3) or demands or receives any remuneration or reward whatsoever from a borrower or intending borrower for or in connection with or preliminary to procuring, negotiating or obtaining any loan made or guaranteeing or securing the repayment thereof commits an offence. [emphasis added]”

7. Mr. Jang, counsel for the defendant submits, the acts of SEAL and Unique Mortgage contravened section 29(10) of MLO when consultation fees in sum of $182,000 and $27,900 were being charged and collected from the defendant. The plaintiff was also being accused of contravening the same section because the plaintiff was colluding with Unique Mortgage in procuring the defendant to accept the mortgage loan. The mortgage agreement was tainted with illegality and was unenforceable.

8. Mr. Jang further submits the issue of illegality as characterized by the receipt of remuneration by the plaintiff (or its agent, Unique Mortgage) should be determined at trial. The defendant might have a counterclaim against the plaintiff.  The defendant is entitled to have leave to defend, or at least, conditional leave to defend.

9. His argument is further advanced by saying the legislative intent of section 29(10) of MLO was enacted to protect borrowers. As I have found a private right might have been created between parties in acts contravening section 29(10) of MLO, leave to appeal should be granted in the interest of justice.

10. I am not persuaded by the Mr. Jang’s argument. In the Decision, I find it is arguable that a private right between the parties might have been established in cases where contravention of section 29(10) of MLO is noted. Having said that, I maintain my holding that there was no evidence in establishing collusion between the plaintiff, Unique Mortgage or SEAL in procuring the mortgage loan advanced to the defendant. The dealings between the defendant, SEAL and/or Unique Mortgage are irrelevant to the mortgage loan agreement with the plaintiff. Mr. Lau, counsel for the plaintiff, has rightly submitted, the defendant might have a valid claim against SEAL and/or Unique Mortgage when the said sums have been charged and collected from the defendant, which might be in  contravention of section 29(10) of MLO.

11. As the defendant’s affirmation did not contain believable evidence that appeared to be collusion between the plaintiff, SEAL and/ Unique Mortgage, whether a private right has been established under section 29(10) of MLO does not assist the defendant’s defence.

12. I am of the view that the defendant’s appeal against the Decision lacks reasonable prospect of success and there is nothing in the interest of justice why the defendant’s appeal should be heard.

The plaintiff’s application

13. I ordered costs of the plaintiff’s application for summary judgment and this action be to the plaintiff, with certificate of counsel, to be taxed if not agreed. It should be made absolute in absence of application to vary by any parties within 14 days from the date of the Decision. The costs order nisi was then made absolute on 31December 2014. The plaintiff filed a summons to vary the costs order nisi on 23January 2015, which is around 3 weeks out of time.

14. The plaintiff seeks an order to vary the costs order nisi to one that the defendant shall pay the plaintiff’s costs on an indemnity basis. Mr. Lau relied on Clause 12 of the mortgage agreement:

“It is also agreed that the Borrower [the defendant] will be liable to the Lender [the plaintiff] on a full indemnity basis for all legal costs, charges and expenses (such costs, charges and expenses shall alternatively be taxed on the solicitors and own client scale) and all other disbursements charges and expenses which the Lender may incur in enforcing the provisions of this Agreement against the Borrower and in recovering from the Borrower all or any sums payable hereunder. [emphasis added]”

15. I aware the plaintiff has duly pleaded “costs on indemnity basis” of this action in the prayer of the statement of claim.

16. Mr. Lau concedes the plaintiff’s application to vary the costs order nisi out of time came without explanation. No affirmation has been filed to explain the reason for the tardiness.

17. Mr Jang opposed costs should be awarded to the plaintiff on an indemnity basis, he cited Hang Seng Credit Card Ltd v. Tsang Nga Lee [2000] 3 HKLRD 33, Yam J dismissed the appeal by the plaintiff appellant, the credit card company, in applying for costs arising from a default judgment against the defendant respondent on an indemnity basis, where the legal costs provision expressly stipulated in the credit card contract to be paid on an indemnity basis. Yam J dismissed the appeal on the basis that the contract between the credit card company and the defendant respondent, a consumer, was an unconscionable one. I find this case is distinguishable from the present action because the mortgage agreement was far from an unconscionable contract.  

18. Albeit there was no explanation as to why the plaintiff’s application was made out of time, the period of delay was not significant. I do not find the defendant is able to resist the plaintiff’s application when the costs provision was expressly stipulated in Clause 12 of the mortgage agreement with clarity, and was well pleaded in the prayer of the plaintiff’s statement of claim in the outset.  The plaintiff’s application to vary the costs order nisi out of time is justified.

Conclusion

19. I dismiss the defendant’s application for leave to appeal against the Decision.

20. I grant leave to the plaintiff to vary the costs order nisi in the Decision out of time, that the plaintiff’s costs of the action and the summary judgment application be to the plaintiff, on an indemnity basis, to be taxed if not agreed.

21. Costs of both the defendant’s summons filed on 6^th January 2015 and the plaintiff’s summons filed on 23^rd January 2015 be to the plaintiff, on an indemnity basis, to be taxed if not agreed.