WONG MING WAI v. TSUI KAM MING t/a TUNG TAI CONSTRUCTION CO.

CACV 179/1999

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 179 OF 1999

(ON APPEAL FROM HCA 8846 OF 1997)

----------------------

----------------------

J U D G M E N T

----------------------

Rogers, J.A. :

1. This is an appeal from a decision of Chung, J. when he was sitting as a Deputy Judge. The action was heard in the middle of May and the judgment was handed down on 21st May.

2. The case concerned a claim by the Plaintiff, Mr. Wong, to recover a loan which had been made to the Defendant, Mr. Tsui plus interest.

3. Both Mr. Wong and Mr. Tsui were construction sub-contractors. The Plaintiff was introduced to the Defendant by a mutual friend, Mr. Tsui Pak Ning. It was not disputed that the Defendant was short of money and needed some form of bridging finance.

4. It matters not how the payment was made, but there was a finding of fact by the Judge that the Plaintiff made a loan of $1 m to the Defendant. The loan was made, as the Judge found as a matter of fact, on 26th August 1994. The Judge did not accept all the evidence of either the Plaintiff or the Defendant but he found that under the agreement, the amount repayable by the Defendant was $1.2 m; that was secured by a cheque which the Defendant had written. The cheque was post-dated. It was dated 20th December 1994.

5. Largely on the footing of the date of that cheque, the Judge also found as a fact that the loan plus the interest was repayable on 20th December 1994 which was, of course, a few days less than 4 months from 26th August 1994. The cheque was presented by the Plaintiff for payment on 14th February 1995; it was dishonoured and hence followed the action.

6. There was some evidence which the Judge recited verbatim, at page 12 of his judgment, from the Plaintiff when he was cross-examined as to why the cheque was paid into the bank later than the 20th December 1994. The Judge summarised that evidence as follows: it was that the Defendant had asked for further time; the Plaintiff at the time was busy; he was not too concerned because the other Mr. Tsui was a guarantor and therefore there was no need to press for immediate repayment and he was willing to give the Defendant an indulgence since he regarded the Defendant as a friend. But the finding of fact, as I say, was that the loan plus the interest was payable on 20th December 1994. It follows from that that at any time between 20th December 1994 and 14th February 1995, the Plaintiff could have demanded repayment of the loan plus the interest.

7. On the basis of those findings, it follows that if the interest is calculated, it would work out at over 60% per annum, namely 62.39%. That brings into play section 24 of the Money Lenders Ordinance, Cap. 163. Section 24 provides that :-

"(1) Any person (whether a money lender or not) who lends or offers to lend money at an effective rate of interest which exceeds 60 per cent per annum commits an offence."

And sub-section (2) provides that :-

"No agreement for the repayment of any loan or for the payment of interest on any loan and on security given in respect of any such agreement or loan shall be enforceable in any case in which the effective rate of interest exceeds the rate specified in subsection (1)."

8. It follows that the loan is irrecoverable if it is in excess of 60%. The Court is not able to re-open the agreement between the parties under section 25 of the Ordinance because section 25 starts with the words in sub-section (1) "Subject to section 24(2)" which clearly indicate that, if the particular loan falls foul of the provisions of section 24, the matter cannot be re-opened by the Court.

9. Before us, Mr. Allan on behalf of the Plaintiff who has taken every point that could be taken on the Plaintiff's behalf, has urged us that in the absence of evidence from an expert witness, the Judge should not have found the rate of interest.

10. In my view, there was no need for an expert witness in this case. The Judge found the various parameters of the loan, namely, the amount that was lent; the period for which it was lent and the interest which was payable at the end of that period. What followed was a simple matter of mechanical calculation. It may well have been that in the days before the electronic calculator existed, an accountant would have been called to make that mechanical calculation. But in this day and age, that is no longer necessary.

11. I should add, that it is no part of an expert witness's function to give evidence or opinions relating to factual matters as to, for example, the period of the loan, the amount of the loan or such other factors. Those are matters for the Court to find as a matter of fact and do not come within the province of an expert witness's evidence.

12. The next point taken by Mr. Allan was as to whether the Money Lenders Ordinance applied to this transaction. Clearly, in my view, section 24 applies whether the person seeking to recover the loan is a money lender or not. In my view, that point then falls away.

13. The only other matter which arose did so as a result of a query from the Court as to whether the period of the loan had been extended to 14th February 1995 but, in my view, it had not. All that had happened was that the payment had not been demanded. There was no extension of the loan period, let alone an agreement to extend the loan. This, in my view, is implicit in the Judge's findings as to the period of the loan.

14. In conclusion, I would say that I have some sympathy for the Plaintiff who clearly made a loan of a million dollars and now finds it irrecoverable. But, in my view, the provisions of the Ordinance are clear and this appeal should be dismissed.

Keith J.A.:

15. I agree that this appeal must be dismissed. I add a few words of my own on the only issue of substance which in my opinion this appeal raises, namely the date by when the loan was to be repaid.

16. The judge found as a fact that the loan was repayable by 20th December 1994. In reaching that conclusion, he rejected the Plaintiff's evidence that it had been agreed that the loan was repayable within 4 months of the making of the loan, i.e. by 26th December 1994. He also rejected the Defendant's evidence that it had been agreed that the loan was repayable within 31/2 months of the making of the loan, i.e. by about 10th December 1994. The judge found, by way of inference, that the date by which it had been agreed the loan was repayable was the date on which the cheque provided by the Defendant by way of security for the repayment of the loan could be presented, i.e. by 20th December 1994. In my view, there is no basis on which that finding can be challenged.

17. However, the question then arises as to whether the date by when the loan was to be repaid was extended by agreement. The Plaintiff did not present the cheque for payment on 20th December 1994. He was asked why. His answer was that, shortly after 20th December 1994, the Defendant telephoned him and asked for further time to repay the loan. The Plaintiff did not say what answer he gave to the Defendant, though he decided in his own mind to give the Defendant more time to repay the loan because the Defendant was a friend of his. He did not in fact present the cheque for payment until 14th February 1995. In those circumstances, could it be said that the period for the repayment of the loan was extended beyond 26th December 1994? If so, could it be said that the agreed interest of $200,000.00 was in respect of a period longer than 4 months, in which case the rate of interest would not have been in excess of 60%?

18. I take the view that this issue was not addressed by the judge. When he referred to, and commented on, the Plaintiff's evidence relating to this conversation, he was doing so in the context of determining by when the loan was originally agreed to be repayable. He was not addressing the issue whether the effect of the conversation was to extend the period of the original loan and what the effect of any such extension was. I do not, of course, criticise the judge in any way for not addressing that issue. The issue was not one on which he was asked to rule.

19. In my view, had the judge addressed that issue, he would have been bound to conclude that there had been no extension of the period of the original loan. On the Plaintiff's evidence, there had been no agreement for the extension of the period of the loan. The Plaintiff had merely explained why he had not presented the cheque for payment on 20th December 1994, but had only presented it for payment on 14th February 1995. Indeed, without any conversation as to the new date by when the loan was to be repaid, it is difficult to see how the conversation could have amounted to an agreement for the extension of the period. Thus, far from agreeing an extension of the period for the repayment of the loan, the Plaintiff was doing no more than refraining from enforcing his security for the repayment of the loan for such time as he chose.

20. I should add that, even if the conversation had amounted to an agreed extension of the period for the repayment of the loan to an unidentified date beyond 26th December 1994, that agreement would not have had the effect of altering the period in respect of which the interest of $200,000.00 was payable. The effect of the agreement would have been that the interest of $200,000.00 would still have been payable for the period up to 20th December 1994, and that the unidentified period for which the repayment of the loan was extended would have been interest-free.

Cheung, J. :

21. I agree.