WONG KWAI FUN v. LI FUNG

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H E A D N O T E

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Money Lenders Ordinance (Cap. 163) ss.18, 23, 24 & 25 - effective rate of interest exceeding 60 per cent per annum - security given for loan illegal and unenforceable - power of court to re-open transaction - whether right of subrogation given rise by discharge of former charge over property where money not forming part of loan - assaults - threats amounting to assaults constituting actionable wrong - aggravated damages - exemplary damages.

1986, No.A5810

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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Date of handing down judgment: 28 January 1994

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J U D G M E N T

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1. This action was commenced by the plaintiff claiming against the defendant for possession of the premises known as Flat B with its Flat Roof on 4th Floor of General Building, at Nos. 6-14 Centre Street and erected on Inland Lots Nos. 5101, 5102, 5103, 5104 and The Remaining Portion of Inland Lot No. 5105, Hong Kong ("the property") and mesne profits for wrongful occupation thereof

COMMON GROUNDS

2. There are the following common facts and documents although the reasons and purposes for, and the effect and validity of, them are in dispute:--

(a) The defendant was prior to 8/9/86 the registered owner of the property.

(b) The defendant has been in occupation of the property.

(c) The defendant executed a power of attorney dated 2/4/86 in favour of one Ho Sum Wah ("Ho") giving him the power to sell the property, to receive the proceeds of sale and to redeem the mortgages thereon ("the power of attorney").

(d) By an agreement made between the defendant and one Wong Kwai Wing ("Wong") dated 18/4/86 ("the 18/4/86 agreement"), the defendant agreed to sell the property to Wong with vacant possession at the price of $600,000.

(e) By an agreement made between the plaintiff and Wong dated 6/8/86 ("the 6/8/86 agreement"), Wong agreed to sell the property to the plaintiff with vacant possession at the price of $490,000.

(f) By an assignment dated 8/9/86 ("the suit assignment"), Ho, as the defendant's attorney by virtue of the power of attorney, assigned the property to the plaintiff free from any encumbrance and Wong joined in the assignment as confirmor.

THE PLAINTIFF'S CASE

3. The plaintiff's case and evidence is simple and straightforward. He told me that in 1986, his younger brother, Wong, was running a Hollywood Co. situate at Room 1818 Hollywood Centre, No. 680, Nathan Road, Kowloon ("Room 1818") doing trading and property agency businesses. In early April 1986, Wong intended to purchase a property (which turned out to be the property in issue) from a customer surnamed Li and that the customer asked for a cash cheque. As Wong did not have sufficient money in his bank account, he asked the plaintiff to draw a cash cheque. So the plaintiff issued a cash cheque for $118,850, exhibit D1, to Wong who could then have dealing with the seller.

4. In August 1986, Wong told the plaintiff that he failed to locate the seller when the completion was due, that he had given some money to the seller, that a sale and purchase agreement had been signed, that there was a letter of authorization (presumably the power of attorney), and that in order to gain possession of the property, it might be necessary to take legal action. Wong asked if the plaintiff would buy the property from him with the price from the $600,000 agreed between him and the seller cut to $490,000, realising that legal fees were likely to be incurred for obtaining possession. The plaintiff agreed.

5. So, on 6/8/86, the 6/8/86 agreement was entered into between the plaintiff and Wong. Upon the completion of the transaction by the suit assignment, the plaintiff mortgaged the property to the Hongkong and Shanghai Banking Corporation ("HK Bank").

6. In October 1986, the plaintiff gave instructions to solicitors to issue a writ for recovery of possession of the property.

7. The plaintiff's case is simply that since 8/9/86, the date of the suit assignment, he has been the registered owner of the property and the defendant has had no right to be or remain there.

8. The property was before the suit assignment subject to two mortgages created by the defendant in favour of Nanyang Commercial Bank as security for loans or banking facilities. Upon completion of the purchase, the plaintiff discharged the two mortgages by paying a sum of $302,856.94, inclusive of legal expenses, to that bank. Based on this, the plaintiff claims by way of a counterclaim to counterclaim that irrespective of his claim, he is entitled to be subrogated to the rights of Nanyang Commercial Bank over the property for that sum.

THE DEFENDANT'S CASE

9. The defendant's case is that the documents and the matters or steps taken referred to in (c), (d) and (f) above were all done as part and partial of an illegal and unenforceable money-lending transaction. Briefly, he borrowed $150,000 from the pla0intiff on 2/4/86 and the power of attorney was a security for the loan and interest thereon. He was compelled by threats to execute the 18/4/86 agreement with Wong, which was a further security. The main thrust of the defendant's contention is that the interest charged was around 400% per annum. On this basis and others like duress and illegality, the defendant counterclaims for various declarations that the documents referred to in (c), (d) and (f) above were void and unenforceable and also for cancellation of those documents.

10. The defendant also counterclaims damages for assaults committed on him and his family members and threats uttered to them, for which he holds the plaintiff liable.

THE ISSUES

11. The main issues between the parties are:

(a) whether there was a genuine sale of the property by the defendant;

(b) whether there was a loan of $150,000 or thereabout to the defendant;

(c) if there was such a loan, whether the loan was illegal or unenforceable or void for contravening the provisions of the Money Lenders Ordinance, Cap. 163;

(d) whether the relevant documents were security for the loan and unenforceable and void;

(e) whether the plaintiff was the lender;

(f) whether there were the assaults and threats as alleged by the defendant;

(g) whether the plaintiff was the perpetrator of the assaults and threats; and

(h) whether the plaintiff is entitled by way of subrogation to an equitable charge over the property in respect of the sum of $302,856.94.

ASSESSMENT OF WITNESSES AND EVALUATION OF THE EVIDENCE

12. The title documents of the property on the face of them being all in favour of the plaintiff, the burden of proving these issues rests squarely on the defendant. The defendant had the right to begin. He, his wife, Madam Lam Kam Mui ("Madam Lam"), as well as his niece, Ms. Li Hung Har ("Ms. Li"), gave evidence. The plaintiff was the only person who gave evidence in support of his own case.

13. The plaintiff cross-examined the defendant and his wife at some length. He mainly attacked the defendant's evidence and credibility by referring to the contents of the defendant's statements made to the police dated 25/6/87, 28/6/87, 25/7/87 and 14/12/87, being exhibits P2, P1, P3 and P5 respectively. Some of these statements are more detailed than others. In exhibits P2 and P1, for instance, there was no mention that the defendant saw anybody surnamed Fung (by which the defendant told me that he knew the plaintiff) on 1/4/86 or 2/4/86. While exhibit P1 was silent on the point, exhibit P2 contained a reference that Fung telephoned the defendant on 17/4/86 and visited the property in that evening. Exhibit P3 did not touch on any event that took place on 1/4/86 although it mentioned Fung in the events that occurred on 2/4/86. Exhibit P4 was the first and only statement of the defendant that dealt with the events on 1/4/86 in connection with Fung and it also described Fung's visit to the property in the evening of 1/4/86. It also mentioned the dealings with Fung on 2/4/86. The common factor of all these four exhibits is that there was no reference to Wong's contact with the defendant on both 28/5/86 and 29/5/86 regarding the newspaper advertisements put up by the defendant for the sale of the property at the price of 650,000.

14. The defendant was long-winded in answering questions. His answers were not always directed to the questions asked of him, and on a number of occasions he went off telling me a lot of irrelevant matters. He was repetitive and his manner of giving evidence annoying. However, apart from the two matters referred to in the following paragraph, there is no significant discrepancy between his statements to the police as a whole and the story he told me. The unsatisfactory way in which he gave evidence was caused, I think, partly by his own style of expression and partly because he gave evidence in Cantonese whereas he is a Hakka and his usual language is Mandarin. I feel that the main difficulty confronting him was his hatred for what the plaintiff and the other persons had done to him and his family during the course of 1986. He told me that he feared to face the plaintiff. Madam Lam's mother-tongue was also Hakka and she was similarly reluctant to answer questions put to her by the plaintiff. Notwithstanding these weaknesses in the defendant's evidence, I do not find him to be basically dishonest. Most of his oral testimony is supported by and consistent with the contemporaneous documents. Moreover, the evidence given by his niece and wife also supports the major part of his evidence. I have no doubt as to the truthfulness of Ms. Li's evidence which I accept unreservedly.

15. There are two matters in the evidence of the defendant and his wife which I do not accept. The defendant and his wife said that he did not gamble. There were two references in his statements to the police that he gambled. I feel that the defendant and his wife tried to deny the defendant's gambling in an attempt to paint a picture that the defendant had an impeccable character. However, I accept Ms. Li's evidence that she did not know about the defendant's gambling for either she was too young at the time or she simply did not know. I also do not accept that Wong pressurised the defendant on 28/5/86 to put up newspaper advertisements to sell the property, for this point was never mentioned in the defendant's statements to the police and both the wording of the advertisement which the defendant admitted to be drafted by himself and the relatively large size of the advertisement tell against the allegation. Apart from these two matters, I accept the totality of the evidence given on behalf of the defendant.

16. The plaintiff conducted the trial all by himself. He impressed me as a very clever man. He addressed and made applications to me and conducted the cross-examination of the defendant and his witnesses admirably as a layman. He was good at reasoning and analysis, sharp on facts and systematic in presentation. However, despite his sophisticated arguments and explanations, and notwithstanding his knowledge in conveyancing and financing matters, he was not able to explain satisfactorily why some documents existed and others were not produced. Moreover, a significant portion of his case and testimony is not supported by or consistent with the contemporaneous documents.

17. The plaintiff's case and evidence concerning the alleged purchase of the property are summarised below for closer examination:

(a) On 1/4/86, there was a provisional sale and purchase agreement in respect of the property whereby the defendant agreed to sell it to Wong or Hollywood Co., Wong's company, at the price of $600,000 and the deposit agreed to be paid to the defendant the following day was $120,000, i.e., 20% of the purchase price ("the provisional agreement").

(b) On 2/4/86, the defendant wanted to obtain from Wong a 40% deposit in the sum of $240,000, as opposed to the agreed sum of $120,000. For that purpose, the defendant signed the 2/4/86 Chinese document and offered to pay $40,000 as tea money or commission. The effect of the 2/4/86 Chinese document is that the property was transferred for $240,000 with a power reserved for the defendant to buy back for the same amount by 3/7/86, and it was reinforced with a deposit of 6 cheques drawn by him for a total of $240,000 as security. Wong rejected the defendant's proposal and the 2/4/86 Chinese document was therefore not signed by the "transferee" and rejected. Only the agreed deposit of $120,000 was then paid by Wong to the defendant.

(c) The cash of $30,000 over the $120,000 (making up the defendant's alleged loan of $150,000) received by the defendant on 2/4/86 was a private loan from a Lau Chun Hung ("Lau") to the defendant, and the plaintiff did not know the details of it.

(d) On 18/4/86, before the 18/4/86 agreement was signed by the defendant and Wong, there was a dispute between the two as to the value of the property and they wanted to cancel the provisional agreement. As the defendant was not able to repay the $120,000 received by him on 2/4/86 from Wong as deposit, there could be no cancellation. Wong paid the defendant another $120,000 and allowed a cancellation clause to be included in the 18/4/86 agreement that if the defendant paid $245,000 (i.e., $5,000 above $240,000, the total of the deposits paid) by 3/7/86, the completion date, then the defendant was entitled to cancel the 18/4/86 agreement.

18. There are a number of flaws in the plaintiff's account.

19. The provisional agreement allegedly entered into by the defendant and Wong on 1/4/86 was not produced. It was never referred to in the plaintiff's List of Documents in this action, nor in any other document, nor indeed in the Amended Statement of Claim.

20. The plaintiff's story cannot withstand any careful scrutiny. If it is true, then Wong would have on 2/4/86 refused to pay $240,000 as deposit and yet agreed to pay $240,000 as deposit, without the security of the proposed 6 cheques and the benefit of the offered $40,000, on 18/4/86 when well appreciating that the defendant was not able to repay even $120,000. The only monetary benefit that Wong could obtain from paying the additional $120,000 as deposit was the $5,000.

21. There is no credible evidence as to why Wong changed his attitude between 2/4/86 and 18/4/86, only 16 days later. On the plaintiff's case, on 1/4/86 there was already the provisional agreement that the defendant would sell the property to Wong at the price of $600,000 and that the deposit to be paid was $120,000. On 2/4/86 it was the defendant who requested to get a deposit of $240,000 immediately. Wong rejected the request. The effect of the 18/4/86 agreement was substantially the same as the 2/4/86 Chinese document, save that for the buy back of the property the defendant had to pay an extra $5,000, and save that the purchase price was increased from $240,000 as stated in the 2/4/86 Chinese document to $600,000 in the 18/4/86 agreement. The plaintiff was not able to explain satisfactorily why Wong was willing to change his attitude from refusing to accept the defendant's proposal with all the benefits attached to it on 2/4/86 to agreeing to accept the defendant's proposal on 18/4/86, only for a small advantage of the opportunity to earn $5,000. I do not think it credible that Wong accepted the proposal on 18/4/86 for having that opportunity if there had been a true transaction of sale and purchase of the property.

22. There is no evidence or even assertion that Wong was softened up in the interim. The plaintiff's so-called explanation was that what Wong did was for the purpose of avoiding the dispute with the defendant as to the market value of the property and the possible trouble consequent upon that dispute. But according to the plaintiff, there was already in existence the provisional agreement whereby the price for the property had been mutually agreed to be $600,000. If this were true, it would have been simply not open to the defendant to argue about the market value. There was absolutely no reason for Wong to have agreed to the terms of the 18/4/86 agreement, had there been a genuine sale and purchase agreement, provisional or otherwise, and had he truly wanted to buy the property. The plaintiff told me that Hollywood Co. was a property dealer as well as agent. I do not believe that any real estate dealer in the position of Wong who had an agreement, albeit provisional, to buy a property, would have been agreeable to include a cancellation clause in a formal sale and purchase agreement, unless he did not wish or intend to buy the property.

23. On the other hand, according to the defendant's evidence, the money he obtained from the plaintiff on 2/4/86 (i.e., $148,850 comprising $30,000 in cash and money from the cheque for $118,850, and not only $120,000) was a loan. The 2/4/86 Chinese document was proposed by the plaintiff for him to sign but after realising the effect was to transfer the property, he pocketed it. He was then threatened and pressurised to go to a solicitors' office to sign the 18/4/86 agreement. He rejected the plaintiff's proposal on 2/4/86, and his change of attitude on 18/4/86 was caused by the threats uttered by the plaintiff and his associates.

24. Moreover, it is important to note that the 2/4/86 Chinese document provided the purchase price to be $240,000. This price makes nonsense of the story that Wong refused to accept this price of $240,000 on 2/4/86 whereas he accepted the price of $600,000 on 18/4/86. Conversely, if the provisional agreement existed, even if the defendant intended to obtain $240,000 as deposit on 2/4/86, there was no reason for him to agree to lower the originally and provisionally agreed price of $600,000 to $240,000.

25. The alleged dispute raised by the defendant on 18/4/86 could reasonably have been ignored by Wong without fear of any trouble or complexity that might possibly be caused by the defendant. Wong had, according to the plaintiff, the provisional agreement in hand, which could easily be registered to protect his interest in the property, or if he was kinder to the defendant, he could have formal sale and purchase agreement made with the defendant including a clause for the defendant to cancel it if he was to repay by completion date the $120,000 received on 2/4/86 with or without a sum of $5,000. That would have saved Wong from paying another $120,000 to the defendant, well knowing that the defendant could not even repay the $120,000 and that the defendant was a gambler, especially where the remaining outstanding purchase money in the sum of $360,000 might not even cover the outstanding mortgage loan.

26. The dispute over the value of the property on 18/4/86 also indicates that the 18/4/86 agreement was intended to be used as security for the repayment of the loan and interest. Had the price been agreed upon on 1/4/86, there could be no argument about the value on 18/4/86, and the most probable reason for the dispute was how much the property should be worth when it became obvious to the parties, or at least to Wong, that the property would have to be realised to cover the loan and interest.

27. It is therefore clear that the plaintiff's story is hard to believe and the defendant's story is much more consistent with the contemporaneous documents and much to be preferred.

28. There are documents, if they existed at all, which are too important to the plaintiff's case to be missing: the alleged provisional agreement, a receipt for $120,000 being 20% deposit received by the defendant on 2/4/86 and documentary evidence of the payment to the defendant of an additional sum of $120,000 on 18/4/86. None was produced. The plaintiff tried to explain the absence of these documents by using the excuse that he had been in jail and the documents were not available to him. What is strange is that the plaintiff's List of Documents prepared by his former solicitors did not allude to the existence of any of these documents. The possibility that his former solicitors would have omitted to include them into the List is so slim as to be non-existent. The plaintiff failed to produce any evidence showing that $120,000 was made available on 18/4/86; there is nothing such as a cheque or any savings account deposit passbook proving that that sum or a similar one was withdrawn on that day. The absence of this kind of evidence is too convenient for a clever businessman like the plaintiff and too untidy and careless for his alleged large organization of property dealing or money-lending, especially viewed in the light of the evidence that for a small sum of $500, a receipt was given by Hollywood Trading Co. to the defendant.

29. On the other hand, the letter dated 12/2/87 from Leo Lok & Co., who prepared and witnessed the execution of the 18/4/86 agreement, lends support to the defendant's case that no payment was received by him on 18/4/86.

30. The Plaintiff said that he issued his cheque for $118,850 to lend to Wong, and not as a loan to the defendant. He admitted that during the relevant period, he was operating as an illegal money-lender and the reason for the illegality of his activities as a money-lender was that he charged excessive interest. He also agreed that all the companies under his name were under his control and carrying on illegal money-lending transactions and activities. The funds used for the illegal loans came from his own bank accounts and also that he had used false information to obtain financing from banks to the extent of about $16 million, a major part of which was used for his money-lending activities.

31. He said that the defendant was selling the property to Wong. It can be seen from the 2/4/86 Chinese document (even upon the plaintiff's version that it was voluntarily submitted by the defendant but rejected by Wong) that the defendant did not wish to sell the property without a condition whereby he could buy it back. What the defendant needed at the time was money. There was no reason why the plaintiff, carrying on illegal money-lending business, should not have seized the opportunity of lending money to the defendant at an excessive rate than lending the $118,850 to Wong, probably without any interest.

32. The contents of the 2/4/86 Chinese document are to the effect that the defendant had transferred the property to Che Long Group Investment Company ("Che Long") for $240,000 and he had the right to re-purchase the property from Che Long by the payment of $240,000 in 6 instalments of $40,000 each at 15-day intervals. But for the fact that this document was pocketed by the defendant, it was obviously intended to be used as further security for repayment. The plaintiff's story is that the defendant on 2/4/86 attempted to ask Wong to put down a 40% deposit for the purchase of the property, and that was the reason why the defendant filled in the 2/4/86 Chinese document and signed it, but that it was not signed by the proposed transferee. I do not accept the plaintiff's story.

33. The 2/4/86 Chinese document is a printed form with blanks in it to be filled out. It was printed as addressed to Che Long. Unless the form was one of the formalities that Che Long required borrowers to complete regarding loans, it would not have been in existence at the plaintiff's office at Room 1818. The plaintiff accepted that this form was used for money-lending. The format of this form and the contents are most consistent with the defendant's evidence and contradict the plaintiff's story.

34. The form shows clearly that for a loan, the property of the borrower would be used as a security. If the defendant had agreed to sell the property at $600,000, there could not have been any good reason for him to propose in this document to transfer the property for $240,000, lowering the price by 60%.

35. The plaintiff argued that the vendor of a property would make a power of attorney in favour of the purchaser where the vendor had no further interest in the property after receiving the deposit and taking into consideration the outstanding mortgage loans on the property. This argument does not avail the plaintiff on the facts as alleged by him, which were that on 2/4/86 after receiving $120,000, the defendant still had an interest of at least $120,000 in the balance of the purchase money which Wong agreed to and did pay him on 18/4/86. Even without the power of attorney, Wong's interest in the property could have been protected to the same extent by registering the provisional agreement with the Land Office, if it existed. This shows quite clearly that the provisional agreement did not in fact exist.

36. There is also no doubt that the power of attorney was also in the nature of and to be used as a security for repayment. It was referred to in the 2/4/86 Chinese document as a letter of authorization and evidence of the transfer of the property. The plaintiff argued that the power of attorney was reasonably provided by the defendant to Wong because Wong was to pay a 20% deposit immediately without having the opportunity to first check the incumbrances on the property. That, it was argued, was for protecting Wong. There was no explanation proffered by the plaintiff why for Wong's protection, the alleged provisional agreement was not registered, if Wong in fact sought protection. It was alleged that the defendant wanted to obtain a 40% deposit in the sum of $240,000 and he was therefore willing to provide the power of attorney. If he had been able to obtain $240,000 on 2/4/86, well knowing that there was not a large sum left of the purchase money after taking into account his mortgage loans, then the plaintiff's argument might be more attractive. When the plaintiff's case is that the defendant only received a sum of $120,000 from Wong on 2/4/86, it is most improbable that the defendant was willing to provide the power of attorney in the course of a genuine sale transaction.

37. I therefore reject the plaintiff's story, and in particular, that there was a genuine sale of the property by the defendant, that there was a provisional sale and purchase agreement on 1/4/86 or 2/4/86, that the defendant was paid $120,000 on 18/4/86, that the power of attorney was provided in the course of a sale and not for a loan.

38. The plaintiff had put to the defendant in cross-examination that he was never at the defendant's home, being the property. Not only the defendant gave evidence that the plaintiff, then represented to the defendant as Mr. Fung, was there on 2 occasions, both the defendant's niece and wife told me that the plaintiff was there. This evidence has to be viewed against their evidence that persons other than the plaintiff visited the property after 17/4/86. If the defendant and his witnesses were lying about the plaintiff's visits prior to 18/4/86 and so dishonestly minded to attach blame to the plaintiff, with their hatred towards the plaintiff, they could have, over shoes over boots, easily told a further untruth by substituting the plaintiff for one of those other persons who visited the property after 17/4/86. I believe the defendant and his witnesses and not the plaintiff on this score. There would have been no reason for the plaintiff to be at the property but for the fact that he was personally involved in the transactions.

39. Regarding the lender of the loan, the defendant's case is that either he borrowed the money from the plaintiff or from Che Long, an organisation owned or controlled by the plaintiff. The plaintiff was a shareholder and director of one Wisdom Development Company Limited, the Chinese version of which is "Che Long Trading and Investment Limited Company". It seems to me that what the defendant saw at Room 1818 was the name of this company as adopted by it or the plaintiff, being "Che Long Group Investment Company". Che Long, however, did not exist as a sole proprietorship or a firm but a limited company. The receipt for the $500 cash paid by the defendant was chopped with a stamp of Hollywood Trading Co. The plaintiff told me that Wong opened and operated a Hollywood Co. at Room 1818 and he also opened another company by the same name at that address. The plaintiff either owned or had close connection with all these companies. Anyhow, bearing in mind that the cheque for $118,850 which was cashed and the money from it given to the defendant was signed by the plaintiff, the proper inference in the circumstances is that it was the plaintiff who made the loan to the defendant. Whether the defendant's 6 cheques were drawn with Che Long as the payee does not matter. The loan was made by the plaintiff.

40. It is very clear that the terms of repayment of the loan were that the defendant had to pay 6 equal instalments of $40,000 each within 3 months at 15- day intervals. The plaintiff fairly admitted that the effective rate of interest on the loan based on such repayments was over 400% per annum, as worked out in accordance with Schedule 2 to the Money Lenders Ordinance, Cap. 163 by a firm retained by the defendant. The 6 post-dated cheques each for $40,000 were to be used as security for repayment.

41. In all the circumstances, I reject the plaintiff's evidence and his case. The evidence of the defendant and his witnesses is much more believable and reliable, and is accepted.

FINDINGS OF FACT

42. My findings of fact are as follows. The facts are set out in some detail so as to see the involvement of the plaintiff and the extent of the suffering of the defendant and his family members.

43. Shortly before April 1986, the defendant was in financial difficulties. On 1/4/86, his friend Lau took him to Room 1818 to borrow money therefrom. On the door, there were Chinese characters of "Hollywood Trading Company", but at the reception area of the office, the defendant saw a wooden board with the name of Che Long in very good Chinese calligraphy. Lau introduced the defendant to a Mr Fung (who was identified by the defendant and his wife in court to be the plaintiff). The defendant asked to borrow $150,000 and the plaintiff said there was no problem. Although upon the plaintiff mentioning that the repayment had to be made by 6 instalments with 6 cheques to be issued by the defendant each for $40,000 totalling $240,000 in a period of 3 months, the defendant, feeling the interest too high, refused to borrow, he was eventually persuaded by Lau to agree. After Lau filled out some forms, the plaintiff said to the defendant that he would come to his house in the evening because it was part of the company's procedure.

44. Sometime that early evening, Lau, the plaintiff and a person said to be his secretary came to the property. The defendant, Madam Lam, their four children and Ms. Li lived at the property. The plaintiff walked round the property and commented that the balcony was big and nice. The defendant said that he was not selling the property to which the plaintiff readily agreed. The plaintiff then told the defendant that he agreed to lend $150,000 to him. When the plaintiff asked Madam Lam to provide a personal guarantee for the loan, she protested angrily and objected to the borrowing. Upon the defendant telling the plaintiff that he did not wish to take up the loan, the plaintiff said that the defendant was obliged to pay for his retraction 3 sums of charges: $500 for his visit to the property, $1,500 for solicitors' fees, and $5,000 to compensate his loss of time and energy. However, the defendant paid only a sum of $500 in cash to the plaintiff who gave him a receipt therefor. The receipt was signed with a chop stamp of Hollywood Trading Co. Before he and his secretary left, the plaintiff told the defendant to attend a solicitors' office the following day to sign some documents concerning the procedure of his company. Lau stayed behind and persuaded the defendant that he should borrow the money. Madam Lam and Ms. Li both saw the plaintiff on this occasion.

45. On 2/4/86, Lau went to the property and took the defendant to a solicitors' office. While at that office, believing that his signing of a document shown him was a requisite procedure of the plaintiff's company for the loan as had previously been represented by the plaintiff, the defendant signed it. That was the power of attorney authorising Ho to sell the property and receive the proceeds. In fact, the defendant did not know Ho from Adam. He also paid the solicitors a sum of $350 and obtained a receipt for it.

46. He and Lau then went to Room 1818. The plaintiff asked him to issue 6 cheques each for $40,000 dated respectively 17/4/86, 3/5/86, 17/5/86, 3/6/86, 17/6/86 and 3/7/86 which he did. He asked Lau to fill in the payee for him, and Lau did it in English which he represented to the defendant to be "Che Long". Lau handed the original of the power of attorney to the plaintiff, telling the defendant that when all the cheques were honoured, the document would be returned to him. The plaintiff then brought a bundle of $1,000 notes totalling $30,000 with a Chinese document dated 2/4/86 to the defendant and asked him to sign it. The defendant complied (which became the 2/4/86 Chinese document), but upon realising that its purport included transferring the property, he pocketed it and asked the plaintiff to return the 6 cheques. Eventually, however, the plaintiff agreed to lend the money without retrieving that document from the defendant but keeping the cheques. The plaintiff then gave the cash of $30,000 to the defendant. After the defendant told the plaintiff that he had paid $350 to the solicitors, the plaintiff signed a cheque. He gave the cheque to an employee and told him to go with the defendant to the bank to withdraw the money. When the employee presented the cheque to the teller, the defendant overheard the teller say that the date was wrong. The employee then left the bank and later returned to the bank with another cheque. After the teller asked the defendant to sign on the back of the cheque, it was cashed and the money was handed to the defendant. The sum was $118,850. Although the loan was agreed to be $150,000, altogether the defendant only received $148,850 consisting of the cash of $30,000 and cash of $118,850 being the proceeds of the cheque. $1,500 for legal expenses was supposed to have been deducted from $150,000, leaving a sum of $148,500; the excess of $350 over the balance of $148,500 was for reimbursing the defendant for the $350 paid by him to the solicitors earlier. The loan was therefore $148,500. The cheque, of which exhibit D1 is a copy, was signed by the plaintiff in his personal capacity.

47. On 17/4/86, the defendant was unable to meet the first of his 6 cheques for $40,000 and he asked the plaintiff for an extension of 3 days. Over the telephone, the plaintiff warned the defendant: "If the cheque is not honoured, then your whole family will be killed by somebody. You telephone Mr. Lau right now." Lau was not helpful at all; he said: "Li Fung, your cheque must be honoured. ... Should any big problem happen to you and your family, I would not be responsible."

48. At about 9:40 p.m. that evening, Lau came to the property. After about 3 minutes, someone pressed the door bell and Lau opened the door for the plaintiff and 3 other persons to enter. Although the defendant suggested a way to repay the loan, the plaintiff refused and instead told him to attend a solicitors' office to sign a sale and purchase agreement to sell the property for $600,000. Upon the defendant's suggestion of calling the police, the plaintiff said: "If you report to the police, then your whole family will be killed by somebody." The voice was loud, and the tone hostile. The 3 persons who accompanied the plaintiff also stood up as if they were going to beat the defendant. The plaintiff insisted on the defendant attending the solicitors' office the next day, adding that he had many employees who had to eat. He also said that before 3/7/86 he would come again to deal with the money. The defendant was frightened and he succumbed. His niece also gave evidence that the plaintiff was present at the property that evening, and this evidence belies the plaintiff's story that he was not there.

49. On 18/4/86 the defendant attended the office of the firm of solicitors as directed. On the ground floor, he saw Lau and 3 other persons, but only Lau and a tall and slim person went up with him to the solicitors' office. Lau then left. That tall and slim person and the defendant waited in the conference room. This person did not reveal his identity but told the defendant that it was Mr. Fung (who the defendant understood to be the plaintiff) who told him to attend, although when this person eventually signed the 18/4/86 agreement, the defendant learned that his name was Wong Kwai Wing. The defendant and Wong waited in the conference room for almost two hours before the 18/4/86 agreement was made ready. During this time, Wong told the defendant, "If you don't sign, you will not be able to go home. You will be beaten to death by somebody." The defendant asked Wong to have, inter alia, a condition to buy back the property included in the 18/4/86 agreement. After a solicitor explained briefly the contents of the 18/4/86 agreement to Wong and the defendant, both of them signed. Wong also demanded from the defendant $1,500 for legal charges in a hostile manner, and he complied with cash. He, however, learned from the solicitor that the fee was only $550. The 18/4/86 agreement was for the sale of the property at the price of $600,000. The completion date was 3/7/86 but there was a clause (in the Third Schedule thereto) that the defendant had the right to cancel it by paying a sum of $245,000 to Wong on the completion date. The 18/4/86 agreement was, similar to the power of attorney, plainly also a security for the repayment of the loan.

50. After about a week, on about 24/4/86, at about 2 or 3 a.m., Lau telephoned the defendant to say that his cheque could not be honoured and unless he repaid the plaintiff, the plaintiff would get somebody to beat him and do harm to his family. At about the same time the following day, a caller claiming to be surnamed Chan telephoned and complained that the defendant had issued bounced cheques. He told the defendant to repay all the money to Mr. Fung (the plaintiff) or that he and his family would be beaten up. A similar intimidating telephone call was received by the defendant at about the same time the next day, but the caller did not identify himself.

51. Nothing happened for about a month but on 25/5/86, at about 10:30 p.m., Wong, Lau and 2 or 3 strangers came to the property. The defendant, his wife, niece and 4 children were at home. Wong said he was sent by the plaintiff to collect all the money represented by the 6 cheques issued by the defendant, i.e., $240,000. Upon the defendant saying that the plaintiff told him on 17/4/86 to repay by 3/7/86, Wong became abusive and scolded the defendant. The 2 or 3 strangers stood up and forced the defendant to have a photograph of him taken. When he refused, one of the strangers pushed him to fall onto the floor and punched him twice. He succumbed. At that time, Madam Lam was in the master bedroom nursing the children to sleep. The strangers forcibly pushed and kicked open the bedroom door and dragged her out. She was on the floor and when she stood up after being told to, she was punched on the chest. She let a photograph of her and 2 children taken. Wong then asked the defendant to go to his (the defendant's) bank the following afternoon to check the credit balance of his current account. Being shaken, the defendant agreed.

52. Nor was the niece spared. On seeing the people's aggressive behaviour, Ms. Li was frightened and retired to her room. All of a sudden, somebody kicked at her door and forcibly dragged her out. She was fortunate enough to free herself and go to the kitchen to lock up the door. She only came out after she heard that the intruders had left.

53. The defendant and his wife then discovered that the keys to the main door and to the balcony door were missing. He immediately telephoned Lau but Lau denied knowledge although he promised to make inquiries.

54. On 26/5/86, the defendant and Madam Lam went to his bank and statements of his current account were obtained for being shown to Wong who was there. After that, Wong returned the keys to him.

55. On 30/5/86, the defendant advertised in a newspaper to sell the property at $650,000.

56. On about 30/5/86, Wong came to the property with 4 or 5 persons. Wong demanded from the defendant the keys to the property and when he refused, Wong threatened that the 4 or 5 persons would stay to live there. He scolded the defendant for a while and took the persons to leave.

57. The next evening, i.e., 1/6/86, shortly after 11 p.m., again Wong and 4 or 5 persons came. Wong demanded repayment of the whole of $240,000 immediately. The defendant pleaded for time till 3/7/86 but Wong refused. Wong told the defendant to go to his elder brother to get the money the next day. Upon the defendant refusing, Wong threatened that he and his whole family would be beaten to death.

58. Despite the threat, the defendant did not wish to go to see his elder brother. However, early in the morning on 2/6/86, Madam Lam and Ms. Li went to see the elder brother. Madam Lam returned empty-handed and related to the defendant that she failed to get the elder brother to help immediately.

59. Sometime after 9 a.m. the same day, Wong telephoned the defendant to say that he (Wong) was at the elder brother's company and asked the defendant to go over at once. The defendant refused despite Wong's threat that his fokis would go to the property immediately to kill the defendant and his whole family. The defendant dared Wong to do that and hung up.

60. In fact, the defendant felt extremely frightened and he was at his wit's end. He felt that Wong had thoroughly ruined his creditworthiness and everything was meaningless. He felt a great sense of guilt towards his family whom he believed would be killed. After he wrote a note addressed to Wong, asking Wong to spare his children, he locked himself inside his room and attempted to take his own life by swallowing a whole bottle of about 100 sleeping pills mixed with detergent and coca cola. Fortunately, his groans from pains in the stomach were so loud that Madam Lam was alarmed. He was taken to hospital.

61. When he came to, he found a tube was in place through his nostril down into his stomach, causing great discomfort. The tube was only removed in the evening of 3/6/86 and he was discharged on 5/6/86.

62. On 8/6/86, at midnight, Wong and a group of persons came to the property. The defendant did not let them in. They struck at the metal door, pressed the door bell and called the intercom system for about half an hour before they left with rubbish placed in front of the doorway. They returned the following night making the same kind of disturbance. The defendant switched off all lights in the property and the whole family tried not to make any sound. Through the intercom, the defendant heard Wong say: "If you do not take your own life, you will be killed by somebody." Being absolutely shaken and distressed, the defendant opened the door of the balcony wanting to jump off it. Madam Lam was quick to stop him and took him to hospital the next day.

63. This time, the doctors did not discharge him until sometime in January 1987, although he was given some short periods of home leave in between. He was given psychiatric treatments. After January 1987, he had to attend hospital for follow-up treatments and for medication to be prescribed until November 1991 when he was considered and he considered himself fully recovered.

64. However, a number of incidents happened in between in June and July 1986. Ms. Li received a telephone call looking for the defendant. She told the caller he was in hospital. The caller then asked her how old she was. She said 14 years. The caller then threatened her that she would be indecently assaulted, raped and then sold to be a prostitute. She trembled with fright. There were occasions where the lock to the main gate of the property was jammed with glue and tooth-picks, and rubbish and even urine were left outside the door when the people outside causing disturbance were ignored by Madam Lam and Ms. Li. Sometime after 13/7/86, the ladies used the back door for getting in and out of the property.

65. On 18/9/86, at his request, the defendant was allowed home leave from hospital for the Mid-Autumn Festival. He returned home at about 11 a.m. and was taking a rest in bed. When the children returned home from school Ms. Li opened the door for them, but two strangers took the opportunity to rush in. One of the strangers rushed into the defendant's bedroom. While saying that he was from the finance company and scolding the defendant for failing to repay a loan, the stranger punched him, grabbed his hair and banged his head against the wall. The stranger then punched the defendant again but this time so forcefully that the defendant banged against the glass panes of the door, breaking the panes. In the meantime the other stranger outside beat Madam Lam. After the strangers left, the police was called and an ambulance came to take the defendant back to hospital.

66. Although the plaintiff was not physically present at the property and did not contact the defendant personally after 17/4/86, all the acts of Wong and the various strangers vis-a-vis the defendant and his family had been done either in the plaintiff's name or for his benefit as the money-lender. Despite the fact that he was found not guilty by the District Court for criminal offences relating to the transactions and activities with which this action is concerned, the civil standard of proof is different. On the balance of probabilities, I am satisfied that he was the person either carrying out the acts complained of personally or behind the scene and he should be liable for them.

67. All these events in 1986 had caused the defendant grave anxiety for the safety of himself and his family. He felt confused, worried and terrified. He did not even dare to get out of his residence and was hiding at home, and he became very suspicious about telephone calls. Even when he was giving evidence before me, he feared to face the plaintiff.

68. Sometime later, upon the advice of the police, the family, save for the niece, moved out of the property and stayed with a relative. The family only returned to live in the property in September 1988 when the plaintiff and others had been prosecuted.

69. After these unfortunate events, the defendant had not been gainfully employed. He felt that because of his attempts to commit suicide and his psychiatric treatments being known to his friends and others, his business reputation and creditworthiness had been completely ruined and banks did not trust him any more. Apart from that, he also felt that his stomach had been injured by the sleeping pills he took and that he had internal injuries. He further told me that it hurt when he breathed. On the other hand, he felt that he had fully recovered and the pressure on him was minor.

70. Unknown to the defendant at the material time, Ho assigned the property as his attorney to t e plaintiff with Wong as the confirmor by the suit assignment. Also unknown to him, the 2 mortgages on the property that he had made to the Nanyang Commercial Bank and a charging order in favour of the American Express International, Inc. against the property had all been discharged.

71. In a nutshell, I find the following as facts:

(a) There was no genuine sale of the property by the defendant to Wong or anybody else.

(b) The plaintiff made a loan of $148,500 (i.e., $150,000 less $1,500 deducted for expenses) to the defendant on 2/4/86. The amount to be repaid was $240,000 payable by 6 instalments of $40,000 each at 15-day intervals between 2/4/86 and 3/7/86. The effective rate of interest charged was in excess of 400% per annum.

(c) The power of attorney and the 18/4/86 agreement were for securing the repayment of that loan and interest.

(d) There were the assaults committed and threats uttered by the plaintiff and the other persons as described by the defendant.

(e) Those other persons were acting as agents or servants of the plaintiff and for whose acts the plaintiff is liable.

72. The history regarding the property does not end there. When the suit assignment took place on 8/9/86, the property was subject to the 2 mortgages in favour of Nanyang Commercial Bank. On that day, the plaintiff mortgaged the property to HK Bank and part of the purchase money paid by him for the property was used to discharge the outstanding balance of the loans under the said 2 mortgages. In fact, the sums totalling $302,856.94 paid for the discharge of the said 2 mortgages are the subject matter of the plaintiff's counterclaim to counterclaim for declaratory relief that he be subrogated to Nanyang Commercial Bank for that amount or alternatively that the property be charged for the amount in his favour.

73. The mortgage in favour of HK Bank was registered with the Land Office against the property on 6/10/86 and the defendant's counterclaim herein was registered on 7/1/87. HK Bank has brought an action intituled High Court Miscellaneous Proceedings Action No. 1090 of 1990 against the plaintiff and the defendant ("the said action"). Judgment in the said action was obtained by HK Bank against the plaintiff on 22/9/92 for vacant possession of the property and for a sum of $1,960,877.89 together with interest and costs. The defendant and HK Bank reached a compromise in the said action by way of a Tomlin Order dated 23/11/92 made by consent. The relevant parts of the Order are as follows:-

(3) If the plaintiff shall succeed in his claim herein against the defendant whereby the defendant is ordered inter alia to deliver up possession of the property to the plaintiff, the defendant shall consent to judgment to be entered in the said action in favour of HK Bank for possession of the property and mesne profits to be assessed from date of the inception of the said action to the date of delivery of vacant possession.

(4) If the defendant shall succeed in his counterclaim against the plaintiff and the plaintiff's claim is dismissed, and notwithstanding any decision of the court on the plaintiff's counterclaim to counterclaim,

(a) the defendant shall pay to HK Bank within 60 days the sum of $450,000;

(b) upon receipt of the said sum of $450,000, HK Bank shall withdraw the said action against the defendant (but without prejudice to any claim or judgment HK Bank may have against the plaintiff);

(c) HK Bank shall either consent to an Order that the said mortgage dated 8/9/86 in its favour registered against the property be vacated or alternatively agree to a discharge of the said mortgage.

74. In his opening, counsel told me that the said action and the present action would have been consolidated and HK Bank would appear as a party before me but for the compromise which was to avoid the necessity of deciding HK Bank's rights and to save the costs of HK Bank having to make representations to me.

75. HK Bank may be a bona fide purchaser without notice of the defects, if any, in the title of the plaintiff to the property. The law in England concerning the bona fide assignee or purchaser for value is summarised in Volume 32, Halsbury's Laws of England, para. 156, as follows:

"Any agreement with, or security taken by, a moneylender in respect of money lent by him is valid in favour of any bona fide assignee or holder for value without notice of any defect due to the operation of the Moneylenders Act 1927, and of any person deriving title under him."

76. I am not saying that the law in England applies to Hong Kong in this respect, but the compromise between HK Bank and the defendant covers both situations whether I hold for the plaintiff or for the defendant. It has enabled me to decide this case without considering HK Bank's rights in the property, if any, that might be affected by this judgment. I would proceed to consider this matter as purely one concerning the rights between the plaintiff and the defendant.

THE MONEY LENDERS ORDINANCE

77. I will set out the relevant statutory provisions of the Money Lenders Ordinance, Cap. 163 which form the backbone of the defendant's case. Section 18(1) of the Ordinance provides that no agreement for the repayment of money lent by a money lender or for the payment of interest on money so lent, and no security given to any money lender in respect of any such agreement or loan, shall be enforceable unless the documents required by that section, i.e., a note or memorandum of the agreement and a prescribed summary, are made and copies of them are given to the borrower. This is subject to section 18(3) referred to below.

78. Section 23 provides as follows:

"No money lender shall be entitled to recover in any court any money lent by him or any interest in respect thereof or to enforce any agreement made or security taken in respect of any loan made by him unless he satisfies the court by the production of his licence or otherwise that at the date of the loan or the making of the agreement or the taking of the security (as the case may be) he was licensed: ..."

79. By the Money Lenders (Amendment) Ordinance 1988, which came into force after the transactions the subject of this action had taken place, a proviso to section 23 was incorporated, which gives the court the power to enforce the agreement or security that contravenes the section with modifications and exceptions if the court considers it inequitable to do otherwise. Although the wording of section 18(3) was also amended by the Amendment Ordinance, it gave similar power to the court even before the amendment. There is therefore no dispute that section 18(3) in its unamended form in 1986 applies to the transactions the subject of this action.

80. Despite the late introduction of the proviso to section 23, it may be argued that its provisions should apply to all relevant transactions that come before the court for determination after the coming into force of the Amendment Ordinance. The provisions confer power on the court before which the enforcement of the offending loan agreement or security comes into question. The relevant time is when the matter comes before the court, not when the transaction took place. The language used is plain and clear, and where the court finds a contravention of the section it has power to apply the proviso.

81. However I am persuaded by Mr. Bharwaney's submission that the proviso to section 23 has no application to the subject transactions that took place in 1986 because it came into force after 1986. If the proviso is applied, then the Amendment Ordinance would be given retrospective effect and allowed to adversely affect the vested rights of borrowers who were and are entitled to rely on the protection offered by section 23 without the proviso. Such vested rights should not be taken away except by express language in the legislation.

82. The plaintiff did not produce any note or memorandum of the agreement for the loan as required by section 18, nor did he produce any licence or attempt to prove that he was at the material time a licensed money-lender. It follows, therefore, that section 18 applies to the present case with the power for the court to enforce the agreement or security with modifications or exceptions, whereas section 23 applies without any power for the court to do the same.

83. Mr. Bharwaney heavily relied on section 24 of the Ordinance which reads:

"(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.

(2) No agreement for the repayment of any loan or for the payment of interest on any loan and no 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).

(3) ...

(4) Any person who commits an offence under this action shall be liable to a fine of $100,000 and to imprisonment for 2 years.

(5) ..."

Section 25(1) of the Ordinance provides:

"(1) Subject to section 24(2), where--

(a). proceedings are taken in any court by any person (whether a money lender or not) for the recovery of any money lent or the enforcement of any agreement or security in respect of any loan; and

(b) subject to subsection (3), there is evidence which satisfies the court that the transaction is extortionate, the court may reopen the transaction so as to do justice between the parties having regard to all the circumstances, and, for the purpose, make such orders and give such directions in respect of the terms of the transaction or the rights of the parties thereunder as the court may think fit."

84. The effect of section 25(3) is that a transaction of loan with an effective rate of interest that exceeds the rate specified in section 24(1) is presumed to be one which is extortionate. It is therefore clear that the court is empowered by section 25(1) to reopen transactions where the effective interest rate is over 60%, although as section 25(1) is expressed to be subject to section 24(2), the court has no power to enforce the loan or security, even with modifications and exceptions, as it would have under section 18(3) or the proviso to section 23 (if the proviso applies).

85. As I said before, I find that there was a loan of $148,500 and the effective rate of interest charged on it was over 400% per annum. By reason of the excessive rate of interest, the loan, the agreement and the security for it must be illegal and unenforceable as being in contravention of section 24 of the Money Lenders Ordinance. The power of attorney and the 18/4/86 agreement were executed by the defendant as security of one form or another for the repayment of the loan and interest on it. These documents are therefore illegal, unenforceable and void.

86. The suit assignment was executed by Ho purportedly as attorney under the power of attorney and for the performance or completion of the 18/4/86 agreement which did not have any legal effect, and as such it was tainted with the same illegality and invalid. Section 24 makes any security unenforceable. Here the security was in the form of the power of attorney and the 18/4/86 agreement. The suit assignment was to enforce the security, carrying the 2 other documents into effect or fruition. If it is not struck down by the court, then the provisions of section 24 would just be dead letters. An illegal transaction which is in limine cannot logically be more damnable than one which is perfected; and if a transaction in limine is unenforceable, its being perfected should not be allowed to afford it any protection from being struck down by the section.

87. To look at the matter another way, the 18/4/86 agreement, if valid, would pass an equitable interest in the property to Wong or his nominee or assign the plaintiff. The assignment if valid would pass the legal title in the property to the plaintiff. Where the equitable interest is unenforceable and void, the plaintiff could only have obtained the legal title without the beneficial interest, and he would simply become a trustee holding the legal title in favour of the defendant. The trust is now determined by the defendant as the sole beneficiary sui juris, asking the court in effect to determine the trust. This wish of the sole beneficiary must be given effect to. I am therefore of the view that all these documents purporting to affect the title of the defendant to the property are not enforceable and the court will not recognise any effect purported to have been created by them.

88. The plaintiff is not required to be a money-lender to come within the ambit of section 24, as opposed to sections 18 and 23. He had, however, very fairly admitted that he was at the material times operating as an illegal money-lender. He had not adduced any evidence to prove that the transactions in issue were not encompassed by sections 18 and 23. For the contravention of these sections, the transactions giving him title to the property are also unenforceable. Although I do not need to decide the point because of my above ruling based on section 24, I would also say that in all the circumstances of this case, I am not prepared to exercise my power under section 18(3) and the proviso to section 23 (even if the proviso were applicable) to enforce the agreement or security.

89. In the circumstances, I declare that all of the documents, namely, the power of attorney, the 18/4/86 agreement and the suit assignment are all unenforceable and void. They should be delivered up for cancellation, and if they are lost or otherwise no longer available, I make a declaration that they are cancelled and were at all times void and of no effect. The plaintiff's claim for possession of the property is dismissed.

REOPENING THE TRANSACTION

90. Section 25(1) of the Ordinance gives the court power to reopen extortionate transactions so as to do justice between the parties having regard to all the circumstances, although it has no power to enforce the loan agreement or security as it would have under section 18(3) or the proviso to section 23 (if the proviso has application).

91. In the present case, despite the plaintiff's denial, I have found as a fact that the plaintiff made a loan of $148,500 to the defendant. The grossly exorbitant interest charged alone makes it obvious that the transaction is extortionate. To do justice between the parties, I am of the view that a sum of $146,500 should be paid by the defendant to the plaintiff. This sum is reached by reducing the $148,500 that the defendant received from the plaintiff on 2/4/86 by the $500 paid to the plaintiff on 1/4/86 and the $1,500 paid to Wong on 18/4/86. The two sums were paid as expenses which would not have been necessary if the plaintiff had not sought or created the unenforceable security.

92. When reaching this sum, I am not unmindful of the circumstances surrounding the loan and the cruel and oppressive acts committed by the plaintiff and his cronies on the defendant and this family. The rate of interest charged by the plaintiff exceeded 400% per annum. He was obviously an unscrupulous loan shark preying on victims like the defendant. If I were to allow reasonable interest on the sum of $146,500, it would enable the plaintiff or any person operating like him to earn interest hopefully as charged but if he failed, then he could always fall back on a rate reasonably charged by a bank at the material time. That would be a no loss position which I do not think the court should create. Even an expectation of that by any loan shark would do society no good; loan sharking must be discouraged. On the other hand, I do not take the acts of assault, intimidation and disturbance perpetrated by the plaintiff and his pawns as a relevant factor in considering the justice between the parties whether the defendant should pay the plaintiff back the $146,500 received from him, for such acts are and should properly be dealt with under the defendant's counterclaim for damages for them.

SUBROGATION

93. The plaintiff claims in the counterclaim to counterclaim a declaration that he is entitled to be subrogated into the position of Nanyang Commercial Bank under the 2 mortgages created by the defendant in its favour or that the property is subject to a charge by way of subrogation in his favour to the sum of $302,856.94. The argument ran as follows. Nanyang Commercial Bank was all along the mortgagee under the 2 mortgages. Whoever paid the mortgage loans would be entitled to obtain the charge over the property as Nanyang Commercial Bank had. When the plaintiff paid the purported purchase money for the property as the assignee, part of this purchase money was used to discharge the 2 mortgages, whereby he stepped into the shoes of Nanyang Commercial Bank or in other words he was subrogated as the holder of the security represented by the prior charges in favour of Nanyang Commercial Bank.

94. Mr. Bharwaney drew my attention to a number of authorities concerning subrogation. In Orakpo v. Mansion Investments Ltd. [1978] A.C. 95, where money lent (without the note or memorandum required by the Moneylenders Act 1927) was used, inter alia, to pay off prior legal or equitable charges on the property of the borrower, it was held that a right of subrogation could only have arisen if it was the common intention of the parties that the money borrowed was to be used to pay the holders of existing charges, and that if such was the intention it was a term of the contract of loan which should have been included in the memoranda evidencing the loan. As the memoranda did not include such a term, it was defective under the Moneylenders Act, and the right of subrogation was also unenforceable.

95. It is instructive to see how their Lordships considered the right of subrogation. Lord Diplock at pp. 104D-F and 105A said:

"My Lords, there is no general doctrine of unjust enrichment recognised in English law. What it does is to provide specific remedies in particular cases of what might be classified as unjust enrichment in a legal system that is based upon the civil law. There are some circumstances in which the remedy takes the form of 'subrogation,' but this expression embraces more than a single concept in English law. It is a convenient way of describing a transfer of rights from one person to another, without assignment or assent of the person from whom the rights are transferred and which takes place by operation of law in a whole variety of widely different circumstances. Some rights by subrogation are contractual in their origin, as in the case of contracts of insurance. Others, such as the right of an innocent lender to recover from a company moneys borrowed ultra vires to the extent that these have been expended on discharging the company's lawful debts, are in no way based on contract and appear to defeat classification except as an empirical remedy to prevent a particular kind of unjust enrichment.

...

The mere fact that money lent has been expended upon discharging a secured liability of the borrower does not give rise to any implication of subrogation unless the contract under which the money was borrowed provides that the money is to be applied for this purpose: Wylie v. Carlyon [1922] 1 Ch. 51. Furthermore, even where the contract does so provide, the implication may be displaced by the presence in the contract of express terms which are inconsistent with the acquisition or retention by the lender of a right of subrogation."

Lord Salmon at p. 110E said:

"The test as to whether the courts will apply the doctrine of subrogation to the facts of any particular case is entirely empirical. It is, I think, impossible to formulate any narrower principle than that the doctrine will be applied only when the courts are satisfied that reason and justice demand that it should be."

At p. 119B-D of the report, Lord Keith of Kinkel had this to say:

"Subrogation may result from agreement, or it may arise by operation of law in a number of different situations. In some circumstances the debtor may know nothing whatever about the transactions which have caused a third party to become subrogated to the rights of his original creditor, as in Brocklesby v. Temperance Permanent Building Society [1895] A.C. 173, where a forged mortgage had been used, unknown to the debtor, to obtain money to pay off the holder of an existing charge. But in the present case the ground for the appellant's claim to subrogation is that, in so far as the money borrowed from them was used to pay the unpaid vendors and the holders of the existing charges, this was done in pursuance of the common intention of the parties, and indeed matters were so arranged that the respondent never obtained unrestricted control of the money. If there had been no such common intention, and the respondent had simply borrowed the money without any strings attached and then voluntarily used it to complete contracts for the purchase of land or to pay off the holders of existing charges, no question of subrogation would have arisen."

96. In Ghana Commercial Bank v. Chandiram [1960] A.C. 732, where at the request of a debtor, a bank advanced money to pay off a prior equitable charge on terms that the advance would be secured by a legal mortgage granted by the debtor in its favour, and the legal mortgage so executed by the debtor was held to be void as it contravened certain subordinate legislation, the Judicial Committee held that the bank was entitled to the benefit of the equitable charge. At p. 745, Lord Jenkins, delivering the opinion of the Judicial Committee, said:

"It is not open to doubt that where a third party pays off a mortgage he is presumed, unless the contrary appears, to intend that the mortgage shall be kept alive for his own benefit: see Butler v. Rice [1910] 2 Ch. 277, 282, 283."

97. In In re Tramway Building & Construction Co. Ltd. [1988] 2 W.L.R. 640, Scott J. after referring to the Ghana Commercial Bank case said at p. 651C:

"The intention attributed by Lord Jenkins to the Ghana bank was not an actual intention, either express or inferred. It was an assumed intention which their Lordships thought the bank would have held if it had had in mind the invalidity of the legal mortgage."

At p. 652F-G, the learned judge went on:

"In my judgment, in the case of purchase as in the case of loan, if the money is intended to be used, and is used, to discharge a prior secured indebtedness and if the intended transfer or the intended charge is for some reason void, then, prima facie, the payer of the money, purchaser or lender as the case may be, is entitled in equity to keep alive the discharged security in order to secure the repayment of the money."

98. In the present case, the Counterclaim to Counterclaim alleges that the plaintiff paid the money to discharge Nanyang Commercial Bank's 2 mortgages. The fact is: the money used to discharge the mortgages was not part of the illegal loan and it was not paid pursuant to any term of the contract of loan. It follows that the Orakpo case, which dealt with the use of the loan, is distinguishable.

99. It can be argued that the plaintiff's situation is covered by the judgment of Scott J. in the Tramway case, and that as part of the purchase money paid by the plaintiff was for the discharge of the mortgages, and it is assumed to have been intended to be so used, the plaintiff is entitled in equity to keep alive the discharged security in order to secure the repayment of the money. The plaintiff's right of subrogation had no connection with the illegal and unenforceable loan which cannot be used as a basis for displacing or rendering inoperable the rules of equity concerning liens and subrogations. In other words, applying these rules of equity will not in any way enforce the unenforceable loan, the agreement and the security that are prohibited by sections 18, 23 and 24 of the Money Lenders Ordinance. Nor was the payment for discharge of the mortgage loans tainted with illegality.

100. There are, however, a number of circumstances that enervate these arguments.

101. In paragraph 12 of the Reply and Defence to Counterclaim and Counterclaim to Counterclaim, it is pleaded that the plaintiff's solicitors advised him to and the plaintiff did make payments totalling $302,856.94 to discharge the 2 mortgages immediately before the completion of the sale and purchase on 8/9/86. In paragraph 5 of the Amended Statement of Claim, it is pleaded that the defendant through his lawful attorney Ho assigned the property to the plaintiff free from any incumbrance. When Ho executed the assignment the property was already free of the 2 mortgages. The 18/4/86 agreement imposed on the defendant the obligation to discharge the 2 mortgages and the power of attorney gave Ho the power to redeem them. There was no reason for the plaintiff to have to pay anything to discharge the 2 mortgages, as advised by his solicitors or otherwise. On the other hand, if the plaintiff had to make the payments to discharge the 2 mortgages, the most favourable interpretation that can be made for him is that the purchase money in the sum of $490,000 had not been fully paid by him to Ho, as stated in the assignment. But that is not the plaintiff's case.

102. By virtue of the 18/4/86 agreement, the defendant as vendor was obliged to discharge the 2 mortgages. As there is no evidence that he had put forward any money to discharge the 2 mortgages, Ho acting as his lawful attorney must have used part of the purchase money to discharge the mortgages upon completion. Looking at the matter by way of form, it was Ho, and not the plaintiff, who discharged the mortgages and it follows that the ground upon which the plaintiff lays his subrogation claim falls apart.

103. On the other hand, looking at the substance of the transactions, the plaintiff mortgaged the property to HK Bank for banking facilities to be granted to Wealthfound Investment Co. Ltd. ("Wealthfound"). It can be reasonably inferred that the money used to discharge the 2 mortgages was borrowed by Wealthfound from HK Bank. Wealthfound or the plaintiff used the money so borrowed to pay to Ho as the purchase money upon completion. In substance therefore, the money used for discharge of the 2 mortgages was from HK Bank although it went through the intermediaries Wealthfound or the plaintiff and Ho. There is no evidence that the plaintiff paid anything out of his own pocket for the discharge of the 2 mortgages. Even if Wealthfound was the payer, the situation does not enure to the benefit of the plaintiff. I am of the view that if the substance of the matter is taken into account, then it would be HK Bank who is entitled to the right of subrogation, for the intermediate parties must give way to the actual person who in fact provided the money. It follows that on this basis also, the plaintiff's claim for subrogation must fail.

104. Moreover, the equity of the case is not in favour of the plaintiff. The plaintiff mortgaged the property to HK Bank to secure general banking facilities for Wealthfound on the same day when the discharge of the 2 mortgages and the suit assignment took place. The interpretation of the facts most favourable to the plaintiff is that part of the money raised by him from the mortgage to HK Bank was used for the discharge of the 2 mortgages. This HK Bank mortgage has become, at least arguably, a blot on the title of the defendant to the property. By the said action brought by HK Bank against the defendant, HK Bank was alleging its right as a mortgagee against the defendant and the property. The defendant was open to the peril of HK Bank's claim until he compromised it by agreeing to pay HK Bank $450,000. Although it is not for this court to consider whether the compromise was reasonable or otherwise, if that claim had not been compromised, the defendant would be open to the risk of having the property subject to the mortgage created by the plaintiff in favour of HK Bank or subject to HK Bank's charge by subrogation, with the added risk of incurring more costs and facing a hefty order for costs that might be awarded against him in favour of HK Bank. The price of the compromise of $450,000 is more than the amount claimed by the plaintiff to be charged as a lien over the property in his favour, and it is doubtful whether the defendant is enriched to any significant extent, unjustly or otherwise. In my judgment, the plaintiff having created such a situation from which the defendant was compelled one way or another to extricate himself, the equity is against the plaintiff claiming back the $302,856.94 or any right of subrogation.

105. In the circumstances, I rule that the plaintiff is not entitled to his counterclaim to the counterclaim.

ASSAULTS AND INTIMIDATION

106. Now I come to the defendant's claim for assaults, battery and intimidation. Instances of threat, intimidation, assault and battery have already been set out in some detail in my findings of fact.

107. The tort of intimidation is well established (see Rookes v. Barnard [1964] A.C. 1129), although there is no tort of harassment. Clerk & Lindsell on Torts, 16th Ed., states:

"17-12 Threats and vile abuse per se do not constitute assault. ... ... Threatening words alone do not amount to an assault."

108. Patel v. Patel [1988] 2 F.L.R. 179 CA, an injunction had been made against the defendant including an order that he be restrained from trespassing upon the plaintiff's property or from approaching within 50 yards of it. The county court judge discharged the order and substituted therefor a more restricted one to the effect that the defendant should merely not assault or molest the plaintiff, or trespass on his property. May L.J. agreed to that course being taken, and said, at p. 180H to 181B:

"... in common-law actions based upon an alleged tort injunctions can only be an appropriate remedy where an actual tortious act has been or is likely to be committed. ... and I have no doubt that it was for this reason that the judge thought it proper to limit the terms of the original injunction ... removing from it the restraining on the son-in-law from approaching within 50 yards of the father-in-law's house. Unless an actual trespass is committed or is more than likely to be committed, it does not seem to me that merely to approach to within 50 yards of a person's house does give a cause of action which may be restrained by an injunction in those terms. In these circumstances I do not think that the learned judge is to be criticized at all for restricting the original injunction in the way that he did."

At p. 182G, Waterhouse J. said:

"... I endorse the approach adopted by the judge below in reformulating the injunctions. The essence of the appellant's complaint is that he has been the victim of repeated harassment since May 1985, but in the present state of the law there is no tort of harassment. The judge was right, in my judgment, in limiting the scope of the injunctions in the way that he did."

109. However, in Mead's Case (1823) 1 Lew C C 184, 168 ER 1006, a criminal case where Mead was charged with murder, Holroyd J. in his direction to the jury treated an attack upon a dwelling as an assault to the resident's person. He said:

"If a person takes forcible possession of another man's close, so as to be guilty of a breach of the peace, it is more than a trespass. So, if a man with force invades and enters into the dwelling of another. ... ..., the making an attack upon a dwelling, and especially at night, the law regards as equivalent to an assault on a man's person; for a man's house is his castle, and therefore, in the eye of the law, it is equivalent to an assault; but no words or singing are equivalent to an assault, nor will they authorize an assault in return. ..."

110. In Read v. Coker (1853) 13 C.B. 850, 138 ER 1437, where the plaintiff was in the defendant's workshop, and he refusing to quit when desired, the defendant and his servants surrounded him, and, tucking up their sleeves and aprons, threatened to break his neck if he did not go out, whereupon he, apprehensive of violence, departed. It was held that the acts of the defendant and his servants constituted an assault. Jervis C.J. said:

"If anything short of actual striking will in law constitute an assault, the facts here clearly showed that the defendant was guilty of an assault. There was a threat of violence exhibiting an intention to assault, and a present ability to carry the threat into execution."

111. In Police v. Greaves [1964] NZLR 295, where the defendant armed with a carving knife in his right hand poised at waist height and pointed toward a police constable uttered words that if the constable came a step closer, he would get the knife straight through his guts, the Court of Appeal, approving Read v. Coker, held that that was an assault.

112. I consider the rules laid down by Mead's Case and Read v. Coker as good law. Merely uttering annoying statements or singing or causing a nuisance outside another's house may not amount to a tort, but if threats of physical violence are uttered and, a fortiori, in close proximity of one's residence, and reasonably appreciated by those inside it to be able to be carried out, then they are actionable torts. In the present case, the threats were uttered face to face, outside the door, and over the telephone or intercom system. The plaintiff and his pawns could easily have access to and did on a number of occasions visited the property, absolutely uninvited and taking the defendant and his family members by surprise. In the circumstances, it is reasonable for the defendant to apprehend imminent danger that the threats were presently able of being carried into execution. These threats amount to trespasses to the person of the defendant.

113. Moreover, threats and intimidations can constitute a tort and actionable when they cause illness following nervous shock. In Wilkinson v. Downton [1897] 2 Q.B. 57, the defendant, by way of a practical joke, falsely represented to the plaintiff, a married woman, that her husband had met with a serious accident whereby both his legs were broken. The defendant made the statement with intent that it should be believed to be true. The plaintiff believed it to be true, and in consequence suffered a violent nervous shock which rendered her ill. Wright J. held the defendant's act to be an actionable wrong. He said, at p. 58-59:

"The defendant has wilfully done an act calculated to cause harm to the plaintiff--that is to say, to infringe her legal right to personal safety, and has in fact thereby caused physical harm to her. That proposition without more appears to me to state a good cause of action, there being no justification alleged for the act. This wilful injuria is in law malicious, although no malicious purpose to cause the harm which was caused nor any motive of spite is imputed to the defendant.

... One question is whether the defendant's act was so plainly calculated to produce some effect of the kind which was produced that an intention to produce it ought to be imputed to the defendant, regard being had to the fact that the effect was produced on a person proved to be in an ordinary state of health and mind. It think that it was. It is difficult to imagine that such a statement, made suddenly and with apparent seriousness, could fail to produce grave effects under the circumstances upon any but an exceptionally indifferent person, and therefore an intention to produce such an effect must be imputed, and it is no answer in law to say that more harm was done than was anticipated, for that is commonly the case with all wrongs. The other question is whether the effect was, to use the ordinary phrase, too remote to be in law regarded as a consequence for which the defendant is answerable. Apart from the authority, I should give the same answer and on the same ground as the last question, and say that it was not too remote. ... it seems to me that the connection between the cause and the effect is sufficiently close and complete."

114. In Janvier v. Sweeney [1919] 2 K.B. 316, CA, the defendant uttered false statements and threats to the plaintiff for the purpose of inducing her to show him some letters, as a result of which the plaintiff fell ill from a nervous shock. After referring to Wilkinson v. Downton, Bankes L.J. said at pp. 321-322.

"... In my view that judgment was right. It has been approved in subsequent cases. ... That case was subsequently considered in Dulieu v. White & Sons [1901] 2 KB 669. I would refer to two passages from the judgment of Phillimore J He said: 'I think there may be cases in which A. owes a duty to B not to inflict a mental shock on him or her, and that in such a case. if A. does inflict such a shock upon B.--as by terrifying B.--and physical damage thereby ensues, B. may have an action for the physical damage. though the medium through which it has been inflicted is the mind.' He then ... proceeded thus: 'These principles and cases seem to establish that terror wrongfully induced and inducing physical mischief gives a cause of action'; and further on: 'Once get the duty and the physical damage following on the chain of causation being mental only makes no difference.' I adopt those passages which seem to me to state the law accurately."

115. It is therefore clear that intimidations and threats uttered by a person to another can amount to a tort if the other to whom the threats were uttered suffered any nervous shock or illness therefrom. Here the threats of violence uttered by the plaintiff and his servants or agents were desired and calculated to be believed by the defendant, and all the more so because on some occasions they were followed with actual assaults and beatings on the defendant and his family, and the defendant had reasonable basis to believe that the threats would be carried out. As a result, he suffered fear and depression which caused his attempts to commit suicide. Those threats and acts done outside the door of the property after his first attempt on his own life on 2/6/86 were taken also seriously resulting in his second attempt to commit suicide. In the circumstances, I hold that all the threats and those threats and acts of disturbance outside the door on 7/6/86 and 8/6/86 set out in my findings constituted actionable wrongs and trespasses to the person of the defendant.

DAMAGES

116. As far as damages are concerned, the learned editors of Clerk & Lindsell summarise the law as follows:

"17-02 Trespass is actionable per se. and all the damage flowing from that unlawful act is recoverable.

17-58 Any trespass to the person. however slight. gives a right of action to recover at any rate nominal damages. The defendant may still be liable in trespass for all the consequences flowing from the tort or trespass to the person whether or not those consequences are foreseeable. Even where there has been no physical injury. substantial damages may be awarded for the injury to a man's dignity or for the discomfort or inconvenience. ... Apart from special damages .... the damages are at large. The time, place and manner of the trespass and the conduct of the defendant may be taken into account and the court may award aggravated damages on these grounds."

117. Aggravated damages are to compensate the victim for his sufferings in his feelings, dignity and pride, for his mental discomfort and distress, and they must be justifiable on the basis of compensation. Exemplary damages, on the other hand, are punitive in nature and are awarded to teach the culprit that "tort does not pay" and to deter him and others from similar conduct. See Clerk & Lindsell, ibid., paras. 5-36 and 5-37.

118. In Rookes v. Barnard [1964] A.C. 1129, 1226-7, Lord Devlin was of the opinion that apart from statutory authorisation, exemplary damages should only be awarded in 2 specific categories of cases. He said:

"The first category is oppressive, arbitrary or unconstitutional action by the servants of the government. ...

Cases in the second category are those in which the defendant's conduct has been calculated by him to make a profit for himself which may well exceed the compensation payable to the plaintiff. ... Where a defendant with a cynical disregard for a plaintiff's rights has calculated that the money to be made out of his wrongdoing will probably exceed the damages at risk, it is necessary for the law to show that it cannot be broken with impunity. This category is not confined to moneymaking in the strict sense. It extends to cases in which the defendant is seeking to gain at the expense of the plaintiff some object--perhaps some property which he covets--which either he could not obtain at all or not obtain except at a price greater than he wants to put down. Exemplary damages can properly be awarded whenever it is necessary to teach the wrongdoer that tort does not pay."

119. The learned Law Lord went on:

"I wish now to express three considerations which I think should always be borne in mind when awards of exemplary damages are being considered. First, the plaintiff cannot recover exemplary damages unless he is the victim of the punishable behaviour. ... Secondly, the power to award exemplary damages constitutes a weapon that. while it can be used in defence of liberty ...can also be used against liberty. ... Thirdly, the means of the parties. irrelevant in the assessment of compensation, are material in the assessment of exemplary damages. Everything which aggravates or mitigates the defendant's conduct is relevant."

120. As a result of the assaults and threats of violence and disturbances within and outside the property caused by the plaintiff and his pawns, the defendant became horrified, distressed and depressed. His pride and dignity as a husband, father and uncle, and as a businessman and a person, were severely battered. He felt a grave sense of guilt towards his family. He attempted twice to take his own life. For 3 or 4 years, he had suffered insomnia, loss of appetite, loss of weight, and multiple bodily complaints such as dizziness and chest discomfort. He was diagnosed to be suffering from reactive depression, and as late as March 1992, he still tended to be anxious and tense when faced with stresses especially financial and family problems. All these, I find as facts.

121. Apart from the intimidations and threats, there were a number of occasions where the defendant, Madam Lam and Ms. Li were physically assaulted and battered. The whole course of conduct and behaviour of the plaintiff and his servants or agents was part and partial of a softening up process for the purpose of compelling the defendant to repay the illegal and unenforceable loan with the grossly excessive interest which was by law unenforceable and therefore absolutely unjustified. The acts of intimidation and assault after 18/4/86 were all the more damnable as the defendant had already signed the 18/4/86 agreement and the money lent together with whatever usurious interest could have been recovered from the acquisition of the property from the defendant. Such acts were totally unnecessary even if the plaintiff had honestly believed that the repayment of the illegal and unenforceable loan with the agreed interest was enforceable. The Third Schedule to the 18/4/86 agreement to which the plaintiff must be taken to have consented had made express provision that the defendant could cancel it by a payment of $245,000 on 3/7/86. Before that deadline, there was no reason whatsoever for the plaintiff to send along his employees and pawns to utter threats and perpetrate batteries on the defendant and his family. Even after the defendant had attempted to take his own life, the threats and disturbances still persisted. Such acts are what Lord Devlin contemplated to be punishable with exemplary damages. The plaintiff with a conical disregard for the defendant's rights calculated that the money by way of the excessive interest he charged to be made out of his wrongdoing would probably exceed the damages at risk, which interest he knew to be unenforceable and illegal. Alternatively, he sought to gain at the expense of the defendant an object, i.e., the property, which he coveted, which either he could not obtain at all or could not obtain except at a price greater than he wanted to put down.

122. All these acts should be condemned by the courts, or else it might be misunderstood that assaults of a minor nature (not causing very serious injuries to the person) would pay in the sense that the perpetrator would only be punished under our criminal system with a small fine or a short term of imprisonment and would only be liable under our civil system to pay a small award of damages for the actual physical harm done to the victim. This is an apt case for exemplary damages to be awarded so that the plaintiff and people like him and others will be apprised of the policy and attitude of the court in dealing with such torts. This is especially necessary in the present climate of society when usury and illegal money-lending are no rare occurrence.

123. Mr. Bharwaney provided me with a number of awards of damages in cases involving psychiatric injuries. However, few of those cases is similar to the present one. I would therefore have to, as best I can, make an appropriate assessment of damages for the defendant's injuries, physical and psychiatric, pain and suffering and loss of earning capacity, without much assistance from those cases. I would also award aggravated damages for the injury to his feelings and to his pride and dignity as a businessman, and as a husband, father and uncle. Taking all the circumstances into account, especially that the defendant had fully recovered in November 1991, I think a round sum of $200,000, inclusive of interest, for the two heads of damages is appropriate.

124. For exemplary damages, I would also make an award against the plaintiff in the sum of another $200,000, also inclusive of interest. Although the plaintiff's present situation is that he has been serving terms of imprisonment, these terms of imprisonment are not in respect of any of the particular transactions and activities with which this action is concerned. No penalty or punishment has been meted out by the criminal courts in respect of them and an award of exemplary damages is therefore appropriate. There is no evidence as to the plaintiff's present financial situation, and therefore I cannot take that aspect into account for considering whether the exemplary damages of $200,000 should be reduced.

CONCLUSIONS

125. The plaintiff's claim for possession and his counterclaim for having a charge over the property for $302,856.94 by way of subrogation or otherwise are dismissed. However, I reopen the loan transaction between the parties and order the defendant to pay a sum of $146,500 to the plaintiff.

126. The defendant's counterclaim for damages is allowed. I award the sums totalling $400,000 to the defendant as damages. The sum of $400,000 is to be set off in part by the sum payable by the defendant to the plaintiff, leaving a balance of $253,500 payable by the plaintiff to the defendant.

127. Declarations are also made that the power of attorney is unenforceable and void, that the 18/4/86 agreement is unenforceable and void, and that the suit assignment was ineffective to and did not pass any title, rights or interest in the property to the plaintiff and is unenforceable and void against the defendant. The plaintiff do deliver up the power of attorney, the 18/4/86 agreement and the suit assignment to the defendant's solicitors for cancellation. A declaration is also granted that in the event of default of delivery by the plaintiff of any of such documents within 14 days from the date of this judgment, the document shall be deemed to be cancelled. I also make an order that the plaintiff do deliver up all the title documents in respect of the property to the defendant's solicitors.

128. I also give the parties liberty to apply.

COSTS

129. As the plaintiff's claim and counterclaim to counterclaim are dismissed and judgment is granted in favour of the defendant on all the issues concerning the title to the property and for damages for assault and battery, the normal order for costs is that costs should follow the event. The plaintiff did not seek to argue otherwise. I therefore make an order that the defendant do have the costs of this action against the plaintiff. Since the defendant is legally aided, his costs are to be taxed in accordance with the Legal Aid Regulations.