Ever Finance Ltd v. Yuen Wai Piu

CACV000053/1982

Headnote

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Coram: Hon. Cons, Zimmern, JJ. A. and Hooper, J.

Date: 23 June 1982

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JUDGMENT

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Cons, J .A. :

1. The story of this appeal presents some curious features. The appellant is a registered deposit taking company which had lent money to the respondent when he was running a taxi cab business. The business failed and he was unable to pay all the money back. The company sued, claiming almost five million dollars and interest, then followed the writ with an Order 14 summons. The respondent was represented but offered no opposition at the hearing before Mr. Registrar Wilson, who naturally entered judgment. That was on the 4th December last year.

2. In January the company levied execution in the course of which the respondent was arrested and put in prison. His application for release was refused by O'Connor, J. His appeal to this court against that refusal was dismissed. And that was on the 23rd March this year.

3. The respondent languished in prison for a further month and then tried a new tack. On the 23rd April he lodged an appeal against the judgment entered by Mr. Registrar Wilson. He was by now of course well out of time. The appeal should have been lodged not later than the 10th December, that is more than four months previously. The respondent sought to justify the delay by saying that he had originally been advised by counsel that he had no defence to the claim and that it was only later when he consulted leading counsel with regard to his application for release from prison that he was advised that the company's claim was founded on an illegal contract and was therefore unenforceable.

4. It may be noted that the advice must have been given by the beginning of February and there is no explanation advanced as to why he waited then for over two months more.  Nevertheless Jackson-Lipkin, J., before whom the proceedings came on the 30th April, enlarged the time for appealing as requested. He then allowed the appeal and set aside the judgment entered earlier.

5. We have only the formal order drawn up as the result of the judge's decision. The recital ends with the somewhat surprising words "and upon both counsel agreeing and consenting that no reasons be given", although the recollection of counsel puts it not quite like that. They remember it mare as a fait accompli to which they raised no express objection.

6. "The giving of reasons is one of the fundamentals of good administration."⁽¹⁾ Even more so is it one of the fundamentals of a good system of justice.  Lord Denning would have thought that went without saying. And it matters not whether that decision is final or interlocutory or in what particular court it is given. The principle holds good for all levels of adjudication. Parties are entitled to know by what the judge was influenced, particularly the party who has lost. As Mr. Megarry (as he then was) said

"... no defeated litigant should leave an English court with the feeling that he judge has failed to appreciate his case. This view is reinforced by the fact that under the common law system the judgment is no mere formal document, but a reasoned speech, often of considerable length, explaining just what are the facts, the issues, the rival contentions and the reasons for the result"(2)

7. In appellate matters there is also the judge below to consider. If he is found to be wrong he needs to know where he went wrong so that he will not repeat his error. In the present instance, for example, it would have been a comfort to the Registrar to know that in fact he did not go wrong, even though his judgment was set aside.

8. This does not mean that the judge must reduce his reasons to writing. In the High Court there will usually be solicitor or counsel present who will take a note of what the judge says, and should it ever afterwards be necessary to refer to it, counsel will submit that note to the judge for his agreement. In other courts the position may be covered by legislation, e.g. Sec. 60, District Court Ordinance, Cap. 336.

9. Nor does it mean a lengthy speech on each and every occasion. That would be quite unnecessary in most interlocutory matters, where all that is needed is some indication of the "why" as well as of the "what".

10. In his affidavit before the learned judge the respondent contended that the company's claim was unenforceable because the original loans had been made in breach of Sec. 22, Deposit Taking Companies Ordinance, Cap. 328, which provides in essence that a company may not lend in the aggregate more than 25% of its paid up capital and reserves to any one person. In the affidavit in reply the company contended that no breach had been occasioned because the loan had not been made under one single account in the name of the respondent, but was spread over that and three other accounts, each with an independent guarantor.

11. That argument has not been pursued before us. It is now conceded that there was a breach, although it is not agreed exactly how and when that breach occurred. There is contradiction between the affidavits as to the numbers and amounts of the individual loans, which may be of importance, as it is argued for the respondent that if any particular loan takes the aggregate above the permitted limit it is bad as to the whole of its amount and not just as to the excess. This contradiction can only be resolved by evidence at a trial.

12. The argument before us goes to the effect of the breach. The company submits that although the loans may be unlawful in the sense that they can incur criminal sanction under the ordinance, that sanction does not operate to make them illegal and unenforceable by civil action. Counsel makes two points. Firstly, that the ordinance, as the preamble recites, is for the protection of depositors, who would only stand to lose if the loans were irrecoverable. Secondly, that in addition to probibiting the single act of granting, the section envisages a continuing state of affairs (permitting to be outstanding); this is inconsistent with unenforceability. Reliance is placed upon comments contained in paragraph 1015 of the 24th edition of Chitty on Contract, The General principles, and upon dicta of Devlin, L. J. in St. John Shipping Corp. v. Joseph Rank Ltd.⁽³⁾ and Archbolds (Freightage) Ltd. v. S. Spanglett Ltd.⁽⁴⁾.

13. We have each formed tentative views on the arguments nut forward, views which are not however, in all respects identical. What we do agree upon though, is that the arguments raise a point of law which is not easy of decision. That then is a second reason for giving the respondent leave to defend.

14. For these two reasons the judge was quite right to set aside the judgment entered by the Registrar and the company's appeal must be dismissed.

15. The matter however does not end there. The judge did not give leave to defend as one might have expected. He remitted the matter to the Registrar for reconsideration on the new facts disclosed. He did so apparently off his own bat. Neither party had asked him to, in fact counsel say they were greatly taken by surprise.

16. An appeal from a registrar to a judge in chambers is not the same as an appeal to this court. No grounds of appeal are filed. The judge takes the matter de novo for himself. It is a re-hearing in the true sense of the word for the judge is in no way restricted by what has gone before.

17. This is confirmed by the comments of Lord Atkins in Evans v. Bartlam ⁽⁵⁾ :

"I wish to state my conviction that where there is a discretionary jurisdiction givento the Court or a judge the judge in Chambers is in no way fettered by the previous exercise of the Master's discretion. His own discretion is intended by the rules to determine the parties' rights : and he is entitled to exercise it as though the matter came before him for the first time."

18. We would add to that that he is also bound to exercise his jurisdiction, whether it be one of discretion or otherwise. That is why he is there, why the parties have come to him. We appreciate that in the present instance the argument addressed to the judge below had not been addressed to the registrar in the first instance. But we see no point in incurring the delay or expense of a further proceeding to obtain a decision which could have force in no way whatsoever in the event of yet another appeal.

19. It may be that the judge had in his mind some matter that was not covered by the existing affidavits, for he gave leave as well to file further affidavits. If so, counsel do not know what it may have been and there is nothing indicated in the present affidavits, that is nothing which would be admissible in evidence. However if that were the circumstance the proper course would have been to adjourn and allow further affidavits to be filed before himself.

20. The respondent, by his Respondent's Notice which we gave leave to file out of time, the company having declined to give their consent, asks us to vary the judge's order and give unconditional leave to defend. There has been no suggestion at any stage that conditions ought to be imposed. For the reasons we have just given we accede to that request.

(1) Breen v. Amalgamated Engineering Union [1971] 2 Q B 175 at 191.

(2) "Lawyer and litigant in England", Hamlyn Trust Lecture, 1962.

(3) (1957) 1 Q.B. 267

(4) (1961) 1 Q.B. 374, in particular at page 390

(5) (1937) A. C. 473 at 478

Representation:

Mr. D. Chang, Q .C. & Mr. H .L. Wong (M/S C .T. Chan & Co.) for Appellant.

Mr. Corrigan (M/S P. H. Sin& Co.) for Respondent.