Standfast International Insurance Co Ltd v. Lau Ming Kit and Another
Read the full judgment text of HCA 2295/1971 on BabelCite. This High Court CFI judgment.
1. This is an application for summary judgment under Order 14 by the plaintiff against the 2nd defendant for the sum of $120,000 in respect of a cheque dated the 16th August 1971 drawn by the 1st defendant and endorsed by the 2nd defendant, which cheque upon presentation for payment was dishonoured.
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HCA002295/1971 IN THE SUPREME COURT OF HONG KONG ORIGINAL JURISDICTION ACTION NO. 2295 OF 1971 -----------------
----------------- Coram: Mr. B. L. Jones, Assistant Registrar, in Chambers. Date of Judgment: 14th day of December, 1971. ----------------- DECISION ----------------- 1. This is an application for summary judgment under Order 14 by the plaintiff against the 2nd defendant for the sum of $120,000 in respect of a cheque dated the 16th August 1971 drawn by the 1st defendant and endorsed by the 2nd defendant, which cheque upon presentation for payment was dishonoured. 2. At the commencement of his argument for the plaintiff Mr. Martin Lee commented that the 2nd defendant was in breach of Order 41 rule 1(4) of the Rules of the Supreme Court in that he had not set out his residential address in his affirmation dated the 9th November 1971. During the course of the hearing I made an order that the 2nd defendant file a supplemental affirmation within 2 days setting out details of his full residential address and this order has since been complied with. 3. I was informed that Mr. Asome for the 2nd defendant would not take the issue of accommodation set out in paragraph 4(b) of the 2nd defendant's affirmation and I am therefore not concerned with this sub-paragraph nor with sub-paragraphs (c), (d) and (e) of paragraph 4. 4. It was in about the middle of May 1971 that the 2nd defendant was inform d by the 1st defendant that the plaintiff was prepared to lend the 1st defendant the sum of $90,000.00 for a period of 3 months provided that he agreed to pay interest amounting to $10,000.00 per month. The total payment for interest would therefore amount to $30,000 at a rate of approximately 11.1% per month. A cheque post-dated the 16th August 1971 for the sum of $120,000.00 to cover both principal and interest is issued by the 1st defendant and endorsed by the 2nd defendant on or about the 16th May, 1971. 5. The 2nd defendant admits that he was the endorsee of the cheque but claims that the plaintiff is an unlicensed money lender and that the cheque, the subject matter of the action, was given as security for a money lending transaction which is illegal by virtue of the Money-Lenders Ordinance Cap. 163. He further contends that the transaction is void or illegal on the grounds that the interest charged was excessive, harsh and unconscionable. This argument will however only be relevant if I find that the plaintiff is a moneylender. 6. The memorandum of association of the plaintiff company, which was incorporated on the 26th May, 1970, contains the usual wide object clauses, the first three of which provide that the company is established for marine insurance, marine and aerial insurance, and fire insurance. 7. Exhibited to the affidavit of Mr. Francis Ng, the managing director of the plaintiff company is a letter of request in Chinese dated the 9th August 1971 signed by the 1st defendant and the 2nd defendant in which they requested the plaintiff not to present the cheque until the 10th September 1971. The 2nd defendant claims that he was not informed by the plaintiff of the dishonour of the cheque until he received the plaintiff's solicitors' letter of the 21st August 1971 and maintains that the notices was late and prejudicial to his interests. I do not consider that there is any validity whatsoever in this argument. 8. Mr. Asome for the 2nd defendant emphasised the objects set out in clauses (w) and (ff) of the memorandum of association. Clause (w) provides inter alia that the company may lend money, guarantee etc. whilst clause (ff) provides inter alia for the advancement of moneys. He argued that as the plaintiffs did not set out the primary object in their affidavit it is therefore not known, with the result that it is for the plaintiffs to show that they do not come within the definition of moneylender. However, I do not accept this submission. 9. My attention was drawn to Order 14/3-4/20 on page 135 of the Supreme Court Practice 1970 Volume I under the heading Moneylender which reads -
10. It is clear from the authorities cited that whether the business of money lending is being carried on is in each case a question of fact. It is therefore necessary for the 2nd defendant to establish particulars as to his belief that the plaintiff is an unregistered money lender in order to ascertain whether there is a triable issue upon which the 2nd defendant can be given leave to defend. In his affirmation of the 9th November 1971 the 2nd defendant has made a bare assertion that the plaintiff is a money lender but does not support this allegation with evidence upon which this contention can be founded. He says that there were no previous business relations or dealings between him and the 1st defendant nor between him and the plaintiff. He further states that the plaintiff and the 1st defendant have had previous dealings or relations of which he is unaware and in view of the past association between them that the plaintiff was prepared to enter into the money lending transaction with the 1st defendant. 11. In Wu Kwai Yuk v. Woo Tai Suen 1955 H.K.L.R.P. 61 Reece J. at page 66 said 'In the action the defence alleges that the plaintiff is a money-lender and that he was not licensed to carry on business as a money-lender. But the mere allegation that the plaintiff is a money-lender does not make the plaintiff a money-lender. Whether or not the plaintiff is a money-lender is a question of fact and has yet to be proved vide Litchfield v. Dreyfus (1906 (1) K.B. 584), per Farwell J. at pp. 588-590. He does not advertise or announce or hold himself out to be a money-lender, he does not bring the action in such capacity and in my judgment, until some court finally holds that the defence is established that he is a money-lender, so as to make the proviso apply. I would observe, en passant, that there is authority for saying that a person who has on several occasions lent money at remunerative rates of interest is not necessarily a money-lender within the meaning of the Ordinance.' 12. Mr. Lee referred to page 35 of Charlesworth's Company Law 9th edition under the heading 'Main object' which reads as fellows:-
13. It is significant that the word 'insurance' is included in the title of the plaintiff company and that the object clauses (a), (b) and (c) relate to insurance business. It is abundantly clear that these three clause are the main object clauses and the remainder are subsidiary. As a result upon the evidence before me the defendant has not established that the plaintiff is a money lender wit in the definition laid down in section 6 of the Money-Lenders Ordinance and I therefore accept Mr. Lee's submission that the plaintiff company is essentially an insurance company. In view of my finding the issue as to whether the interest charged is excessive or the transaction harsh and unconscionable is not relevant. 14. I shall therefore enter judgment against the 2nd defendant for the sum of $120,000.00 with costs. There will be a certificate for counsel. 15. Dated this the 14th day of December, 1971.
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