Kwok Ying Lung v. Ko Chi Hung and Another

HCMP000209/1999

HCMP209/99

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO.209 OF 1999

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Coram : Hon Mr Justice Cheung in Chambers

Date of hearing : 27 July 1999

Date of delivery of judgment : 27 July 1999

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J U D G M E N T

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The Plaintiff's application

1. The Plaintiff applied by way of originating summons to enforce a Second Legal Charge ("the Charge") created by the Defendants in his favour. The Plaintiff asked for payment of money due under the Charge with interest and also delivery of vacant possession of the property charged on the ground that the Defendants had failed to pay the money under the Charge. The question of possession is no longer in issue because the Defendants had paid the money under the Charge of $1.6 million into Court.

The parties' case

2. The Plaintiff's case is that the Defendants had asked him to lend $1.1 million. He agreed to do so and the parties agreed that the Defendants would pay interest at 5% per month to the Plaintiff on the loan. Further, the property of the Defendants was to be used as security for the loan. As the property was already mortgaged to a bank, a second legal charge was created.

3. The Defendants opposed the application on the ground that the Plaintiff was a moneylender and also extortionate interest had been charged on the loan. They asked the Court not to enforce the Charge.

The order

4. Master Muttrie ordered that judgment be entered in favour of the Plaintiff in the sum of $1,060,000 together with interest at the rate of 12% per annum from 15th July 1998 to date of judgment. Of the sum of $1,600,000 deposited in Court, the Plaintiff be paid the sum of $1,060,000 and the balance sum of $540,000 be paid to the Defendants.

The appeal

5. Both parties appeal against the decision. The Defendants did not specify in the Notice of Appeal what order should be made instead. Ms Tsui, Counsel for the Defendants, now asks for the whole of the transaction to be reopened, or alternatively, the order relating to the 12% per annum interest be varied.

6. The Plaintiff asks for the order of Master Muttrie to be set aside, or alternatively, the interest rate at 12% per annum be varied.

Money-Lender

7. A moneylender can only recover the money lent or the interest thereof or enforce any agreement relating to the loan if he is a licensed moneylender : s.23 of the Money Lenders Ordinance. However, the proviso to s.23 also enables the Court to allow the moneylender to recover the loan if it is equitable to do so even though the moneylender does not have a licence.

8. A moneylender is in the business of money-lending. The burden must be on the party who alleged someone to be a moneylender to prove that fact. Before the question of licence comes into play, the fact that the Defendants alleged the Plaintiff to be a moneylender without more does not mean the Plaintiff must prove that he is not a moneylender. However, in this case, the Defendants' evidence is that a friend of the Plaintiff told them that the Plaintiff is a moneylender. The evidence is hearsay in nature. However, that does not mean that there is no prima facie evidence of money-lending.

9. Furthermore, the transaction is quite well-structured. In fact, $1.3 million was lent by the Plaintiff to the Defendants. This loan was divided into two parts : $1.1 million was secured by the Charge and the balance of $200,000 was unsecured. Post-dated cheques were issued to secure repayment of the loan.

10. I think the matter cannot be dealt with by way of affidavit evidence only.

Extortionate transaction

11. Furthermore, there is a further issue in this case whether s.25 of the Money Lenders Ordinance had been engaged. The issue is whether the transaction in question should be treated as extortionate because the 5% per month, or 60% per annum interest charged by the Plaintiff is in excess of the 48% per annum interest provided in s.25(3).

Further conduct of the case

12. This being an originating summons proceedings, I think the only way forward is to give directions for the further conduct of this case. I will set aside the order of the Master and give directions. I do not think further pleadings are required, instead the matter should be adjourned for argument and that the deponents of the affidavits be tendered for cross-examination at the adjourned hearing.

Representation:

Miss Annie Lai, inst'd by M/s Jessica Wong & Tam, for the Plaintiff

Ms Jennifer Tsui, inst'd by M/s Kwan & Kwan, for the Defendants