Nora Viloria Renon v. Heisei Finance & Credit Co Ltd

HCSA 44/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

SMALL CLAIMS TRIBUNAL APPEAL NO 44 OF 2012

(ON APPEAL FROM SCTC 5211 OF 2012)

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Before: Hon Au-Yeung J in Chambers

Date of Hearing: 4 January 2013

Date of Judgment: 16 January 2013

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J U D G M E N T

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1.On 18 October 2012 (1^st hearing) the applicant was absent. She had asked for an adjournment because her legal aid application was pending. In fact, by 18 October 2012, the automatic stay of proceedings under the Legal Aid Ordinance had expired. I had directed the hearing to proceed but the applicant failed to turn up. The application was thus dismissed.

2.The applicant had applied to restore her leave application.  Such restoration will not be entertained unless (i) she can provide a good explanation for not turning up at the 1^st hearing; or (ii) there are merits in her leave application.

Explanation for not turning up at the 1^st hearing

3.The applicant’s explanation was that she had written to the court to vacate the 1^st hearing.  In my view, that was not good enough. A litigant who applies to vacate a hearing cannot assume that the court will definitely grant an adjournment.  Unless and until he or she has written confirmation from the court that the hearing is vacated or adjourned, he or she must attend the hearing as set down.  Otherwise, he or she runs the risk that the application may be dismissed. 

4.Equally, even if a party has applied for legal aid, he or she cannot assume that there will be an automatic stay of proceedings beyond the 42 days granted under the Legal Aid Ordinance until the time he or she can find a lawyer.  As I have mentioned, the automatic stay had expired by the date of the 1^st hearing.  Accordingly, there was no good explanation offered by the applicant for her absence at the 1^st hearing. 

Merit of the leave application

5.The applicant sued the defendant for repayment of money paid by her pursuant to an alleged bogus loan agreement.  It was her case that when she came to Hong Kong to start working under a domestic helper’s contract, she was asked by her agency (Sunlight) to approach the defendant.  At the defendant’s office, the applicant was asked to sign on a small piece of paper containing words in small print, which she took to be part of the normal procedures for her employment in Hong Kong and so she signed the paper without reading it. She had not been given a copy of that piece of paper.  The contents of the document were not explained to her by the defendant’s representative.  She was only given a Loan Disbursement Voucher, a card with a loan number and a schedule of payment, which asked her to pay two monthly instalments of HK$2,758 per month.  She did not understand the effect of the Loan Disbursement Voucher but did not ask.  She was subsequently told by other domestic helpers that it was a loan agreement to ensure payment of the placement fee to Sunlight. 

6.The applicant did not repay the 1^st instalment.  Attempt to cancel the loan with the assistance of the Philippines Consulate was not successful.

7.It was not in dispute that: (1) on about 22 August 2011, the loan was restructured so that it had to be repaid at HK$1,275 per month for five months; (2) the applicant had paid two instalments, one for HK$1,275 and the other for HK$1,000. 

8.The applicant claimed that the loan was a sham and illegal, being effectively unlawful imposition of illegal placement fee charged by Sunlight.  She also said that the defendant contravened sections 18 and 19 of the Money Lenders Ordinance as a copy of the loan agreement was not provided to her. 

9.The defendant’s case was that it was a personal loan granted by the defendant to the applicant who signed all the loan documentation with full understanding.  A customer copy of the promissory note was given to the applicant at the time she applied for the loan.  The loan of HK$5,200 was remitted to an account designated by the applicant.  The applicant was simply trying to escape from responsibility under the loan agreement.

10.The learned Deputy Adjudicator (as he then was) found that the applicant had signed the Loan Disbursement Voucher, terms and conditions of promissory note and payment instructions, and that the loan was remitted as she instructed. He further found that the sum of HK$2,275 was partial repayment by the applicant for the loan.  He dismissed the claim and ordered costs against the applicant.

11.The only intended ground of appeal in the application for leave to appeal on point of law was that “the learned [Deputy Adjudicator’s] analysis and assessment of the weight to be given to the evidence was flawed.”  However the affidavit in support of the applicant’s leave to restore the leave application and her written submission showed that there were in fact more substantial grounds of appeal that she intends to rely on:

(i)  that the learned Deputy Adjudicator had found that the applicant had signed the documents but he never dealt with the crucial question as to whether this was a personal loan to her or one to finance the illegal placement fees;

(ii)  whether there was breach of the Employment Ordinance and Employment Agency Regulations in that excessive and illegal placement fees were charged; and

(iii)  whether there had been a breach of the Money Lenders Ordinance, Cap 163.

Ground (i)

12.In paragraphs 39 and 41 of his Reasons for Decision (“the decision”), the learned Deputy Adjudicator found that the defendant did advance a loan to the applicant in the sum of HK$5,200 and that HK$2,275 were partial repayments.  He had therefore implicitly rejected the applicant’s case that this was an illegal placement fee charged by Sunlight.  The finding was open to the learned Deputy Adjudicator on the evidence before him.  No error of law had been shown.  A judge on appeal will not disturb the finding of fact of the tribunal who had the advantage of hearing the evidence and observing the demeanour of a witness.  There are no merits in this intended ground of appeal. 

Ground (ii)

13.By finding the money advanced to be a personal loan, the learned Deputy Adjudicator in fact had rejected the applicant’s case. 

Ground (iii)

14.The applicant had distinctly raised the issue of not having received the written loan agreement and the legality of the loan in paragraphs 28 and 29 of her first witness statement.  In fact, paragraph 29 of the decision also referred to the issue of illegality.  Having made the findings of fact, which rightfully were within his power, the learned Deputy Adjudicator had not gone on to analyze whether there was an element of the illegality in the loan itself.

15.Looking at the documentary evidence, the Loan Disbursement Voucher stated on its face that a loan of $5,200 was advanced with total interest charged at $316 ($158 per month on average).  The monthly interest rate was stated to be 3% whereas the annual interest rate was stated to be 48%.  That should already have sounded an alarm that the interest rate was close to being extortionate pursuant to section 25(3) of the Money Lenders Ordinance. 

16.That was not the end of the matter.  The decision did not deal with whether restructuring of the repayment was illegal.  There apparently was no written document produced to the tribunal concerning this restructuring. Further, the monthly interest appeared to be HK$235, much higher than the original monthly interest of HK$158.  The immediate question is whether the interest was excessive under section 24 of the Money Lenders Ordinance.

17.There are merits in the intended ground (iii). 

Conclusion

18.Although there was no good explanation for the applicant’s absence at the 1^st hearing, there are merits in the intended 3^rd ground of appeal.  I order as follows:

(i)  there be leave to restore the application for leave to appeal;

(ii)  there be leave to appeal limited to one point of law — whether or not the loan agreement and or any subsequent restructuring of it was in contravention of the Money Lenders Ordinance; and

(iii)  the costs of this leave application will be costs in the cause of the appeal.

19.Given this decision, the applicant should act expeditiously to reapply for legal aid, seek assistance from the Bar Pro Bono Scheme or consult a lawyer as she deems fit.  Issues under the Money Lenders Ordinance are not straightforward.  There is a time limit to meet for filing a notice of motion for appeal. 

The claimant (applicant) appeared in person