PACIFIC ACE FINANCE LTD v. DELAY, GILDA H. AND ANOTHER

DCCJ 3298/2018 & DCCJ 3299/2018

(Heard Together)

[2026] HKDC 669

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 3298 OF 2018

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BETWEEN

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IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 3299 OF 2018

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BETWEEN

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DECISION

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1.  Delay, who is the 1^st Defendant of DCCJ 3298/2018 and the 2^nd Defendant of DCCJ 3299/2018, took out two summonses for these respective cases on 6 August 2025 for leave to appeal (the “Appeal Summonses”) from my judgment handed down on 10 July 2025 (“the Judgment”). Each of the Appeal Summonses was filed together with an affirmation of Delay in support of her application.

2.  I directed that those affirmations from Delay were to be treated as her draft Notice of Appeal which set out her grounds of appeal (“Delay’s Grounds of Appeal”). Given Delay was not legally represented, I directed that the Appeal Summonses would be determined after an oral hearing. The parties have provided me their respective written submissions in accordance with my directions. I have duly considered all the submissions, both written and oral provided by the parties. The facts and the reasons for the Judgment have been set out therein and I do not repeat the same here. For ease of reference, the abbreviations used in the Judgment are adopted in this Decision.

Background of the cases and proceedings

3.  These two cases that were tried together are money lenders’ actions where the Plaintiff (“P”) tried to recover the principal sum with interest of two set of loans from the Defendants in the respective two actions (“Ds”). In my Judgment, I found in favour of P and while agreeing with the calculation of interests proposed by P under Loan 1 (see paragraphs 54 and 55 of the Judgment), I directed P to re-calculate the default interest of Loan 2 based on the principals stated in paragraphs 56 and 57 of the Judgment, and gave P the option to waive the accrued default interest of those months before the unpaid sums.

4.  P provided their updated calculation of outstanding amount due from Ds to P on 31 July 2025 (the “Updated Calculation”) and Ms Lo who appeared for P confirmed to minimize further costs, P agreed to apply all the repayments made by Delay to discharge the total interests payable under Loan 2, and to pursue the default interest based on the outstanding principal from the due date to the date of Judgment.

5.  In the Updated Calculation, the calculation of Loan 1 is as follows:

Outstanding Principal: $8,250

Number of days from due date to date of Judgment: 3,688 days

Rate of default interest: 30% per annum

Default interest:

Outstanding principal × Default interest × (Number of due days/365)

ie $8,250 × 30% × 3688 / 365 = $25,007.67

Thus, the total outstanding amount under Loan 1 as at the date of Judgment:

$8,250 + $25,007.67= $33,257.67

6.  With Loan 2, the Ds made sporadic repayments between 27 June 2015 and 5 December 2017 totally at $13,432. According to the Updated Calculation and P’s confirmation as stated in paragraph 4 above, all the repayments made by Delay would first apply to settle the interest payable under the Loan 2 with surplus applying to the outstanding principal. In such premise, the outstanding principal would be $1,442. Since P waived all interest payable before the due date, the calculation is as follows:

Outstanding Principal: $1,442

Number of days from due date to date of Judgment: 2,740 days

Rate of default interest: 28.8% per annum

Default interest:

Outstanding principal × Default interest × (Number of due days/365)

ie $1,442 × 28.8% × 2740 / 365 = $3,117.56

Thus, the total outstanding amount under Loan 2 as at the date of Judgment:

$1,442 + $3,117.56= $4,559.56

The proposed grounds of appeal

7.  Delay’s Grounds of Appeal can be broadly summarised as follows:

(i) Delay was prejudiced by the Court’s decision of allowing P to recalculate the default interest of both Loan 1 and Loan 2, which contradicted to P’s pleaded case;

(ii) The Updated Calculation was wrong and the effective rate of interest under Loan 1 and Loan 2 per Delay’s calculation has exceeded 60% per annum thus being unenforceable;

(iii) Delay was prejudiced by the Court’s decision of rejecting and/or did not give sufficient weight to the respective statutory declaration of Rosalina and Andrenee filed by Delay (the “Statutory Declaration”), which could allegedly prove first, Delay did not consent to be the co-borrower of Loan 1 and secondly, Andrenee was ‘made by’ P to act as Delay’s co-borrower in Loan 2;

(iv) The Court erred in law and fact to have held that both P’s witnesses as unreliable witnesses and rejected their evidence;

(v) The Court erred in law and fact to reject Delay’s and/or Ds’ evidence; and

(vi) The Court erred in law and fact to accept the validity of the Promissory Note of Loan 1 and Loan 2 as the loan agreements of respective loans.

Applicable Principles for Leave to Appeal

8.  The legal principles applicable for leave to appeal are well-established. Section 63A of the District Court Ordinance, Cap 336 (“DCO”) is the governing provision. Section 63A(2) stipulates: -

“(2) Leave to appeal shall not be granted unless the judge, the master or the Court of Appeal hearing the application for leave is satisfied that —

(a) the appeal has a reasonable prospect of success; or

(b) there is some other reason in the interests of justice why the appeal should be heard.”

9.  The relevant test of whether an appeal has a reasonable prospect of success under section 63A(2) of the DCO is whether the applicant for leave can show that he has an arguable case with reasonable chances of success on appeal. It means an appeal with prospects that are more than “fanciful” but which do not need to be shown to be “probable”: see the Court of Appeal (“CA”) decision in KNM v HTFper Fok JA (as the learned PJ then was) at paragraph 9 [1]. The same test has been consistently applied by the CA: see for example, Yuen Oi Yee Lisa v Charoen Sirivadhanabhakdi & Others[2].

10.  If there is a challenge of the court’s findings of facts, the following legal principles apply:

(a) The CA can only intervene in a finding of fact by a primary judge where the finding is plainly wrong;

(b) In an appeal, the CA focuses on the question whether the primary judge has fallen into palpable errors which could only give rise to grounds for intervention by the appellate court; it is not germane that the CA may reach a different conclusion from that of the judge;

(c) Where a trial judge has reached a conclusion on the primary facts, the kinds of mistake which could engage an appellate court’s power of intervention are:

(i) where there was no evidence to support the conclusion;

(ii) the conclusion was based on a misunderstanding of the evidence; or

(iii) the conclusion was one which no reasonable judge could have reached.

11.  Delay’s Grounds of Appeal (iii) – (vi) as stated in paragraph 7 above are baseless as those are challenges to the Court’s findings of facts and the appellant court would only reverse a finding of primary facts if it were satisfied that the finding is plainly wrong.

12.  The appellate process is not designed to give a litigant a platform for regurgitating her closing submissions on the evidence and factual aspects of the case again with the hope that the appellate judges may come to a different view to that of the primary judge. The mere assertion that the finding of the judge is against the weight of the evidence or that the judge should have reached another conclusion because of points advanced in the closing submissions below are not errors coming within that category. (See China Gold Finance Ltd v CIL Holdings Ltd, unreported, CACV 11/2015, 27 November 2015 at paras 11-19 and Yu Pak Kan v Busy Firm Investment Limited[2023] HKCA 105 at para 19)

13.  Delay’s Grounds of Appeal were mostly a replay of her case and evidence, and one must remember Delay did not give evidence in the trial but attempted to introduce all evidence from a hearsay perspective from one TamAng. The Court gave thorough considerations in paragraphs 15 to 17 of the Judgment as to how much weight should be given to TamAng’s evidence, and I shall not repeat here. I remain my view that TamAng’s evidence as to those he has no direct personal knowledge of should not be considered.

14.  On the same token, the complaint of the Court did not give sufficient weight to the Statutory Declaration of Rosalina and Andrenee is completely invalid. Delay averred that the Statutory Declaration was filed and served upon the P about 2 weeks before the Trial and thus gave P sufficient time to make a reply. The Statutory Declaration is merely a hearsay evidence, and as explained in paragraph 17 of the Judgment, it would be prejudicial to P should the Court accepted the contents of the Statutory Declaration without having Rosalina and Andrenee being cross-examined in the Trial.

15.  Since most of the points raised by Delay in her Grounds of Appeal, written submissions and oral submissions were simply regurgitation of her earlier submissions for the Trial, I do not consider that Delay has any reasonable chance of success in appealing against any of my primary findings of facts as the Judgment has already provided all the weighing exercise and considerations I made before coming to my decision. I shall not repeat my reasonings here as the Judgment has provided so.

16.  It is clearly a misconceived allegation that the Court was erred in law by allowing P to ‘amend its pleadings’ after the Trial. After the Court adjudged the Loan 1 and Loan 2 both being enforceable at the interest rates pleaded by P in their respective claims, the Court is entitled to assess the actual interests, or “compensatory damages” suffered by P due to Ds’ breach of contract. By asking P to provide the Updated Calculation is by no means allowing P to ‘amend’ their pleaded case.

17.  Last but not least, Delay’s calculations of the interest rates were rejected by the Court in the Judgment. With respect, her calculations, as I said in the Judgment, did not take into account of the interest accrued from her late payment which made her calculation factually wrong.

18.  Further, in a recent judgment Sun Entertainment Culture Limited v Inversion Productions Limited (formerly known as TNC Productions Limited) [2024] 4 HKLRD 991, the Court of Appeal confirmed that default interest is not taken into account in the calculation of effective interest rate under sections 24 and 25 of the Money Lenders Ordinance, Cap 163 (“MLO”).

19.  The Court of Appeal took the view in paragraph 37 of the judgment that the nature of default interest is “not an agreed price for the use of money as a loan, but stipulated compensation for the wrongful detention of money after the loan has expired”. But there is obstacle to include default interest into the calculation of effective interest rate under Schedule 2 to the MLO because default interest is typically charged on an open-ended basis and without an end date of the default period, so it is not possible to calculate an average rate covering both the loan period and default period.

20.  In any event, P waived the charges for late payment before the trial and in their Updated Calculation, P applied all the paid amount to settle the interests payable under the respective Loans, and thus Ds only needed to pay the default interest based on the outstanding principal. This could hardly be described as unfair and the Court accepted the calculation under both Loan 1 and Loan 2.

21.  In light of the above, I consider Delay has failed to demonstrate any reasonable grounds to suggest that my findings are plainly wrong. There is no merit in any of the grounds proposed by Delay, and thus no reasonable prospect of success in Delay’s appeal.

22.  Both Delay’s Summonses must be dismissed. Since the Judgment made on 10 July 2025 was pending P’s Updated Calculation, and now having dealt with Delay’s Appeal Summonses, for the sake of clarity, the Court affirmed the Judgment with the following orders:

23.  For DCCJ 3298/2018, both the 1^st and 2^nd Defendants do pay the Plaintiff:

(i) the outstanding principal at $1,442.00;

(ii) the default interest from 18 January 2018 to the date of Judgment at $3,117.56;

(iii) the interest on both (i) and (ii) from the date of Judgment at the judgment rate until payment; and

(iv) Costs.

24.  For DCCJ 3299/2018, both the 1^st and 2^nd Defendants do pay the Plaintiff:

(i) the outstanding principal at $8,250.00;

(ii) the default interest from 5 June 2015 to the date of Judgment at $25,007.67;

(iii) the interest on both (i) and (ii) from the date of Judgment at the judgment rate until payment; and

(iv) Costs.

Costs

25.  The Court made a costs order against all the Defendants to pay P’s costs of these two actions and asked P to file and serve their statement of costs for the proceedings up to the trial for summary assessment. Delay filed her objections to P’s statement of costs but did not make any counter-propose. She simply denied her liability to pay costs.

26.  Costs should follow the event and the losing party has to bear the winning party’s costs of proceedings. With the Plaintiff being regarded as the real winner or the successful party in the trial of these two actions, the matter would proceed as Bokhary JA (as he then was) said in Elpe International (Far East) Limitedv Hewlett Packard Hong Kong Limited, unreported, CACV 58/1993, 30 July 1993 on the general rule that the winner is in general entitled to be paid his costs unless there are special circumstances called for some other orders to be made. In displacing the general rule on costs in favour of the successful party, the Defendants bear the burden to show that the circumstances justified such exceptional course, such as the successful party failed on certain allegations or issues and thereby “caused a significant increase in the length or cost of the proceedings”.

27.  There is, of course, no such circumstances being highlighted from Delay. In fact, Delay should be aware of the costs consequence from various interlocutory applications she made but failed in years of 2023 and 2024. There have been inordinate delay in these two simple money lenders’ actions since the issue of the writ, thus the Court decided to have the costs of these two actions summarily assessed rather than going through taxation, which would incur more costs and time.

28.  Having considered the nature of these two actions as well as the documents involved, I consider that the costs incurred could have been substantially inflated but for P’s sensible approach of not instructing counsel. It therefore justifies more working hours of P’s instructed solicitors, and by taking a broad brush approach, I consider the costs of proceedings for these two actions be at $530,000.00 is just and reasonable.

29.  Since the Appeal Summonses are both dismissed, I further order on a nisi basis that Delay do pay P costs of these two Appeal Summonses, to be assessed summarily. The P’s solicitors have filed a Statement of Costs dated 10 December 2025 seeking a sum of HK$47,523.00, I consider that the amount as sought by P is just and reasonable. I therefore order costs against Delay summarily assessed at HK$47,523.00. This costs order nisi shall be made absolute if no application to vary the same (including any summary of objections to P’s statement of costs in respect of the Appeal Summonses) is made within 14 days hereof.

Ms Eva Lo, of King & Company, for the Plaintiff in DCCJ 3298/2018 and the Plaintiff in DCCJ 3299/2018

The 1^st Defendant in DCCJ 3298/2018 and the 2^nd Defendant in DCCJ 3299/2018, appeared in person

DCCJ 3298/2018 & DCCJ 3299/2018

(Heard Together)

[2025] HKDC 1161

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 3298 OF 2018

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BETWEEN

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IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 3299 OF 2018

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BETWEEN

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JUDGMENT

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I. INTRODUCTION

1.  By the order made by Master Ross Li dated 20^th December 2023, these two actions are to be heard and tried together.

2.  Both DCCJ 3298/2018 and DCCJ 3299/2018 are money lenders’ actions, pursuant to Order 83A of the Rules of the District Court, Cap 336H, for recovery of the principal sum with interest of two loans. Both loans were advanced by the Pacific Ace Finance Limited as lender (“the Plaintiff”) to the defendants as borrowers in the respective actions with details alleged by the Plaintiff as follows:

Loan Agreement	DCCJ 3299/2018 (“Loan 1”)	DCCJ 3298/2018 (“Loan 2”)
Date	28 March 2015	4 May 2015
Loan Principal	HK$10,000.00	HK$13,000.00
Principal Borrower	Villasfer, Rosalina J., D1 (“Rosalina”)	Delay, Gilda H., D1 (“Delay”)
Co-Borrower	Delay, D2	Villasfer, Andrenee M., D2 (“Andrenee”)
Interest rates	2.5% per month 30% per annum	2.4% per month 28.8% per annum
Instalments	4	6
Repayment Amount for each Instalment	HK$2,750.00	HK$2,479.00
Total Repayment Amount (including interests)	HK$11,000.00	HK$14,874.00
Actual Amount repaid to the Plaintiff	HK$2,750.00	HK$13,432.00
The date upon which such unpaid sum became due	5 June 2015	17 January 2018

3.  It is not disputed that the Plaintiff was at all material times a registered and licensed money lender under the Money Lenders Ordinance, Cap 163 (“the Ordinance”). At the time of entering into the agreements of Loan 1 and Loan 2 specified above, the Plaintiff was duly licensed as money lender under the Ordinance.

4.  All defendants in both actions were domestic helpers at the time when Loan 1 and Loan 2 (collectively called “the Loans”) were taken out. Besides Delay who is still working in Hong Kong at the time of the trial, both Rosalina and Andrenee had returned to the Philippines before the commencement of these two actions.

5.  Loan 1: It is the Plaintiff’s case that Delay and/or Rosalina had only repaid the first out of a total of four instalments on 4^th May 2015, and thus the whole of the balance of the Loan 1 together with interests, default interests and late charges would become immediately due in default of repayment for one month.

6.  Loan 2: It is the Plaintiff’s case that Delay and/or Andrenee had paid a total of HK$13,432.00 in respect of Loan 2 but such sum was made over 11 tranches of payments on various dates later than the due dates specified in the Loan Agreement. Moreover, the amount of each tranche of repayment was less than the agreed instalment, ie HK$2,479.00. The Plaintiff therefore avers it is entitled to default interest at the same rate from the due date of payment until actual payment.

7.  For the purpose of these two actions, the Plaintiff foregoes the claim over the late charges.

8.  Since Andrenee and Rosalina are both not in Hong Kong since the commencement of these actions, only Delay filed the homemade Defence and Counterclaim (“D&CC”) for both cases.

9.  The defence case can be summarised as follows:

(a) The Plaintiff ran a debt-trapping scam by having a principal borrower and co-borrower in the Loans. It is averred by Delay that the co-borrower was ‘fake’ in the sense that the loan money was not received by the co-borrower but who was made to enter into the loan agreement to act as a ‘human form of securities’ over the principal borrower (“the Debt-trapping Scam”);

(b) The promissory note of the Loans were forged because the principal borrower did not sign the promissory note together with the co-borrower on the same day, but the Plaintiff forged the signing date. The promissory note for the respective Loans are therefore illegal documents, hence invalidate the Loans (“Forgery”);

(c) The Plaintiff and its staff was in breach of Condition 10(a) and (c) of the Licensing Conditions of Money Lenders License (“the Licensing Conditions”) by adopting unlawful debt collection practices to recover debts of the Loans from Delay, which included “criminal intimidations, death threat, intrusion, public humiliations, and torments” against Delay and “disturbed and harassed” Delay’s employer who was not indebted to the Plaintiff (“Unlawful Debts Recovery Practice”);

(d) The Plaintiff charged effective interest rate exceeding 60% per annum and thus violated the Ordinance (“Excessive Interest Rate”);

COUNTERCLAIM:

And due to the Unlawful Debts Recovery Practice, Delay averred to have “suffered tremendously for 6 years of fear”, thus counterclaiming the Plaintiff “punitive damages” of HK$10 million but reducing it to HK$3 million thus within the jurisdiction of the District Court.

The Plaintiff’s Evidence

10.  The Plaintiff tendered two witnesses, including Mona Liza Q Bautista (“Bautista”) and Aldrin R Samoza (“Samoza”). Bautista is the Director and Loan Approving Officer of the Plaintiff, and has worked for the Plaintiff for 28 years at the time of the trial. Samoza is a collection supervisor of the Plaintiff and has worked for the Plaintiff for 29 years at the time of the trial.

11.  Bautista explained the usual procedure of loan applications with the Plaintiff, which involved in essence, a loan application form to be filled in by the applicant(s) (“Application Form”), a briefing session with the applicant(s) followed by an interview by a loan approving officer. Should the application be approved, the applicant(s) will be provided a promissory note which is equivalent to a loan agreement (“Promissory Note”) with contents fully explained to them in English and/or Tagalog (“the Loan Application Procedure”). Bautista was not the officer who interviewed the Defendants but she believed the Loans were approved under the Loan Application Procedure, and the Defendants must understand the terms of the Loans as the Promissory Note were written in both English and Tagalog.

12.  Samoza gave evidence that the Plaintiff instructed him to collect debts from Delay in September 2017. He therefore went to the address that was provided by Delay on her Application Forms for the Loans on 1^st September 2017 (“the First Visit”). He explained the purpose of the First Visit was to verify if Delay was still residing at such address, and he disagreed that he had ever harassed her at the First Visit. He gave evidence that the person from inside the premises did not open the front door but sent Delay to the lobby where they had a meeting. During the meeting, Samoza said Delay promised she would pay the overdue debts owing to the Plaintiff and with her consent, Samoza took a photo of her to show to the Plaintiff that they had a meeting.

13.  Subsequent to the First Visit, Delay made two repayments each at HK$500.00 on 5^th October 2017 and 5^th December 2017.

14.  Samoza paid another visit at Delay’s address on 14^th December 2017 (“the Second Visit”) since the Plaintiff received no further repayments from her. He agreed that he had left Delay a notice in the letterbox (“the Notice”) because Delay told him via the intercom that she could not meet him at the lobby. This was the second and last time of his visit at Delay’s address and the Plaintiff received no further repayments from her subsequent to the Second Visit.

The Defendants’ Evidence

15.  Notwithstanding an unless order made by Master Timon Shum on 14 June 2023, Delay and other defendants did not file any witness statements in these actions but rather, chose to rely on a witness statement prepared by Steven Tam-Ang (“TamAng”) as the only defence witness in these two cases. TamAng was not present at the time when Delay applied for the Loans and/or signed the Promissory Notes, neither had he witnessed the alleged harassment. In gist, he has no personal knowledge about the allegations made by Delay but all his understandings were based on information relayed to him. Moreover, his witness statement was prepared in a style akin to legal submissions, which involved his own analysis of the Plaintiff’s pleaded case, and credibility of various witnesses.

16.  In dealing with hearsay evidence in civil proceedings, s 49 of the Evidence Ordinance, Cap 8, provided a list of considerations that the Court could take into account when assessing how much weight, if at all, to be placed on the hearsay evidence. The Plaintiff’s solicitors urged the Court not to place any weight on TamAng’s evidence, and I agreed based on the following reasons:

(i) Opportunities were given to Delay to file her witness statements as evidence of her cases;

(ii) The presence of Delay at the trial demonstrated her availability of being a witness in these cases;

(iii) Delay, who was unrepresented, was perfectly capable in making her opening and closing submissions, and cross-examining the Plaintiff’s witnesses. This demonstrated her ability in preparing witness statements and giving evidence at the trial;

(iv) The information was relayed to TamAng by Delay in July 2016, that is more than a year after the Loans were taken out and at least 6 months after the last repayment was due. There was no evidence showing TamAng knows or has any contact with Rosalina or Andrenee. This demonstrated his inability to discern the truthfulness in Delay’s account of the Debt-trapping Scam;

(v) TamAng was not present when the alleged harassment took place, including the allegation of the Plaintiff sending debt collector to Delay’s employment address and calling her employer’s workplace. There was no evidence showing TamAng knows or has contacted Delay’s employers, and thus he would not be in a position to discern the truthfulness of the alleged incidents;

(vi) The allegations of Forgery and Excessive Interest Rate were matters of legal discussion, and TamAng was not in any position to provide his opinions as a factual witness.

17.  It would be prejudicial to the Plaintiff should the Court put any weight on TamAng’s evidence without having Delay being cross-examined. Since Delay gave up on her rights being a witness, all accounts of incidents which TamAng referred as told by Delay should therefore be rejected.

18.  On the other hand, I found both the Plaintiff’s witnesses gave evidence in a straightforward and honest manner. Their evidence was unshaken under cross-examination and was supported by various contemporaneous documents which I will explain in the paragraphs below.

The Debt-trapping Scam

19.  By rejecting TamAng’s evidence, Delay’s allegation of the Plaintiff’s Debt-trapping Scam was nothing more than a bare assertion. None of the principal borrowers or co-borrowers gave evidence, and even taking the defence case to its highest that the co-borrower was simply a ‘human form of security’ and no loaned money was ever passed into the hands of the co-borrower is not in itself a breach of any law. First, what Delay described as ‘human form of security’ in her D&CC is commonly known as surety or guarantor who provides ‘financial backing’ to the borrower’s repayment obligation. Most financial institutions require borrowers to nominate a surety or guarantor especially when borrowers could not provide any collaterals for their loans. Pursuant to section 12 of the Money Lender Regulations, Cap 163A (“MLR”), there are only three forms of security for loan is prohibited, namely identity card of a person, bank savings or deposit account book or photograph of the borrower or surety or that of their family member. As such, should the co-borrowers of the Loans be in fact acting in the capacity as a surety, the Court does not see how this violated the MLR as alleged by Delay.

20.  Secondly, while it was the Defendants’ case saying these co-borrowers were fake, it was not her pleaded case that Delay and/or Andrenee as the respective co-borrower in Loan 1 and Loan 2 were misled or coerced into entering in the loan agreement and signed on the Promissory Note(s). Nor was their case that the signatures on the Application Form and/or Promissory Notes were forged. It is well-worthy to note that Delay took out another loan from the Plaintiff on the same terms and conditions just few months before Loan 1 with one Madam Balbontin acting as the co-borrower. It signified Delay’s understanding of the Loan Application Procedure, and both her voluntariness and willingness in accepting the terms and conditions of Loan 1 and Loan 2.

21.  So even if the co-borrower was in fact a surety of the principal borrower (which the Defendants failed to prove), I accept the evidence of Bautista that all loan applicants, including Delay and Andrenee were properly advised before they accepted the terms and conditions of the Loan Agreement, and in these circumstances, no criticism could have attached to the Plaintiff in requiring a co-borrower to assume the principal borrower’s liability when he or she fails to repay the loan.

Forgery

22.  The allegation of Forgery simply has no groundings. It was pleaded that the date of the Promissory Note of the Loans did not reflect the actual date when the principal borrower and co-borrower signed on the forms, thus such Promissory Note was forged, hence unenforceable.

23.  No legal authorities were submitted by the Defendants in support of her proposition, and the Court does not see how and where the forgery occurred. The Application Form would only be processed and approved when both the principal borrower and co-borrower signed on the requisite documents, it is not a condition nor a legal requirement that all interested parties must sign the documents at the same time and/or place. Should one of these borrowers went to the Plaintiff’s office to sign the documents, the approval of the loan would be pending on the signature of the other borrower. The significance of the date is not about when the documents were signed, but when the contract was duly executed and the Promissory Note became effective. The argument on forgery must therefore fail.

Unlawful Debts Recovery Practice

24.  As to the allegations of Unlawful Debts Recovery Practice, since neither Delay nor her employer gave evidence, the averred telephone calls made to her employer in 2016 and the screenshots captured from allegedly Delay’s mobile phone showing threatening messages were all bare assertions without any supporting evidence. Again, taking the Defendants’ case to its highest, the so-called life-threatening message read as follows:

“no more just bullshit here, lets start now! I am exciting of yr harassment!”

“are you still alive bullshit everyday? HK no need the trash walk around like u, where is the police? arrested U?”

“u try x care, let see u stay hk longer than me or not, all will 100% make u know …”

25.  Not only I saw no threats between these lines of nonsensical messages, but there was also not a single word about repayment of the Loans or any kind of implications that Choi being a staff of the Plaintiff (in fact there was no proof of the identity of sender). It was also telling that Delay only reported to the Police almost two years after receiving these threatening messages, and no charges were made against anyone by the Police. As such, I do not consider there is any substance in Delay’s allegation.

26.  It is also the defence case that a demand letter and the Notice were placed inside the letterbox of Delay’s employer’s address as well as the First Visit and Second Visit amounted as harassment, and misuse of Delay’s personal data.

27.  Samoza admitted that he placed a Notice inside the letterbox at his Second Visit after seeking permission from both Delay and the security guard of the building. The Notice was simply a card addressed to ‘GILDA DELAY” bearing the Plaintiff and collection officers’ names, address and contact telephone numbers. There was no mention of the Loans or repayment but printed with the following statement:

“Please report to the office or contact us through hotline no 2532-5800 during office hour 9:00AM – 6:00PM. before we take further action that may cause inconvenience to you or to your employer.”

28.  A demand letter dated 29 December 2017 addressing to Delay (“Demand Letter”) was allegedly placed inside an envelope addressing to Delay’s employer ‘戴小姐’. There was no evidence before me confirming Delay’s employer’s name but let us assume so for the purposes of legal analysis.

29.  My attention was first drawn to the following clause in the Application Form in relation to the personal data provided by applicant, which was acknowledged and signed by Delay (“the Personal Data Clause”):

“The undersigned acknowledges and understands the contents of the Circular to Customers relating to the Personal Data (Privacy) Ordinance, Terms and Conditions of loans and agrees that the Company is authorized to contact all relevant parties for verification and to disclose any information concerning the undersigned to and third parties for the purpose of exchanging credit information, debt collection or any other reasonable purpose(s). The undersigned also acknowledges that, whether the said application is approved or not, this application form belongs to the property of Pacific Ace Finance Limited.” (Emphasis added)

30.  On the other hand, Condition 10 of the Licensing Conditions sets out the obligation of licensees in connection with debt collection activities:

Condition 10

(a) The money lender and his debt collectors shall not try to recover debts, whether directly or indirectly, from anyone unless such person is in law indebted to him;

(b) The money lender shall take all practicable steps and measures to ensure that personal data collected in the course of his business are protected against unauthorized or accidental access, processing, erasure or other use by any debt collectors, and shall at all times comply with the Personal Data (Privacy) Ordinance, Cap 486, Laws of Hong Kong, in the collection, use, holding and processing of such information or personal data;

(c) The money lender and his debt collectors shall not, while trying to locate the whereabouts of debtors, harass anyone, adopt unlawful or improper debt collection practices;

(d) The money lender shall, so far as reasonably practicable, maintain and monitor proper systems and procedures for handling complaints and/or inquiries relating to the loans lent by him in the ordinary course of business and the debt collection activities arising therefrom;

(e) The money lender shall, so far as reasonably practicable, keep updated and accurate records of the debt collection activities of his debt collectors during the term of the licence.

31.  It is clear that the Licensing Conditions Condition 10 (a) specifies money lenders and/or debt collector can only try to recover debts from the borrowers, but Condition 10(c) also allows money lender and his debt collectors to locate the whereabouts of the debtors but not through any improper or unlawful practices.

32.  Bautista gave evidence that while employer is not a ‘relevant party’ to collect a loan of a borrower, the employer is a relevant party for verification of the borrower’s address and employment status. Both Bautista and Samoza also gave evidence about the debt recovering practice of the Plaintiff that demand letters will only be sent out after the Plaintiff failed to contact the borrowers after SMS and follow-up calls, and any face-to-face meeting at the address provided by the borrower was to confirm if he or she was still under the same employment.

33.  Bearing in mind the Demand Letter was sent out after Delay stopped making any repayment and refused discussing the Loans with the Plaintiff, and taking into consideration that while the envelope was addressed to allegedly Delay’s employer, the Demand Letter was addressing to Delay. I incline to think such arrangement was reasonable for the Plaintiff to locate and to confirm if Delay was still under the same employment as specified in her Application Form and to make demand for repayment from Delay. I do not consider there has been any breach of the lenders’ obligations under the Licensing Conditions Condition 10.

34.  The Court has the benefit of reading the contents of the Demand Letter and it was inconceivable how a standard, formal and courteous demand letter been perceived as a source of threats and harassment. Equally, the Notice was nothing more than an appeal asking for contact, which was sent to an address voluntarily provided by Delay.

35.  Since Delay did not give evidence in these actions, the evidence given by Samoza about the First and Second Visits could only be challenged by Delay under cross-examination. As explained earlier, I found Samoza’s evidence is to be preferred. He denied his First Visit had terrified a little girl who opened the front door for him and he was adamant that he only spoke to someone over a closed door and was later invited to meet Delay in the lobby. Should the version of event suggested by Delay be accepted, it would imply her leaving her employer’s daughter, who was in a terrified state alone in the house while she went down to the lobby meeting Samoza. I found this to be inherently improbable. Further, I could hardly detect any distress from Delay in the photo taken by Samoza at the Lobby; her smile in the photo might not be as genuine as it seemed, the chance of it taken without her consent in a public place with security guards was seemingly odd.

36.  Quite apart from the fact that I cannot see any threats, harassment or misuse of personal data from the Plaintiff, it seems to me that the Plaintiff had all along acted reasonably in its effort to recover the debts, and there in any event no basis at all for the complaints identified in paragraphs 24 – 35 above.

Excessive Interest Rate

37.  In the D&CC filed by Delay for the respective cases, she took TamAng’s view that the interest rate the Plaintiff was charging over Loan 1 and Loan 2 was in excess of the legal requirement of 60% per annum (which is now lowered to 48% per annum from 30^th December 2022). As such, the Loans are unenforceable under section 24(1) and 24(2) of the Ordinance.

38.  The Defendants’ calculations were premised on two beliefs she held. First, the interest for the subsequent month’s installment was calculated based on the remaining balance of the loan instead of the loan principal, secondly for all those late repayments she made in respect of Loan 2, she treated them as settling the total loan amount without calculating the default interest for late payment.

39.  There are different repayment schedules depending on the type of loan. The repayment schedule suggested by Delay is often called the ‘amortized loan’ where lenders and banks set a regular payment schedule that includes both the interest and principal, and monthly payments will chip away at the principal amount as well as the interest accrued. The interest on an amortized loan is calculated based on the most recent ending balance of the loan, and thus the repayment amount fluctuates each month.

40.  Contrary to Delay’s averment, Loan 1 and Loan 2 (so as an earlier loan she took out from the Plaintiff) were not amortized loan but a simple fixed interest loan, which is also a type of loan commonly available amongst financial institutions (and certainly legal). Instead of having a repayment schedule splitting the monthly payable interest and principal, lenders using the loan principal and the fixed interest rate to calculate the total amount of interest to be paid over the entire the installment period. This is exactly what being shown on the “Installment Schedule” provided to Delay by the Plaintiff, which has clearly indicated the number of installments and amount payable for each installment.

41.  The formula for calculating simple interest is:

Principal x annual interest rates (%) x duration of the loan (years)

100

42.  For Loan 1

Principal Loan: HK$10,000.00

Annual Interest Rates: 30%

Duration of the loan: 4 months, ie 0.333 years

Therefore the simple interest for Loan 1 is:

($10,000.00 x 30% x 0.3333) / 100 = $999.9

Rounding off to the nearest number will therefore give us a simple interest at $1000.00, and thus the total amount payable being $10,000 + $1,000 = $11,000.00

Since the total amount payable be repaid in 4 installments, $11,000/4 = $2,750.00 is the monthly payable installment.

These figures match with the repayment schedule provided to Delay by the Plaintiff.

43.  For Loan 2

Principal Loan: HK$13,000.00

Annual Interest Rates: 28.8%

Duration of the loan: 6 months, ie 0.5 years

Therefore the simple interest for Loan 2 is:

($13,000.00 x 28.8% x 0.5) / 100 = $1,872.00

Thus the total amount payable being $13,000 + $1,872 = $14,872.00.

Since the total amount payable be repaid in 6 installments, $14,872/6 = $2,478.66 is the monthly payable installment. Rounding off to the nearest number will therefore give us $2,479.00 that matches the repayment schedule provided to Delay by the Plaintiff.

44.  The repayment schedules for both Loan 1 and Loan 2 showed that the Plaintiff charged the Defendants the interest rates as described in their respective Promissory Notes, which did not exceed the statutory limit.

45.  For the sake of completeness, I reminded myself that since the rate in interest was stated as an actual rate of interest in the Promissory Notes, it is therefore not necessary to resort to Schedule 2 of the Ordinance which was used to ascertain the ‘deemed rate’. (See Kwok Ying Lung v Ko Chu Hung [2001] 3 HKC 480) Lord Denning in Askinex Ltd v Green [1969] 1 QB 271 at 282B-E used the following example to illustrate a case of an actual rate of interest:

“... To illustrate the first alternative (a) [ie the actual rate], I would take the case where a moneylender makes a loan of £24,000 repayable over 10 years at £200 a month, and meanwhile interest to be payable at the rate of 25 per cent per annum on the balance outstanding from time to time. Under such a contract, the principal is reduced by £200 a month. So the interest gets less each month. The interest payable for the first month is £500 (25 per cent per annum on £24,000 for one month). The interest payable for the second month is £495 16s 8d (25 per cent per annum on £23,800 for one month). And so on. The interest is reduced by £43s 4d(25 per cent per annum on £200 for one month). The total sum payable for interest over the 10 years comes to £30,250. That is the “interest charged on the loan”. But it is capable of being expressed in terms of an actual rate per cent per annum, namely, 25 per cent per annum. The moneylender satisfies the statute by expressing the interest as 25 per cent per annum.”

46.  In the case before me, the total interest payable during term of Loan 1 and Loan 2 were clearly calculated (being $1,000 and $1,872 respectively) and capable of being expressed in terms of an actual rate of interest per cent per annum. Such rate would be accepted by the court as the effective rate of interest for the Loans for the purpose of section 25.

47.  On the same note, since Delay and other Defendants received and signed on the Promissory Notes showing the precise interest rates and amount payable for each instalment, there was simply no room for them to argue they were in any way misled or uncertain as to what those terms were.

48.  The words ‘compound interests’ were used by Delay describing how Plaintiff calculated the default interest. She presented to the Court various algorithms in calculating the interest rate, which some of them were as high as 300%. I regret to say that there is not much point in demonstrating here how she arrived various interest rates as she muddled the concept of ‘compound interest’ with ‘default interest’, and has fallen in the error of calculating the interest without taking into account of the number of days overdue (or allocated random arbitrary number as the number of days overdue). Her whole computation was wholly misconceived.

49.  It is not disputed that Delay, Rosalina and Andrenee, being either or both the principal borrowers and co-borrowers in Loan 1 and Loan 2 defaulted in repayment. Only one repayment at HK$2,750.00 was made for Loan 1 by the first due date on 4^th May 2015 and the other three instalments were all in default. In respect of Loan 2, the tables below compare the actual date of repayment and its amount vis-à-vis the agreed repayment schedules:

Due Amount	Due date	Actual Repayment date	Actual Amount of Repayment
$2,479	10/06/2015	27/06/2015	$1,000
$2,479	10/07/2015	04/07/2015	$1,559
$2,479	10/08/2015	28/07/2015	$2,545
$2,479	10/09/2015	18/09/2015	$1,500
$2,479	10/10/2015	22/11/2016	$2,000
$2,479	10/11/2015	07/01/2016	$1,500
		25/02/2016	$1,000
		05/04/2016	$828
		27/04/2016	$500
		05/10/2017	$500
		05/12/2017	$500
Total: $14,874			Total: $13,432

50.  The 6 instalments payable in 6 months were made over 11 repayments over 30 months, and not a single repayment was made by the due date. The total amount of repayment was also less than what was agreed under the Promissory Note.

51.  According to the Promissory Note for both Loans, default interests will be applied in the event of default payment. The relevant clause read as follows:

“… if any payment be not made on its due date, interest on such payment at the rate applicable to the capital amount hereof from the date it becomes due until payment thereof.”

52.  The Plaintiff is therefore entitled to default interest at the same rate the due date of payment until actual payment, and the outstanding amount depends on the number of days overdue. Contrary to Delay’s averment in the D&CC and/or submissions, such computation is different from compound interest which allows the borrower to enjoy interest accumulated from previously accumulated interest and the principal sum. Rather, any default gives rise to the borrower the right to charge interest on the outstanding payment until full payment on top of the simple interest over the principal loan.

53.  The charge on default interest is permitted under s 22 of the Ordinance:

“Provided that provision may be made by any such agreement that if default is made in the payment upon the due date of any sum payable to the money lender under the agreement, whether in respect of principal or interest, the moment lender shall be entitled, subject to Part IV, to charge simple interest on that sum from the date of the default until the sum is paid at an effective rate not exceeding the effective rate payable in respect of the principal apart from any default, and any interest so charged shall not be reckoned for the purposes of this Ordinance as part of the interest charged in respect of the loan.”

54.  The Defendants were therefore contractually obligated to pay default interest on the overdue amount from its due day until payment. In respect of Loan 1, only one payment was made by the due date of 1^st instalment, and it is reasonable for the Plaintiff to apply the amount of the 1^st instalment to first discharge the interest accrued on the overdue amount, with surplus goes to reduce the then overdue principal and further default interest would accrue on the reduced principal until next payment.

55.  As such, the HK$2,750 paid on 5^th May 2015 should apply to discharge the total payable interests of Loan 1 which was HK$1,000. The surplus of HK$1,750 should go to reduce the total overdue loan principal of HK$10,000, and thus the amount due but unpaid was HK$8,250. Since the whole of the balance of Loan 1 became due and payable since 5^th June 2015 (upon default of payment for one month), the default interest should therefore be payable on HK$8,250 from 5^th June 2015 onwards at 30% per annum until the date of judgment, and judgment rate thereafter until full payment.

56.  Regarding Loan 2, since the defendants had made various repayments since 27 June 2015, I agree that the Plaintiff could first apply these subsequent payments to discharge interest accrued on the overdue amount until the date(s) of the relevant payments. Likewise, surplus in any payment should go to reduce the then overdue principal and further default interest would accrue on the reduced principal until next payment. Since the last payment was made on 5^th December 2017, the default interest at 28.8% per annum should therefore be payable on the balance of the overdue principal from the deadline the Plaintiff set on their Demand Letter, i.e. 8^th January 2018 instead of 17^th January 2018 as pleaded in the Plaintiff’s Statement of Claims until the date of judgment, and judgment rate thereafter until full payment.

57.  As such, the total amount paid by Delay in respect of Loan 2 was HK$13,432, this sum should apply to discharge the total payable interests of Loan 2 which was HK$1,872. The surplus of HK$11,560 should apply to set-off the total overdue loan principal of HK$13,000. After giving credit to such payment, the sum of $1,440 remained due as well as all default interest accrued from 10^th June 2015 to 8^th January 2018. Default interest would be payable on this total overdue amount from 8^th January 2018 onwards at the rate of 28.8% per annum until the date of judgment, and at judgment rate until full payment.

58.  The Plaintiff’s current calculations of the default interest accrued between 10^th June 2015 and 10^th November 2015 is HK$3,067 but without providing any explanations in their computation. My observation is that such pleaded amount was not calculated in accordance with my ruling in paragraphs 57-58. I therefore direct the Plaintiff to work out the outstanding due from the defendants to the Plaintiff following my above ruling within 21 days from the date hereof. Bearing in mind the amount of default interests accrued before the sum was due would unlikely be substantial, and given the repayments made by the defendants between June 2015 and December 2017 were sporadic, the costs of having the Plaintiff’s solicitors re-calculating the accrued default interest during that period would potentially be higher than the interest itself. The Plaintiff is therefore at liberty to waive that part of claims.

Conclusion

59.  In light of the above, I order that for DCCJ 3299/2018 be entered against Rosalina and Delay in favour of the Plaintiff for the outstanding sums as ruled under paragraphs 54 and 55 above. With DCCJ 3298/2018, I order that after the outstanding amounts are ascertained as aforesaid, judgment be entered forthwith against the Delay and Andrenee in favour of the Plaintiff for such outstanding amounts.

60.  As explained in my rulings above, I do not accept there was any misconduct in the Plaintiff’s debt recovery exercise against Delay, and there was no basis at all for Delay’s counterclaim. The amount of damages she sought reflects not only her ignorance in law but sheer greed. The counterclaim against the Plaintiff in DCCJ 3298/2018 is dismissed.

61.  I see no reason why costs should not follow the event. I therefore grant a costs order nisi that all Defendants do pay the Plaintiff costs of these two actions (including all costs reserved if any) to be summarily assessed and paid forthwith. However, part of the Plaintiff’s calculation of the outstanding amounts in DCCJ 3298/2018 is not accepted by this court and I am of the view that the costs in preparing the outstanding due should be borne by the Plaintiff.

62.  Accordingly, I grant the following directions for summary assessment of costs:-

(a) The Plaintiff do within 21 days from the date hereof file with court and serve on the Defendants of both DCCJ 3298/2018 and DCCJ 3299/2018 a statement of costs for summary assessment;

(b) The Defendants of both DCCJ 3298/2018 and DCCJ 3299/2018 do within 21 days after receipt of the D’s statement of costs file with court and serve on D a succinct summary of objections to D’s statement of costs of not more than 3 pages; and

(c) Unless otherwise directed, the summary assessment of costs will be dealt with by way of paper disposal.

Ms Eva Lo, of King & Company, for the plaintiff in DCCJ 3298/2018 and the plaintiff in DCCJ 3299/2018

The 1^st defendant in DCCJ 3298/2018 and the 2^nd defendant in DCCJ 3299/2018, appeared in person

The 2^nd defendant in DCCJ 3298/2018 and the 1^st defendant in DCCJ 3299/2018, were not represented and did not appear

DCCJ 3298 & 3299/2018
(Heard together)

[2024] HKDC 1735

DCCJ 3298/2018

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 3298 OF 2018

--------------------------------

--------------------------------

AND

DCCJ 3299/2018

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 3299 OF 2018

--------------------------------

--------------------------------

(HEARD TOGETHER)

--------------------------------

DECISION

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I.  INTRODUCTION

1.  Ms Delay is the 1^st defendant in DCCJ No 3298 of 2018 (“DCCJ 3298”) and the 2^nd defendant in DCCJ No 3299 of 2018 (“DCCJ 3299”). In each of the actions, Ms Delay filed a summons on 6 September 2024 (a Friday) returnable on the PTR to take place on 9 September 2024 (the following Monday), to seek an order under 47B(1) of the District Court Ordinance and O 24 r 7A that the Director of Immigration produce:-

(1)  The travel record of the 2^nd defendant in DCCJ 3298 since April 2015 and her “current address and contact (excluding her employer’s) if she is working in Hong Kong but inclusive of the Philippines address and contact”; and

(2)  The travel record of the 1^st defendant in DCCJ 3299 since April 2015 and her “current address and contact (excluding her employer’s) if she is working in Hong Kong but inclusive of the Philippines address and contact”.

2.  At the PTR, I gave directions for filing affirmations, and I heard the substantive argument today.

3.  At the hearing, Ms Delay informed the Court that she served the summons in each action on the Director of Immigration in person by hand on 7 September 2024. She also informed the Court that she served her affirmation in person by hand as well. However, there is no written acknowledgment of receipt of any of the documents. Nor has the Director written to the Court (as he would usually do) as to what position he would take.

4.  Given that Ms Delay acts in person, I am prepared to consider the merits of the summonses themselves on the basis that the Director of Immigration has been properly served and would take a neutral stance. Only if I am satisfied that Ms Delay’s summonses should be allowed, then I may have to consider whether to hear the Director of Immigration on the matter.

5.  In determining whether to allow a late application, I have to consider:-

(1)  Length of delay;

(2)  Reason for the delay;

(3)  Prejudice caused by the delay; and

(4)  Merits of the application themselves.

II.  DELAY

6.  The trial shall commence on 9 December 2024 with 9 days reserved. Ms Delay’s applications are quite near the trial. So, the delay is considerable.

III.  REASONS FOR DELAY

7.  Ms Delay’s explanation for her delay is that she received information from a person she did not identify that the 2^nd defendant in DCCJ 3298 left Hong Kong on 4 May 2015 and so it was impossible for her to sign on the promissory note on 4 May 2024 as alleged thereon, which promissory note is relied upon by the plaintiff for its claim in DCCJ 3298 (see below). In respect of the 1^st defendant in DCCJ 3299, Ms Delay says that because the 1^st defendant is related to the 2^nd defendant, it is also necessary to obtain the information concerning the 1^st defendant in DCCJ 3299.

8.  I do not accept the explanation, because she did not identify the person who informed her about the 2^nd defendant’s whereabouts on 3 May 2015, and also because there is no explanation why that person could not have told her about this earlier. In any event, this explanation is not applicable for DCCJ 3299 at all – the only explanation for the delay is DCCJ 3299 is that the 1^st defendant in DCCJ 3299 is related to the 2^nd defendant in DCCJ 3298. It is simply no explanation, let alone any valid explanation, for DCCJ 3299.

IV.  PREJUDICE CAUSED BY THE DELAY

9.  The documents sought are documents from the Director of Immigration and there could not be any realistic challenge to the accuracy of the contents thereof. It thus appears to me that there would not be much disruption caused to the trial, even if the documents are relevant.

10.  However, the most important question is whether the documents are relevant at all.

V.  RELEVANCE

11.  In DCCJ 3298, the plaintiff’s claim is that:-

(1)  The plaintiff is a licensed money lender.

(2)  On 4 May 2015, Ms Delay and the 2^nd defendant therein, as borrowers borrowing money from the plaintiff, made and delivered a promissory note to the plaintiff, whereby they promised to repay a loan of HK$13,000 by 6 instalments of HK$2,479 per month on 10 June 2015 and thereafter on the 10^th day of each succeeding month.

12.  Similarly, in DCCJ 3299, the plaintiff’s claim is that on 28 March 2015, Ms Delay and the 1^st defendant therein, as borrowers borrowing money from the plaintiff, made and delivered a promissory note to the plaintiff, whereby they promised to repay a loan of HK$10,000 by 4 instalments of HK$2,750 per month on 5 May 2015 and thereafter on the 5^th day of each succeeding month.

13.  There is no dispute that for each loan, some repayment had been made, but then the borrowers defaulted.

14.  Ms Delay’s defences are essentially the same in both actions. I only need to set out the defence relevant to the present purposes[1]:-

(1)  The loan in DCCJ 3298 is a loan lent solely to her but not the 2^nd defendant, whether as a joint borrower or a separate borrower.

(2)  The loan in DCCJ 3299 is a loan lent solely to the 1^st defendant therein but not to her, whether as a joint borrower or a separate borrower.

(3)  The plaintiff did not explain to the alleged non-borrowers (the 2^nd defendant in DCCJ 3298 and her in DCCJ 3299) why they had to sign the relevant documents as a joint borrower.

(4)  Further, the 2^nd defendant did not sign the promissory note in DCCJ 3298 on 4 May 2015  but on 3 May 2015, and Ms Delay did not sign the promissory note in DCCJ 3299 on 25 March 2015 but on 15 March 2015. So, the notes are forged or the dates therein are false contrary to section 71 of the Crimes Ordinance (Cap 200).

(5)  According to Ms Delay, the plaintiff’s intention was to secure the otherwise unsecured loans. I take this to mean that the plaintiff would be able to pursue the alleged non-borrower in the event that the borrower defaults in repayment, like a surety or a guarantor with primary liability.

(6)  Ms Delay calls (1) – (5) above a “Debt-Trapping Scam and Forgery”.

15.  For this defence, Ms Delay does not mount a case that the 2^nd defendant in DCCJ 3298 and the 1^st defendant in DCCJ 3299 were fictitious. Nor does she mount a case that the 2^nd defendant in DCCJ 3298 or the 1^st defendant in DCCJ 3299 did not sign or did not agree to the promissory note. The only dispute she raises is about the dates when the 2^nd defendant in DCCJ 3298 and Ms Delay herself signed the respective promissory notes. However, I fail to see how the alleged discrepancy of the dates could constitute any valid and relevant defence, when it is not Ms Delay’s case that the signatories did not agree to the contents of the promissory note.

16.  So, I do not see how the travel records of the 2^nd defendant in DCCJ 3298 and a fortiori the 1^st defendant in DCCJ 3299 are relevant (who, according to Ms Delay’s case, did sign the promissory note on 25 March 2015). Nor can I see how their addresses and contacts, whether in Hong Kong or in the Philippines, are relevant. Ms Delay’s argument that such information would testify against the plaintiff is totally unmeritorious.

17.  Ms Delay also made submissions that the addresses and contacts would help her to find the 2^nd defendant in DCCJ 3298 and the 1^st defendant in DCCJ 3299 so that she could ask them to testify at trial. If this were really her intention, then clearly, a discovery application is not the right course to take.

VI.  CONCLUSION

18.  In the premises, I dismiss Ms Delay’s summonses. Ms Delay shall pay the plaintiff the costs of the summonses forthwith, summarily assessed at HK$6,000 in each action (thus, in total, HK$12,000), already factored in the discount applied due to the plaintiff’s failure to lodge and serve the statement of costs in a timely manner as required by PD 14.3.

Ms Eva Lo of King & Co., for the plaintiff in DCCJ 3298/2018 and the plaintiff in DCCJ 3299/2018.

Ms Delay, Gilda H., the 1^st defendant in DCCJ 3298/2018 and the 2^nd defendant in DCCJ 3299/2018, in person

DCCJ 3298 & 3299/2018
(Heard Together)

[2023] HKDC 611

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 3298 OF 2018

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IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 3299 OF 2018

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DECISION

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Introduction

1.  By an Order 58 Notice of Appeal filed by Ms Gilda H Delay (“Ms Delay”), the 1^st defendant in DCCJ 3298/2018 (“the 3298 Action”), Ms Delay appealed against the order of Master Roberta Chan made on 20 January 2023 refusing to summarily dismiss the 3298 Action, and ordering Ms Delay to pay costs (“the 3298 Appeal”).

2.  By another Order 58 Notice of Appeal filed by Ms Delay, who in addition to being the 1^st defendant in the 3298 Action was also the 2^nd defendant in DCCJ 3299/2018 (“the 3299 Action”), Ms Delay appealed against a separate order of Master Roberta Chan made on 20 January 2023 refusing to summarily dismiss the 3299 Action, and ordering Ms Delay to pay costs (“the 3299 Appeal”).

3.  Since the arguments vis-à-vis these appeals were similar, they were heard together by me at a single hearing on 3 May 2023. Pacific Ace Finance Limited (“P”), the common respondent and a money lender under the Money Lenders Ordinance (Cap 163) (“the MLO”), was represented by Ms Eva Lo of King & Company Solicitors, while Ms Delay represented herself and addressed me directly.

4.  In gist, Ms Delay argued the two actions should be summarily dismissed by me, and/or should have been summarily dismissed by Master Roberta Chan, whilst Ms Lo argued otherwise.

5.  At the end of the oral hearing on 3 May 2023, I reserved my decision and indicated I would carefully think about the parties’ arguments and hand down my written decision within 3 months.

6.  This is my written decision for both appeals.

Ms Delay’s Arguments

7.  Ms Delay lodged comprehensive written submissions prior to the hearing and supplemented them by way of further oral submissions. In summary, her arguments were:-

(1)  For the 3298 Action, P’s claim was only for HK$7,574 plus interests and costs, whilst for the 3299 Action, P’s claim was only for HK$8,250 plus interests and costs. Ms Delay argued, here and below, that for a claim to be handled by the District Court, and not the Small Claims Tribunal (“SCT”), the amount in question must be over HK$75,000 but below HK$3 million. Ms Delay then argued that P, by starting its two actions in the District Court instead of the SCT, knowing it should never have done so, was abusing the judicial process of the District Court (“the Venue Argument”).

(2)  By Ms Delay’s calculation, she was charged interests at the rate of 191% per annum, which was “illegal” under Section 24 of the MLO. P also, suggested Ms Delay, committed “numerous indictable criminal offences” by reason of, inter alia, Sections 24 and 71 of the Crimes Ordinance (Cap 200) and if this Court were to allow P’s two actions to proceed, we would be “condoning” P’s terrible acts (“the Illegality Argument”).

(3)  Ms Delay had been ordered to pay costs for standing up to defend her fundamental legal rights, and this was just “unjust and unfair” (“the Unfairness Argument”).

Ms Lo’s Arguments

8.  Ms Lo responded to Ms Delay’s arguments comprehensively. In summary, Ms Lo suggested that:-

(1)  The Venue Argument was wrong. P’s two actions were obviously caught by §1(c) of the Schedule to the Small Claims Tribunal Ordinance (Cap 338) (“the SCTO”). The SCT had no jurisdiction to deal with P’s actions at all, and P could not have brought them in the SCT. The actions were correctly brought in the District Court.

(2)  The Illegality Argument was also wrong. By Ms Lo’s calculation, P charged interests at the rates of 28.8% per annum (for the 3298 Action) and 30% per annum (for the 3299 Action) respectively, which was lawful. P did not commit any crime. At the very least, P’s assertions of criminality gave rise to “disputed facts to be tried”, and the two actions should proceed to full-blown trials in the normal manner.

(3)  The Unfairness Argument was wrong too. Ms Delay’s dismissal applications in both actions were attempts to delay P’s claims against her. Master Roberta Chan had “considered all circumstances including those which were not even raised” by Ms Delay herself and reached the correct conclusion. The 3298 Appeal and the 3299 Appeal should both be dismissed with costs.

My View

9.  As HHJ Jonathan Wong had correctly pointed out in Chiu Kei Leung v Chui Deon Yau Han [2023] 1 HKLRD 1375 [2023] HKDC 134 at §3.15, the District Court, just like the Court of First Instance, has a general case management power to dismiss a civil action summarily, at the court’s own initiative or at the invitation of a party. Whether such a power should or should not be used in a case depends on the facts of that particular case and the arguments raised by the parties. Since dismissing a civil action is a drastic step, I should be cautious in my consideration.

10.  For each of the appeals here, whilst I am sympathetic towards Ms Delay, and I understand her frustration, I agree with Ms Lo the appeal should be dismissed. Both actions should be allowed to proceed. I shall state my reasons for so holding and demonstrate to Ms Delay that I have brought an independent mind to my judicial function, exactly as I had said I would during the oral hearing on 3 May 2023.

The Venue Argument

11.  In my view, the Venue Argument was indeed misconceived.

12.  It is not, and it has never been, the law that for a claim to be handled by the District Court and not the SCT the amount in question must be over HK$75,000 but below HK$3 million. The District Court handles disputes worth substantially less than HK$75,000 all the time, and this is as prescribed by law.

13.  For example, in Shiu Hon Po v Tam Siu Ping (DCCJ 31/2006, HHJ HC Wong, 10 May 2013), a defamation case, the claim was assessed to be worth just HK$7,620 (§77). It was, however, correctly commenced in the District Court. Similarly, in Max Surplus Finance Limited v Yip Yuk Chor[2018] HKDC 388, a licensed money lender case, the claim was only worth HK$8,000 plus interests (§57). It was also correctly commenced in the District Court.

14.  This situation is largely a result of the Schedule to the SCTO, which says the SCT “shall not have jurisdiction” to determine any action in respect of defamation or a maintenance agreement within the meaning of Section 14 of the Matrimonial Proceedings and Property Ordinance (Cap 192) (“the MPPO”), or any action by a money lender licensed under the MLO for the recovery of any money lent, etc.

15.  Since P’s claims, in both actions, were caught by the Schedule to the SCTO as “any action by a money lender licensed under the MLO for the recovery of any money lent”, P could never have commenced its claims in the SCT, and its claims were correctly commenced in the District Court under Section 32 of the District Court Ordinance (Cap 336).

16.  One may argue while the exclusion of defamation and MPPO cases from the SCT, irrespective of the monetary values of such claims, is understandable, the blanket exclusion of money lender cases from the SCT is bizarre. Indeed, one would have thought a much better policy would be to grant to the SCT a general jurisdiction to handle money lender cases and leaving it to the SCT to decide for itself whether to exercise its power under Section 7 of the SCTO to transfer some of such cases to the District Court, or the Court of First Instance. In Max Surplus (§59), DDJ Jonathan Chang also noticed the undesirability of forcing parties to a money lender dispute to litigate at wholly disproportionate legal costs in the District Court and suggested legislative reform. However, as I had said to Ms Delay on 3 May 2023, the District Court is bound by statutory provisions like everyone else. Given the clear wording of the Schedule to the SCTO, there is no room for Ms Delay’s argument on venue. P did not abuse the judicial process of the District Court by picking the District Court as the litigation venue, since P could not have brought the actions in the SCT.

17.  If I could borrow the very wise words of HHJ Andrew SY Li in Cheung Ka Man v Wong Yu Huen[2023] HKDC 370 (§151), we are all under the law and “nobody is above it”. Unless and until the Schedule to the SCTO is revised by LegCo, my judicial duty is to respect, enforce, and give full effect to it as it stands.

18.  For completeness, I should add that Ms Delay had suggested to me, at the oral hearing on 3 May 2023, that she did not know about the Schedule to the SCTO. I assumed that to be true, but that is neither here nor there. The Venue Argument was raised by Ms Delay herself. The duty was obviously on Ms Delay herself to research it properly, before deciding to raise it. No person forced her to raise the Venue Argument. I appreciate Ms Delay was a litigant-in-person, but that was also her own choice. There were plenty of fully qualified litigation lawyers in Hong Kong who would be willing to take up cases on a pro bono basis. The Duty Lawyer Service also had a “Free Legal Advice Scheme” which Ms Delay could have used without having to pay anything. The SCTO, inclusive of its Schedule, was available for free download on the Internet and it would show up on Google Search. While I am sympathetic towards Ms Delay her suggestion that she did not know about the Schedule to the SCTO counts for very little. I shall come back to this point towards the end of this decision.

The Illegality Argument

19.  In my view, the Illegality Argument was also misconceived.

20.  Firstly, there was no Order 33 Summons before either Master Roberta Chan or myself asking us to determine the interest rates in question as preliminary issues. My duty should not be to examine all relevant facts, do the arithmetic, and make a binding determination on the rates. My duty is to simply examine whether P’s pleaded cases on the rates are arguable so that the actions should be allowed to proceed to trial. The short answer is yes, P’s pleaded cases on the rates are indeed arguable so that the actions should be allowed to proceed. It was not good enough for Ms Delay to say she found an alternative calculation which could be correct. The burden was on Ms Delay to demonstrate to this court why P’s pleaded cases were so unarguable, or demonstrably false, that these actions should not even be allowed to proceed to trial, and this she has failed to do.

21.  Secondly, neither Ms Delay nor Ms Lo had ever addressed me on the case law on the MLO, for example on what was said by Chu JA in Easy Fortune Property Limited v Yung Chun Him[2019] HKCA 1055. For Ms Delay, I assumed that was because she was unaware there were judicial authorities on how to do the calculations. For Ms Lo, my understanding is that she only received Ms Delay’s “191% per annum” calculation after the start of the hearing on 3 May 2023, and Ms Delay’s previous submissions only referred to a range of rates (“180% to 200%”) without explaining why the rates would be a range, or how the suggested range was arrived at. This being the situation, and since there will in any case be a traditional trial on the whole matter (see below), the best way forward would be for the dispute on the calculation of rates to be resolved as part of the future trial.

22.  Thirdly, Ms Delay’s illegality assertions went way beyond the offences created by the MLO and were serious. Whilst serious allegations may of course be true (indeed our criminal courts properly convict people of very serious crimes from time to time), there is a huge difference between attempting to decide on the truthfulness of serious allegations “on paper” (which can be difficult) and attempting to do so “after trial” (which would usually be easier, and more reliable). In Si Wing On Andrew v Cheng Sau Wai [2023] 2 HKLRD 187 [2023] HKDC 309, DDJ George Lam refused to enter judgment summarily even though there were admissible criminal convictions supporting it. Allowing parties to a civil claim to proceed to a trial does not mean the court is “condoning” the alleged criminal activities. It simply means a decision has been made that the allegations and counter-allegations should be examined in a more traditional manner, with live oral evidence being given under oath and subject to the counter-party’s cross-examination. The aim is never to bury, but to better ventilate, such serious allegations.

23.  In fact, at the oral hearing on 3 May 2023, I specifically asked Ms Delay whether in her view, attempting to decide on the truthfulness of serious allegations “on paper”, or requiring factual witnesses to walk into the witness box to be cross-examined, would be the better option, and Ms Delay said she thought requiring factual witnesses to walk into the witness box to be cross-examined would be better. On the facts of the two actions before me, I agree with this specific comment. Ms Lo, speaking on behalf of P, was perfectly content to allow both actions to proceed to trial “as they were” without striking out anything. The proper ventilation of allegations in a traditional full-blown trial being something favoured by both P and Ms Delay, these two actions should proceed to trial.

24.  Finally, it must be said the Illegality Argument was wrong for an even more important reason. Even if P was guilty of criminal offences, and I am making no ruling one way or the other, that does not necessarily mean P would then lose literally all of its legal entitlements. As the saying goes, in a commendable legal system, even Satan himself would be entitled to a fair, secular, trial.

25.  Indeed, at present, the law on criminality and its impact vis-a-vis civil claims is as explained in Monat Investment Limited v Lau Chi Kan Kenith[2023] HKCA 479, where the Court of Appeal explicitly disowned Tinsley v Milligan [1994] 1 AC 340 and applied Patel v Mirza [2017] AC 467 instead. In Patel, Lord Toulson JSC of the UKSC summarized the legal position (at §120) as follows:-

“The essential rationale of the illegality doctrine is that it would be contrary to the public interest to enforce a claim if to do so would be harmful to the integrity of the legal system (or, possibly, certain aspects of public morality, the boundaries of which have never been made entirely clear and which do not arise for consideration in this case). In assessing whether the public interest would be harmed in that way, it is necessary (a) to consider the underlying purpose of the prohibition which has been transgressed and whether that purpose will be enhanced by denial of the claim, (b) to consider any other relevant public policy on which the denial of the claim may have an impact, and (c) to consider whether denial of the claim would be a proportionate response to the illegality, bearing in mind that punishment is a matter for the criminal courts…” (Emphasis added)

26.  As we can see from the above, the Illegality Argument framed by Ms Delay was with respect too simplistic. I do not blame Ms Delay, as she was not represented by lawyers. I must, however, set out the quotation above to illustrate to Ms Delay that our laws do recognize and entertain the possibility that a litigant may well be guilty of some criminal offences, but still be allowed to claim certain civil remedies, as we need to bear in mind punishment for criminal behaviour is a matter for the criminal courts. By allowing the two cases before me to go to trial, I am not “condoning” any of the alleged criminal acts. I am simply deciding Ms Delay’s allegations, be they true or false, do not lead to the conclusion that P should be deprived of a traditional full-blown trial, where all allegations and submissions can be examined by this Court in a much more comprehensive manner.

The Unfairness Argument

27.  In my view, the Unfairness Argument was misconceived too.

28.  The award of costs in District Court civil actions is governed by Order 62 of the Rules of the District Court (Cap 336H) (“RDC”), which is substantially the same as Order 62 of the Rules of the High Court (Cap 4A). The most important principle is that a judicial officer has a wide discretion on matters concerning costs, but the discretion must be exercised judicially. See, eg, HKCP 2023, §62/2/6. Usually, a judicial officer would start from the assumption that “costs should follow the event”, which is to say the losing party should pay for the legal costs incurred by the winning party, not because there is such a rule, but because in the vast majority of scenarios that would be the fair, just and most appropriate order.

29.  In our present case, Ms Delay voluntarily took out summonses and argued for the summary dismissal of the two actions. No person forced her to take such steps. The taking of such steps was a voluntary choice on the part of Ms Delay. The arguments Ms Delay had chosen to put forward were without merits, but P was forced to pay extra money to its lawyers in order to deal with them. Ms Delay then lost her arguments in front of Master Roberta Chan. Master Roberta Chan, in the exercise of her wide discretion, started from the usual assumption that “costs should follow the event”, and ordered costs against Ms Delay. For each set of costs, Master Roberta Chan then made a most generous 50% reduction. The entire process was within the norm and no valid reason to disturb Master Roberta Chan’s costs orders had been put forward by Ms Delay. While Ms Delay had said she was just “standing up to defend her fundamental legal rights”, in a civil action that is actually neither here nor there. No litigant has any legal right to be made the perpetual winner of all applications irrespective of the substance of her arguments. If the “legal rights” referred to the rights to have access to the courts, then in a typical civil action all parties would be exercising them in the exact same way, and that would be neither here nor there also because the legal costs incurred must still be paid by “someone”, and a suggestion that all parties were exercising their legal rights does not tell us who, then, should pay for the legal costs incurred.

30.  In my view, in the circumstances of these two actions, Master Roberta Chan was quite entitled to order costs against Ms Delay in the way as she did, and I can see no reason to change her costs orders, or to say they were in any way unjust or unfair. Master Roberta Chan’s costs orders were designed to compensate P for having to spend extra legal costs dealing with Ms Delay’s summary dismissal applications. Clearly, had Ms Delay refrained from taking out such applications in the first place, such costs orders could have been avoided. This may sound very harsh, but Ms Delay, by choosing to take out risky applications in court in the manner as she did, created her own predicament. In fact, if I were Master Roberta Chan, and I was invited to deal with Ms Delay’s applications at first instance, I would have made the exact same orders.

31.  I should take this opportunity to remind Ms Delay, and indeed all litigants, that litigation is an inherently risky activity. Those who would like to know more about litigation risks should consult their own lawyers, and read what was said by the late Mr Justice Lightman in “Litigation: The Last Resort” (2004) New Law Journal 185, a copy of which can be found in the High Court Library.

Appeal Costs

32.  Having carefully considered all rules in Order 62 of the RDC, and all material authorities on such rules, in the exercise of my discretion, I take the view that for both appeals, costs should indeed follow the event. Ms Delay chose to appeal but lost her arguments. P was forced to pay extra money to its lawyers to deal with these appeals. I should and do order costs against Ms Delay, for each of these appeals, as I consider this to be fair, just and most appropriate, all things considered.

Disposition

33.  By reason of the above, the order I make in the 3298 Appeal is as follows:-

(1)  The appeal brought against the order of Master Roberta Chan be dismissed.

(2)  Costs of the appeal be paid by Ms Delay to P forthwith, to be taxed if not agreed.

34.  By reason of the above, the order I make in the 3299 Appeal is as follows:-

(1)  The appeal brought against the order of Master Roberta Chan be dismissed.

(2)  Costs of the appeal be paid by Ms Delay to P forthwith, to be taxed if not agreed.

Final Remarks

35.  As HHJ Mimmie Chan once said in Federal Express Pacific Inc v Tung Sau Kam trading as Tin Shun Company (DCCJ 6675/2003, 17 March 2008, §39), it is “very unfortunate” when litigants in person attempt to deal with litigation issues without legal advisers, or without the benefit of sound legal advice. The present case is another example of this. I hope Ms Delay would be able to take sound legal advice from pro bono lawyers, possibly through the “Free Legal Advice Scheme” run by the Duty Lawyer Service, as soon as possible, though this is, of course, a matter for her.

36.  I do thank Ms Delay and Ms Lo for their able assistance.

Ms Eva Lo, of King & Company, for the plaintiff in both DCCJ 3298/2018 and DCCJ 3299/2018

Ms Gilda H Delay, the 1^st defendant in DCCJ 3298/2018 and the 2^nd defendant in DCCJ 3299/2018, appeared in person