THE QUEEN v. CHENG CHUN HUNG

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IN THE DISTRICT COURT OF HONG KONG

HOLDEN AT VICTORIA

CRIMINAL JURISDICTION KOWLOON CASE NO. 619 OF 1986 _____ The Queen against CHENG Chun-hung _____ Coram: H.H. Judge Caird in Court Date : 29th November 1986 _________

REASONS FOR VERDICT _________ Defendant faced 4 charges. The first to which he pleaded guilty was lending money at an excessive rate of interest contrary to Section 24(1) .of the Money Lending Ordinance Cap.

163. The second charge was also brought pursuant to the Money Lending Ordinance as being one of carrying on business as a money-lender without a licence contrary to Section 29(1)(a) of that Ordinance. The third charge was one of procuring a woman to become a prostitute contrary to Section 131(1)(a) of the Crimes Ordinance Cap.

200. The fourth and final charge was living on the earnings of prostitution contrary to 137(1) of the Crimes Ordinance Cap.

200. Defendant at the outset of the trial pleaded guilty to the first charge. The amount involved was $3,000 Hong Kong currency, this being lent to one YIM Chi-yuen at an affective rate of interest of 553% per annum which of course substantially exceeded the amount stipulated by statute of 60% per annum. The Defendant pleaded not guilty to the second, third a fourth charges and at the conclusion of the Crown's case Mr. R. Griffiths on behalf of Defendant submitted no case to answer in respect of all three charges. The Crown in my view very properly conceded that there was no case to answer in respect of the third and fourth charges. It was obvious that the witness concerned in those two charges - one SAE Lieu-lin, wife of the victim in the first charge, completely failed to come up to brief, indeed, her evidence was in some respects quite contradictory to the Crown's summary of facts presented as the Crown's opening. In fact at the stage of re-examination of this witness Mr. Tse did ask the Court's views to whether it would be appropriate for him to make an application for this witness to be treated as hostile. In view of the late stage of the application I informed him that I felt that it was inappropriate at that time. I held there was no case to answer in respect of the third and fourth charges. I held that there was a case to answer in respect of the second charge although

the matter was one of some difficulty and after my so holding the Defendant elected no t to give evidence himself, or call any witnesses. The defence which has been presented by Mr. Griffith on his behalf was essentially one of law. I turn to consider the statutory provisions. Section 29(1) of Cap. 163 provides: Any person who carries on business as a money lender - (a) without a licence; or .. commits an offence." Section 2(1) of that Ordinance defines "money lender" in the following terms: "means every person whose business (whether or not he carries on any other business) is that of making loans or who advertises or announces himself or holds himself out in any way as carrying on that business but does not include a person specified in Part I of the first schedule;" There was no question of any claim being raised that Defendant held a licence or that he acted on behalf of any licence holder, nor is there any question that Defendant can possibly be considered to be such a person as is specified in Part I of the schedule. A large amount of the Crown's case was not in dispute and I make the preliminary finding that Defendant did lend $3,000 to YIM Chi-yuen at an effective rate of 553% in terms listed in the particulars of offence of the first charge, which he accepted through his Counsel and he has pleaded guilty to that offence as charged. (2) This as far as the Crown's

evidence was concerned was a "one off transaction and occurred on the 15th of December 1985. (3) Payments were made by SAE Lieu-lin in respect of her husband's debt, or rather I should say it would appear to be in respect of interest claimed, but was thought by the husband and wife concerned to include repayments of principal. It is clear from the evidence of P.W.2 - Mrs. Yim that all payments were effected to a "fat guy" who was someone other than the Defendant whom she referred to as "fat boy". (4) "Fat guy" lent Mrs. Yim a sum of $150 and she during cross-examination acknowledged that when Defendant paid her $150 (a $100 dollar note being part of that sum having had its serial number recorded by police) that this was in repayment of fat guy's loan, as far as she was concerned. (5) P.W.2 Mrs. Yim gave Eividence that on a "certain evening" three persons came to her home including "fat boy" i.e. Defendant whom she identified. Defendant said he was looking for her husband and she told him that he was still at work. The question of borrowing and consequent repayment was raised by Defendant. Later her husband admitted that he had borrowed about $3,000.00. She went on to say that about March one of those three males came to her flat, that is fat boy being Defendant. She alleged that he was there to collect the money, that is interest of $400 but later as I have indicated it became

clear from her evidence that she maintained that it was "fat guy" who called to collect the interest on every occasion. She referred to mother occasion in mid April 1986 when three persons came to her home (including Defendant) and that he told her that he was there to collect the money. Her husband was told to produce keys to the premises and Defendant asked her husband to pay interest. Again there was another telephone call 11 a.m. on the 22nd of May when she alleged she was introduced to a friend of fat boy's by him. There were allegations as to a treat against the husband and wife, and family child - a daughter born in November of 1985. There were discrepancies in the evidence of P.W.1 and P.W.2. P.W.2 sought to explain one of these as being brought about by her husband having a poor memory . At the outset P.W.1 Mr. Yuen had said that on returning home one day there was a card at his door. It had a name printed (not that of Defendant) and a telephone number and referrence to lending money up to "several thousands". After he telephoned this number when he was in financial difficulty Defendant called. The evidence over the card is, I believe correctly pointed out by Mr. Griffiths, as being evidence only as to the existence of the card not as to the truth of its contents. The only possible facts which can be found on this evidence, and I do so find, is that Defendant turned up

at Mr. Yuen's home and lent him money in a "one off" transaction and that this was consequent upon a phone call to an unknown person. I am asked by the Crown to infer that the evidence was sufficient to establish that Defendant, did in fact, carry on the "business" of a money lender. The question of definition of "business" is of great importance and constitutes the nub of this case. Mr. Griffiths rightly points out that if he sells someone his pen, this does not make him a seller of pens to the extent of being in that business, and as he said if the Court were to sell a suit, it doesn't make the Court into a seller of suits. Many people sell items, it may be, for example, that an individual could sell a motor car every two or three years in order to replace his vehicle with a more up-to-date model. Can it be said that he is in the business of selling motor cars? I commence with definitions of "business" as contained in the shorter Oxford English Dictionary "the state of being busily engaged in anything," diligence, 2) activity briskness, 9) that about which one is busy; function, occupation M.E. b that with which one is concerned at the time; often the errand on which one comes, 10) Stated occupation, profession, or trade, 12) a piece of work a job; 16) Dealings; intercourse, 18) Trade, commercial transactions or engagements, 19) A commercial enterprise as a going concern." As

is to be expected that word has received judicial consideration, in particular in various revenue cases. "The word 'business' means almost anything which is an occupation as distinguished from a pleasure anything which is an occupation or duty which requires attention is a business". Rolls v. Miller (1884) 27 C.H, D71 C.A. per Lindley L.J. at p.88. "Whether one or two transactions make a business depends upon the circumstances of each case. I take the test to be this: if an isolated transaction, which if repeated would be a transaction in business, is proved to be undertaken with the intent that it should be the first of several transactions, that is, with the intent of carrying on a business, then it is a first transaction in an existing business. The business exists from the time of the commencement of that transaction with the intent that it should be one of a series." Re Griffen Ex-parte Board of Trade (1890) 60 L.J.Q.B. 235 C.A. per Lord Esher M.R. at page 237. The word was held to have a more extensive meaning than the word "trade" Harris v. Amery L.R. 1 C.P. 148 per Willes J. In Smith v. Anderson 15 C.H.D. 258 Jessel M.R. said "anything which occupies the time and attention and labour of a man for the purpose of profit is business." Further on he went on to say "There are many things which in common colloquial English would not be called a business, when carried on by a

single person which should be so called when carried on by a number of persons . This decision was reversed on appeal but as has been pointed out, it would seem without affecting the value of those observations in regard to the use of the word in Section 4 of the then Company s Act 1862. There have been many occasions where the meaning of the word "business" has been considered in testamentary dispositions however I see no advantage in considering this further. Essentially it appears to me that the word has been considered in civil cases including bankruptcy, company legislation probate and revenue litigation. Neither Counsel nor myself have been able to discover the meaning of "business" being considered in criminal proceedings involving money lending, such as in the instant case although I have considered civil money lending cases as follows. The leading authority on what does or does not amount to the carrying on of a money lending business (at a particular address) is that of the House of Lords in Kirkwood v. Gadd [1910] A.C.

422. That case makes is clear that the question whether a money lender is carrying on business (at other than an authorized address) within the meaning of the Act of 1927 is a question of fact. There is no difference in essence in the statutory provisions with which I am concerned, the facts must be decided upon all the circumstances of the case. In Newton v. Pyke (1908) 25 T.L.R. 127 the question of whether or not a person was carrying on the business of a money lender was held to be in each case a question of fact. Walton J. in that case went on to hold at Page 128 (when considering that it was not enough merely to show that a man on several occasions lent money at remunerative rates of interest): "There must be a certain degree of system and continuity about the transactions and as in that case the money lending transactions had been very few and had been mostly, if not entirely, with persons who could be described as friends or relations and there would be no advertising or announcement that the Plaintiff had held themselves out as a money lender. It was found that it would not be right to say that the Plaintiff was a person whose business was that of money lending at the time the bill was given." Further, whether or not a transaction is a money lending transaction depends on the nature of the transaction and not on its object. A recent illustration of this is Premier Clothing And Supply Co. v. Hillcoat [1969] C.L.Y. 2279(9). It has been held that prima facie a loan to friends is not "money lending" within a meaning of 5.6 of the Act of 1900. Litchfield v. Dreyfus [1906] 1 K.B.

584. The same point was decided in the same way in Tuchminn v. Schmerler [1944] 172 L.T.

43. After a perusal of these Cases and what may be derived from them (bearing in mind that I am concerned with a criminal case) I believe that the evidence which may be relevant as to whether or not there was a money lending business in operation, in the instant case, consists of: (1) the card and the response to the telephone call; (2) the granting of the loan; (3) the rate of interest (extortionate); (4) the collection service. In short it can be said that the evidence clearly shows a "typical loan sharking" operation, which of course embraces the concept of a money lending business. It is the position of the Defendant in relation to this "operation" that I have to consider and I bear in mind the unreliable nature on the evidence of P.W.1 and P.W.2. What I have gleaned from the authorities is two factors: (i) each case depends on its own facts: (ii) business involves continuity, although on the facts of a particular case it may be found that proof of one transaction which is the first transaction in a series, may suffice to establish there was the operation of a business. I make the following determinations: (I) that although certain activities may involve a continuing series of transactions, the perpetrator of that series of transactions has not necessarily initiated an activity which constitutes a business e.g. on a number of occasions selling motor vehicles, whether

independently or by way of trade-in, in order to up date or replace the perpetrator's existing model. (II) that when a criminal charge is sought to be proved pursuant to Section 29(1)(a) of Cap.163 it is necessary not only to prove the existence of a business of money lending, but that an alleged offender is connected with the operation of that business and that he is not limited to one isolated aspect of the activity alleged. Had the witnesses been reliable, especially as to the Defendant's presence and participation during collection activities I would hold that he was guilty as charged. However, it could be that on the evidence the Defendant was involved in assisting a friend having been called on to assist in one transaction only and was not otherwise connected with the business concerned. The Crown has failed to negative this with reliable evidence. Accordingly, Defendant is entitled to the benefit of the doubt and is acquitted in respect of the 2nd Charge. (B.T. Caird) District Judge

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