Lee

- vs -

Chong

Judgment

H.H. Lee CJ (Borneo)

(delivering the judgment of the Court)

1. This is an appeal against the dismissal of a claim for the return of excess interest charged on two loans.

2. Plaintiff is a merchant and defendant a goldsmith. They have known one another for more than 30 years. Being in need of funds plaintiff had on occasions borrowed money from defendant and his wife. On 24 January 1962 he borrowed from defendant $10,000 and agreed to pay interest at 9.6% per annum. He lodged his land title with defendant as security. A Memorandum of Charge was executed by the parties and registered with the Registrar of Titles, Pahang. In May 1965 plaintiff borrowed from defendant another sum of $2,000 with interest at 9.8% per annum. As security he gave two Mercantile Bank cheques for $1,000 each.

3. Plaintiff alleged that defendant demanded interest at 24% per annum in respect of the two loans and threatened to foreclose his land. So plaintiff paid the interest demanded. Despite that demand and threat plaintiff took a second loan of $2,000 from defendant more than three years later. For a period of ten years, that is, from January 1962 to February 1972 plaintiff alleged that he had paid defendant a total interest of $24,000 at 24% per annum when he should only pay $9,680. Therefore, he claimed to have overpaid $14,520.

4. By a letter dated 3 March 1972 plaintiff, through his solicitors Messrs Kam Woon Wah remitted to defendant a sum of $12,240 in final settlement of the two loans plus interest. The Memorandum of Charge was enclosed for defendant’s execution. Defendant did not return the Charge until 16 months later when he was threatened with legal proceedings. Upon receipt of the abovementioned letter defendant wrote to plaintiff the following day demanding for the sum of $32 being four days’ interest on the loans. Plaintiff contended that on the face of this demand it was sufficient to prove that defendant had collected excessive interest. On cross-examination defendant explained that the $32 was interest for other loans which plaintiff took from defendant’s wife. It would seem that apart from taking more than two loans from defendant he had also borrowed from defendant’s wife.

5. Thus, in referring to the interest stated in two documents P5 and P7 the learned judge observed at page 57 of the Appeal Record that:—

   .... But these documents P5 and P7 did not specifically and clearly say that they relate to the interest in question or else did not say that there had been an excess bearing in mind that the plaintiff said he had taken four or five loans from the defendant and loans big and small from his wife. The defendant’s evidence did not help the plaintiff’s case either because he said P5 relates to the arrears of interest due to him up to December. P7 was interest due to his wife and him. This was not improbable. It cannot be denied that the defendant had been in arrears of repayment as seen clearly by the defendant’s letter to him in P4. He had nowhere disputed the facts stated in that letter. It was asked how could P7 be the interest due to the defendant’s wife when the defendant had admitted he was not sure whether his wife had made an oral agreement with the plaintiff for the payment of interest but again that was not necessarily inconsistent with what he said. The wife had asked him to collect the interest. He did not know the actual amount of loans given by her to the plaintiff in which case he would not necessarily know whether the wife had made an oral agreement with the plaintiff to give her an interest. The husband said the wife had made small loans to the plaintiff which was not improbable considering that he had clearly taken a loan for $5,000 from her as shown in D1.

6. Defendant quite rightly pointed out that it was only after ten years that there was any mention by plaintiff of overpayment of interest. The relationship of the parties became strained because of the delay by defendant in signing the Discharge of Charge. It is the plaintiff who claimed that there was overpayment of interest. The onus is on him. During cross-examination plaintiff mentioned keeping a proper account and that his son translated a copy of such account. However, the account was never produced in court. It is also strange that when plaintiff instructed his solicitors Messrs Kam Woon Wah to write and remit payment no mention was made of overpayment of interest.

7. The explanation given by plaintiff in respect of the letter dated 3 March 1972 was that the $240 was interest for the two loans of $10,000 and $2,000. However, during cross-examination defendant gave a simple and straightforward answer. He said the $240 was interest due for three months, i.e. $80 per month. This works out at $8 per mensem per $1,000 and is in accordance with the Charge.

8. It has not been disputed by plaintiff that apart from the loan of $10,000 from defendant he took other loans from defendant and also defendant’s wife for which he also paid interest. Defendant stated that plaintiff borrowed $5,000 from his wife for which plaintiff also paid interest. Because of the number of loans it would cause less confusion if plaintiff were to give clear evidence of particulars of the interest in respect of each loan. It is no use making wide allegations as in his written submission that:—

   .... There are many subtle ways in which an avaricious moneylender can conceal the demand for excessive interest but there was nothing subtle in the manner in which the defendant did so.

9. Defendant had explained about the interest of $32. If defendant received excessive interest plaintiff was a party to such payment. If plaintiff is saying that the whole transaction is illegal then he cannot succeed in claiming the excessive payment arising out of an invalid transaction as he was a party to it. Since plaintiff claims excessive payment of interest the burden is on him to prove the claim.

10. The learned judge did not say why he required a higher burden of proof than is normal in a civil action, i.e. the balance of probabilities. The statement of claim does not allege fraud but in effect that is what the plaintiff is alleging.

11. Bater v Bater [1950] 2 All ER 458 is a divorce case and there Bucknill LJ at pages 458–459 said:—

    .... If a high standard of proof is to be required because of the importance of a particular case to the parties and also to the community, divorce proceedings require that high standard ....

12. In so saying he supported the finding of Commissioner Grazebook who had held that in a petition for divorce on the ground of cruelty the petitioner should prove her allegation of cruelty beyond reasonable doubt. Denning LJ at page 459 said:—

    The difference of opinion which has been evoked about the standard of proof in these cases may well turn out to be more a matter of words than anything else. It is true that by our law there is a higher standard of proof in criminal cases than in civil cases, but this is subject to the qualification that there is no absolute standard in either case. In criminal cases the charge must be proved beyond reasonable doubt but there may be degrees of proof within that standard. Many great judges have said that, in proportion as the crime is enormous, so ought the proof to be clear. So also in civil cases. The case may be proved by a preponderance of probability, but there may be degrees of probability within that standard. The degree depends on the subject matter. A civil court, when considering a charge of fraud, will naturally require a higher degree of probability than that which it would require if considering whether negligence were established. It does not adopt so high a degree as a criminal court, even when it is considering a charge of a criminal nature, but still it does require a degree of probability which is commensurate with the occasion. Likewise, a divorce court should require a degree of probability which is proportionate to the subject matter.

13. We would therefore with respect suggest the test to be applied is one set out in Bater v Bater, [1950] 2 All ER 458 i.e. the learned judge was correct in relying on Bater v Bater though his mistake was in not saying that the statement of claim in substance alleges fraud.

14. Plaintiff has to prove his claim. The learned judge has gone into the evidence carefully and reached the conclusion that plaintiff has failed to discharge the onus of proof. Plaintiff has every opportunity to protest about excessive interest he paid but has not done so for the last ten years. As the learned judge rightly pointed out that:—

    .... He had not breathed a word of dissent or discontent or objection to the defendant or anyone for the whole of ten years that the loan was in operation. The plaintiff had at all relevant times the benefit of counsel to advise him what to do.

15. It is pertinent to note that the learned judge also made these observations regarding plaintiff’s attitude at page 65 of the Appeal Record:—

    .... Having entered into the ten thousand dollar loan agreement and been supposedly oppressed and extorted by the defendant during its tenure he had nevertheless willy-nilly entered into another contract with him for $2,000 loan and we are told other loans also and despite the harsh and bitter experience and treatment he was still undergoing under the ten thousand dollar loan ....

16. The learned judge found that the plaintiff had failed to prove his claim. We agree with his conclusion. It must be kept in mind that he had the advantage of seeing and hearing the witnesses. We have no reason to interfere with his finding of facts. Accordingly, we would dismiss the appeal with costs. Deposit to respondent on account of taxed costs.

Cases

Bater v Bater [1950] 2 All ER 458

Representations

Y Sivaloganathan for the appellant.

Karpal Singh for the respondent.