CHINA EVERBRIGHT FINANCE LTD AND ANOTHER v. CHAN YUNG AND ANOTHER

cacv 396/2006

in the high court of the

hong kong special administrative region

court of appeal

civil appeal no. 396 of 2006

(on appeal from HCA NO. 18300 of 1999)

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D E C I S I O N

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1.  This is an application for a stay of judgment pending appeal.

2.  In short, it is a moneylender’s claim against the 1st defendant.  There are bankruptcy proceedings which are due to be heard on the 14th of this month, which is next week, and the appeal in this case is due to come up on the 24th.

3.  There are a number of points which have been raised on the appeal.  It is said that no contract was given to the defendant and there was no commencement date.  More importantly, to my mind, are the facts that it is said that the contract provided for what, in effect, was a floating rate of interest, it provided for compound interest and it provided that the rate of interest, or a mechanism whereby the rate of interest, could be increased on default.

4.  Mr Sarony SC, who appeared on behalf of the 1st defendant, says, “Well, these are serious matters, because it is all very well for the plaintiffs to come to court and simply claim simple interest, but what they are doing is they are riding a coach and horses through the Ordinance and they are charging their clients this compound interest rate, they are charging them a floating rate, they are putting up the interest rate when there is default, and so on and so forth, and it is only when they come to court that they behave themselves and confine their claim to simple interest.  But other than that, if they can get away with it, they do.”

5.  To my mind, if that is right it is quite monstrous, but it is similar to what has happened in other cases which have gone to the Court of Final Appeal and the Court of Final Appeal has allowed judgment in favour of the moneylender.  I find it difficult to follow that reasoning, because it seems to me that the Ordinance is there to control what moneylenders do.

6.  But to come down to this case, to my mind, the difficulty is this.  The 1st defendant has had a brain tumour.  He is not in a position even to pay the principal amount.  I have asked whether that could be paid into court and it cannot be and so it seems to me that I should let the matters go ahead.

7.  But I do say this and I hope this is brought to the attention of whoever becomes Trustee in Bankruptcy that he should look very carefully at this contract.  I hope, and I say no more than this, I hope sense will be seen by the moneylender in this case.  If the facts are as alleged it would be right that they abandon their claim to interest, because I do consider, on the face of it, that there are strong grounds for saying the way they have carried on is inequitable.  If they get their principal, so be it; they are entitled to that.  But the way they have carried on their business by flouting the law, on Mr Sarony’s argument, seems to me to be quite wrong, and there are grounds that they should not be allowed interest.  The court cannot and should not tolerate any party, let alone one that writes the terms of a contract, playing fast and loose with the statutory provisions which govern their mode of business.

8.  So I am afraid, Mr Sarony, I have to refuse your application.