CHEANG KUOK SAM v. ATTORNEY GENERAL

IN THE COURT OF APPEAL

1994, No. 166
(Civil)

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D E C I S I O N

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Nazareth, V.-P.:

1. By a majority, on 16th February 1995 we allowed this appeal upon the basis that the transaction between the parties operated as an equitable charge upon the property to secure the interest free loan of HK$3m made by the plaintiff to the 1st defendant about May 1992. We directed that an agreed minute of the order to be made be submitted to the Court. However, the matter comes back to us as the parties have been unable to agree upon the matter of interest.

2. Mr Alan Leong, who appears for the first time in the matter on behalf of the appellant, contends for interest upon the sum of $3m at commercial rate, i.e. 9½%. Mr Barlow, for the respondent, contends that no interest at all is due. Before turning to their respective submissions, it is necessary to record that the Crown's restraint order was registered on 17th September 1992. On 17th February 1993, the plaintiff took out the writ in this action (A1366 of 1993) for repayment of the loan. He obtained judgment in default of defence on 23rd April and registered the charging order on 4th June. The Attorney General obtained the order for registration of a decree of forfeiture upon an external confiscation order on 23rd December 1993.

3. It is common ground that the confiscation order could only operate to vest in the Attorney General such interest in the property as the 1st defendant had retained at that date. For the purposes of this appeal that would be the 1st defendant's entire estate and interest in the property subject only to the 1st applicant's equitable charge to secure the repayment of the loan, and so far as we can see nothing else.

4. The delay in repayment or recovery of the loan, it is submitted, has since then attracted interest, i.e. in practical terms from mid-June 1993 when the applicant sought to enforce his charging order in HCMP No. 1602 of 1993, or at least from payment of the net proceeds to the Registrar of the High Court in MP 2830 of 1992 in February 1994, when the property came to be sold under a consent order embodying very sensible arrangement by the parties concerned.

5. By a majority, this Court upheld the applicant's submission that the property was merely security for the $3m interest-free loan. No interest was to accrue. The only basis upon which on his submissions he could be entitled to interest would be that of being kept out of the use of his money. That situation would only begin when his money should have been released from the external confiscation order. On the facts we think that should have been on 19th July 1994, i.e. the date on which the applicant effectively sought by summons the release of his money. In the result, we can see no basis upon which the applicant's claim for interest prior to 19th July 1994 can succeed in the context of his appeal. We would accordingly award him interest at commercial rate, i.e. prime plus one per cent until 16th February 1995, the date of judgment.

6. As to the costs of the 24th March 1995, counsel very properly agreed that these should be finally ruled upon by this Court in its decision upon the issue of interest and, for that purpose, outlined such submissions as they felt able to make upon the matter. We need only say, therefore, that the hearing of the 23rd March was concerned almost entirely with the issue of interest. We can see no reason why the costs should not follow that event and would accordingly order that they be to the respondent.