CITYLINKERS GROUP LTD v. CENTURY CROWN INVESTMENT LTD AND OTHERS

HCA 825/2024

[2026] HKCFI 1575

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 825 OF 2024

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D E C I S I O N

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INTRODUCTION AND BACKGROUND

1.  This is an appeal by the Plaintiff (“P”) against the Order of Master Ken To (“Master”) of 20 August 2025 dismissing P’s Summons dated 9 May 2025 (“P’s Summons”) seeking summary judgment to be entered against the Defendants (“Ds”) or alternatively, interim payment for a sum as the court finds just.

2.  P’s case is that this is straightforward claim for recovery of two loans advanced by P to Ds which had not been repaid in full. It is not disputed that the two loans were advanced by P to the 1^st Defendant (“D1”) and/or the 2^nd Defendant (“D2”) totaling HK$8M on 7 February 2022 and 4 April 2022 (collectively, “the Loans”). The 3^rd Defendant (“D3”) is the director of D1 and D2. For each of the two loans, a supplemental agreement was subsequently entered into by the parties in June 2023 whereby P extended the payment date originally from 6 March 2022 and 3 May 2022 respectively to 6 September 2023 and 3 June 2023 respectively.

3.  Demand letters were sent to Ds on 22 August 2022 by Ps’ solicitors.

4.  On 27 May 2024, after this action was commenced, P and Ds signed a supplemental agreement (“Supplemental Agreement”) whereby inter alia: (1) Ds acknowledged that they had refused to repay any part of the Loans and were also in default of payment of interest; (2) D3 on behalf of Ds represented eagerness to make repayment of the outstanding loans and shall put two of his properties in the UK for sale with complete date no later than 31 December 2024; (3) Ds confirmed that they were aware of the present action; and (4) P agreed not to take enforcement action before 31 December 2024.

5.  Ds have pleaded a number of defences in their Amended Defence but for the present application (and also before the Master) the following defences are advanced:

(1)  P is an unlicensed money lender under the Money Lenders Ordinance, Cap. 163 (“MLO”) and the Loans should be unenforceable pursuant to s.23 of MLO; and

(2)  The Loans were extortionate, harsh and unconscionable transactions contrary to s.25 of MLO and should be reopened.

6.  At today’s hearing, Mr Anson Wong SC leading Mr Keith Cheung, counsel, appeared for P and Mr Conan Shek, counsel appeared for Ds.

Applicable Principles

7.  It is trite that an appeal from a master to a judge in chambers is dealt with by way of an actual rehearing of the application which led to the order under appeal, and the judge treats the matter as though it came before him or her for the first time: see Hong Kong Civil Procedure 2026, Vol.1, §58/1/2.

8.  The applicable principles for O.14 of Rules of the High Court, Cap. 4A (“RHC”) are trite. These were summarised by Ng J in Guanghua SS Holdings Limited v Lim Yew Cheng & Another [2022] HKCFI 1052 at §13 as follows:

(1)  The Order 14 machinery works on the basis that if the plaintiff’s application is properly constituted, it is prima facie entitled to judgment unless the defendant shows cause to the contrary;

(2)  The mere assertion in an affidavit of a given situation by the defendant responding to an application for summary judgment does not, ipso facto, ground leave to defend;

(3)  The burden is on the defendant to show a real or bona fide defence or some other reason for a trial. The defendant must satisfy the Court that his evidence is capable of being believed and that on the basis of such evidence, there is a fair or reasonable probability of the defendant having a real or bona fide defence;

(4)  In deciding whether there is a fair or reasonable probability of the defendant having a real or bona fide defence, the Court does not isolate each factual issue and consider whether it is possible that the defendant’s story on that issue is credible. Rather, the Court must look at the whole situation;

(5)  In assessing the credibility of the defendant’s factual case, while the Court will not embark upon a mini-trial on affidavit evidence, the Court is not obliged to suspend its critical faculties and assume that the defendant’s evidence is accurate;

(6)  If having regard to inherent plausibility, inconsistency with contemporaneous documents and other compelling evidence, the defence is not credible, the Court must say so; and

(7)  If the defendant’s evidence is incredible in any material respect, it cannot be said that there is a fair or reasonable probability that the defendant has a real or bona fide defence.

9.  Furthermore, O.14 is for clear cases only which mean cases in which there is no serious material factual or legal dispute. The procedure is entirely inappropriate where the plaintiff’s entitlement to recover any sum is the subject of any serious dispute, whether of law or fact. See Lesnina H DOO v Wave Shipping Trade Co Ltd [2022] 2 HKLRD 727 at §36 and Hong Kong Civil Procedure 2026, Vol.1, §14/4/9.

10.  As for an application for interim payment under O.29, r.12 of RHC, the applicable principles were summarized by Recorder Eva Sit SC in Binchuang Resources Co Ltd v Lockwood Group Ltd [2022] 2 HKLRD 221 at §10:

(1)  The court must be satisfied that if the claim were to go to trial then, on the matter before the judge at the time of the application for interim payment, the plaintiff would succeed in his claim and would obtain a substantial amount of damages;

(2)  The court must be satisfied on the balance of probabilities. It is insufficient that the plaintiff is likely to succeed; the court must be satisfied that the defendant has no arguable defence or that there are sufficient doubts regarding the genuineness of the defence so that the court would not grant the defendant unconditional leave to defend in a summary judgment application;

(3)  In addition, the court should read Rules of the High Court, Cap. 4A, O.29 rr.11 and 12 together and ask the single question of whether the plaintiff fulfils the requirements of those rules as a whole, rather than consider separately and exclusively the plaintiff’s entitlement under each rule;

(4)  As to quantum, under r.11 (damages) the court can order an amount as it thinks just, not exceeding a reasonable proportion of damages which in the opinion of the court are likely to be recovered by the plaintiff after taking into account any relevant contributory negligence and any set-off, cross-claim or counterclaim which the respondent may be entitled to rely, whereas under r.12 (sums other than damages) the amount is that which the court thinks just, after taking into account any set-off, cross-claim or counterclaim on which the respondent may be entitled to rely.

11.  Since in an interim payment application, the court must be satisfied that the defendant has no arguable defence such that the court would not grant unconditional leave to defend in a summary judgment application, in my view, the application for interim payment stands and falls with the application for summary judgment. See Delco Participation B. V. v Chiho Environmental Group Limited (formerly known as Chiho-Tiande Group Limited) & Another [2020] HKCFI 1643, at §32 per Coleman J.

12.  As for the relevant principles where in an application for summary judgment the defendant allege inter alia that the plaintiff was a money lender operating without a licence under MLO, the following principles were formulated by Registrar K W Lung in Chan Miu Chu Zoe v Choi Chiu Yuk (unrep) HCA 698/2012, 21 February 2014, at §21:

“ The legal principles for determination of the issue on whether the lender is carrying on business as a money-lender under section 2 of the Ordinance, as according to the above authorities, can be summarized as follows:

a. The issue is a matter of fact to be determined by the court for each case. It is not possible to set out any description or definition, still less fixed formula for the determination of this issue. Each case must depend on its own facts. Conroy v Kenny [1999] 1 WLR 1345G, in which Kennedy LJ. had considered Litchfield’s case and Newton’s case;

b. The number of transactions made by the lender is not the determining factor. The court has to look at all the relevant facts of the case. Even one transaction may be sufficient if there is evidence to show that the lender was a money-lender at the time of the transaction. Conroy at 1345H;

c. The proper approach for the court to determine this issue is to look at the evidence to determine if the lender was, at the material time, a money-lender within the meaning of the Ordinance, and if so, it is not necessary to consider further. If there is no such evidence, the court then should look for other evidence as, at the relevant time, whether the lender had advertised or held out as a money-lender. Conroy at 1346D;

d. Our Court of Appeal in Chow Wun Sing Winston v Yiu Chun Luk CACV No. 295 of 2006 (20 February 2008) at paragraph 15 adopted the case of Conroy v Kenny [1999] 1 WLR 1345G; and the Court of Appeal agreed with the Judge that even if the lender made the loan at remunerative interest rates and with proper security, this might not be an indicia of a money-lender. See paragraph 18.

e. In an Order 14 application where the court will not conduct a mini-trial on the affidavits, the court may make a summary judgment if the defendant is clearly unable to adduce any evidence to support the allegation that the plaintiff was, at the material times, a money-lender. Huang Mucai v Cheng Zhen Shu HCA No.1237 of 2011 (17 September 2012).”

13.  The above principles were set out and applied by the Court of Appeal in Lau Kam Sing Dickie v Lo Hon Kwong [2023] HKCA 506 at §19.

14.  Furthermore, s.23 of MLO provides a discretion to the court where it is “satisfied that in all the circumstances it would be inequitable if a money lender did not satisfy it that he was licensed at the relevant time was thereby not entitled to so recover such money or interest or to enforce such agreement or security, the court may order that the money lender is entitled to recover such money or interest or to enforce such agreement or security to such extent, and subject to such modifications or exceptions, as the court considers equitable”.

Discussion

15.  Applying the above principles, having heard the submissions of counsel, I am of the view, from the evidence adduced, that there are triable issues on whether: (1) P was a money lender; and (2) the discretion under s.23 of MLO should be exercised. I do not find any triable issues that the Loans should be reopened under s.25 of MLO as plainly the applicable interest rate is 48% p.a and even on Mr Shek’s calculation that rate has not been reached[1].

Re: triable issue whether P is a money lender

16.  Mr Wong submitted firstly, that the audio messages and WhatsApp messages between Paxson, a director of P, and D3 unequivocally showed that the Loans were advanced out of friendship.  Reliance is made on the fact that Paxson and D3 called each other “Bro”, sent greetings to each other on the festive occasions and shared personal situation/feelings. He referred to the decision of Lisa Wong J in Link Excellent Limited v Ruijun Technology Limited (unrep) HCA 1993/2016, 6 November 2017 at §22 that the definition of “money lender” in MLO “was intended to apply only to persons who are really carrying on the business of money-lending as a business, not to persons who lend money as an incidence of another business or to a few old friends by way of friendship”.

17.  However, in D3’s affirmation, he has said on oath that he was not a personal friend of Paxson and their dealings were strictly business related. Merely relying on the WhatsApp and audio messages where D3 called Paxson “bro” and shared details of intended plans for the use of the funds and the projects involved in requiring funds as well as needing loans to get over anti-money laundering concerns, I have no reason to doubt D3’s credibility in saying the Loans were not advanced because of any friendship but as an incidence of business. His credibility should be tested at trial in cross-examination. Besides, the fact the Loans were advanced by P not Paxson should also be taken into account.

18.  Secondly, it was submitted that there was nothing business-like about the Loans when D3 voluntarily offered himself to be a guarantor, personally prepared the loan documents and interests were waived by P for substantial periods of time and no further interest was charged after November 2022.

19.  According to D3, it was Paxson and/or P’s usual practice to require a personal guarantee to be provided and Paxson asked him in relation to the earlier loan in October 2021 from P to so provide, which he did. He therefore also provided the personal guarantees for the Loans. As for the drafting of the Loans, he also said the October 2021 Loan was prepared by him using a sample loan agreement of P. The circumstances and reasons for the provision of the personal guarantees and drafting of loan documents should be investigated at trial and not to be resolved on affidavit.

20.  As for Mr Wong’s submissions that no money lender would agree to extend the loan only months after payment was due and waive interest for substantial periods, the fact of the matter remains, the effective rates of interest even taking into account the waiver of interest (16.17% p.a. for the 1^st loan and 11.64% p.a. for the 2^nd loan) were not low by any standard. Furthermore, although the Loans were not secured by a mortgage over Ds’ properties they were secured by personal guarantees. The Loans arguably were commercial and business-like. I also take into consideration that the Loans were entered into using companies rather than in Paxson or D3’s personal capacity.

21.  Thirdly, it was submitted that the examples given in D3’s affirmation of other lending transactions do not show that P was at any time carrying on the business of money lender as: (a) the loans were some 9 years before the Loans; (b) were not advanced by P; and (c) involved exempted loans under s.15 of Part 2 of Schedule 1 of MLO. Mr Shek had taken me to documents to show that Paxson, as partner of P, had offered or arranged loans, quoted interest rates and charges etc. on behalf of P which would raise a triable issue on this. Besides, even if Mr Wong is correct, the number of transactions made is not determinative. In an event, even disregarding these other transactions just between P and Ds, on P’s own case, there were 3 loans (the one in October 2021) made by P to D1 and/or D3. There is clearly a triable issue on the “degree of repetition, system and continuity” required for the carrying on of money lender business (see Link Excellent Limited, §20(1)).

22.  Fourthly, it was submitted that prior to the filing of the Defence, Ds have never suggested that P was an unlicensed money lender relying on the observations of the Court of Appeal in Paul Y. Management Limited v Eternal Unity Development Limited & Ors (unrep) CACV 16/2008, 12 August 2008 at §19 that the court will consider whether the defence is only recently raised despite opportunity being given to the defendant to respond. However, this is not a case where the defence was not raised in the first version of the Defence but only subsequently. As for the fact that it was not raised before the Defence was filed and to the contrary the Supplemental Agreement was executed, I do not regard it incredible for Ds not to raise a legal defence when the parties were attempting to settle proceedings amicably to avoid litigation.

23.  In all, I take the view from all the materials before me and having considered all the submissions of counsel, that there is a triable issue raised that there are indicia that P granted the Loans as a money lender. Whilst Mr Wong had taken me to a number of cases where the plaintiffs were found not to be a money lender[2], each case must depend on its own facts and circumstances, and in many cases the finding was reached after trial.

Re: triable issue whether the discretion should be exercised under s.23 of MLO

24.  It is not in dispute that where no reasonable court would refuse to exercise the statutory discretion summary relief might be granted: see Vinson Finance Limited v Chu Qingzhu & Anor [2022] HKCFI 449 at §22. However, as held by the Court of Appeal, the court should have a full picture of all the circumstances to say with reasonable confidence at this stage no reasonable court would refuse to exercise the statutory discretion. See Cheung Chow v Cheung Ng Sheong Steven (unrep) CACV 119/1993 at §§20-21:

“20. It is at least reasonably arguable that, as those learned judges held at first instance, the courts should be slow to relieve money lenders who fail to comply with the Ordinance regulating their activities, since any other approach would be to frustrate rather than to promote the objects of such legislation. One can understand that point of view, as money lenders are sometimes companies, and the financial penalty is not particularly high when it comes to the criminal sanctions for breaches of the provisions of the relevant legislation. In a final appeal with all the facts having been investigated, as opposed to an interlocutory one with many relevant facts in issue, this Court would be in a position to give further guidance as to how the discretion is to be approached.

21. If it be correct for the courts to approach their discretion in the way in which it was approached in the two first instance decisions which I have mentioned - and I do not think that we can rule that out at this stage - then it would be important to have a full picture of the activities in general of the money lender in question. That picture is not before us. Overall, no court can say with reasonable confidence at this stage that it has a clear view of all the circumstances which fall to be considered in the exercise of the discretion here in question.”

25.  In Mr Wong’s Skeleton (§59), he referred to 7 facts which he submitted demonstrate that no reasonable court will refuse to exercise its statutory discretion in favour of P.  However, I am of the view even those matters which he relied upon are highly facts sensitive. I have taken the view the extent of the friendship and circumstances of advancing the Loans and extending them on the terms they were with the waiver of interests are all matters which should be tried.

26.  Furthermore, in the present case, Ds has alleged that P used threats and illegal means when seeking repayment from Ds. This is supported by the contemporaneous records of the phone call and WhatsApp messages between Paxson and D3, messages received from Brother Hung and evidence that P/P’s agents had caused photos of D3’s name, photo and image of his identity card to be stuck at various locations and the clinic of D3’s sister was vandalized by red paint. These are very serious allegations which no doubt should go to trial too and the full picture is not before me (or the evidence is not sufficiently clear).

27.  Whilst Mr Wong relied on the case of Wong Kwai Fun v Li Fung [1994] 1 HKC 549 at 573 and submitted that Woo J (as he then was) held that he did not take the acts of assault, intimidation and disturbance perpetrated by the plaintiff in that case as a relevant factor to consider the justice between the parties whether the defendant should pay back the loan (which was advanced with grossly exorbitant rate of over 400% p.a.), as pointed out by Mr Shek, that was in the context of the exercise of the discretion under s.25(1) of MLO. At the time of that decision, the proviso to s.23 had not come into operation. In any event, I disrespectfully disagree that that case laid down any principle set in stone that acts of assault, intimidation etc. are not relevant to the exercise of the court’s discretion, and the defendants are confined to taking out civil action to sue for damages for the harassment and criminal intimidation.

Disposition

28.  For all the above reasons, I too like the Master, would dismiss P’s Summons. This appeal should be dismissed.

[Discussion on costs]

29.  P should pay to Ds the costs of this appeal to be summarily assessed if not agreed. Directions were given for the P to lodge and serve any objections to D’s Statement of Costs within 7 days (limited to 3 pages) and there shall be summary assessment by me on paper.