YARDLEY FINANCE LTD v. RONG XIULI

HCA 890/2024

[2025] HKCFI 4036

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 890 OF 2024

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BETWEEN

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DECISION

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I. INTRODUCTION

1.  On 16 Mary 2025, Master KW Wong of the High Court (the “Learned Master”) make an order for interim payment whereby the Defendant was ordered to pay HK$187,548,09514 to the Plaintiff within 90 days, being the principal loans lent by the Plaintiff to the Defendant, not including any interest. This is the Defendant’s appeal (the “Appeal”) by Notice of Appeal filed on 30 May 2025.

II. BACKGROUND

2.  At the material times, the Plaintiff was a licensed money lender under the Money Lenders Ordinance (Cap. 163) (the “MLO”).

3.  The Defendant is and was the Chairman and Founder of Vital Innovations Holdings Limited (“Vital Innovations”). Vital Innovations is a company listed and traded on the Main Board of the Stock Exchange of Hong Kong. The Defendant graduated from Hunan University with a degree in mechanical engineering in 1983, and from China-Europe International Business School with a degree of business administration in 1993.

4.  In or about 2015, the Defendant’s friends introduced Mr Chan Kin Sun (“Mr Chan”) to the Defendant. Mr Chan offered assistance to the Defendant in arranging loans for her, knowing that the Defendant had difficulty with her working capital. Eventually, Mr Chan arranged for the Defendant to enter into loan agreements in 2016.

5.  On 14 November 2016, Leung Tak Shing Raymond (“Raymond Leung”) of the Plaintiff sent two emails to Desmond Cheung of Li, Wong Lam & W.I. Cheung who acted on behalf of the Defendant. The first email referred to a stock loan in the maximum amount of HK$40,000,000. In the second email, Raymond Leung stated:-

“Dear Desmond,

As mentioned in my below email, the stock will only be available after execution of the Loan Documentation by the Borrower/Share Mortgagor. In this connection, I enclose herewith the Loan Documentation for Ms. Rong’s signature or, if she so wishes, for your review and comments.”

6.  In 2016, the Plaintiff as borrower and the Defendant as lender entered into two loan agreements (the “2016 Loan Agreements”):-

(1) On or about 15 November 2016, the Defendant signed a loan agreement (the “November 2016 Loan Agreement”) with the Plaintiff whereunder the Plaintiff lent, and the Defendant borrowed, a loan (the “First Loan”); and

(2) On or about 12 December 2016, the Defendant signed another loan agreement (the “December 2016 Loan Agreement”) with the Plaintiff whereunder the Plaintiff lent the Defendant another loan (the “Second Loan”).

(3) On 8 March 2017, the Plaintiff and the Defendant entered into a supplemental agreement (the “2017 Supplemental Agreement”) to the December 2016 Loan Agreement.

7.  All the above Agreements were in simplified Chinese.

8.  The Defendant drew down as follows:-

(1) On 16 November 2016, the Defendant drew down HK$35,000,000, as evidenced by the drawdown notice dated 16 November 2016;

(2) On 12 December 2016, the Defendant drew down HK$124,000,359.40, as evidenced by the drawdown notice dated 12 December 2016; and

(3) On 8 March 2017, the Defendant drew down HK$69,999,640.60, as evidenced by the drawdown notice dated 8 March 2017.

9.  Since June 2019, the Plaintiff sent statements in respect of the loan account almost every month to the Defendant. The deadline of repayment of the loans was extended until 12 August 2019.

10.  On 27 June 2019, the Defendant and her daughter attended the Plaintiff’s office to sign documents. The Defendant does not recollect what documents she signed, but in my view, in the evidence before me, the documents must include the 2019 Loan Agreements (as defined below) and the Share Pledges (as defined below).

11.  In June 2020, the Defendant and Mr Chan had the following WeChat conversation:-

“Defendant: 市道不好，要减债务，今年争取还您一半

Mr Chan: 上週日完整方案，弄好了嗎？

Defendant: 引进一个战略伙伴，一定时间内还您两个亿，正在律师谈合同

Mr Chan: 知道”

12.  In June and July 2021, the assistant of the Defendant, Li Xia, had the following WeChat conversation with Mr Chan on behalf of the Plaintiff, in a conversation group of which the Defendant was a member:-

“Li Xia: 陈先生您好，荣总这边准备支付一年利息，麻烦您给我一个收款帐户，还有就是不知道您是只能香港收款还是人民币也可以呢？谢谢你！

Mr Chan: 你好，我叫梁先生處理

…

Mr Chan: 請問霞總，幾時能加到我公司帳戶呢？

Li Xia: 我们先尽快把资金调到香港那边，预计下周应该可以的

…

Mr Chan: 刚发到你邮箱借款合同，这个借款合同早在一年前已电邮给你，请你们不要老是以合同文件、假日等一堆借口再次拖拖拉拉，到今天为止，已没有支付利息18个月，你方行为真令人感到非常烦厌。

Li Xia: 好的，谢谢！

…

Li Xia: 本次支付2150万港币，是2020年利息，昨天开始第一笔支付了500万港币，这两天会陆续支付

Mr Chan: 好，谢谢！

Li Xia: 不客气

Li Xia: 陈总我们这次支付的是20年一年的利息费用

[Li Xia then sent a schedule]

Li Xia: 陈总这是本次支付的金额请您核对，谢谢！

[Li Xia then sent a schedule]

Li Xia: 陈总您核对看看有没有问题，谢谢~

Mr Chan: 對收了2150萬

Li Xia: 好的好的，这个是支付20年的利息费用，谢谢您！”

13.  From 2019 to 2021, the Defendant paid to the Plaintiff about HK$27,000,000. There is dispute over whether the payment was for the principal or the interest, a matter I shall return to below.

III. PLAINTIFF’S CLAIM

14.  The Plaintiff claims that the Plaintiff and the Defendant entered into two loan agreements both dated 12 August 2019 (the very date of the extended deadline of the loans mentioned above) (the “First August 2019 Loan Agreement” and the “Second August 2019 Loan Agreement” respectively, and collectively the “2019 Loan Agreements”). The witness to these agreements was one Wu Wai Yuk (transliteration). All the Agreements were in simplified Chinese. Schedule 1 to each of the 2019 Loan Agreement mentioned a share pledge.

15.  Correspondingly, the Defendant executed a share pledge (the “First Share Pledge”) in favour of the Plaintiff dated the same date, and one Winmate Limited (“Winmate”) executed a share pledge (the “Second Share Pledge”) in favour of the Plaintiff dated the even date. All the Share Pledges were in simplified Chinese.

16.  Under the First August 2019 Loan Agreement, the Plaintiff advanced the loan to the Defendant by way of set-off of an existing loan, thereby treated as fully repaid. The amount was HK$21,000,000. The interest rate thereon was 7% per annum, while the default interest rate was 21% per annum. The First August 2019 Loan Agreement was signed by the Defendant as borrower personally, and by Raymond Leung on behalf of the Plaintiff. The Defendant has not repaid any of the principal or the interest of the loan.

17.  Under the Second August 2019 Loan Agreement, the Plaintiff advanced the loan to the Defendant by way of set-off of another existing loan, thereby treated as fully repaid. The amount was HK$194,000,000. The interest rate thereon was 7% per annum, while the default interest rate was 21% per annum. The Second August 2019 Loan Agreement was signed by the Defendant as borrower personally, and by Raymond Leung on behalf of the Plaintiff. The Defendant has paid interest of HK$22,168,726.78 but not any principal.

18.  By the First Share Pledge, the Defendant pledged her 52,856,000 shares in Vital Innovations in respect of the loan under the First August 2019 Loan Agreement, and by the Second Share Pledge, Winmate pledged its 480,624,000 shares in Vital Innovations in respect of the loan under the Second August 2019 Loan Agreement. The pledging of these shares in the listed company is consistent with positions held by the Defendant in the shares stated in the Interim Report for 2024 of Vital Innovations.

19.  At the hearing before the Learned Master on 16 May 2025, the Plaintiff relied only on the 2019 Loan Agreements for its application for interim payment. The causes of action were the loan agreements themselves, alternatively unjust enrichment, alternatively relief under sections 18(3) and 22(2) of the MLO. After the Learned Master ordered interim payment on 16 May 2025, on 11 June 2025, the Defendant amended her defence from non-admission of authenticity of the 2019 Loan Agreements to denial of the authenticity of the 2019 Loan Agreements. As a result, on 30 July 2025, the Plaintiff amended the Statement of Claim to add an alternative claim, which the Plaintiff also relies upon in addition to the 2019 Loan Agreements.

20.  The alternative claim is consequential upon the Defendant’s amendment. The alternative claim is that if there were no 2019 Loan Agreements, the Plaintiff would rely on the November 2016 Loan Agreement and the December 2016 Loan Agreement. There is disagreement over whether the Plaintiff may rely on this alternative claim at the present Appeal. I shall return to this matter after setting out the Defendant’s defence.

IV. DEFENDANT’S DEFENCE

21.  According to the Defendant, no one explained to her the November 2016 Loan Agreement or the December 2016 Loan Agreement. Further, when she and her daughter attended the Plaintiff’s office on 27 June 2019 to sign documents, no one explained to her the contents of 2019 Loan Agreements. Nor was there any person named Wu Wai Yuk and Raymond Leung. The Defendant did not come to Hong Kong in August 2019 or any other months in 2019.

22.  Therefore, the Defendant denies that she executed or signed any agreement on 12 August 2019, and avers that there was no 2019 Loan Agreements.

23.  Alternatively, if she is found to have executed the 2019 Loan Agreements, she avers that there was no loan to be set off because according to §§6(2) and 14(2) of the Amended Defence:-

“(i) In breach of Section 18 of the [MLO], no note or memorandum in writing of the [November 2016 Loan Agreement] or the [December 2016 Loan Agreement] or for repayment of the [First Loan] or the [Second Loan], as required thereunder (“Required Note or Memo for the [First] or [Second] Loan”), was signed by the Defendant before the money was lent under the [November 2016 Loan Agreement] or the [December 2016 Loan Agreement].

(ii) In breach of Section 18 of the MLO, no copy of the Required Note or Memo for the [First] or [Second] Loan signed by the Defendant has even been given to the Defendant.

(iii) No copy of the [November 2016 Loan Agreement] or the [December 2016 Loan Agreement] had been given to the Defendant before the commencement of these proceedings.

(iv) The [November 2016 Loan Agreement] or the [December 2016 Loan Agreement] are illegal pursuant to Section 22 of the MLO as Clause 7.4 of the [November 2016 Loan Agreement] and Clause 7.5 of the [December 2016 Loan Agreement] provide for the payment of compound interest and the rate of interest being increased by reason of any default in the payment of sums due under the [November 2016 Loan Agreement] or the [December 2016 Loan Agreement] respectively.”

24.  Similarly, for the 2019 Loan Agreements, the Defendant raises the same points mutatis mutandis at §§10(3) and 19(3) of the Amended Defence. The Defendant avers that therefore, the 2019 Loan Agreements were rendered illegal and unenforceable.

25.  As regards the Plaintiff’s cause of action of unjust enrichment, the Defendant raises illegality or lack of clean hands as defence.

26.  As regards the Plaintiff’s reliance on relief under the MLO, the Defendant pleads that it was not inequitable and not disproportionate to refuse enforcement. I note the Defendant does not plead any particulars in support. So, basically, the Defendant puts the Plaintiff to strict proof, without any positive case such as prejudice, that the Court should grant relief under the MLO.

27.  Finally, it is noteworthy that while the Defendant denies having executed or signed any of the 2019 Loan Agreements, the Defendant avers at §§7(1) and 16(1) of the Amended Defence respectively that she executed a share pledge to pledge her 52,856,000 shares in Vital Innovations in respect of the loan under the First August 2019 Loan Agreement, and Winmate executed a share pledge to pledge its 480,624,000 shares in Vital Innovations in respect of the loan under the Second August 2019 Loan Agreement, although she denies execution of the pledges on 12 August 2019 without putting forward a positive case of when they were executed. It is also noteworthy that while the Defendant specifically avers that she was not explained the 2016 Loan Agreements or the 2019 Loan Agreements, she is silent upon the share pledges.

V. RELIANCE ON PLEADINGS SUBSEQUENT TO MASTER’S ORDER UNDER APPEAL

28.  As mentioned in §20 above, the parties have disagreement over whether the Plaintiff may rely on the amendment in the Amended Statement of Claim made after the Learned Master’s Order now under Appeal. Mr William Wong SC (leading Mr Martin Lau and Ms Valerie Kwok), counsel for the Plaintiff, submits that given that the hearing before me is a de novo hearing, the Plaintiff may rely on the amendment. Mr Kin Lau (leading Mr Hui Ho Ming), counsel for the Defendant, submits that it is an appeal against the Learned Master’s Order and it would be unfair to the Defendant if the Plaintiff could rely on the amendment. However, he does not go so far as to say that the Defendant cannot rely on the amendment in the Amended Defence, also made after the Learned Master’s Order now under the Appeal. That said, to be fair to Mr Lau, he also submits that with or without the amendment, the Court is entitled to consider the Defendant’s evidence and amendment could still be made eventually.

29.  In my view, the starting point is that the hearing of an Appeal against a Learned Master’s Order is a de novo hearing. Before the Civil Justice Reform, it was a completely de novo hearing, completely in the sense that parties may even file new evidence without much restriction for the Appeal hearing. After the Civil Justice Reform introduced Order 58 rule 1(5), new evidence may be filed only upon satisfaction of the Ladd v Marshall conditions. But this is the only change to the nature of the de novo hearing made by the Civil Justice Reform. The Civil Justice Reform does not in any aspect impose any restrictions on making new or even different submissions or amended pleadings. Therefore, from time to time since the Civil Justice Reform, as before it, new or different submissions are made before Judge based on the same evidence, and the Judge considers submissions with the materials put before the Court. Sometimes, the other party may criticise the credibility of such new or different submissions because they were not made below, but this is another matter.

30.  When new or different submissions can be made and accepted in an Appeal hearing, I see no reason why amended pleadings (amended with leave) cannot be considered. Of course, if the amendments would necessitate new evidence (for example, an amended statement of claim has to be verified by affirmation in an Order 14 application), then the Court would consider whether the Ladd v Marshall conditions are satisfied, and/or whether it would be fair to the other side when the one amending the pleadings would not need to adduce new evidence but the other side would need to adduce new evidence to answer the amendment. Even in a situation where the other side would need to adduce new evidence to answer the amendment, the Court should not be too ready to disallow the amending party to rely on the amendment but rather, should consider whether it would be appropriate to adjourn the matter for the new evidence. The reason is that if the amendment (with leave) could not be relied upon at the appeal hearing, the party may simply (subject to res judicata, issue estoppel or the like) start an application again with the amendment before Master, and may go again to Judge for Appeal. This would undesirably delay the matter and exact the judicial resources as well as parties’ costs.

31.  That should be the general proposition. However, where the amendment would necessitate substantial evidence that would materially alter the substantive arguments on the application, such delay and exaction of resources and costs may be of less concern, and in such situation, the better course may be not to allow the parties to rely on the amendment but the parties should consider a fresh application before Master (subject to res judicata, issue estoppel or the like). Each case depends on its own context.

32.  In the present case, the amendment in the Amended Statement of Claim is the reliance on the 2016 Loan Agreements. This 2016 Loan Agreements were pleaded in the original Defence of the Defendant in the first place. Even in the original Defence, the Defendant had already pleaded to the breach of the MLO in respect of the 2016 Loan Agreements. The Plaintiff does not adduce any new evidence for the amendment. Despite Mr Lau’s submissions that it would be unfair, he cannot articulate what prejudice the Defendant would suffer when the original Defence had already pleaded on the 2016 Loan Agreements, and in answer to my enquiry, he confirms that the Defendant does not seek adjournment so that she can file further evidence. I can see no prejudice in such circumstances.

33.  Mr Lau makes another point – the Amended Statement of Claim cannot be served during court vacation. While no service could be effected during court vacation, it does not follow that the documents cannot be relied upon at hearings during court vacation. In any event, Mr Lau cannot really articulate any prejudice upon this very technical point. If necessary, I would give leave for the Plaintiff to effect service during court vacation.

34.  Therefore, I think the Plaintiff may rely on the amendment in the Amended Statement of Claim.

VI. ISSUES

35.  Based on the Plaintiff’s claim and the Defendant’s defence, the issues are:-

(1) Whether there were any 2019 Loan Agreements;

(2) If so, whether the 2016 Loan Agreements were unenforceable due to breach of sections 18 and/or 22 of the MLO;

(3) If not, whether the 2019 Agreements were unenforceable due to breach of sections 18 and/or 22 of the MLO; and

(4) Irrespective of the above, whether the Plaintiff may claim restitution on unjust enrichment.

VII. LEGAL PRINCIPLES IN RELATION TO INTERIM PAYMENT

36.  The legal principles in relation to an application for interim payment under Order 29 rules 11 and 12 are well established. A two-stage approach should be adopted: see Chiu Ricky Tong v Eagle Bright Property Development Company Ltd and Ors [2022] HKCFI 872 at §23 per Cheng J:-

“(1) At the first stage, the question is whether the applicant would obtain judgment for a substantial sum of money at trial. In this regard, the court should read O.29, rr.11 and 12 together and ask the single question of whether the applicant fulfils the requirements of those rules as a whole, rather than considering separately and exclusively the applicant’s entitlement under each rule.

(2) If the court is satisfied that the applicant would obtain judgment for a substantial amount at trial, it then decides whether to exercise its discretion to make an order and if so, for what amount.

(3) At both stages, the court is required to take into account the likelihood of a set-off or other defence or counterclaim succeeding at the trial.”

37.  For the first stage:-

(1) “The court must be satisfied on the balance of probabilities that the plaintiff ‘would’ obtain judgment, and not merely that he ‘would be likely to’”: see Chiu Ricky Tong v Eagle Bright Property Development Company Ltd and Ors, supra at §24.

(2) “The court must also be satisfied that the defendant has no arguable defence, such as one that would warrant the grant of unconditional leave on an O.14 application”: see Chiu Ricky Tong v Eagle Bright Property Development Company Ltd and Ors, supra at §24.

(3) “Where the defence is shadowy, so that only conditional leave to defend would be given on an O.14 application, it is possible for the court to be satisfied that the plaintiff will succeed at trial (although it does not automatically follow that it will be appropriate to make an order for interim payment)”: see Chiu Ricky Tong v Eagle Bright Property Development Company Ltd and Ors, supra at §24.

38.  For the second stage:-

(1) Prejudice to the plaintiff is not a necessary condition before the Court may exercise its discretion at the second stage of the two-stage approach.

(2) Further and in any event, delay in recovery is in itself a prejudice to the plaintiff: see Mengiwa Property Investment Ltd v Lifestyle Restaurant Ltd [2023] 1 HKC 457 at §§27-28 per DHCJ MK Liu.

VIII. WHETHER THERE WERE ANY 2019 LOAN AGREEMENTS?

39.  There is no dispute that the borrower’s signature on the 2019 Loan Agreements is the Defendant’s. The Defendant’s reasons for saying that that there were no 2019 Loan Agreements are:-

(1) She signed some documents on 27 June 2019, but not on 12 August 2019 as the 2019 Loan Agreements were dated. Therefore, there were no Loan Agreements on 12 August 2019.

(2) When she signed some documents on 27 June 2019, no person named Wu Wai Yuk (the witness to the 2019 Loan Agreements) or Raymond Leung (signing on behalf of the Plaintiff) was there in the Plaintiff’s office.

(3) No one explained the contents of the 2019 Loan Agreements to her.

40.  With regard to (1), the fact that an agreement is not signed on the date which the agreement is dated does not mean that there is no agreement. It is not unusual that parties sign undated or post-dated agreements in the event that the agreements would become necessary subsequently. A typical example is post-dated or undated cheques in escrow. Another example is where a loan is to be repayable in a month, and the parties to sign some undated or post-dated agreement to extend the deadline in advance in the event that the borrower would turn unable to repay the loan in the next month. When the extension would become necessary on the deadline, the agreement would be dated and become effective. This way, the borrower would also feel more pressure to repay the loan on time, or else he would know what consequences to meet him as he would have already signed an undated agreement to become effective in the event he could not repay on time.

41.  This is of course another matter if the parties deliberately date an agreement in a way that while the agreement has actually become effective, they intentionally give an impression to the outsiders that the agreement has not been so, or the while the agreement has not yet become effective, they intentionally give an impression to the outsiders that the agreement has been so.

42.  In the present case, the 2019 Loan Agreements would be unnecessary if the Defendant would be able to repay the loans on 12 August 2019. Put another way, there was no point for the 2019 Loan Agreements to become effective before 12 August 2019. Thus viewed, I do not see how the 2019 Loan Agreements signed on 27 June 2019 but dated 12 August 2019 would mean that there were no agreements.

43.  Mr Lau submits that this was not the case pleaded by the Plaintiff. In my view, the Plaintiff has already pleaded and relied upon the 2019 Loan Agreements. I do not see why the Plaintiff would have to plead to how the 2019 Loan Agreements were intended to become effective in the Statement of Claim. In any event, the Statement of Claim and the Amended Statement of Claim both carefully pleaded to these agreements as agreements dated 12 August 2019 rather than agreements executed on 12 August 2019.

44.  Further, the date of the 2019 Loan Agreements would not affect the contents, which in essence were that the parties agreed to extend the deadline in exchange for some more interest. When the parties agreed to the contents, a binding agreement was formed. Wrong date in such circumstances constitutes no vitiating factor or would not make an agreement non-existent. At most, it makes the 2019 Loan Agreement not authentic in the sense that they were not executed on the date as purported, but not in the sense that they were not executed at all or they were fabricated.

45.  With regard to (2), it may be inappropriate for a person to sign as a witness when he does not really witness the execution of the document. A person signing as a witness when he does not really witness the execution may be a risk for that person to take, and the agreement is false in the sense that it states that it was witnessed by that person. However, a witness is not a necessary element for a binding agreement. I do not see how a “false” witnessing would vitiate an agreement or would somehow make the agreement non-existent.

46.  With regard to (3), Mr Lau, for the Defendant, confirms to me, rightly in my view, that he is not running non est factum. As such, whether there was any explanation to the Defendant or not is irrelevant to my determination of the existence or non-existence of the 2019 Loan Agreements. This, however, may be relevant to whether there was any breach of the MLO or whether I should exercise my discretion to grant relief under the MLO.

47.  In the circumstances, I find that there were the 2019 Loan Agreements.

IX. WHETHER THE 2016 LOAN AGREEMENTS WERE UNENFORCEABLE DUE TO BREACH OF SECTIONS 18 AND/OR 22 OF THE MLO

48.  The Defendant complains that in breach of section 18(1) of the MLO:-

(1) There was no signed memorandum of the 2016 Loan Agreements; and

(2) No copies of any memorandum of the 2016 Loan Agreements given to her.

49.  In respect of (1), as to what constitutes a memorandum for the purpose of section 18 of the MLO, Chan PJ had this to say at §23 of Strong Offer Investment Ltd v Nyeu Ting Chuang (2007) 10 HKCFAR 529:-

“… Construed in its context, s.18 does not and is not intended to refer to only one single document by the words “a note or memorandum in writing of the agreement”. A loan agreement may be made orally or in writing, or partly orally and partly in writing. All that s.18 requires is that there must be something in writing so that the borrower can know all the terms and conditions of the loan. It matters not whether they are contained in one document or more than one document. If a contract contains all the terms and conditions of the loan, as is usually the case, it is as good as anything and clearly meets the requirements of the section. It would be absurd to ask for another note or memorandum to set out all the terms and conditions again just to satisfy the requirements. Such construction is inconsistent with the letter and spirit of s.18.”

50.  In the present case, the 2016 Loan Agreements contained all the terms. Both 2016 Loan Agreements were prepared in simplified Chinese, which the Defendant clearly understood. In my view, the 2019 Loan Agreements were sufficient to constitute the signed memoranda for the purpose of section 18. Mr Lau rightly does not take this point. That said, Mr Wong, for the Plaintiff, fairly accepts that the 2016 Loan Agreements did not have any “declaration as to the place of negotiation and completion of the agreement” in breach of section 18(1)(b).

51.  In respect of (2), having considered the evidence, I find no difficulty in forming my view that the trial court would find that copies of the 2016 Loan Agreements were given to the Defendant within 7 days as required by section 18(1) of the MLO. I form such view based on the following matters:-

(a) The Defendant engaged legal representatives, namely, Desmond Cheung of Messrs Li, Wong Lam & WI Cheung, to review the 2016 Loan Agreements.

(b) The Defendant did draw and receive the loans under the 2016 Loan Agreement. While the Defendant alleges that she does not have any clear recollection of the amount of the loans, she does not say that she did not receive any loan. Further, I do not accept that she does not have any clear recollection of the amount, considering the WeChat conversation between Raymond Leung on behalf of the Plaintiff and Li Xia on behalf of the Plaintiff in June and July 2019. I find that she, as an experienced businessperson, did know the amounts of the loans she borrowed.

(c) The Defendant was an experienced businessperson. In receiving such substantial amounts of money, it is inherently improbable that she would not have sought copies of the documents relevant to the amounts.

(d) It was the usual practice of the Plaintiff to provide copies of the loan agreements in question, as in Integrated Capital (Asia) Ltd v Chan Ting [2025] 2 HKC 164 at §31(c) per K Yeung J.

(e) The Defendant found it necessary or appropriate to attend the Plaintiff’s office to sign some documents in June 2019 knowing that the deadline of 12 August 2019 was imminent. This shows that she knew she had to repay according to the 2016 Loan Agreements.

52.  All that said, that there is no declaration as to the place of negotiation and completion of the agreement constitutes breach of section 18, as fairly accepted by Mr Wong for the Plaintiff.

53.  The Defendant also complains that the 2016 Loan Agreements breached section 22(1). Mr Wong fairly accepts this for the present purpose.

54.  The question of enforceability of the 2016 Loan Agreements thus become whether I should exercise the discretion under section 18(3) and 22(3) of the MLO to enforce the principal amounts thereunder. I highlight the following legal principles in this regard:-

(1) The purpose of sections 18 and 22 is to ensure that he receives a complete and accurate record of the transaction and to protect the borrower from unconscionable transactions: see E-Way (Hong Kong) Property Credit Ltd v Fung Wing Tim [2019] 5 HKC 14 §79 per DDJ Phoebe Man (as she then was).

(2) I should consider the breaches in question, their consequences for the parties and any other relevant circumstances that would make it inequitable to hold the agreements unenforceable: see Emperor Finance Ltd v La Belle Fashions Ltd & Ors (2003) 6 HKCFAR 402 at §§119-120 per Ribeiro PJ.

(3) Prejudice is one of the considerations: see Strong Offer Investment Ltd v Nyeu Ting Chuang, supra at §37 per Chan PJ.

(4) Whether the transaction is an arm-length transaction is another consideration: see Trillion Wide Credit Finance Ltd v Ample Sky Holdings Ltd [2022] HKCFI 3813 at §28 per Au-Yeung J.

(5) Even extortionate interest may not be sufficient to render the principal unenforceable: see Trillion Wide Credit Finance Ltd v Ample Sky Holdings Ltd, supra at §32; Orix Asia Ltd v Grant Forward Industrial Ltd and Ors, HCCL 79/1999, 15 June 2000 at §8; Chiu Ricky Tong v Eagle Bright Property Development Company Ltd and Ors, supra at §§45-46; and Wang Weichen v Praise Fortune Ltd [2022] HKCFI 1880 at §§20-22 per DHCJ H Au-Yeung (as he then was).

55.  In the present case, for the following reasons, I find that at trial, the Court would exercise discretion to hold the 2016 Loan Agreements enforceable:-

(1) The Defendant was an experienced businessperson.

(2) The Defendant was given copies of the 2016 Loan Agreements.

(3) There is no evidence of undue pressure or anything other than an arm-length transaction.

(4) The Defendant received the loans and knew the amounts of the loans.

(5) The Defendant had legal advisers, namely, Desmond Cheung of Messrs Li, Wong Lam & WI Cheung, to review the draft 2016 Loan Agreements.

(6) There is no evidence of prejudice to the Defendant as a result of the breaches in relation to the principal amounts. At least for the present purpose, the Defendant is “protected” from the interest, which the Plaintiff is not claiming for interim payment.

(7) On the contrary, the Defendant was prepared to pay the Plaintiff, as evidenced by the 2019 Loan Agreements.

(8) The prejudice to the Plaintiff, in the light of the substantial amounts of the loans, would be significant.

(9) As regards Mr Lau’s submissions that the Defendant should be afforded a chance to cross-examine the Plaintiff on whether the breach was repeated and/or intentional, as this would be relevant for the trial court’s consideration, the breach of section 18 is about the failure to declare the place of negotiation and completion of agreement. I cannot see any reason for the Plaintiff intentionally to breach this, since this would not give the Plaintiff any advantage, and can only say that the repeated breaches of section 18, if any, would not have any substantive significance in the present circumstances especially given the Defendant’s experience. As regards the breach of section 22 by increased interest, assuming that the breach was intentional, the Plaintiff does not claim the interest for the present purpose. In any event, even assuming that both breaches were deliberate, I still consider all the above factors, and come to the same conclusion.

(10) The Plaintiff only claims the principal amounts, not interest.

56.  Mr Lau, for the Defendant, heavily relies upon Vinson Finance Ltd v Chu Qingzhu and Anor [2022] HKCFI 449. In that case, the date of the loan agreement and the guarantee was found arguably not to be the actual date of the execution of the documents. Cheng J found it inappropriate to determine whether to exercise discretion under section 18(3) of the MLO. Mr Lau submits that I should also come to the same finding that it is inappropriate for me to determine whether to exercise the discretion under section 18(3) and 22(3) of the MLO.

57.  Each case depends on its own fact and evidence. In any event, in my view, Vinson Finance Ltd v Chu Qingzhu and Anor, supra, is materially distinguishable on the following material facts:-

(1) There was no evidence that the borrower and his wife were any experienced businesspersons as the Defendant in the present case.

(2) There was evidence that the borrower did not receive a copy of the loan agreement in question: see §23, but in the present case, I have already found that the Defendant received copies of the 2016 Loan Agreements.

(3) As regards the guarantee executed by his wife, the borrower was under undue pressure from the plaintiff to pressurize his wife: see §11. There is no allegation of undue pressure in the present case.

(4) The borrower borrowed various loans from the money lender and when making payments to the lender, it was not clear at all for which of the loans the payments were made, and therefore it was not clear whether the borrower did acknowledge the loan in question: see §18.

58.  In the circumstances, in my view, the Trial Court would find hold the 2016 Loan Agreements enforceable.

X. WHETHER THE 2019 AGREEMENTS WERE UNENFORCEABLE DUE TO BREACH OF SECTIONS 18 AND/OR 22 OF THE MLO

59.  For the same reason as for the 2016 Loan Agreements, Mr Lau rightly accepts that the 2019 Loan Agreements constituted the memoranda for the purpose of section 18 of the MLO. The dispute is over whether the Defendant received copies of the 2019 Loan Agreements within 7 days of the execution of the Agreements.

60.  For the following reasons, I find that the trial court would find that the Defendant received copies of the 2019 Loan Agreements within 7 days:-

(1) The Defendant was an experienced businessperson. In signing documents at a moneylender’s office, it is inherently improbable that she would not have sought copies of the documents relevant to the amounts.

(2) It was the usual practice of the Plaintiff to provide copies of the loan agreements in question.

(3) The Defendant did draw and receive the loans under the 2016 Loan Agreements. As I have found above that the Defendant had copies of the 2016 Loan Agreements, she of course knew that the deadline of 12 August 2019 was imminent. Therefore, the 2019 Loan Agreements, to extend the deadline, were necessary. In the light of the substantial amounts of the transaction, it is inherently probable that she, a very experienced businessperson, would have asked copies.

(4) Unlike the 2019 Loan Agreements, the Defendant does not even say that she did not execute or did not know the Share Pledges mentioned above. As mentioned above, on the contrary, the Interim Report of 2024 of Vital Innovation, showed positions held by the Defendant consistent with the pledging. So, the evidence points to that she knew that there were the Share Pledges, and the Share Pledges were part and parcel of the 2019 Loan Agreements. This in turn points to that she knew about the 2016 Loan Agreements.

(5) She did make payments of interests since 2019. Here, I note that the Defendant has said in her affirmation that to her recollection, she made the payments towards the principals but not interests. However, she gave no particulars, and this allegation is contrary to the WeChat conversation set out in §12 above. Therefore, I find that she did make payments of interests but not principals.

(6) The WeChat conversation between Mr Chan on behalf of the Plaintiff and Li Xia on behalf of the Defendant in June and July 2021 showed that in 2020, copies of the 2019 Loan Agreements were given to the Defendant. While this only shows that copies were given in 2020, this is not inconsistent with the proposition that copies were given in 2019 per the usual practice of the Plaintiff. It was just that copies were “emailed” again in 2020 upon the Defendant’s request. I note that in the WeChat conversation, there was nothing from the Defendant like “2020 was the first time we obtained the copies”. On the contrary, the Plaintiff was complaining that the Defendant’s request for copies seemed to be an excuse for delay in repayment. If 2020 was the first time the copied had ever been given to the Defendant, it is inherently improbable that the Defendant would simply reply to such complaint by “好的，谢谢！”.

61.  As regards whether I should exercise my discretion to hold the 2019 Loan Agreements enforceable, I consider the same factors as for the 2016 Loan Agreements except that the Defendant did not engage any legal advisers for the 2019 Loan Agreements as she did for the 2016 Loan Agreements.  That said, the material terms of the 2016 Loan Agreements were essentially the same as those of the 2019 Loan Agreements. The Defendant was also prepared to, and did, pay the Plaintiff. Having considered all these, I find that the trial court would hold the 2019 Loan Agreements enforceable.

XI. WHETHER THE PLAINTIFF MAY CLAIM RESTITUTION ON UNJUST ENRICHMENT

62.  There is no dispute that there is unjust enrichment. The Defendant’s defence is that the loans advanced were illegal by virtue of the breaches of sections 18 and 22 of the MLO. However, as I have found that the trial court would hold the relevant agreements enforceable, the Defendant’s such defence would fall away at trial. I do not see how Mr Lau’s reliance on the Monat’s case would make any difference.

63.  Therefore, in my view, the trial court would also find that the Defendant has to refund the principal amounts to the Plaintiff.

XII. RELIANCE ON THE 2016 LOAN AGREEMENTS IN THE AMENDMENTS

64.  Given my view above, the trial court would find that the loans under the 2016 Loan Agreements were paid off by the loans advanced under the 2019 Loan Agreements. So, no cause of action would sustain on the 2016 Loan Agreements, and therefore, it is not necessary for the Plaintiff to rely on the amendment for the present purpose.

65.  In any event, if somehow it would become necessary, for the reasons given under Part IX above, the trial court would hold the 2016 Loan Agreements enforceable.

XIII. WHETHER TO EXERCISE ITS DISCRETION TO MAKE AN ORDER FOR INTERIM PAYMENT

66.  On my view above, the trial court would find that the Defendant is liable to repay the Plaintiff the principal amounts. Delay in receiving such amounts would be a prejudice to the Plaintiff: see §38(2) above. In my view, the Plaintiff should prima facie be awarded interim payment to address such prejudice.

67.  In §42 of his Skeleton Submissions for the Defendant, Mr Lau submits the following three points urging me not to exercise my discretion to make an order for interim payment:-

“42.1 The sum sought in the Summons is substantial and given this is not a case where the liability has already been tried and determined, the substantial sum to be paid would mean that D may need to give up on her defence.

42.2 The time allowed for D to make payment is relatively short particularly with regard to the amount sought.

42.3 Though delay in obtaining the final outcome of the case may be a form of prejudice for P, it can be compensated by interests.”

68.  For his submissions at §42.1, in my view, an application for interim payment is always by nature involves a substantial sum and liability is not tried and determined. I do not see how such submissions can help the Defendant at this discretion stage.

69.  For his submissions at §42.2, there is no evidence, not even general evidence, to explain how much time the Defendant would need. While the length of the time is discretionary, the Court should exercise it judicially, based on evidence. Without such evidence, I cannot see how one can see the period is short or long.

70.  For his submissions at §42.3, on my view that the Trial Court would hold the Defendant liable to pay the Plaintiff the principal amounts, absent any other factors, I find no reason why the Plaintiff would have to wait to be compensated by interest.

71.  There is no evidence of prejudice which the Defendant would suffer if an order for interim payment would be made.

72.  In the circumstances, the Plaintiff discharges its burden to convince me that I should exercise my discretion to order interim payment.

XIV. EXTENSION OF TIME FOR INTERIM PAYMENT

73.  As a last resort, Mr Lau seeks that I should give 90 days from the date of the present Decision for the Defendant to make the interim payment. Mr Lau regards this last resort as part of the Appeal against the Learned Master’s Order.

74.  As I explain in §69 above, the Court’s discretion should be exercised judicially. There is no material for me to determine the length of time needed, or why the 90 days ordered by the Learned Master is not appropriate, or why 90 days more should be given. Although the Appeal before me is a de novo hearing, in the absence of any evidence for me to extend the time, I do not think it appropriate to extend the time for such a long period as 90 days. Therefore, I refuse to allow appeal on the time.

75.  However, I have the power to extend time under Order 3, but again, there is no material before me based on which I can exercise my power judicially. As a matter of rough justice, I would give 14 days from today.

XV. CONCLUSION

76.  For the reasons above, I dismiss the Appeal. I order that notwithstanding the Learned Master’s Order, the interim payment shall be made on or before 25 September 2025. For costs, I order that the Defendant should pay the Plaintiff costs of the Appeal, with certificate for two counsel, summarily assessed at HK$400,000, payable forthwith.

77.  It remains for me to thank Mr Wong, leading Mr Lau and Ms Kwok (counsel for the Plaintiff) and Mr Lau, leading Mr Hui (counsel for the Defendant) for their assistance.