TOTALCORP (NOMINEES) LTD v. HONG KONG SAI KUNG NGONG WO RESORT DEVELOPMENT LTD

CACV 72/2020

[2021] HKCA 1935

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 72 OF 2020

(ON APPEAL FROM HCMP NO 674 OF 2017)

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J U D G M E N T

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Hon G Lam JA (giving the Judgment of the Court):

1.  This is our judgment on the defendant’s application by notice of motion for leave to appeal from our judgment dated 29 September 2021[1] to the Court of Final Appeal. The first ground relied on is that the appeal involves questions of great general or public importance which ought to be submitted to the Court of Final Appeal for decision. Those questions are:

“ (1) Whether the principle in New Japan Securities International (HK) Ltd v Lim Yiong Lin [1987] 3 HKC 153 remains applicable to a situation when the loan in question has been found to be illegal and/or unenforceable and/or tainted with illegality even though the said loan had been superseded or varied by a new loan agreement apparently not illegal or unenforceable on the basis that no further advance(s) had been made.

(2) What is the correct approach in calculating the effective interest rate so defined in Money Lenders Ordinance, Cap. 163 (“MLO”) by the Court with respect to the principal sum? Should the Court adopt the new figure of HK$63,241,006 for the principal sum (by the Court of Appeal) based on previous accumulated unpaid interests instead of the original advanced figure of HK$41,004,220 especially when default interest at the monthly rate of 4% was levied on the amount of HK$63,241,006 (being found to constitute part of the agreement on interests for the loan inferred by the Trial Judge) which effectively charged interests on both original principal sum and the accumulated interests?

(3) In determining whether the Respondent (Plaintiff) is a ‘money lender’ within the meaning of MLO, should the Hong Kong Court adopt the English approach to Section 6 of Money Lenders Act 1900 by the test that a person carrying on the business of money-lending or of making loans is referred to those who are ready and willing to lend to all and sundry rather than those who lend money as an incident of another business or by way of friendship.”

2.  Question (1) is illogical.  There would be no breach of section 24 and therefore no illegality if the transaction was construed (as it was in our decision) as involving a new loan with an increased principal, as the effective rate of interest would not then exceed 60%.  The premise of the question, namely, that the loan was illegal, assumes the answer to the question itself.  As such, this is not a proper question to be submitted for appeal.  It will be noted that in New Japan Securities International (HK) Ltd v Lim Yiong Lin itself, the loans sued upon would have been illegal for charging compound interest if they were not construed as new loans based on the aggregated outstanding liability.  Indeed, the trial judge had found the loans to be illegal and unenforceable for that reason.  This did not prevent the Court of Appeal from deciding that the loans should be construed as new loans and, as such, were not illegal.

3.  Further, the defendant has not been able to point to anything that detracts from this Court’s reasoning in our judgment at §§27-31 for the conclusion that, as a matter of construction, the Inferred Agreement involved a fresh loan in the principal sum of $63,241,006.  We are not satisfied that a reasonably arguable contrary construction has been put forward.

4.  As to Question (2), the defendant argues that given the changes in interest rate in the loan transaction, the court should not consider that a new principal amount was to be adopted for the purpose of calculating the effective interest rate.  It is plain from the submissions advanced by the defendant that their argument on Question (2) turns on the facts of the present case.  There is no question of general importance involved.

5.  The defendant has likewise failed to show that Question (3) should be submitted for further appeal.  First, the trial judge and this court made concurrent findings on the question whether the plaintiff was a money lender, with which the Court of Final Appeal will generally not interfere.  Secondly, the defendant has not provided any answer to the point that the loan falls within the exception under Part 2 of Schedule 1 to the Ordinance (see our judgment at §39) other than repeating its argument, which we already rejected, that the loan was not secured by the Legal Charge.  The defendant has not raised any argument why our conclusion was wrong in that regard.  In the light of that exemption, Question (3) is academic.  Thirdly, to the extent that the defendant says a different legal test was applicable, the argument was not advanced in the appeal before this court.  It was not argued before us that a different approach from that in Chow Wun Sing v Yiu Chun Luk (CACV 295/2006, 20 February 2008) should be adopted for determining whether a person is a money lender.  The case of Litchfield v Dreyfus [1906] 1 KB 584 now relied upon by the defendant was not cited to this court.

6.  There is therefore no question of great general or public importance to be submitted to the Court of Final Appeal.

7.  The second ground for the application is that leave to appeal should be given on the “or otherwise” limb of section 22(1)(b) of the Hong Kong Court of Final Appeal Ordinance (Cap 484).  It is well established that this court does not normally grant leave on the “or otherwise” limb.  The defendant has failed to show any exceptional circumstance justifying the grant of leave on that basis.

8.  The defendant’s motion is therefore dismissed with costs.  We summarily assess the plaintiff’s costs in the sum of $95,000.