Read the full judgment text of CACV 182/2016 on BabelCite. This Court of Appeal judgment was delivered on 27 September 2019 before Yuen, Chu and Poon JJA.
Civil law – money lending – Money Lenders Ordinance (Cap. 163) – interpretation – effective rate of interest – default interest – enforceability of loan and security – exercise of discretion – costs of collection – extortionate transactions – appeal – HK$5 million loan secured by legal charge over residential property – loan repayable in lump sum with monthly interest – preferential interest rate of 9.6% p.a. and contractual rate of 21.6% p.a. – three Chinese documents executed alongside Loan Agreement not reflected in memorandum – 30% collection fee on default – borrower adjudicated bankrupt – plaintiff licensed moneylender – whether s.24 MLO analysis is based on default or non-default interest – whether s.22(1)(c) MLO permits charging default interest at 21.6% when contractual rate is 9.6% – whether court may exercise discretion under ss.18(3) and 22(2) to enforce loan – whether legal charge should be enforced despite MLO breaches – whether 30% collection fee calculated on instalment or on principal plus interest – whether collection fee contravenes ss.27(3) and 29(10) – whether transaction extortionate under s.25 – appeal allowed in part: set-aside of order for delivery up of vacant possession and grant of leave to defend claim for possession; plaintiff's judgment for HK$4,160,000 (principal less set-up fee of HK$40,000 and HK$800,000 interest already paid) with judgment-rate interest upheld; no order as to costs of appeal – Kwok Ying Lung v Ko Chi Hung applied – Emperor Finance and Strong Offer Investment followed – Good Time Finance, Broad Mark, Treasure Spot, Yu Tai Hing, Brother's Company distinguished or treated as unpersuasive – Yip Yuk Chee Juspine, Dah Sing Bank, Hang Seng Credit Card considered but not adopted – court holds s.24 analysis turns on contractual rate (not default scenario); s.22(1)(c) only permits simple interest on overdue sums at the effective rate of the principal apart from default; discretion under ss.18(3) and 22(2) exercised in plaintiff's favour to reduced extent given borrower's sophistication; security enforcement requires separate consideration on a striking-out application; collection fee clause is to be construed by reference to overdue instalment only; ss.27(3) and 29(10) do not extend to default collection charges; transaction not shown to be extortionate under s.25.
Legal issues: Whether s.24 MLO analysis is based on default or non-default interest rate · Exercise of discretion under ss.18(3) and 22(2) MLO to enforce the loan · Enforceability of the security despite MLO breaches · Construction of the 30% collection fee clause · Whether collection fee contravenes ss.27(3) and 29(10) MLO · Whether the loan transaction is extortionate under s.25 MLO
Outcome: Defendant's appeal allowed in part: paragraph 4 of the Judge's order (delivery up of vacant possession of the Property) set aside, and paragraph 3 varied to grant the defendant leave to defend the plaintiff's claim for an order for possession of the Property (in addition to leave already given to defend any claim above HK$4,160,000). The rest of the appeal is dismissed. The plaintiff's claim for HK$4,160,000 with interest at judgment rate stands.
Cited by 17 cases · Cites 7 cases