Trillion Wide Credit Finance Ltd v. Ample Sky Holdings Ltd
Read the full judgment text of HCA 288/2019 on BabelCite. This High Court CFI judgment was delivered on 23 December 2022.
1. This trial involves 2 sets of related proceedings, ordered to be heard together:
Cited by 3 cases · Cites 6 cases
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HCA 288/2019 & HCA 288/2019 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO 288 OF 2019 ____________ BETWEEN
____________ HCMP 2203/2019 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE MISCELLANEOUS PROCEEDINGS NO 2203 OF 2019 ____________ BETWEEN
____________ Before: Hon Au-Yeung J in Court Date of Trial: 21 December 2022 Date of Judgment: 23 December 2022 _______________ J U D G M E N T _______________ A. INTRODUCTION 1.This trial involves 2 sets of related proceedings, ordered to be heard together:
2.Despite being served with the notice of today’s hearing, the bundles and opening submission of the Plaintiff, the Defendant has failed to appear. As I am satisfied as to service, I have proceeded to try these cases. B. FACTS 3.The Plaintiff was a licensed money lender under the Money Lenders Ordinance, Cap 163 (“MLO”). 4.The Plaintiff advanced 2 loans to the Defendant:
5.The 1st Loan Agreement contains a recital that a property and car park in Mainland China would be used as collateral (抵押品) to the 1st Loan. The 2nd Loan Agreement contains a recital which stated that a property known as “Flat A on the 16th [Floor] with Balcony and Utility Platform of High West, Hong Kong” (“the Property”) would be used as collateral to the 2nd Loan. 6.The 2 Loan Agreements contained common provisions:
7.The 1st Loan was remitted to China as directed by Mr Huang Ying Pin (director of the Defendant) and was treated as paid and lent to the Defendant. The 2nd Loan was advanced for the purposes of funding the purchase of the Property by the Plaintiff’s deposit into the account of Messrs. Lo & Lo, the conveyancing solicitors for the Defendant. 8.The Defendant has failed to repay any part of the Loans. 9.On 22 January 2019, the Plaintiff, via its solicitors, made a formal demand for repayment of the 1st and 2nd Loans. 10.On 29 January 2019, the Plaintiff applied to register the 2nd Loan Agreement at the Land Registry. Registration has been pending since. 11.On 22 February 2019, the Plaintiff issued the writ in the High Court Action to seek money judgment of HK$29 million. 12.On 28 November 2019, the Defendant commenced the HCMP Proceedings. C. THE DEFENCE 13.There is no dispute on pleadings that the Defendant had never repaid the Loans. The pleaded defences in the High Court Action and the Defendant’s case in the HCMP Proceedings are that:
14.The Plaintiff denies the Defendant’s version. D. THE EVIDENCE 15.The Plaintiff has called one witness, Ms Wong Oi Chun, Manager of the Plaintiff, who produced contemporaneous documents to prove its case. The Defendant has not filed any witness statement, or produced any documentary evidence. E. NO AGREEMENT ISSUE 16.The Plaintiff was a money lender between 18 March 2014 and 18 March 2015. This is proved by production of the original license. 17.Ms Wong was the person who attended to the execution of the 2 Loan Agreements. She had personally seen Mr Huang Ying Pin at the Plaintiff’s office to execute the Loan Agreements and apply the company seal of the Defendant. Ms Wong had taken copies of the identity documents of Mr Huang and gathered documents relating to the collaterals under the 2 Loan Agreements. 18.Ms Wong testified that the 1st Loan was remitted to Mr Huang in China who received it on behalf of the Defendant, although no documents have been produced. The 2nd Loan was given to Lo and Lo, solicitors, to enable the Defendant to complete the sale and purchase of the Property. There were documents concerning that Property transaction previously provided by Mr Huang to Ms Wong at or about the time the 2nd Loan Agreement was executed. 19.According to Ms Wong, the Loan Agreements were executed in duplicates with one set given to the Defendant (and the guarantors). 20.Ms Wong could not remember why the 2nd Loan Agreement was not registered in 2015 when it was executed. In 2015, her father (who beneficially owed the Plaintiff) and Mr Huang were business partners and were in good relationship. In 2019, however, her father lost contact with Mr Huang and that was why the Plaintiff sought to register 2nd Loan Agreement. Ms Wong had no idea why registration was withheld by the Land Registry. 21.The Defendant has nothing to contradict the Plaintiff’s case. I am satisfied from the evidence of Ms Wong that Mr Huang, on behalf of the Defendant, had executed the 2 Loan Agreements and the seal of the Defendant was properly applied. The Loans have been advanced to and received by the Defendants. The Plaintiff has proved its case and I find the facts in §§3-8 above to be established. F. DBS MORTGAGE ISSUE 22.DBS lent money to one Cheung Wing Holdings Ltd (owned by Ms Wong’s father) on the security of the Property (owned by the Defendant). The Mortgage was executed on 15 May 2015 by Ms Wong’s father on behalf of Cheung Wing Holdings Ltd and Mr Huang on behalf of the Defendant, in the presence of Ms Wong. The Mortgage had been redeemed on 12 January 2017. 23.I accept Ms Wong’s evidence. The Mortgage was executed by the Defendant. The Mortgage had nothing to do with the 2 Loan Agreements. There was nothing to suggest that the Defendant was in any way prejudiced by the Mortgage. The DBS Mortgage Issue does not constitute a defence to the Plaintiff’s claim. G. ILLEGALITY ISSUE 24.The pleaded defence on this aspect is as follows:
G1. Provisions of the MLO were not provided to the Defendant 25.This cannot be true because, according to Ms Wong a duplicated version of the Loan Agreements with a memorandum under MLO had been given to the Defendant after execution. 26.In any case, there is no pre-conception in favour of or against a money lender or a borrower. The key consideration is whether there was prejudice caused by the non-compliance: Strong Offer Investment Ltd v. Nyeu Ting Chuang (2007) 10 HKCFAR 529 at §20 per Chan PJ and §62 per Ribeiro PJ. 27.In the present case, the Defendant has not even pleaded prejudice, not to say prove it. 28.The details of the Loans have all been set out in the Loan Agreements and the Memoranda attached to them. There was nothing pointing otherwise than to the fact that the transactions were at arm’s length. Even if exercise of discretion conferred by section 18(3) of MLO is necessary, the Court does not see fit to bar the Plaintiff from enforcing the Loan Agreements for the alleged non-compliance. 29.In any event, insofar as the 2nd Loan was concerned, the Plaintiff was not regarded in law as a “money lender” because the 2nd Loan was made by the Plaintiff bona fide for the purchase of an immovable property (ie the Property) on the security of a mortgage of that Property: see MLO s. 2 for the definition of “money lender” and Schedule 1, Part 2, clause 4. Accordingly, the Plaintiff was simply not caught by the requirements to provide provisions of MLO to the Defendant. The alleged non-compliance cannot get off the ground with regard to the 2nd Loan Agreement. G2. Prohibition of Early Repayment 30.There is no substance is this complaint, because:
G3. Charge of Default Interest 31.The defence pleads that the rate of interest was increased by reason of default in payment. Such is levelled presumably with reference to the 5%[1] default rate per month under the Loan Agreements. 32.The defence has become academic because the Plaintiff no longer seeks to enforce the default interest. Given that the Loan Agreements were entered into between businessmen at arm’s length and not under extortionate circumstances, I do not see why the existence of the default interest rate should, in itself, bar the Defendant from enforcing the rest of the Loan Agreements. G4. Excess of Default Interest Rate 33.The defence pleads that the effective interest rate exceeded 60% (or 48%) per annum. This plea is unmeritorious because:
G5. A term for payment of costs, charges or expenses 34.The defence pleads that there was a term for payment of costs, charges and expenses incidental to the negotiations for the granting of the Loans or securing the repayment thereof. This attack presumably relies on s. 27 of MLO. 35.It is not clear which term of the 1st and the 2nd Loan Agreements the Defendant is relying on. In any event, the short answer is that there is no claim based on that unidentified term and there is no evidence that the Plaintiff had charged the same. Even if s.27 is somehow not being complied with, it would not invalidate the entire agreement: Hao Tian, Finance Company Limited v. Hung Yuk Ming & Anor [2020] HKCFI 465 at §97 per Ng J. This plea has no merit. 36.In summary, the Illegality Issue cannot stand. H. REGISTRABILITY ISSUE 37.The applicable principles concerning registrability are summarised in DHCJ Burns SC’s decision dated 16 November 2000 when he dealt with the Defendant’s application for a declaration of non-registrability in the HCMP Action. In essence:
38.There is evidence that the 2nd Loan Agreement created equitable interest in the Property:
39.Mr Lau, counsel for the Plaintiff, submits that whilst the terms in the 2nd Loan Agreement might be said to be rudimentary, they were cured by the default provisions in s. 51 and Schedule 4 of the Conveyancing and Property Ordinance, Cap. 219, which gave extensive powers to the Plaintiff as a mortgagee. Hence enforcement mechanism was available. 40.I have reservations about this argument as those default provisions only apply to a legal charge or equitable mortgage “by deed”, but the 2nd Loan Agreement was not by deed. However I do not need to come to any affirmative decision because this is not an action to enforce the security or section 51. 41.It is for the Defendant to satisfy the Court that the 2nd Loan Agreement is not registrable, but the Defendant has failed to. 42.In summary, no part of the Defendant’s case has merits. The Plaintiff has validly established liability and is entitled to judgment in the High Court Action. The originating summons should be dismissed. I. QUANTUM 43.Ms Wong has produced a repayment schedule for each of the Loans showing the amount due upon judgment based on the terms in §4 above. No default interest has been included. I accept the schedules and hold that the Defendant is liable to pay the Plaintiff:
J. CONCLUSION 44.I order as follows:
45.I also order, on a nisi basis, that costs should follow the event and be payable by the Defendant for both sets of proceedings, summarily assessed in the amount of HK$450,000. 46.I thank Mr Martin Lau for his assistance.
Mr Martin Lau, instructed by Gallant, for the Plaintiff in HCA 288/2019 and for the Defendant in HCMP 2203/2019 The Defendant in HCA 288/2019 and the Plaintiff in HCMP 2203/2019 was unrepresented and did not appear |
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