Yardley Finance Ltd v. Rong Xiuli
Read the full judgment text of HCA 890/2024 on BabelCite. This High Court CFI judgment was delivered on 11 September 2025.
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.
Cited by 2 cases · Cites 10 cases
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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 ________________________ BETWEEN
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________________________ DECISION ________________________ 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:-
6.In 2016, the Plaintiff as borrower and the Defendant as lender entered into two loan agreements (the “2016 Loan Agreements”):-
7.All the above Agreements were in simplified Chinese. 8.The Defendant drew down as follows:-
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:-
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:-
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:-
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:-
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:-
37.For the first stage:-
38.For the second stage:-
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:-
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:-
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:-
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:-
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:-
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:-
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:-
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:-
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:-
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.
Mr William Wong SC, leading Mr Martin Lau and Ms Valerie Kwok, instructed by Y. S. Lau & Partners, for the Plaintiff Mr Kin Lau, leading Mr Hui Ho Ming, instructed by Cheung Yan & Associates, for the Defendant |
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