Lam Yee Hung (林義雄) v. Chinachem Charitable Foundation Limited (華懋慈善基金有限公司)

FAMV No. 31 of 2026

[2026] HKCFA 20

IN THE COURT OF FINAL APPEAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO. 31 OF 2026 (CIVIL)

(ON APPLICATION FOR LEAVE TO APPEAL FROM

CACV NO. 124 OF 2023)

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DETERMINATION

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Mr Justice Ribeiro PJ :

1.At the hearing, we granted leave to appeal to the applicant as set out below, indicating that we would hand down our Determination in writing, which we now do. 

2.In 2009, the applicant (“Lam”) deposited a total of HK$42.85 million into the bank account of the respondent (“CCF”). Lam sued for repayment, alleging that the money was borrowed by CCF to finance its probate litigation against one Tony Chan.  CCF resisted the claim alleging that it was an unconditional donation.  DHCJ Simon Leung,[1] rejected that defence.  He found that there was an oral loan agreement for the sums to be repayable on demand after the conclusion of the probate action[2] with interest at “the maximum rate permitted by the law”.[3]  He found that by this stipulation, the parties intended an interest rate of 48%.

3.The Court of Appeal[4] accepted the Judge’s finding that it was orally agreed that the rate of interest should be at “the maximum rate permitted by the law” but set aside his finding as to the 48% rate, holding that this was unsupported by the evidence.[5]  The Court of Appeal held instead that the parties should be taken to have agreed an interest rate which, objectively ascertained, was 60% taking into account the provisions of the Money Lenders Ordinance (“MLO”).[6]

4.The presumption under MLO section 25(3) that it was an extortionate transaction was therefore held to have been triggered (since an interest rate above 48% was involved) and it was ordered that certain issues should consequently be remitted to the Judge for determination.

5.Both parties applied to the Court of Appeal for leave to appeal to this Court.  CCF was granted leave regarding three of the five questions put forward and no further issues presently arise in respect thereof.

6.Lam sought leave to appeal on two questions, namely:

Question P1 (“QP1”) – when a loan agreement by its express term provides for “maximum interest permissible by the laws of Hong Kong”, should the court apply the principles of contractual construction (cf Eminent Investments (Asia Pacific) Limited v DIO Corporation (2020) 23 HKCFAR 487, §§43, 45; Sinoearn International Ltd v Hyundai-CCECC Joint Venture (A Firm) [2012] 1 HKLRD 823, §§25, 27) to construe the numerical interest rate that the parties objectively intended by that language in its context?

Question P2 (“QP2”) – on a true and proper construction of Part IV of the Money Lenders Ordinance, Cap 163:

(a)     whether, in circumstances where s 25(1)(a) applies but s 24(1)-(2) and the presumption of extortion under s 25(3) do not, the court should determine if the transaction is extortionate for the purposes of s 25(1)(b) (by considering the elements in s 25(2) and the factors in s 25(4)-(6)); and

(b)     whether, in reopening a loan transaction under s 25(1), the court can reduce the outstanding principal?

7.The Court of Appeal granted leave only on QP1.  Lam renewed his application before the Appeal Committee, seeking leave to appeal on both QP1 and QP2.

Is leave needed for QP1?

8.A preliminary question that initially arose was whether Lam requires leave to appeal regarding both questions or only on QP2 since the Court of Appeal had granted leave on QP1.

9.The answer, provided by Hong Kong Island Development Ltd v The World Food Fair Ltd,[7] is that leave in respect of both questions is needed:

“ ... an applicant may advance say, grounds A, B and C as matters which ought to be submitted to the Court for decision pursuant to s.22(1)(b) and the Court of Appeal may grant leave only in respect of say, ground C. If the applicant wishes to have grounds A and B - and even an additional or alternative ground D - referred to the Court, the Appeal Committee may entertain a fresh application on the footing that a sufficient refusal or absence of leave has been established (by reason of the Court of Appeal’s rejection of grounds A and B) for the purposes of ss.23(1) and 24(3). However, the application thus made to the Appeal Committee is an entirely fresh application. The Appeal Committee has full discretionary powers to deal with it, including the power to reject the entire application either after an oral hearing or, where appropriate, on the papers pursuant to r.7 of the Hong Kong Court of Final Appeal Rules (Cap 484, Sub.Leg.).”[8]

10.That principle was reiterated in Yim Tin Fook v Yu Chor Lai and others:[9]

“On a renewed application for leave, the Appeal Committee has full discretionary power to consider it afresh, including the power to reject the entire application. Further, if the Appeal Committee deems fit to grant leave on such application, we have the power to direct the parties to address the Court at the substantive appeal on points not raised in the application which require resolution for the just and effective disposal of the appeal.”[10]

11.While Ms Frances Lok SC, appearing for Lam, had initially sought to distinguish the aforesaid authorities, she was content to proceed at the hearing on the basis that leave was required regarding both questions. 

12.She was right to do so.  Where several questions are put forward in a leave application, the Appeal Committee considers those questions as a whole since their inter-relationship may influence the decision whether or on what terms to grant leave.  The Appeal Committee is not bound by the Court of Appeal’s grant of leave.  It has power to revoke leave previously granted and to decide points necessary for the just and effective disposal of the appeal whatever might have been the scope of the parties’ application or the Court of Appeal’s order.

As to QP1

13.In the present case, we are satisfied that leave should be granted afresh in relation to QP1 (in suitably simplified terms). 

14.The Court of Appeal said that its conclusion that the parties intended a 60% interest rate represented the “logical conclusion” of the Judge’s finding that the interest rate should be “the maximum rate permitted by the law”.[11]  QP1 questions that approach to ascertaining the parties’ contractual intention, raising a point of the requisite importance which is reasonably arguable.  Mr Bernard Man SC, appearing for CCF, did not seriously challenge the grant of leave on QP1.    

As to QP2

15.At the hearing, clarification was sought from Ms Lok SC as to her objectives in putting forward QP2.  It became evident that her apprehensions related principally to the Court of Appeal’s approach to the remitter it had ordered on the footing that the parties had agreed to a 60% interest rate.[12]

16.Mr Man SC made it clear that CCF’s position was to defend the Court of Appeal’s conclusion that a 60% interest rate had been intended, thus necessitating the ordered remitter which, he submitted, would enable the court to reconsider the transaction at large.  However, he stated that if on appeal to this Court the Judge’s 48% rate were to be restored, CCF did not seek to appeal such an outcome nor seek a remitter in that eventuality.

17.We considered a reformulation of QP2 prepared by Ms Lok SC and a possible question as to the scope of a possible remitter suggested by Mr Man SC. 

18.Taking the foregoing matters into account, we make the following Orders, namely:

(a)     That the applicant Lam do have leave to appeal in respect of the following question (which simplifies QP1), namely:

“When an oral loan agreement is made involving express agreement for payment of ‘maximum interest permissible by the laws of Hong Kong’, what principles should the Court apply to ascertain the numerical interest rate intended by the parties?” (Question 1)

(b)     We refuse leave on QP2.

(c)     On the “or otherwise” basis, we grant leave for arguments to be raised as to the proper scope and terms of any remitter that may be ordered.

19.These appeals will be listed for hearing on 10 November 2026.

Ms Frances Lok SC and Mr Kwan Ping Kan, instructed by Haldanes, for the Plaintiff (Applicant)

Mr Bernard Man SC and Ms Natalie So, instructed by Chiu, Szeto & Cheng, for the Defendant (Respondent)