Chan Fun Kwong v. Choi Chak Man and Others

CACV 136 /2024, [2026] HKCA 1116

On appeal from [2024] HKCFI 722

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 136 OF 2024

(ON APPEAL FROM HCA NO 862 OF 2022)

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J U D G M E N T

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Hon Kwan VP (giving the Judgment of the Court):

1.This is the application made by the 1^st defendant (“D1”), 2^nd defendant(“D2”) and the 4^th defendant (“D4”) for leave to appeal to the Court of Final Appeal against our judgment dated 13 February 2026, for which reasons were handed down on 2 March 2026 ([2026] HKCA 357) (“CA’s Reasons”). Unless otherwise stated, the terms and expressions used in the CA’s Reasons are adopted.

2.By our judgment, we dismissed the appeal brought by D1, D2 and D4 against the judgment of Deputy High Court Judge KC Chan (“Judge”) dated 15 March 2024 ([2024] HKCFI 722), which in turn dismissed D1 to D4s’ appeal against Master KW Wong’s order granting summary judgment to the plaintiff (“P”).

3.The parties concerned have lodged written submissions in accordance with Practice Direction 2.1.  Having considered the submissions and papers, it is appropriate to determine the present application on paper without an oral hearing.

Notice of Motion

4.D1, D2 and D4 have, by their Notice of Motion dated 13 March 2026, set out two questions in their application for leave to appeal to the Court of Final Appeal.  They rely upon section 22(1)(b) of the Hong Kong Court of Final Appeal Ordinance (Cap 484) and contend that these two questions are of great general or public importance and ought to be submitted to the Court of Final Appeal for determination:

(1)     Whether a loan can be constituted by a notional discharge of an antecedent indebtedness between parties that are different than those to the loan notwithstanding that there was no actual payment by the lender and receipt by or any advancement of funds to the borrower under the loan (“Question 1”); and

(2)     Whether, in a claim brought by a lender on the basis of breach of a covenant by deed to repay a loan, it is a requirement for the lender to prove an executed consideration, namely, that funds had actually been paid by the lender and received by or advanced to the borrower by way of the alleged loan sought to be repaid (“Question 2”).

5.In relation to Question 1, D1, D2 and D4 contend that it should be answered in the negative.  Question 1 seeks to advance some of the arguments discussed in Ground 2 of the CA’s Reasons (§§59 to 66).  As for Question 2, it is contended that it should be answered in the affirmative. This question raises the arguments addressed in Ground 4 of the CA’s Reasons (§§72 to 79).  In the Notice of Motion, no reliance is placed upon the “or otherwise” limb of section 22(1)(b).

Discussion

6.Under section 22(1)(b), an appeal shall lie to the Court of Final Appeal at the discretion of the Court of Appeal or the Court of Final Appeal in any civil cause or matter if, in the opinion of the Court of Appeal or the Court of Final Appeal (as the case may be), the question involved in the appeal is one which, by reason of its great general or public importance, or otherwise, ought to be submitted to the Court of Final Appeal for decision.  If leave to appeal is to be granted on a discretionary basis, reasonably arguable grounds for achieving success on the proposed appeal must be demonstrated: §36 of Chinachem Charitable Foundation Ltd v Chan Chun Chuen (2011) 14 HKCFAR 798.

7.The facts of the present case and our reasons for dismissing the appeal will not be repeated.  Before turning to Questions 1 and 2, we would highlight the following, taken from §51 and §77 of the CA’s Reasons:

(1)     In this action, P sued D1 to D4 for breach of the 2021 Deed, based on a common law action on a debt.  The 2021 Deed was a document admittedly executed by D1 to D4;

(2)     In the 2021 Deed, D1, D2 and D3 acknowledged that they had entered into the 2019 Loan Agreement, under which P lent D1 and D2 the Loan.  D1 to D4 also acknowledged that there has been a failure to repay the Loan, and that the Loan and the Balance of the S&P Payment with interests were still owed to P;

(3)     By the 2021 Deed, D1 to D4 requested P for a further extension of time, to repay the aforesaid amounts by 1 May 2022.  In particular, D1 and D2 undertook to do so, whilst D3 and D4 jointly and severally guaranteed such liabilities; and

(4)     D1 to D4 have not pleaded nor alleged the existence of any vitiating factor to challenge the 2021 Deed.  D1 to D4 are therefore legally bound by the 2021 Deed executed by them.

Question 1

8.We agree with Mr Anson Wong SC for P that Question 1 does not arise from the issues decided in the Court of Appeal.

9.As set out in §7(1) above, P’s claim in these proceedings is based solely upon breach of the 2021 Deed.  It is not based on the Loan, nor is it based on the 2019 Loan Agreement – which were only of background relevance (as stated in §§14 and 54 of the CA’s Reasons).  By the 2021 Deed, D1 and D2 undertook to repay inter alia the Loan to P by 1 May 2022, and D3 and D4 jointly and guaranteed such liabilities. 

10.In the circumstances, Question 1, by which D1, D2 and D4 ask how a loan (which, in the present case, is the Loan from the 2019 Loan Agreement) can be constituted or how the consideration of a loan agreement can be constituted does not arise.  As we have said in §§52 and 62 of the CA’s Reasons (whereby we addressed arguments that the Loan was never released or advanced to D1 and D2^[1]; and arguments as to the constitution of a valid loan^[2]), such a question is irrelevant to the undertaking given by D1 and D2 to repay under the 2021 Deed, which takes effect without consideration.

11.It is not necessary to consider other points raised by Mr Wong in opposition, namely, there is the concurrent finding of fact by the Court of Appeal and the Judge that the Loan was advanced to D1 and D2 by P, who had used it to pay to himself and Lee to discharge Rensino’s 2^nd Tranche Payment; and the finding by the Court of Appeal that as Lee and P were joint creditors, P’s confirmation on oath that the Loan was released and used to settle the 2^nd Tranche Payment would be sufficient to discharge Rensino’s liability.

12.Nor do we need to deal with the additional authorities cited by Mr Jeff Yau for D1, D2 and D4 in support of his contention in Question 1, as they are of no relevance.

13.As such, Question 1 is hypothetical and it is inappropriate to exercise our discretion to grant leave to the Court of Final Appeal on a hypothetical question^[3].

Question 2

14.Contrary to Mr Yau’s arguments that Question 2 is a question of law of great general or public importance (because there does not seem to have been an opportunity for the Court of Final Appeal to clarify the juridical basis for the rule that no consideration is required for a deed and whether the rule admits of any exception), we do not consider it to be such a question.  In any event, we do not think it reasonably arguable.

15.As we have held in §§52 and 62 of the CA’s Reasons, the liability of D1 and D2 to repay under the 2021 Deed takes effect even without consideration since their undertaking to repay was given by way of deed.  It is a clear and well-established rule that a contract contained in a deed is good even against a party standing to derive no advantage from it – as we have held in §75 of the CA’s Reasons. 

16.Question 2 seeks to question the well-established rule.  But a question of great general or public importance does not arise simply because a party desires a well-established principle to be revisited: §6 of Re Qin Jun [2018] 5 HKLRD 562.

17.D1, D2 and D4’s contention under Question 2 that an exception^[4] should be made as regards common law actions for debts brought on deeds (and to require proof of executed consideration), is not arguable and not supported by any authority, despite the citation of additional authorities by Mr Yau.

18.Mr Yau has referred to §258 of Halsbury’s Law of England (2023), Vol 32.  Nothing therein provides support for his contention of exceptions to the established rule, whether of proof of executed consideration or otherwise.  Rather, it reinforces the well-established rule stated above.  The relevant part reads as follows:

“Where a deed makes a gratuitous assurance of any property or right, or expresses in the form of a contractual obligation a gratuitous promise, it is not open to the party who has so made the assurance or promise to aver or prove that he received nothing by way of consideration in return therefor, and the deed will take effect according to its terms notwithstanding the absence of any consideration.”

19.Similarly, Mr Yau’s reference to Morley v Boothby (1825) 3 Bing 107, 130 ER 455 at 456 does not provide any support for his contention.  The material passage is as follows:

“The common law protected men against improvident contracts. If they bound themselves by deed, it was considered that they must have determined upon what they were about to do, before they made so solemn an engagement; and therefore it was not necessary to the validity of the instrument, that any consideration should appear on it. …”

20.We do not propose to discuss section 3(3) of the Consumer Rights Act 2015 enacted by the UK Parliament cited by Mr Yau, as we fail to see the relevance of it to his contention.

21.D1, D2 and D4’s continued reliance upon Young v Queensland Trustees Ltd (1956) 99 CLR 560 and §§81 to 82 of Big Island Construction (HK) Ltd v Wu Yi Development Co Ltd (2015) 18 HKCFAR 364does not assist them in any way.  As we have stated in §§72 to 74 and 79 of the CA’s Reasons, they are quite simply irrelevant and provide no support for their contention.

22.Similarly, Mr Yau’s reliance upon Commentaries on the Laws of England^[5] to contend that a contract of debt is distinct from covenants found in deeds (such that there exists an exception to the rule that a deed does not require proof of consideration), is likewise contrived.  The reference material does not assist him.  At §153 of the Commentaries, it is stated that a debt is “a sum of money due by certain and express agreement”and “The non-payment ofthese is an injury, for which the proper remedy is an action of debt, to compel the performance of the contract and recover the specified sum due.  This is the shortest and surest remedy; particularly where the debt arises upon a specialty, that is, upon a deed or instrument under seal.”  This is apposite to the present case, as set out in §§7(1) and (3) above.

23.D1, D2 and D4 further rely upon the passage in Chitty on Contracts (36^th Edition), Vol 1, §1-131 (quoted in §75 of the CA’s Reasons), and submit that the word “ordinarily” (as underlined below^[6]) implies exceptions are contemplated.  We do not accept this argument.  That passage in full reads as follows:

“Generally speaking, as will be seen later in detail, the law does not enforce gratuitous promises but instead requires a certain reciprocity for the creation of a ‘simple’ contract, this requirement being expressed through the rules gathered under the heading of the doctrine of consideration. However, in contracts contained in a deed no such reciprocity is ordinarily required, the rule being that a contract contained in a deed is good even against a party standing to derive no advantage from it. This means that the common law actions of debt (for a promised sum of money) or damages (for failure to perform promises more generally) are available to the person for whose benefit they are expressed. On the other hand equity never favoured voluntary transactions even if they were contained in a deed, and refused to grant its special remedies in cases where these were without consideration. So it has been laid down that specific performance will not be decreed of a contract contained in a deed which is entirely without consideration. …”

24.Apart from the word “ordinarily” in the above passage, D1, D2 and D4 have not pointed to any other passage (whether in Chitty on Contracts or otherwise)to support their contention that the exception envisaged by them exists.  We agree with Mr Wong that the use of the word “ordinarily” in the aforesaid passage in Chitty on Contracts does not support D1, D2 and D4’s contention at all.  Rather, it is clear from the entire passage quoted that the word “ordinarily” is used to contrast the principle in equity that equity never favoured voluntary transactions even if they were contained in a deed, and may refuse to grant its special remedies. That is completely different from a common law action of debt based on a deed, with which we are concerned in the present case.

Disposition

25.For the reasons above, we dismiss the Notice of Motion.

26.There is no reason to depart from the general rule that the costs of the application should follow the event.  P has filed a statement of costs for this application, totalling $336,694.  Taking a broad-brush approach, we summarily assess P’s reasonable costs of this application at $276,694. 

Mr Anson Wong SC and Mr Tyrone Tang, instructed by T K Tsui & Co, for the Plaintiff (Respondent)

Mr Jeff Yau, instructed by Chiu Liang & Co, for the 1^st, 2^nd and 4^th Defendants (Appellants)