Read the full judgment text of CACV 000142/2001 on BabelCite. This Court of Appeal judgment was delivered on 16 May 2001 before Wong JA, Le Pichon JA, Yuen J.
Money lending – Money Lenders Ordinance (Cap 163) – interpretation of 'effective rate of interest' – meaning of Schedule 2 – whether schedule applies where interest is expressed as a single constant rate – construction of s.2(1), s.2(2), s.18(2)(i), s.24 and s.25 – Court of Appeal jurisdiction over appeals from Master in Order 88 proceedings – consent requirement under O. 36, r. 1 of the Rules of the High Court – Second Legal Charge dated 15 June 1998 for $1.1 million with interest at $55,000 per month repayable six months later – whether Second Legal Charge unenforceable because effective rate exceeded 60% per annum under s.24(2) – first issue: whether the Court of Appeal had jurisdiction to entertain appeals from Master's orders where the parties' written consent to trial by a master was missing from the order – held: jurisdiction upheld after plaintiff obtained amendment of the July 1999 order to be by consent, curing the deficiency under O. 36, r. 1 – second issue: whether the effective rate under the Second Legal Charge exceeded 60% per annum, rendering the charge unenforceable under s.24(2) – held: no; the interest of $55,000 per month on a constant principal of $1.1 million was capable of being expressed as a single constant actual rate of 60% per annum, and Schedule 2 had no application – third issue: scope of Schedule 2 – held: Schedule 2 only applies where interest is not capable of being expressed as a single constant actual rate, e.g. where instalment repayments comprise both principal and interest, producing a hidden rate increase – court adopted construction of Lord Denning MR in Askinex Ltd v Green [1969] 1 QB 272 – the s.2(1) definition of 'effective rate' is qualified by 'unless the context otherwise requires' and, in context of s.18(2)(i) and the legislative purpose of ss.24 and 25 to strike down excessive rates, 'effective rate' must include the actual stated rate where one exists – both appeals allowed, preliminary issue ruling and August 2000 order set aside, case remitted to Court of First Instance for trial on the remaining s.25 extortionate transaction issue
Legal issues: Jurisdiction of Court of Appeal to hear appeals from Master's orders · Effective rate of interest under the Second Legal Charge and enforceability under s.24 MLO · Application of Schedule 2 to loans with a single constant interest rate
Outcome: Both appeals allowed. The Master Cannon ruling of 26 May 2000 holding the effective rate to be 66.38% and the order of 17 August 2000 entering judgment for the defendants were both set aside. The case was remitted for trial by a judge of the Court of First Instance to determine whether the transaction should be re-opened as extortionate under s.25 of the Money Lenders Ordinance.
Cited by 9 cases · Cites 1 case