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Wu Han Rong v Chan Hor Yee Hilda

Judgment Cited authorities 2 Cited in Precedent Map Related
Vincent
Judgment Date18 December 2015
Year2015
Judgement NumberCACV135/2015
Subject MatterCivil Appeal
CourtCourt of Appeal (Hong Kong)
CACV135/2015 WU HAN RONG v. CHAN HOR YEE HILDA

CACV 135/2015

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 135 OF 2015

(ON APPEAL FROM HCA 1617 OF 2014)

_______________

BETWEEN
WU HAN RONG Plaintiff (Respondent)
and
CHAN HOR YEE HILDA Defendant (Appellant)

_______________

Before : Hon Cheung JA, Hon Yuen JA and Hon Poon JA in Court
Date of Hearing : 26 November 2015
Date of Judgment : 26 November 2015
Date of Reasons for Judgment : 18 December 2015

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REASONS FOR JUDGMENT
____________________________

Hon Poon JA (giving the Reasons for Judgment of the Court) :

A. INTRODUCTION

1. The plaintiff sued the defendant on 14 dishonoured cheques issued between January and April 2014 (“the CITIC Cheques”) for a total sum of HK$55,286,510.00. Upon the plaintiff’s application, the master granted summary judgment in her favour on 16 February 2015. By a decision dated 5 May 2015, Deputy High Court Judge Le Pichon dismissed the defendant’s appeal. She entered judgment for the plaintiff in the sum of HK$57,186,510.00, which is the correct total for the CITIC Cheques. The defendant then appealed to this Court.

2. On 26 November 2015, after hearing the parties, we dismissed the defendant’s appeal with costs. We also indicated that we would give our reasons in writing, which we now do.

3. The background facts may be summarized as follows.

B. BACKGROUND

4. The plaintiff had since at least 2011 been a client of Success International Bullion (HK) Ltd (“Success”), a subsidiary of Success Finance Group which specialized in providing precious metals trading services to investors. The defendant was then a senior vice president of Success and handled the plaintiff’s account. In or about 2012, the defendant established TYG Capital Management Ltd (“TYG”) as one of the founders and invited the plaintiff to invest in TYG. Apparently the plaintiff did so as evidenced by a receipt signed by the defendant for TYG dated 11 June 2014 acknowledging receipt on 25 February 2014 of a sum of US$150,000.00 from the plaintiff for investment in TYG (“the Acknowledgment”).

5. Between 23 September 2011 and 26 October 2013, the parties signed 12 appointment contracts (“the Appointment Contracts”) whereby the plaintiff appointed the defendant to invest in gold and other investments for limited periods between three to four months (“the Earlier Transactions”). Pursuant to the Appointment Contracts, the plaintiff provided the sums specified and the defendant guaranteed the returns at the percentage as stipulated, ranging from 30% to 35%. Typically, a small percentage of the return was payable at various monthly intervals with the balance of the return and the principal due at the end of the relevant period. The defendant gave the plaintiff one of more post-dated cheques as payments for the principals invested by the plaintiff and the returns guaranteed by her. Those post-dated cheques were dated with dates falling within the period between 23 October 2011 and 26 January 2014. All the post-dated cheques issued under the Earlier Transactions were duly honoured on presentation.

6. It is not clear from the evidence as to which of Success and TYG had the plaintiff invested in for each of the Earlier Transactions. But it does not matter as it is common ground that the dealings between the parties, be it guarantees for investments on the plaintiff’s case, or loans on the defendant’s case, is personal.

C. PROCEEDINGS BELOW

C1. The parties’ respective case

7. According to the plaintiff, because of the good results yielded by the Earlier Transactions, she continued to invest and kept giving the defendant more money for investments. Her case is that between January and February 2014, she placed various sums with the defendant for investments into gold and IPO subscriptions and in return, the defendants gave her the CITIC Cheques for the amounts of the principal that she had invested plus the returns guaranteed by the defendant in advance. But unlike the cheques for the Earlier Transactions, the CITIC Cheques were dishonoured upon presentation.

8. The parties signed a結算確認書 dated 10 June 2014 (“the Settlement Confirmation”) in which some particulars of the transactions pertaining to the CITIC Cheques were recorded.

9. The defendant did not deny that the plaintiff had advanced sums to her in the course of their dealings. Nor did she deny that the CITIC Cheques were all dishonoured upon presentation. However, she alleged that the transactions underlying the CITIC Cheques were in fact loans advanced to her for her investment purpose. They were illegal loans as the interests charged by the plaintiff far exceeded the statutory limit under the Money Lenders Ordinance, Cap 163 (“the Ordinance”). The defendant also alleged that she issued the CITIC Cheques to the plaintiff and signed the Settlement Confirmation under duress. Finally, the defendant alleged that the CITIC Cheques were delivered conditionally.

C2. The Judge’s judgment

10. All the points relied on by the defendant as defence were roundly rejected by the learned Judge. She found the defendant’s story that the transactions underlying the CITIC Cheques were loans incredible. She had no hesitation in rejecting it as it defied belief. She dealt with, at some length, the submissions of Mr Ho, counsel for the defendant, on the point of law, namely, whether the underlying transactions could be characterized as loans as a matter of law. She analyzed the case law carefully and applying it to the evidence before her, she found that the defendant had failed to demonstrate on the evidence that such a law point arose. She also rejected the defendant’s allegation that there was duress or conditional delivery for the CITIC Cheques.

D. GROUNDS OF APPEAL

11. The defendant raised four grounds of appeal before us.

D1. The first ground

12. The first ground of appeal complained that the Judge erred in holding that there was no triable issue on whether the CITIC Cheques formed part of an illegal loan transactions under the Ordinance.

13. Mr Ho first submitted that in determining whether a particular transaction is a loan, the substance rather than its form must be looked at. The defining legal characteristic of a loan, as compared to other forms of investment, is that it is risk-free to the lender. On the one hand, the lender assumes no capital risk in relation to the principal amount, and it is to be compensated (if at all) according purely to the period of time in which the lender was deprived of the use value of the principal amount. On the other, the borrower assumes the obligation to make repayment of the principal sum in any event without having regard to any extraneous circumstances.

14. Mr Ho next submitted that the returns of profits guaranteed by the defendant were in fact interest payments. He placed heavy reliance on Nicholas Pike v The Commissioners for Her Majesty’s Revenue and Customs [2014] EWCA Civ 824 (CA) when Romer LJ said at [18] :

“…It was possible to identify certain characteristic of an amount payable by way of interest. First, it is calculated by reference to an underlying debt. Second, it is a payment made according to time, by way of compensation for the use of money. Third, the sum payable accrues from day to day or at other periodic intervals. Fourth, whilst the payment so accrues, it does not, in order for it to be interest, have to be paid at any intervals: it is possible for interest not to become payable until the principal becomes payable … Fifth, what the payment is called not determinative; the question must always be one as to its true nature. Sixth, the fact that an interest payment may be aggregated with a payment of different nature does not ‘denature’ the interest payment…”

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