GAIN EAST INVESTMENT LTD v. CHAN PO WING

CACV 8/2020 & CAMP 55/2020 (Heard together) [2022] HKCA 156 CACV 8/2020 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF APPEAL CIVIL APPEAL NO 8 OF 2020 (ON APPEAL FROM HCA NO 2211 OF 2015) ____________ BETWEEN GAIN EAST INVESTMENT LIMITED Plaintiff (東盈投資有限公司) and CHAN PO WING (陳寶榮） Defendant ____________ CAMP 55/2020 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF APPEAL MISCELLANEOUS PROCEEDINGS NO 55 OF 2020 (ON AN INTENDED APPEAL FROM HCA 2211 OF 2015) ____________ BETWEEN GAIN EAST INVESTMENT LIMITED Plaintiff (東盈投資有限公司) and CHAN PO WING (陳寶榮） Defendant ____________ (Heard together) Before: Hon Yuen, G Lam and Chow JJA in Court Date of hearing: 3 December 2021 Date of Judgment: 20 January 2022 ___________________ J U D G M E N T ___________________ Hon G Lam JA (giving the Judgment of the Court): This is our decision following the hearing of (1) the defendant’s application for leave to file a supplementary notice of appeal out of time; (2) the plaintiff’s application to file an additional affirmation in light of the supplementary notice of appeal; (3) the defendant’s appeal against the summary judgment entered against him by Deputy Judge M K Liu (“Judge”); and (4) the defendant’s application for leave to appeal from the Judge’s decision on costs and post-judgment discovery and, if leave is granted, the appeals themselves. Background The plaintiff was at all material times a company that carried on business as a money lender in Hong Kong. The defendant was the owner of a flat in Grand Dynasty View, Classical Gardens Phase IV, Tai Po, New Territories (“Property”), as well as the sole shareholder and director of two companies. As at early March 2013, the defendant owed debts to three financial institutions, namely, HSBC, UA Finance, and SHK Finance, secured by a first, second and third mortgage on the Property respectively. It is not in dispute that by way of refinancing, on 25 March 2013, the defendant signed a loan agreement to borrow $1.9 million from the plaintiff (“Loan Agreement”) and executed a second mortgage of the Property as security in favour of the plaintiff (“Second Mortgage”). Both documents were prepared by the solicitors firm, Tang, Wong and Cheung (“TWC”). The term of the loan was 1 year. The rate of interest was 30% per annum, or 2.5% per month. Monthly interest in the sum of $47,500 was to be paid on the 25th day of each month starting from 25 April 2013. The principal of $1.9 million was to be repaid in full on 25 March 2014 together with the last instalment of interest of $47,500. According to the defendant, the loan from the plaintiff was arranged through an intermediary, Mr Tom Sze (“Sze”), a manager of another money lender called Billion Step Investments Ltd (“Billion Step”). Sze told the defendant that (i) no introduction fee would be charged; (ii) the loan document and mortgage would not be registered in the Land Registry; (iii) after UA Finance and SHK Finance were repaid, HSBC would accept an application by the defendant for re-mortgaging the Property at a lower interest rate. The defendant said that on the day when he signed the documents, an employee of the plaintiff also told him that neither the loan document nor the mortgage would be registered in the Land Registry. It was based on these representations that the defendant decided to borrow money from the plaintiff at a higher rate than what he was paying on the loans from UA Finance and SHK Finance. The defendant pleaded in his Defence that after signing the documents, he was given to understand that, of the loan amount of $1.9 million: (a) a $1.3 million cheque was drawn to pay UA Finance; (b) a $400,000 cheque was drawn in favour of TWC to discharge the indebtedness to UA Finance with the remainder to be returned to the defendant; and (c) $200,000 was paid to Sze in banknotes as introduction fees on 25 March 2013 at the office of TWC. After they left TWC’s office, the defendant asked Sze to hand over the sum of $200,000 but Sze refused. In his affirmation, the defendant stated that $200,000 out of the loan proceeds had been paid to Sze as introduction fees and $9,500 was paid to TWC as legal fees, and the defendant had therefore never had the benefit of these 2 sums. In response, the plaintiff contended that Sze did not represent the plaintiff and it was not privy to the dealings between the defendant and Sze. The plaintiff did not pay Sze any fees. The plaintiff admitted that $9,500 was paid to TWC as legal fees and, because of the provisions of section 27(3) of the Money Lenders Ordinance (Cap 163) (“Ordinance”), the plaintiff was prepared to reimburse the defendant for that amount by deducting it from the claim. From the contemporaneous documents it can be seen, contrary to what the defendant alleged he was given to understand at the time, that of the loan amount of $1.9 million, $1.5 million was advanced through and disbursed by TWC as follows: redemption money paid to SHK Finance $101,292 legal costs for preparing the discharge of the third mortgage of SHK Finance $2,500 redemption money paid to UA Finance $1,304,368 legal costs for preparing the discharge of the second mortgage of UA Finance $3,000 registration fee $450 TWC’s own fees for preparing the Loan Agreement and Second Mortgage $9,500 sum paid to the defendant by cheque dated 11 April 2013 $78,890 Total $1,500,000 The principal factual dispute raised by the defendant relates to the remainder of the loan, in the sum of $400,000. As mentioned above, the defendant’s case is that $200,000 was paid to Sze as introduction fees (apparently implicitly accepting that the defendant himself received the remaining $200,000). The plaintiff, in contrast, says that the whole sum of $400,000 was “issued at the Defendant’s instruction the receipt of which the Defendant had acknowledged”. The plaintiff produced in evidence (i) a copy of a cash cheque for $400,000 dated 25 March 2013 said to represent the advance of that sum (“Cash Cheque”), (ii) its bank statement showing that the Cash Cheque was presented and paid on 25 March 2013, and (iii) a receipt in Chinese signed by the defendant (“Receipt”) stating: “ 茲收到東盈投資有限公司現金四拾萬元正 (HK$400,000.00)” in English translation: “Hereby received from Gain East Investments Ltd cash of four hundred thousand dollars (HK$400,000.00)” The defendant did not repay the principal of the loan as such but the documents show, and there is now no dispute, that the defendant had paid the monthly interest of $47,500 for the 12 months during the term of the loan (albeit somewhat later than the due dates), another five sums of $47,500 each from May to September 2014, two sums of $10,000 each in December 2014 and January 2015, and six sums of $5,000 each from March to July 2015. These 25 payments, each made by a cheque of the defendant or one of his companies, total $857,500. The proceedings below The plaintiff commenced the action below in September 2015. The defendant filed his Defence in December 2016. On 11 June 2018, the plaintiff filed its Reply as well as a summons for summary judgment. In September 2019, Master J Wong granted the defendant unconditional leave to defend. On appeal by the plaintiff, on 17 December 2019, the Judge gave his decision (“Decision”) allowing the appeal, giving summary judgment in the plaintiff’s favour, and making an order nisi awarding costs to the plaintiff. The reasons given by the Judge for his Decision, rejecting the various matters raised by the defendant in his Defence or affirmations, may be broadly summarised as follows: The defendant has not put forward any evidence, let alone believable evidence, why the court should not attach weight to the Receipt. There is no reason why the defendant should not be bound by the Receipt. The defendant’s allegation that someone in the office of TWC gave a pile of banknotes to Sze is incompatible with the Cash Cheque and the Receipt and is not believable. There is no believable evidence showing that in respect of any matter relating to the Loan Agreement and the Second Mortgage, Sze was acting on behalf of the plaintiff in any way. The alleged representations by Sze, even if made in fact, had nothing to do with the plaintiff. The defendant’s allegation that an employee of the plaintiff told him the documents would not be registered in the Land Registry is unbelievable. Even if that representation was made, it is unbelievable the defendant would have believed or relied on it. The defendant’s argument that he should not be bound by the documents because he did not know their true contents and effect has no merit at all. It is unbelievable that the defendant did not receive the Loan Agreement (which included the memorandum required under section 18(1) of the Ordinance). The fact that the Loan Agreement was made in TWC’s office did not contravene the Ordinance. Despite the non-provision of the summary of the provisions in Parts III and IV of the Ordinance to the defendant (in breach of section 18(1)(b)), it would be inequitable if the plaintiff was not allowed to enforce the Loan Agreement given that the defendant had received the entire loan for his benefit (except the sum of $9,500). The discretion under section 18(3) would therefore be exercised in favour of enforcement. As to the sum of $9,500 paid to TWC, the plaintiff had conceded it. The defendant could not refuse to repay the loan and interest merely because of the plaintiff’s breach of section 27 in that regard. Although the plaintiff had not produced in evidence a money lender licence valid as at 25 March 2013, it had produced the endorsement dated 7 August 2012 issued under section 15(4) of the Ordinance which allowed the plaintiff to transfer its business from the premises originally specified in its licence to new premises. There was sufficient evidence showing the plaintiff was a licensed money lender at the time. Even if the court was not so satisfied, the discretion under the proviso to section 23 should be exercised in favour of the plaintiff by upholding the Loan Agreement. Interest should be awarded in the manner submitted by the plaintiff’s counsel, there being no dispute from the defendant’s counsel. The substantive order made by the Judge required the defendants to pay (i) the outstanding balance of the loan in the sum of $1,726,677.82; (ii) interest on the sum of $1,726,677.82 at 30% per annum from 25 March 2013 to 25 March 2014; and (iii) interest on the sum of $1,726,677.82 at judgment rate from 26 March 2014 until full payment. Subsequently, the defendant and the plaintiff took out summonses to vary the costs order nisi. The defendant also took out a summons seeking discovery from ICBC of the bank’s copy of the Cash Cheque and information concerning the identity of the person who cashed it. The Judge dealt with these applications on the basis of written submissions. On 6 April 2020 he gave his decision on costs, refusing to make no order as to costs pending the defendant’s appeal, as sought by the defendant, and granted the plaintiff’s application for variation by awarding costs to the plaintiff on the solicitor and own client basis. On the same date, the Judge handed down his decision dismissing the defendant’s application for discovery on the ground that the first and second of the Ladd v Marshall conditions would not be satisfied. On 18 May 2020, the defendant applied, inter alia, for leave to appeal out of time against the Judge’s decisions on costs and discovery. The applications were dismissed by the Judge on 2 June 2020. The proceedings in this court The defendant’s Notice of Appeal in this court was reamended on 24 July 2020. There are three grounds of appeal raised in that document which may broadly be summarised as follows: The Judge erred in failing to consider that the question whether the defendant did receive the sum of $400,000 was in serious dispute. He placed excessive reliance on the Receipt. The defendant should have an opportunity of obtaining evidence in relation to the Cash Cheque. On the basis the defendant did not receive $400,000, there was fraud and unconscionable conduct on the plaintiff’s part by depriving him of that sum but charging interest on the entire $1.9 million. Interest beyond 25 March 2014 ought to be charged on the basis of the loan then outstanding and not on $1,726,677.82. Further, the contractual interest at 30% per annum for the period from 25 March 2013 to 24 March 2014 had been paid by the defendant on divers dates up to April 2014. The principal had been repaid to the extent of $287,500 or more from May 2014 to July 2015, and had therefore been reduced to $1,612,500 or less. The judgment was wrong as regards the amount of the outstanding loan, in requiring payment of contractual interest at 30% per annum, and also as regards the commencement date of interest at judgment rate. In deciding whether to grant relief under the proviso to section 23 of the Ordinance, the court should consider all the circumstances of the case. This provides another reason why there ought to be a trial. In September 2020, the plaintiff filed a respondent’s notice. The plaintiff contends that the Judge’s order in relation to interest should be varied to an order that the defendant do pay outstanding interest on the loan up to 21 November 2018 in the sum of $529,930.96 and there be interest on the outstanding principal of $1,726,677.82 at judgment rate from 22 November 2018 until full payment. The defendant contends that this part of the respondent’s notice amounts to a cross-appeal out of time and that the requisite leave to appeal has not been obtained. In addition, by its respondent’s notice, the plaintiff seeks to uphold the Decision on the ground that a substantial part of the principal had been paid out to third parties and the defendant had affirmed the contract by making repayments up to 6 July 2015, as a result of which he could no longer avoid the contract as pleaded in his Defence. Under Order 59 rule 7(1)(b) of the Rules of the High Court (Cap 4A), a supplementary notice of appeal may be served without leave before the date on which a hearing date of the appeal is fixed. On 5 November 2021, long past the date in rule 7, the defendant sought leave to serve a supplementary notice of appeal to raise the following grounds of appeal: The plaintiff’s affirmations filed for the application for summary judgment did not contain a statement of the deponent’s belief that there is no defence to the action and thus failed to comply with Order 14 rule 2. The terms of the plaintiff’s summons, in particular, the amounts for which judgment was sought, did not correspond to the plaintiff’s re-amended statement of claim. The Judge erred in holding that there was sufficient evidence that the plaintiff had a valid money lender licence. If there was no such valid licence, whether the discretion under section 23 of the Ordinance should be exercised in the plaintiff’s favour is a triable issue. (The latter point is in the existing grounds.) There were various breaches of the Ordinance: The Loan Agreement specified a place of negotiation and completion other than the address stated in the plaintiff’s licence: section 7(1)(b). If the Second Mortgage was executed at TWC’s office, then there was a mis-statement in the Loan Agreement of the place of negotiation and completion: section 18(2)(j). The plaintiff did not provide the defendant with a memorandum of the Loan Agreement: section 18(1)(a). The plaintiff did not provide the defendant with a summary of the provisions of Parts III and IV of the Ordinance: section 18(1)(b). The Loan Agreement prohibited repayment by instalments: section 22(1)(b). The sum of $9,500 was charged as fees for TWC: section 27(3). It is further contended that the breaches were serious, extortionate and unconscionable in that the breaches were calculated and intentional breaches with the legal assistance of TWC or even collusion between the plaintiff and TWC. The Judge erred in holding that there was no believable evidence that Sze was acting on behalf of the plaintiff in any way. It was credible that $200,000 was paid to Sze out of the loan amount. To establish collusion, there was no need for the defendant to show that Sze was acting on the plaintiff’s behalf or as its agent. There are suspicious and unexplained features in the plaintiff’s case which warrant giving leave to defend: The plaintiff issued its Order 14 summons almost 3 years after the writ. The plaintiff changed its case in relation to the amounts claimed in its re-amended statement of claim. There was no satisfactory proof of the plaintiff’s money lender licence. The plaintiff did not appear to have proper records and had to seek discovery from banks after seeing the defendant’s affirmation in relation to the repayments he said he made. The plaintiff simply said it had no knowledge of Sze’s misrepresentations but did not deny he was present at the execution of the documents. The plaintiff had chosen not to obtain from ICBC and produce the details or the documents as to who presented the Cash Cheque. The plaintiff did not ask Sze or the handling solicitor of TWC to file evidence in support. The initial skeleton argument lodged by the plaintiff’s counsel improperly included arguments on these proposed supplementary grounds even though the court’s permission had not been given. Regrettably, his revised skeleton argument, which should be limited to the existing grounds of appeal pursuant to the specific direction of G Lam JA, was still defective because it included arguments on some of the proposed supplementary grounds. Other than the new ground set out in §21(5) above, the plaintiff objects to the filing of the supplementary notice of appeal, mostly for the reason that the supplemental grounds are unarguable. In our view, in the absence of real prejudice to the plaintiff, with one exception, the defendant should be permitted to file and serve the supplementary notice of appeal, late though it was. The exception is the ground referred to in §21(4)(g) above, which we disallowed at the hearing, as it involved a very serious allegation of collusion against TWC, a firm of solicitors, made for the first time. Had it been raised below the plaintiff might well have wished to file further evidence to refute that allegation, with leave if necessary. It would not be fair to allow such a point to be taken by the defendant now based on the flimsy basis that TWC prepared the documents and charged $9,500. For its part, by summons dated 17 November 2021, the plaintiff seeks leave to file an affirmation of its director, Mr Wong Fai Wong, made on 16 November 2021, stating that the omission of a statement of belief that the defendant has no defence was due to the plaintiff’s solicitors’ oversight, and that he did believe and still believes that the defendant has no defence to the action. Further, he seeks to produce a copy of the plaintiff’s money lender licence effective for a year from 3 April 2012, which was omitted by the plaintiff’s solicitors when preparing the original affirmation, which only exhibited the endorsement. At the hearing we allowed the statement of belief but not the licence to be adduced in evidence. Separately, so far as the challenge against the Judge’s decisions on costs and discovery is concerned, the parties are content that the hearing should be treated as a rolled-up one for the applications for leave to appeal and, if leave is granted, the appeals themselves. Discussion We shall deal first with the existing grounds in the defendant’s Re-Amended Notice of Appeal before turning to the Supplementary Notice of Appeal. Whether the defendant received the sum of $400,000 On behalf of the defendants, Mr Ma submits that if the payment of the $400,000 was made pursuant to the defendant’s instructions, then it was absurd that the plaintiff issued the Cash Cheque instead of a cheque drawn in the defendant’s favour. There was no explanation why the Receipt was undated and did not refer to the Cash Cheque, and why the defendant did not sign on a copy of the Cash Cheque to signify his receipt. The plaintiff had chosen not to obtain and produce evidence from the bank as to who presented the Cash Cheque. Counsel submits that there are suspicious circumstances warranting leave to defend. We do not agree with this submission. As Ms Lee points out, the Defence as pleaded was that after the documents were signed, a $1.3 million cheque was drawn in favour of UA Finance, a $400,000 cheque was drawn in favour of TWC to discharge the UA Finance loan with the remainder to be returned to the defendant, and $200,000 was paid to Sze in banknotes. After the plaintiff filed its Reply and its affirmation stating that the Cash Cheque of $400,000 was issued at the defendant’s request the receipt of which the defendant had acknowledged, the defendant never said in his two affirmations filed for the purpose of the Order 14 application that he had not received the Cash Cheque or that he had not signed and given the Receipt. What he stated was that $200,000 was deducted from the loan and paid to Sze as introduction fees, without explaining how the defendant received the remaining $200,000 as he implicitly accepted. The defendant’s pleaded case remained that Sze was paid $200,000 in banknotes before they left TWC’s office. In our view neither the defendant’s plea nor his evidence gives rise to any ground for disregarding the Receipt by which the defendant acknowledged that he had received the sum of $400,000. As Ms Lee submits, there could have been a number of reasons why the $400,000 was advanced by way of the Cash Cheque and why the Receipt was issued in the form it took, instead of some other arrangements. After the Cash Cheque was issued and receipt of the money was acknowledged by the defendant, who presented the cheque for payment and how the defendant applied the money are not matters raising triable issues in the absence of fraud which is not pleaded in this regard. We should mention that in an affirmation of the defendant dated 18 May 2020 it was alleged that he did not receive the Cash Cheque and that the Receipt was signed before he received any money. As Mr Ma accepted, this affirmation was made after the Decision and did not form part of the evidence for present purposes, there being no application to adduce it as additional evidence on the appeal. Interest The defendant contends that the Judge erred in his award of interest, even though his counsel did not dispute the plaintiff’s claims for interest below. For its part, the plaintiff also seeks to have the award of interest varied, even though the Judge’s order appears to have been based on the plaintiff’s counsel’s submissions below. Notwithstanding the parties’ positions below, we agree with their contention now that it is an error in principle to order contractual interest on the bulk of the principal for the year ended 25 March 2014, since the defendant did pay monthly contractual interest for the term of the loan (albeit slightly late each month). Subject to the comments below we accept in principle the calculation of outstanding interest for that period set out in the revised schedule submitted by the plaintiff after the hearing (as directed by this Court) using $1,890,500 as the starting principal, which is based on Schedule A annexed to Wong Fai Wong’s second affirmation filed on behalf of the plaintiff on 20 November 2020. Secondly, we accept the defendant’s submission that in the absence of special reason to award interest at judgment rate from 26 March 2014, it was wrong in principle for the Judge to do so for the pre-judgment period. It is for the plaintiff to show why judgment rate should be used prior to judgment, and it cannot try to preclude this argument on the ground that it was not raised below. We do not accept that the fact that the plaintiff is a licensed money lender is a sufficient reason for using judgment rate for the pre-judgment period. Interest should instead run at the normal pre-judgment rate, i.e. prime plus 1% per annum, until the date of judgment below, i.e. 17 December 2019. Thirdly, the amount of outstanding principal should be reduced by $9,500 to $1,890,500, as conceded by the plaintiff. The revised schedule submitted by the plaintiff still appears to contain an error in that monthly interest in the first 12 months is stated in amounts equal to those based on a principal of $1.9 million. Interest at judgment rate will run on the entire judgment sum (including both principal and outstanding interest) as from the date of judgment below until payment. Money lender licence and section 23 of the Ordinance Before the Judge the plaintiff had produced the Endorsement on the Licence No. 55/2012 which endorsed its new premises for the purpose of the plaintiff’s money lender licence, but not Licence No. 55/2012 itself. The Judge was nevertheless satisfied that there was sufficient evidence that the plaintiff was a licensed money lender as at the date of the Loan Agreement since: (1) the plaintiff’s director testified that it was so licensed; (2) the subsequent licences produced show a pattern of the plaintiff having a licence for every 12-month period from 3 April of each calendar year; (3) the Endorsement referred to a licence effective for and after 7 August 2012; and (4) in the Loan Agreement the defendant had acknowledged that the plaintiff was a licensed money lender. The defendant has not in our view made out any ground for disturbing this finding of fact by the Judge. Mr Ma prays in aid section 33(1) of the Ordinance, which provides: “ When in any proceedings under this Ordinance against any person it is alleged that such person is not the holder of a licence, it shall in the absence of proof to the contrary be presumed that such person is not licensed.” We doubt that this section applies in this case because it is not alleged that the plaintiff is not the holder of a licence. What the defendant pleaded was simply that it was not admitted that the plaintiff was a licensed money lender. In any event this provision does not mean that a person is presumed to be not licensed unless the actual licence is produced. It does not prevent proof by other evidence such as that the Judge took into account. Accordingly, the question of the proviso to section 23 whereby the court may allow enforcement notwithstanding the money lender is not licensed does not arise. Statement of belief that there is no defence Contrary to the requirements of Order 14 rule 2(1), the plaintiff’s affirmations filed for the Order 14 application did not state that in the deponent’s belief there was no defence to the claim. This is an elementary mistake on the solicitors’ part for which there is no excuse. However, the point had never been taken by the defendant below. Now that the point is taken, the defect may be cured by the supplemental affirmation that we allowed to be filed. The practice is stated in Hong Kong Civil Procedure 2022, volume 1, at §14/2/5 as follows: “ Any defects or omissions in the original affidavit may be cured or supplemented or supplied by an affidavit made subsequently and the court looks at the matter both on jurisdiction, and on merits, ‘at the end of the day on the affidavits which have been filed’ ”. Deviation from the summons The plaintiff’s summons sought summary judgment in the sum of $2,729,232.88 together with interest on the principal sum of $1.9 million at judgment rate until payment. As a result of taking into account the payments made by the defendant, which were acknowledged in the plaintiff’s Re-Amended Statement of Claim dated 11 December 2019, the claim was reduced to the outstanding principal of $1,736,177.82 and outstanding interest up to 21 November 2018 in the sum of $529,930.96 and interest on the outstanding principal at judgment rate from 22 November 2018. The Judge gave judgment based on the plaintiff’s revised claim. On behalf of the defendant, Mr Ma submits that the judgment granted is not supported by the plaintiff’s own summons. We reject this ground. The judgment is in a lower amount than that claimed in the summons. There is nothing to preclude the Judge from entering judgment for a lower sum when he is satisfied that the excess claimed in the summons is not supported by the evidence. Breaches of the Ordinance Section 7(1)(b) of the Ordinance provides that no person shall carry on business as a money lender at a place other than the premises specified in the licence. The defendant contends there was a breach because the Loan Agreement stated that the place of negotiation and completion of the agreement was an address which was TWC’s office, not the address in the plaintiff’s licence. This ground does not provide any valid basis for impugning the Decision. First, the defendant himself pleads that he signed the loan documentation (except the Second Mortgage) in the plaintiff’s office. It is not open to him to advance an argument based on an opposite factual basis. Secondly, as held by Ng J in Hao Tian Finance Co Ltd v Hung Yuk Ming & another [2020] HKCFI 465 at §§119-124, section 7(1)(b) does not mean that the loan is unenforceable unless “every stage and every incident of every piece of money-lending business” is transacted at the registered premises. The defendant has not put forward sufficient evidence to substantiate the unpleaded allegation that there was a breach of the statute. As to the alleged breach of section 18(1), the Judge held on the evidence that the defendant’s allegation that he did not receive the Loan Agreement (which included the memorandum required) was unbelievable. Mr Ma has simply said that on the defendant’s case there was a breach but has advanced no argument as to why the Judge erred in rejecting the defendant’s case. As to the failure to provide a summary of the statutory provisions as required by section 18(1)(b), the Judge said: “ Ms Lee for P submits that in respect of this non-compliance, the discretion should be exercised in favour of enforcing the Loan Agreement, bearing in mind that save and except the HK$9,500, D has received the entire loan for his own benefit. Further, D is a sophisticated businessman. He is a director and shareholder of two companies which he uses to conduct his motor vehicle business. He has also taken out several loans from banks or other financial institutions in the past. I accept Ms Lee’s submissions. I have carefully considered the evidence adduced by D and the submissions put forward by Mr Tsui for D. In my view, there is no reason why the Loan Agreement should not be enforced against D in full force. It would be inequitable if P is not allowed to enforce the Loan Agreement against D.” This is an exercise of discretion with which this court will not interfere save on limited grounds. The defendant has failed to establish any reason why the Judge’s exercise of discretion may be impugned. The defendant also contends that the Loan Agreement prohibits the repayment of the loan by instalments, contrary to section 22(1)(b). The Loan Agreement simply provided that the principal sum together with the last instalment of interest were to be repaid in full on 25 March 2014. We do not think that on a proper construction this amounted to a prohibition of repayment of the loan by earlier instalments. Mr Ma in his oral submissions said that there was also a breach of section 21 in that early repayment was prohibited. This point was not raised in the supplementary notice of appeal. Section 21 does not render any agreement illegal but simply provides that a borrower shall be entitled at any time to discharge his indebtedness. In any event we do not accept his submission that the Loan Agreement prohibited early repayment. As to the sum of $9,500 paid to TWC for their fees which the plaintiff accepted to be in breach of section 27(3), the Judge took into account the plaintiff’s concession that the sum had to be excluded, and found that this and the other breaches did not render the transaction an extortionate one under section 25. Under the Ordinance, a transaction is extortionate if (a) it requires the debtor to make payments which are grossly exorbitant, or (b) it otherwise grossly contravenes ordinary principles of fair-dealing: section 25(2). The defendant has not adduced much evidence in relation to his age, experience, business capacity, state of health or the degree to which he was under financial pressure at the time of entering into the Loan Agreement, which are factors referred to in section 25(5). On the materials available the Judge found that the defendant was “a sophisticated businessman”, being a director and shareholder of two companies which he used to conduct his motor vehicle business and having taken out several loans from banks or other financial institutions in the past. While there was a breach of section 27, in the circumstances we see no triable ground for interfering with the Judge’s assessment that the transaction was not thereby turned into an extortionate one. Whether an introduction fee was paid by the plaintiff to Sze In relation to the allegation of the introduction fees paid to Sze, the Judge held: “ … I have ruled that the alleged introduction fee paid by P to Sze is unbelievable. In my view, there is no believable evidence before me showing that in respect of any matter relating to the Loan Agreement and the Second Mortgage, Sze was acting on behalf of P in any way. Sze’s representations as alleged by D, even if there is any truth therein, has nothing to do with P.” The defendant contends that it is at least believable that the $200,000 introduction fees paid to Sze was ultimately deducted from the loan of $1.9 million. The plaintiff’s evidence admitted the existence of Sze and that there were mutual referrals between Billion Step and the plaintiff. There is no denial that Sze was present at TWC’s office on 25 March 2013. The defendant submits that it is against commercial sense that no fees would be required for the referral of the defendant to the plaintiff. It is submitted that to establish collusion between the plaintiff and Sze, there is no need for the defendant to show that Sze was the plaintiff’s agent or acting on the plaintiff’s behalf: Gain Wealth Global Credit & Investment Ltd v Chan Suk Fong [2020] 4 HKLRD 831 at §49. The plaintiff accepts that “collusion” in the context of the Ordinance is a wider concept than conspiracy and does not depend upon Sze being the plaintiff’s agent, but the problem for the defendant is that it is his pleaded case that the sum of $200,000 was paid to Sze in banknotes before they left TWC’s office. This is quite incompatible with the available documentary evidence on how the loan of $1.9 million was advanced to the defendant and that is why the Judge found the defence unbelievable. Indeed Mr Ma has not contended that the Judge was wrong to reject the pleaded defence as being incredible. What he contends instead is that it is “at least believable” that the $200,000 was “ultimately deducted” from the loan and paid to Sze, presumably in some other circumstances than those pleaded in the Defence. Quite apart from the fact that the defendant is bound by his pleaded case, the point is that having received the money as acknowledged by the defendant by the Receipt, how he then disbursed it, whether by payment to Sze as introduction fees or otherwise, is not a matter that can thereby establish “collusion” between the plaintiff and Sze, in the sense that they cooperated with each other to do or abstain from doing something with a view to facilitating the conclusion of the loan transaction against the defendant’s interest or otherwise to his prejudice: Gain Wealth at §49. Further, even if it was shown that Sze was a person acting in collusion with the plaintiff, and that the defendant paid him $200,000 as introduction fees for the loan, this would only mean that the defendant would be entitled to set off the sum of $200,000 against the loan pursuant to section 27(4). On Mr Ma’s calculation this would lead to an effective rate of interest of 46.11%, still lower than the 48% stipulated in section 25(3) of the Ordinance. In the circumstances of this case where the defendant plainly received the benefit of the remainder of the loan, we take the view that the defendant has not shown any triable issue why this would render the entire loan extortionate, liable to be re-opened, and ultimately unenforceable to any extent exceeding that $200,000. Unexplained features of the plaintiff’s case Under this ground the defendant points to a number of features in the plaintiff’s case which he says are suspicious or unexplained. Apart from repeating the matters covered by the other grounds, the defendant points to the fact that the application for summary judgment was taken out only in June 2018 when the writ was issued in September 2015. It is also submitted that the plaintiff’s original statement of the amount of indebtedness was wrong and only corrected after obtaining discovery from the banks. We do not think that this provides some “other reason” for the matter to go to trial. The fact remains that of the loan of $1.9 million, $1.5 million (less $9,500) was incontrovertibly paid towards discharging the defendant’s indebtedness to UA Finance and SHK Finance, and receipt of the other $400,000 was indisputably acknowledged by the defendant. The contractual interest had been paid by the defendant. There is no justification to order the action to go to trial simply because of some alleged unexplained or unusual features. Conclusion For these reasons, save that the amounts of principal and interest for which judgment is entered are varied, the appeal is dismissed. As mentioned above, (i) the starting principal should be varied to $1,890,500; (ii) contractual interest of 30% p.a. applied for the term of the loan up to 25 March 2014; (iii) thereafter the rate of interest is prime +1% p.a. up to the date of judgment below (17 December 2019); and (iv) interest at judgment rate runs on the entire judgment sum from the date of judgment below until payment. The plaintiff should prepare a revised calculation of the judgment sum to be entered. The defendant’s applications for leave to appeal The defendant’s application for leave to appeal in relation to post-judgment discovery has no merit. The defendant had actually issued a summons dated 13 November 2019 for similar third-party discovery for information from the bank relating to the Cash Cheque, but unconditionally withdrew the application at the hearing before the Judge on 17 December 2019. It follows that the defendant cannot show that any evidence obtained from such discovery could not have been obtained with reasonable due diligence for use at the hearing below. Further, given that the defendant had acknowledged receipt of the sum of $400,000, any information as to who presented the Cash Cheque would be unlikely to have an important influence on the result of the case. The Judge cannot be faulted for dismissing the post-judgment discovery application for the reasons he gave. We therefore dismiss the application for leave to appeal. The defendant’s application for leave to appeal in relation to costs is likewise without merit. In fact, no argument or proposed ground of appeal has been put forward in the documents filed. Accordingly, we also refuse leave to appeal. Disposition For the above reasons, the defendant’s appeal (CACV 8/2020) is dismissed except to the extent indicated in §55 above. The defendant’s summons for leave to appeal (CAMP 55/2020) is dismissed. On a nisi basis, we order that: The costs of the defendant’s summons filed on 5 November 2021 for leave to file and serve the supplementary notice of appeal be treated as part of the costs of the appeal in CACV 8/2020. There be no order as to the costs of and relating to the plaintiff’s summons filed on 17 November 2021 for leave to file the affirmation of Wong Fai Wong made on 16 November 2021. The defendant do pay the plaintiff two-thirds of the costs of the appeal in CACV 8/2020 to be taxed if not agreed on the solicitor and own client basis. There be no order as to the costs of the plaintiff’s respondent’s notice. (The reduction is intended to reflect the defendant’s partial success in reducing the judgment sum as well as the plaintiff’s omission of the requisite statement of belief in its affirmations.) The defendant do pay the plaintiff the costs of the applications for leave to appeal in CAMP 55/2020 to be taxed if not agreed on the solicitor and own client basis. (Maria Yuen) Justice of Appeal (Godfrey Lam) Justice of Appeal (Anderson Chow) Justice of Appeal Ms Joyce H Y Lee, instructed by Messrs. Tang, Wong & Cheung, for the Plaintiff in CACV 8/2020 & CAMP 55/2020 Mr Billy NP Ma, instructed by Messrs. Humphrey & Associates for the Defendant in CACV 8/2020 & CAMP 55/2020