Ho Yuk Lun Alan v Chan Yui Hang
Court of First Instance
Miscellaneous Proceedings No. 1013 of 2013
Harris J in Chambers
Contract Law
13 February 2015

No provision as to time for repayment of loan – time when cause of action accrued

X and Y were long-time friends and business associates. X claimed that on 1 June 2005, he made a loan to Y’s company, C, which was agreed orally and evidenced only by a cheque for $580,000. X asked for repayment a number of times and was assured by Y that he would be repaid as on past occasions. C went into voluntary liquidation and X lodged a proof of debt dated 25 January 2013 with L, the liquidator. This was rejected by L because he did not receive any loan agreement or bank statement showing the settlement of the cheque from X. X applied to reverse L’s decision. L affirmed that he accepted Y’s assertion that the advance was not a loan but the purchase price of a machine for use in C’s factory to meet orders exclusively for one of X’s companies, since C’s previous sound financial position suggested it did not need the alleged loan and X did not demand repayment earlier. X affirmed that inter alia the arrangement was informal; his requests for repayment were made personally and politely as he did not want to risk harming their relationship; and that Y always replied, “Let’s discuss later”.

Held, reversing L’s decision and ordering the proof of debt to be admitted, that:

  • Where a loan was made without providing for the time for repayment, the borrower was obliged to repay immediately and the cause of action for money had and received accruing at that time, unless it was agreed that a demand for repayment was first necessary. In practice, if a person made a loan without specifying when or in what circumstances it had to be repaid, he must require payment within 6 years or lose the right to recover money. Here, the cause of action accrued in June 2005.

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