Qin Jun, Re, ex p Win Wind Resources Ltd
 4 HKLRD 379
Court of Appeal
Civil Appeal No 109 of 2017
Lam V-P, Yuen and Kwan JJA
24 August 2018
Bankruptcy - bankruptcy order - annulment - whether loan subject of underlying debt in breach of s.18(1) such that court would not have exercised discretion under s.18(3) to enforce loan summarily - Money Lenders Ordinance (Cap.163) s.18(1), (3)
Civil procedure - appeal - raising new point - whether, if raised at first instance, would have caused prejudice and unfairness to other party
The petitioner (P), a licensed money lender, obtained a bankruptcy order (the Order) against the debtor (Q) based on an unsatisfied statutory demand arising from a loan agreement for $45 million (the Agreement). Q's application to annul the Order on the ground he never received the $45 million was rejected by the Judge. Q now appealed, arguing for the first time that the debt was unenforceable, because the loan was made before a memorandum of the Agreement was signed in breach of s.18(1) of the Money Lenders Ordinance (Cap.163) (the MLO), and the Judge would not have exercised his discretion under s.18(3) to enforce the loan summarily without a full trial.
Held, dismissing the appeal, that:
- In respect of P's submission that Q was not entitled to raise on appeal a new case inconsistent with that which he originally raised in the primary court even though the new case was supported by the evidence adduced in the court below, Q was seeking to rely on P's own evidence to contend that even if P's factual evidence and case were accepted, the Agreement would fall foul of s.18(1) of the MLO. Although one component of the new case Q was seeking to raise on appeal (that the loan was made before the signing of the relevant documents) was inconsistent with his case below, this aspect was raised by P and considered by the Judge (Re Walton, ex p Reddish (1877) LR 5 Ch D 882, Capital Rich Development Ltd v Town Planning Board  2 HKLRD 155 distinguished). (See paras.32, 34-35.)
- However, had Q raised the new point below, this was bound to have prompted P to invoke the Judge's discretion under s.18(3) to enforce a non-compliant agreement. New facts might have been introduced and existing facts assessed in a different light (Lehmanbrown Ltd v Union Trade Holdings Inc (HCMP 977/2015,  HKEC 1139) applied). (See para.36.)
- If, as Q argued, there were indeed matters under s.18(3) which cried out for a trial, the Flywin principle must be engaged. Q's new argument would have deprived P of the opportunity to adduce such evidence as might be necessary to satisfy the Judge that the state of the evidence would clearly have been in its favour if the point had been taken at trial. The unfairness was compounded by Q's reliance on the lack of explanation by P to argue against the exercise of the s.18(3) discretion (Flywin Co Ltd v Strong & Associates Ltd (2002) 5 HKCFAR 356 at ,  applied). (See paras.38-40.)
- It was not appropriate to exercise the discretion in Q's favour, since his new arguments on appeal were fact-sensitive and would have affected the course of evidence and the conduct of the case below and caused prejudice to P. On this basis alone, Q's appeal should be dismissed. (See para.41.)
- Q's litigation conduct, involving delay and unmeritorious grounds of appeal, was sufficiently unsatisfactory to justify an award of costs on an indemnity basis. (See paras.43-44.)
This was an appeal against the judgment of Andrew Chung J dismissing the application of the appellant debtor to annul the bankruptcy order made against him under s.33(1)(a) of the Bankruptcy Ordinance (Cap.6) (see  HKEC 1012). The facts are set out in the judgment.