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CACV 335/2023,
[2024] HKCA 884
On Appeal From
[2023] HKCFI 2400
IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF APPEAL
CIVIL APPEAL NO 335 OF 2023
(ON APPEAL FROM HCCW NO 444 OF 2022)
________________________
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IN THE MATTER OF THE COMPANIES (WINDING UP AND MISCELLANEOUS PROVISIONS) ORDINANCE,
CAP 32
, LAWS OF HONG KONG
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and
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IN THE MATTER of INVERSION PRODUCTIONS LIMITED (FORMERLY KNOWN AS TNC PRODUCTIONS LIMITED)
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________________________
BETWEEN
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SUN ENTERTAINMENT CULTURE LIMITED
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Petitioner
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and
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INVERSION PRODUCTIONS LIMITED
(FORMERLY KNOWN AS TNC PRODUCTIONS LIMITED)
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Respondent
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________________________
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Before:
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Kwan VP, Barma and G Lam JJA
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Date of Hearing:
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4 September 2024
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Date of Judgment:
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27 September 2024
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________________________
J U D G M E N T
________________________
Hon G Lam JA (giving the Judgment of the Court):
1.
This is an appeal by Inversion Productions Ltd against the judgment of Deputy High Court Judge Le Pichon dated 22 September 2023 (“
Judgment
”)
[1]
winding up the appellant on the petition by Sun Entertainment Culture Ltd. As the petition is based on a loan borrowed by the former from the latter, we shall refer to them as the “
Borrower
” and the “
Lender
” respectively. The Borrower contends that it is at least arguable that the loan is unenforceable by reason of section 24 of the Money Lenders Ordinance (
Cap 163
) (“
MLO
”) because its “effective rate of interest” exceeds 60% per annum
[2]
having taken into account default interest, and that this dispute should be resolved by arbitration pursuant to the arbitration clause in the loan agreement, with the winding up petition either stayed or dismissed.
Background
2.
The Borrower is a company set up in Hong Kong to finance the production of a motion picture called “Inversion”. The Lender is also a Hong Kong company. There is no allegation or evidence that its business is that of making loans or that it is otherwise a “money lender” as defined in the MLO.
3.
On 12 December 2014, the parties entered into a written agreement (“
Loan Agreement
”), in the form of a term sheet, for a pre-production loan for the motion picture. The loan amount is US$7,500,000, to be advanced in three tranches of US$1,000,000, US$3,000,000 and US$3,500,000 on 12 December 2014, 16 January 2015 and 6 February 2015 respectively, with the maturity date of the loan being 30 April 2015. Interest is stated to be 10% of the loan or US$750,000. There are terms on interest payment and default interest as follows:
“Interest Payment:
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Interest will be payable upon Maturity Date and will be added to the balance of the Loan.
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Default Interest Rate:
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4% per month in addition to the Interest, so long as a Default or Event of Default is continuing.”
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4.
There is also a term for a “guaranty” (“
Guarantee
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