In Kaiser Financing Company Limited v Chen Jiarong [2026] HKCFI 851, Deputy High Court Judge Alan Kwong dismissed a registered money lender’s appeal from a Master’s decision, finding that the Defendant had raised an arguable defence that a loan agreement was not intended to create enforceable legal obligations.
Key Principles
- Assessment of sham allegations: In determining whether a sham defence is arguable, the Court conducts a holistic assessment of all circumstances, including the parties’ subsequent conduct, contemporaneous communications, and objective evidence. The Court examines whether the parties had a common intention that the document should not create the legal rights and obligations it purported to create (§§21-24).
- Significance of parties’ conduct: The Court considered various factors including a 63-month delay before the first demand for payment, the lender’s decision to advance a further substantial loan shortly after the alleged default while pursuing that separate loan diligently, and contemporaneous communications inconsistent with the claimed indebtedness. These matters were found to support the Defendant’s case and raise questions warranting trial (§§25-27).
- Limits of summary determination: Where a Defendant’s case is supported by some contemporaneous documentary evidence and is consistent with objective circumstances, summary judgment will not be granted even if aspects of the defence are imperfect. Questions of credibility that require assessment of live evidence and cross-examination are matters for trial rather than interlocutory determination (§§29-32).
The judgment illustrates the Court’s approach to summary judgment applications where sham allegations are raised in substantial commercial disputes.
Read the full judgment here: https://legalref.
Mr José-Antonio Maurellet SC, Mr Yip Chi Ho, and Mr Charlie Liu appeared for the Defendant.
