1. This appeal arises from a mortgage action brought by the Respondent (“Lender”) against the Appellant (“Borrower”). The Judge dismissed the action on the ground that both the legal charge and the loan it secured were unenforceable because the parties had agreed an interest rate exceeding 60% per year, contrary to section 24 of the Money Lenders Ordinance (Cap 163). The Court of Appeal reversed the decision of the Judge and ordered enforcement of the charge and payment of the loan. The Borrower was granted leave to appeal to this Court. 2. The loan of around HK$40 million was advanced by the Lender to the Borrower in February 2015. Upon expiry of the original three-month loan period, the parties agreed to four successive extensions, the last of which allowed the period of extension to continue indefinitely. It is undisputed that up to and including the fourth extension, the interest rates charged by the Lender fell below 60% per year. In October 2016, the parties entered into a final agreement which retrospectively revised the interest rate over the whole period of extension. The revised interest rate also did not exceed 60% per year. 3. The unlawful interest rate forming the basis of the decision of the Judge was said to have been charged by the Lender under an agreement made by the parties between the conclusion of the fourth extension and the final agreement. That agreement was found to have existed by a process of inference. The evidence upon which the Judge made such an inference was a demand letter sent by the Lender’s solicitors to the Borrower in June 2016. That letter first set out, according to the terms of the four extensions, the Borrower’s total indebtedness at the time (principal and unpaid interest included), which was around HK$60 million. It went on to say that further interest “continued to accrue on the sum”. The Judge inferred from that letter that there must have been an agreement whereby interest had been charged on the said HK$60 million as from June 2016 which, when applied to a loan of some HK$40 million, produced an interest rate that was higher than the fourth extension rate and exceeded 60% per year. 4. The Judge took a poor view of the Lender’s failure to disclose its retained copy of the 2016 demand letter at an earlier stage of the proceedings, considering this as an attempt by the Lender to conceal the letter in order not to reveal that there had been an agreement charging an unlawful interest rate. 5. The Court of Appeal accepted that such an inferred agreement existed, and agreed with the Judge that there was a rule of law that whenever a loan was extended a new loan capitalising the unpaid interest arose. But the Court of Appeal considered the Judge had failed to apply this rule to the inferred agreement when he calculated the interest rate with reference to the original loan amount of some HK$40 million, instead of the deemed new loan amount of some HK$60 million. Applying the higher figure, the interest rate charged under the inferred agreement fell below 60% per year. Thus, no issue of unlawful interest rate arose and the Court of Appeal decided in favour of the Lender on the basis of the final agreement. Existence of the inferred agreement 6. This Court held there was no basis upon which the Judge could properly draw an inference that an agreement charging unlawful interest rate existed. The 2016 demand letter did not support such an inference. The use of the word “continued” in the letter must mean that interest continued to accrue at the fourth extension rate, and the words “on the sum” simply meant that such accruing interest would be added to the Borrower’s total indebtedness which happened to stand at some HK$60 million in June 2016. Neither the demand letter itself nor the parties in the proceedings alleged there was any agreement as inferred by the Judge. There was nothing to support the finding that the Lender attempted to conceal any such agreement, particularly given that the original of the 2016 demand letter would have been in the possession of the Borrower, making any such attempt a futile exercise. Effect of extension of loan 7. Although the point did not arise given the conclusion on the existence of the inferred agreement, this Court considered there was no rule of law that whenever parties agreed to vary the terms of a loan by extending its loan period or changing the interest rate, that must count as entering into a new loan. The law would simply give effect to what, as a matter of construction, appeared to have been the intention of the parties as shown by the language they had used. Disposition 8. Accordingly, this Court unanimously dismissed the appeal. The orders of the Court of Appeal were affirmed, although this Court departed from the Court of Appeal’s reasoning in reaching the same conclusion.