Otb International Credit Card Ltd v. Wong Chun Bong

DCCJ004028/1978

IN THE DISTRICT COURT OF HONG KONG

HOLDEN AT VICTORIA

CIVIL JURISDICTION

ACTION No.4028 OF 1978

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Coram: Judge Jones in Court

Date of Judgment: 23 April 1979

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JUDGMENT

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1. On the 14th December 1976 the defendant signed an application form for a Credit Card with the plaintiff, which was issued on the 23rd December 1976 subject to the Rules of Membership. The card was described by the plaintiff as a gold or V.I.P. Card which is normally issued to a professional person, who is not required to pay a subscription fee. The defendant is a registered medical practitioner. The card is operative for one year.

2. In December 1977, the defendant went to the plaintiff's branch at Happy Valley with regard to the renewal of the card for 1978. Here he was handed an envelope which he did not open, but signed a form which is dated the 9th December 1977 acknowledging receipt of 1 O.B. card. When the defendant returned to his home he discovered inside the envelope the new credit card, a gold folder, and a request for payment of $115 for the annual subscription. Having possessed a gold card the defendant did not expect to receive a demand for his sum. The defendant thereupon decided to cancel the agreement. He telephoned the plaintiff, and spoke to an unidentified lady who informed him that for the renewal to be effective he had to pay the annual subscription. When he enquired about the procedure for cancellation he was merely told to cancel the card. In effect the defendant was informed that he need not return the card. but could dispose of it himself. Before disposal the defendant said that he bent the card several times, but found that it was impossible to tear it apart. He crossed out his name which he had written on the card, and then threw the card away.

3. In July 1978 the defendant received a statement from the plaintiff showing a balance due to them of $1,902 in respect of the purported use of the card on the 24th and 25th June 1978. A second statement dated the 1st August 1978 received by the defendant reveals that further amounts had been incurred on the same dates and that the total sum debited to the account was $5,586.69. The amounts have not been disputed. In response to the first statement the defendant telephoned the plaintiff, and spoke to Miss Dorothy Lui the head of the manual processing section. He said that after checking her records she informed him that the card had been cancelled, but someone had used it. The matter was reported to the Police a few days later.

4. Miss Lui said that she also spoke to the defendant on the telephone in January 1978, but this was denied by the defendant. However, I accept that there was such a conversation, but that the defendant was not aware of the identity of the person to whom he was speaking. I find that the conversation took place in December, and that Miss Lui was the unidentified lady to whom I have previously referred. Miss Lui said that on that occasion the defendant informed her that he wished to cancel payment of the account by auto pay. Miss Lui said that this was in order and upon her instructions the defendant's ledger with the plaintiff was chopped twice with the word 'Cancelled'. In both places above the word there is written 'Request 12/78' and below, the date '6/1/78'. The plaintiff contends that these words mean that the defendant had cancelled his auto pay authorisation, by which method he had agreed to make payments, on the 6th January 1978 in respect of the new card that was due to expire at the end of December 1978. Miss Lui conceded that when the defendant spoke to her about the cancellation of the auto pay he also referred to cancellation of the Credit Card.

5. There is no doubt that the agreement entered into between the parties is a master agreement without a time limit. However, it is the practice of the plaintiff to issue a Credit Card for one year after which period it may be renewed annually. The agreement contains no provision for cancellation either written or oral. Although the evidence for the plaintiff was that an agreement can only be cancelled in writing I am satisfied that there is no such term binding the defendant. Accordingly I find that the agreement may be terminated by reasonable notice which can be given orally. Although the defendant did not sign and return the form of acknowledgment printed on the gold folder I am satisfied that the Credit Card was renewed when he signed it on the reverse side. The plaintiff maintains that the chop on the ledger only refers to cancellation of auto pay and not to cancellation of the agreement. Yet the statements for July and August 1978 have the word 'Autopay' next to the Account Number. It is significant that none of the plaintiff's witnesses made any reference to this fact in evidence. After the present proceedings had been instituted a further statement dated the 1st November 1978 shows the word 'Autopay' next to the account number. The plaintiff submitted the November statement to the defendant's bank for payment by auto pay, but it was returned marked insufficient fund. The defendant never cancelled the auto pay instruction to his bank.

6. I have no hesitation in rejecting the plaintiff's evidence that the word 'cancelled' on the defendant's ledger referred to the cancellation of auto pay. If it had, the word auto pay could easily have been recorded on the ledger whilst 'Autopay' would not have appeared on the subsequent statements of account. I hold that it meant the cancellation of the agreement.

7. Aspersions were cast upon the defendant's evidence that he telephoned the plaintiff in December 1977 when his defence had originally pleaded that it was in about the middle of January 1978. I accept that there was no improper motive by the defendant in making this mistake. His memory was obviously refreshed by seeing the acknowledgment of receipt dated the 9th December 1977 which he was shown just before the trial whereupon his pleading was amended. I am satisfied that the defendant was telling the truth about this matter. I find that the agreement was cancelled as a result of this telephone call.

8. As the new card would not have become operative until the 1st January 1978 the plaintiff's staff presumably delayed the placement of the chop until the 6th of that month.

9. I accept the defendant's evidence that he attempted to destroy the card in the manner that he described and crossed out his signature. I also accept the evidence of Mr. Lai Tin Cheong the handwriting expert who was called on behalf of the defendant. Having regard to this report I am satisfied that the signatures on the vouchers that were produced are not those of the defendant. I find that the defendant did not use the card on the two days in June 1978.

10. The plaintiff seeks to rely on rule 2 of the Rules of Membership endorsed on the agreement. This rule provides: 'The card is not transferable and is subject to withdrawal in case of infringement of this or any other rule of membership. The original card holder remains entirely responsible for all charges incurred on any unlawfully transferred card by the unlawful holder thereof. In the event of loss or theft of the card, the card holder must immediately notify the company by registered mail or telegram and until such notification is received by the company the card holder will remain responsible for all purchases charged through the use of such card!'

11. I accept the defendant's evidence that after crossing out his signature he bent the card which he then threw away. Obviously the card came into the possession of another person. This person must have reconstructed the card and forged the defendant's signature. The card at all times remains the property of the plaintiff so that the person who acquired possession would clearly be guilty of theft. Upon the evidence I find that the defendant did not unlawfully transfer the card. He did not transfer the card to any one. He was undoubtedly very careless in the way that he disposed of the card, but nevertheless I believe his evidence that he genuinely thought that no one else would be able to use the card in that condition. However, there is no limit to the ingenuity of an expert forger.

12. The plaintiff will no doubt have had in the past reports of lost or stolen credit cards whereupon they will take appropriate steps to safeguard their position by informing all member establishments not to honour such cards. Although the agreement was terminated, the card was not returned by the defendant to the plaintiff. In these circumstances the plaintiff having informed the defendant that he could dispose of the card was not returned by the defendant to the plaintiff. In these circumstances the plaintiff having informed the defendant that he could dispose of the card should have taken immediate steps to inform their member establishments of the cancellation. By reason of their neglect in failing to take such action another person was enabled to use the card to the plaintiff's detriment. The plaintiff did not act reasonably in this matter. As a result the plaintiff is not entitled to rely upon rule 2.

13. The plaintiff's claim is therefore dismissed with costs to the defendant on the upper scale.

14. I certify fit for counsel.

Representation:

Mr. Bunting (Tsang & Chau) for the plaintiff.

Mr. Bharwaney (Fairbairn Kwok & Wang) for the defendant.