Sun Hung Kai Bank Limited v. Leung King Kow
Read the full judgment text of HCA 15449/1983 on BabelCite. This High Court CFI judgment.
1. On 23rd August 1983 the Defendant, whom I assume to have then been of full mind and understanding, and who I am told was a Clerk in the offices of Messrs. Oliver and Driver and, therefore, I assume to have been over 21 years of age, chose from all the banks in Hong Kong from which to obtain a Visa Card, the Plaintiff Company. He signed the application form WO1420, and, in due course, was issued with a Card. On 4th November of the same year, he lost his Card in the Crystal Hall Restaurant in Y
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HCA015449/1983
BETWEEN:-
________________ Coram: The Honourable Mr. Justice Jackson-Lipkin in Chambers. Date of hearing: 20th March 1984 Date and time of delivery of judgment: 20th March 1984 at 3.45 p.m.
_________ DECISION _________ 1. On 23rd August 1983 the Defendant, whom I assume to have then been of full mind and understanding, and who I am told was a Clerk in the offices of Messrs. Oliver and Driver and, therefore, I assume to have been over 21 years of age, chose from all the banks in Hong Kong from which to obtain a Visa Card, the Plaintiff Company. He signed the application form WO1420, and, in due course, was issued with a Card. On 4th November of the same year, he lost his Card in the Crystal Hall Restaurant in Yau Ma Tei. He gave notice in writing of that loss to the Plaintiff on 5th November. On the next statement which he received, which went up to 10th December 1983, he found himself charged with the sum of $79,940.21. Of that amount, he personally had incurred only $505.00 worth, that is $450.00 at the Chui Heung Lau Restaurant in Tsim Sha Tsui and $55.00 at the Crystal Hall Restaurant in Yau Ma Tei. I presume that he refused to pay, because, in due course, a Writ was issued against him. That Writ was for the sum of $82,460.66. When he examined his statement, he found that his Card had been used in Osaka, Kobe and Kyoto in the Empire of Japan and at Taipei. None of those items of expenditure had been incurred by him, but had been incurred unlawfully by whoever it was who had absconded from Crystal Hall Restaurant with his Card. 2. The Plaintiff proceeded under Order 14 on an Affirmation of Miss Corinna Yeung Lai-ngo affirmed on 9th February 1984. The matter came before Master Betts on 24th February 1984 when the Learned Master gave judgment for the Plaintiff. The matter comes before me to-day on appeal by a Notice under Order 58 issued on 27th February, and before me to-day is an Affirmation of the Defendant affirmed on 15th March and a further Affirmation from Miss Yeung affirm d on 17th March. 3. The Plaintiff Bank has inserted in the Terms and Conditions governing the use of its Visa Credit Cards the following clause, which is numbered 17: -
4. That clause has been considerably criticised by Mr. Driver, and not without reasons, because, for example if the Cardholder were to lose his card after banking hours, in other words after the bank had closed, on the Wednesday before Maundy Thursday, the Bank would receive the written notification on Maundy Thursday; the next day would be Good Friday; in Hong Kong Easter Saturday is a public holiday; Sunday is a general holiday; Easter Monday is a public holiday; and Tuesday is the first banking day thereafter; and, therefore, a Cardholder who lost his Card after banking hours on the Wednesday before Easter would be responsible for the use of that Card during the remainder of that Wednesday, and all of Thursday, Friday, Saturday, Sunday, Monday and Tuesday, in other words nearly a week. Mr. Driver seeks to rely on the "unconscionability" of that Clause. He says there was inequality of bargining power, and I ought not to enforce it. In the alternative, he says this: "It is implicit in the agreement between my lay client and the bank that he should only be obliged to pay to the bank what the bank is obliged to pay to what are vulgarly known as "outlets" where the Card has been used;", and he points to the standard form of agreement between the bank and the organisations which have agreed to give credit on the bank's visa Card. That is a document known as "Visa Card Program Merchant Agreement" which the Plaintiff into which, in its ordinary course of business, enters, and which has been exhibited before me for my enlightenment (if that be the right phrase). What Mr. Driver points out is this: That the arrangement between Sun Hung Kai and what is described as "Merchant" in this agreement, contains the following Clauses:
The Floor Limit is the amount prescribed in a document known as "Floor Limit List" and exhibited as A-2 to the first Affirmation of Miss Yeung. 5. The other thing that Mr. Driver has pointed out to me is the next Clause 4: -
and in clause 6:-
and Clause 8:-
And, Mr. Driver says, it is quite clear, if you look at the Statements of Account in a number of instances, the Sales Slips were all issued within a short space of time by the same Department Store and exceed the Floor Limit; the bank, therefore, he urges, was not obliged to pay the Merchant. And, if the bank was not obliged to pay the Merchant, my clients, says Mr. Driver is not obliged to pay the bank. 6. This, alas, is not a point of pure law which I can determine here and now. It is a question of mixed law and fact, and there are not sufficient of the facts known to be available to the parties so as to be available to me to-day. In my judgment, therefore, there must be unconditional leave to defend for the amounts which exceed the Floor Limits, which I will be told in a few moments, so that the order that I make can be properly drawn. 7. This is an interesting and difficult point, and, in my judgment, ought to be determined after a full hearing, and not either dismissed or disposed of summarily on Order 14 proceedings. 8. It is for all those reasons that I have granted unconditional leave to defend on that amount. 9. Now I have to consider the balance. In relation to the balance, Mr. Driver says two things: One, he says there is a degree of negligence by the bank. It is conceded by Mr. Chan that there is a degree of care to be exercised by the bank itself to take care to protect its customers, but, he says, the bank has done all that it could do by feeding the central computer known as "Base One Terminal System", the fact that the Card has been lost or stolen, and that System is linked to other Regional Centres throughout South East Asia, which includes Japan. And, says Mr. Chan, "That is quite sufficient.". 10. That, alas, is not a matter that I can determine to-day. Mr. Driver goes further, he says, "But wait; stay", says he, "look at the Visa Card Program Merchant Agreement. If you, the bank, find out that you have paid more than you ought to have paid, you are entitled to re-claim from the Merchant not merely the excess under Clause 8, but the entire amount under Clause 6.". "I do not think", says Mr. Driver, "that you have in fact exercised that degree of care to which I am entitled under the Agreement.". I must confess that I am not happy about Mr. Driver's argument on that point. He, on being pressed, admits that it is a thin defence. "But defence it is", says he. In my judgment, it is somewhere between "thin" and "shadowy", but, nonetheless, it is sufficient for leave to defend, but it is not sufficient for unconditional leave to defend. I have canvassed with both Mr. Chan and Mr. Driver what ought to be done if I made an order for conditional leave to defend, and the joint opinion of both of them is that it should be a condition that the balance over the Floor Limits should be paid into a interest-bearing account in the joint names of both Solicitors, not only for the protection of the Plaintiff but also for the protection of the Defendant whose salary, I am informed, is not very great, and who would benefit much from the interest that would accrue in that account. The Plaintiff, of course, would get the interest but it would not only be able to recover additional interest if it succeeded in due course, and, if it lost, Mr. Leung would get it all back. But if he had to pay the difference, he would not be paid a full 14 ½%; he would be paying a difference between something in the region of 9 ½% to 10% and 14%. I am quite agreeable to such a clause and I will make it on ordinary loan terms. 11. The less I say at this stage the better, because this will have to go to trial, and I do not wish anything contained in this judgment to be taken in any way to affect the eventual outcome. I will annex to this decision a list of the authorities that were cited before me, and which I took into account in reaching the decision. It will also assist whoever has to conduct the trial of this matter in due course. 12. I will not include the figures in this decision now. Mr. Chan and Mr. Driver will agree them and carry them in in due course, notify my Clerk and then the order will be drawn up to contain them. Subject to hearing both of you I believe the proper Order in this instance ought to be that the costs below and here ought to be costs in the cause. 13. By consent, therefore, the Order for costs will be costs in the cause. The Solicitors allowances for to-day will be 6 ½ hours.
Representation:
Authorities Grand Trunk Railway Company of Canada v. Robinson [1915] A.C. 740, 747 Ludditt & Ors. v. Ginger Coote Airways Limited [1947] A.C. 233, 242. Canada Steamships Lines Limited v. The King [1952]A.C. 192, 204, 207/8. AMF International Limited v. Magnet Bowling Limited [1968] 1 W.L.R. 1028, 1054, 1056. Gillespie Brothers & Co. Ltd. v. Roy Bowes Transport Ltd.: Rennie Hogg Ltd. (Third Party) [1973] 1 Q.B. 400 ,416/7. Smith & Anor. v. South Wales Switchgear Coal Ltd. [1978] 1 W.L.R. 165, 167,173. Photo Production Ltd. v. Securicor Transport Ltd. [1980] A.C. 827, 843D-E. O.T.B. International Credit Card Ltd. v. Au [1980] H.K.L.R. 296, 298/9. George Mitchell (Chesterhall) Ltd. v. Finney Lock Seeds Ltd. [1983] 1Q.B. 284 and (on final appeal) [1983] 2 A. C. 803. |