Citibank (Hong Kong) Ltd v. Au Wai Lun

DCCJ 1816 /2003

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 1816 OF 2003

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BETWEEN

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Coram:  Deputy District Judge J. Ko in Chambers

Dates of Hearing:  14^th, 17^th & 28^th October 2005

Date of Handing Down Judgment:  9^th January 2006

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J U D G M E N T

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1.This is the Plaintiff’s application for summary judgment against the Defendant.

The Plaintiff’s case

2.The Plaintiff is a bank carrying on business in Hong Kong and has been assigned the credit card business of Citibank International. 

3.It is the Plaintiff’s case that in about May 1993 the Defendant applied to Citibank International for a credit card known as MasterCard and was issued with a MasterCard numbered 5402-0401-0098-6834 (“the Card”).  Since 8^th March 2003, the Defendant has failed to pay the outstanding balance of the Card which, as at that date, was in the sum of $192,743.48.

4.By this action, Citibank International claimed against the Defendant for the said sum of $192,743.48 and further finance charge.  Pursuant to the Order of the Master dated 27^th September 2004, the Plaintiff was made a party to this action and it was ordered that this action be carried on between the Plaintiff and the Defendant as if the Plaintiff had been substituted for Citibank International as the plaintiff.

Preliminary matters

5.At the beginning of the hearing before me, Defence counsel took a preliminary objection and applied to strike out paragraphs 4 and 5 of the Affirmation of Chan Lick-keung filed herein by the Plaintiff in support of its application for summary judgment.  He submitted that the evidence contained in those paragraphs was based on conjecture, hearsay and supposition because the deponent had no direct personal knowledge of the circumstances leading up to the signing of the application form mentioned therein.

6.The affirmation of Chan Lick-keung begins as follows:

“1.  I am an Assistant Manager of the Plaintiff and am duly authorized to make this affirmation on its behalf.  The facts deposed to herein are within my knowledge or acquired from the books and records of the Plaintiff and they are true to the best of my information and belief.”

Paragraphs 4 and 5, which were objected to by the Defendant, then state that:

“4.  In or about May 1993, by an application made by the Defendant to the Plaintiff for a MasterCard, which was granted by the Plaintiff, the Defendant agreed to be bound by the terms and conditions as stated in the Citibank Visa and MasterCard Agreement (“the Agreement”).  There is now produced and shown to me marked Exhibit “CLK-1” a copy of the MasterCard application form signed by the Defendant (“the Application Form”) and Exhibit “CLK-2” a copy of the Agreement.

5.  I crave leave to refer to the Application Form wherein the Defendant described himself as a solicitor under the employ of William Au & Co., Solicitors.  The Application Form provides that the issue of the Card by the Plaintiff to the Defendant will be accompanied by the Agreement.  The Defendant also agreed that all terms and conditions of the Agreement and the application will form the Defendant’s agreement with the Plaintiff for the use of the Card.”

7.A copy of the MasterCard application form signed by the Defendant and a copy of the Agreement have indeed been exhibited in the said affirmation as “CLK-1” and “CLK-2” respectively. 

8.Order 14, rule 2 of the Rules of the District Court (“the Rules”) provides that:

“(1)  An application under rule 1 must be made by summons supported by an affidavit verifying the facts on which the claim, or the part of a claim, to which the application relates is based and stating that in the deponent’s belief there is no defence to that claim or part, as the case may be, or no defence except as to the amount of any damages claimed.

(2)  Unless the Court otherwise directs, an affidavit for the purposes of this rule may contain statements of information or belief with the sources and grounds thereof.

(3)  …”

9.The Affirmation of Chan Lick-keung was filed by the Plaintiff in support of its application under Order 14, rule 1.  Order 14, rule 2(2) expressly permits the said affirmation to contain statements of information or belief provided that the sources and grounds thereof is also stated.  The deponent Mr. Chan has stated that the statements in paragraphs 4 and 5 are true to the best of his information and belief and that he derived such information from the Application Form, a copy of which has been exhibited as Exhibit “CLK-1”.  It is indeed provided in the Application Form that:

(a)  the Defendant was a solicitor at William Au & Co., Solicitors;

(b)  the issue of the Card by Citibank International to the Defendant would be accompanied by the Agreement; and

(c)  the Defendant agreed that all terms and conditions of the Agreement and the application would form Citibank International’s agreement with the Defendant for the use of the Card.

10.In the premises, there was really no merit in the Defendant’s preliminary objection as the same was clearly inconsistent with Order 14, rule 2(2) of the Rules.  I therefore dismissed the Defendant’s application to strike out paragraphs 4 and 5 of the Affirmation of Chan Lick-keung with costs on 14^th October 2005.

11.Defence counsel then complained that I had not given reason for dismissing his aforesaid application.  Upon the Defendant’s undertaking through his counsel to file an application for leave to apply for judicial review within 30 days, Defence counsel applied for a stay of the Plaintiff’s application for summary judgment pending the disposal of the Defendant’s intended application for judicial review.  A short adjournment was granted for parties to prepare for argument on the Defendant’s application for stay.

12.During the short adjournment, Plaintiff’s counsel lodged in court and served on the Defendant a written skeleton argument regarding the Defendant’s application for stay contending that this court might not have the jurisdiction to grant a stay by reason of Order 53, rule 3(10) of the Rules of the High Court.

13.When the hearing resumed before me on 17^th October 2005, Defence counsel clarified that the Defendant was not applying for a stay but an adjournment pending the disposal of the Defendant’s intended application for judicial review. 

14.In the course of his submission, Defence counsel took me through voluminous authorities touching upon topics such as failure to give reason, breach of natural justice, procedural ultra vires, the Defendant’s undertaking, impartiality, discrimination, legitimate expectation and procedural unfairness.  No doubt, Defence counsel would reiterate these submissionsand authorities at the Defendant’s application for judicial review.  For the present purpose, I needed only to take note of thesesubmissionsand authorities (which I did) andI would respectfully defer the determination to the Judge hearing the Defendant’s application for judicial review.

15.In considering the Defendant’s application for an adjournment, I further took into account the following matters.

16.First, the Defendant’s preliminary objection was clearly contrary to Order 14, rule 2(2) of the Rules to which the Plaintiff’s counsel has expressly referred to in argument.  The Rules were made under the District Court Ordinance.  In the exercise of my judicial function, I could only have applied the relevant law,including the Rules, to the facts before me.  There could not have been any other alternative except to decide as I did.  Any fair-minded and informed observer would have concluded that the Defendant’s preliminary objection was misconceived and the application for striking out bound to fail.

17.Secondly, I noted from Order 53, rule 3(10) of the Rules of the High Court that the Court of First Instance might direct a stay of the proceedings to which the application relatedin granting leave to apply for judicial review.  So, the Defendant might, if he so wished, applied for a stay of the present proceedings when he applied for leave to apply for judicial review.  As the Defence counsel had elected to apply for an adjournment as opposed to a stay, it was not necessary for me to consider the submission of the Plaintiff’s counsel concerning the jurisdiction of this court to grant a stay of the present proceedings.

18.Thirdly, Plaintiff’s counsel observed from authorities such as Secretary for Justice v. Lee Wai-man [1999] 1 HKLRD 572 and Mo Yuk Ping v. Secretary for Justice, CACV 270/2005 that the courts had repeatedly stressed in the context of criminal proceedings that it was highly undesirable and extremely rare to interrupt acriminal proceeding to enable a party disappointed by a ruling on the admissibility of evidence to challenge that ruling.  He submitted there was no reason why the same approach should not be adopted to civil proceedings since a party disappointed by a ruling on the admissibility of evidence could also challenge that ruling by way of an appeal after the conclusion of the relevant proceeding.

19.I noted that the English Court of Appeal had expressed similar sentiment in the context of interlocutory appeals to the Court of Appeal in the course of trials of civil action in E McGarry (Electrical) Ltd v. Burroughs Machines Ltd, April 14, 1986, CA Transcript No.346.  In that case, Dillion LJ said:

“… I greatly regret that the learned judge was persuaded to grant leave to appeal.  It is highly undesirable that there should be appeals in the course of the trial of actions.  It is altogether better that matters of an interlocutory nature which crop up in the course of a trial should work themselves out in the course of the same trial without interlocutory recourse to this court before the facts have been completely determined and the trial has been concluded.”

Lloyd LJ also said in the same case that:

“… The Criminal Division of this court never hears appeals in the course of the trial.  The Civil Division only does so in exceptional circumstances.  The reason is not just that it interrupts the trial, although that is usually a sufficient reason.  There is a further reason.  If it became the practice to give leave to appeal in the course of a trial, this court would soon be overwhelmed with appeals, many of which would or might in the event prove academic.”

20.In my view, the statements of Dillion and Lloyd LJJ quoted above, though spoken in a different context, apply mutatis mutandis to the present situation.  Subject to the granting of leave to appeal, the Defendant in this case could take his objection to the admissibility of paragraphs 4 and 5 of the Affirmation of Chan Lick-keung on appeal if necessary after determination of the Plaintiff’s application for summary judgment. 

21.Fourthly, the hearing before me was in fact the third time parties appeared for argument on the Plaintiff’s application for summary judgment.  The Plaintiff took out the summons on 1^st March 2005.  On 21^st March 2005, the Master gave directions for the filing of affidavit evidence and adjourned the application for argument.  The argumenthad then been adjourned twice on 31^st May 2005 and 21^st July 2005 respectively beforeit was scheduled to be argued before me.  In those circumstances, I considered it generally undesirable to further defer argument on the Plaintiff’s application for summary judgment.

22.For the above reasons, I dismissed the Defendant’s application for an adjournment pending the disposal of the Defendant’s intended application for judicial review on 28^th October 2005 and proceeded with hearing argument on the Plaintiff’s application for summary judgment.

23.After I ruled against the Defendant on his application for adjournment, Defence counsel applied to withdraw the Defendant’s undertaking to file an application for leave to apply for judicial review within 30 days.  It was said that the Defendant had then opted not to apply for judicial review but to pursue his complaint by way of an appeal.  Since the Defendant was no longer minded to apply for judicial review, I considered it appropriate to release him from his said undertaking in order to prevent wasting valuable judicial time and with a view to save costs.

24.I shall now turn to the substantive application before me.

The defences

25.The Defendant has made a number of complaints in his Defence and in his affirmation filed in opposition to the Plaintiff’s application for summary judgment.  These complaints can crudely be grouped under the following headings:

(a)  the Agreement;

(b)  the amount of the Plaintiff’s claim;

(c)  over-repayment;

(d)  interest rates extortionate and/or a penalty; and

(e)  unconscionable contract.

26.In addition, Defence counsel has raised the issue of misrepresentation and/or incorporation of terms in his submission.

The Agreement

27.First, the Defendant complains that prior to Citibank International agreeing to issue the Card to him, it had not been made known to him or drawn to his attention the terms and conditions of the Card and the interest rates chargeable under the Card (see paragraphs 3 and 4 of the Defence and paragraph 2 of the Defendant’s affirmation).  

28.Secondly, the Defendant complains that since the issuance of the Card, the Plaintiff had from time to time revised and issued new terms and conditions of the Card without consulting him.  These “new” terms and conditions, contends the Defendant, constitute new contracts between the parties (see paragraphs 3 and 4 of the Defence and paragraphs 2-4 of the Defendant’s affirmation).

29.There is no dispute that the Defendant did complete the application form dated 26^th April 1993 exhibited as “CLK-1” (“the Application Form”).  At the end of the Application Form, there is the following statement:

“To Citibank N.A.

I/We warrant that the above information is true and correct and authorize Citibank Card Products Center to verify it from and exchange it with any source.  The issue of any card by you to me/us will be accompanied by your Citibank MasterCard Agreement.  I/We agree that all terms and conditions of such Agreement and this application will form my/our agreement with you for the use of such card(s).  I/We also agree to accept joint and several liability for all charges on my/our account.

…

Signature of Principal Card Applicant:

(Defendant’s signature)”

30.To start with, the Defendant has admitted in paragraph 4 of the Defence that Citibank Internationalhas granted him a credit line of $200,000 and he has drawn upon such credit.  As such, the Defendant is not denying the existence of an agreement between Citibank International and him. 

31.By the aforesaid statement in the Application Form, the Defendant had agreed that he would only be supplied with the terms and conditions of the Card subsequently together with the Card.  There is no dispute that the Defendant was indeed issued with the Card.  Significantly, the Defendant does not dispute the fact that he has received a copy of the terms and conditions of the Card together with the Card.

32.It is provided in the preamble to the Agreement that by signing or using the Card, the Defendant agrees to abide by and be liable for any payment to Citibank International in connection with the terms therein.  It is also clear from the monthly statements exhibited as “CLK-3” that the Defendant has used the Card.  By signing and using the Card, the Defendant must have accepted the terms and conditions of the Card.

33.Further, it is common ground that the Plaintiff has revised the terms and conditions of the Card since the issuance of the Card.  It is the Plaintiff’s case that the current terms and conditions are those stated in the Agreement exhibited as “CLK-2”.

34.Clause 10 of the Agreement indeed provides that:

“10.     AMENDEMENTS

10.1    [Citibank International] hereby reserves the right at any time to amend the terms of this Agreement including, without limitation, the rates of any charges or fees and method of payment by prior notice.  Amendments will take effect 30 days after the date of notice of the amendments or such later date stipulated by [Citibank International].

10.2    If [the Defendant] does not accept [Citibank International’s] amendment, [the Defendant] will within 7 days after notification by [Citibank International] of such amendments discontinue the Account by written notice to [Citibank International].

10.3    Any transaction using the Card after the effective date of the amendments will be deemed to be conclusive evidence that [the Defendant] has accepted and agreed to such amendments without reservation.”

35.The Defendant has admitted in paragraph 2 of his affirmation that he has received notices of revisionof the terms and conditions of the Card.  One of such example would be the notice to amend clause 4.3(c) and (j) in the monthly statement of the Card dated 8^th December 2000 (at p.31 of Exhibit “CLK-3”).  The Defendant is generally entitled to refuse to accept Citibank International’s amendments pursuant to clause 10.2 quoted above.  It is not the Defendant’s case that he has ever invoked clause 10.2 to refuse to accept any of the amendments.  On the contrary, it is clear from the monthly statements that the Defendant has continued to use the Card.  By operation of clause 10.3, the Defendant is deemed to have accepted those amendments by subsequent use of the Card.

36.In the premises, it is clear that there is an agreement between Citibank International and the Defendant concerning the use of the Card and the terms and conditions currently applicable are those stated in the Agreement.

37.Clause 4.1 of the Agreement provides that Citibank International will maintain an account in respect of the Card to which the values of all transactions and all charges, fees, interests, outstanding balances and other terms payable will be debited.  Clause 4.3 then sets out all the charges and fees chargeable to the Defendant under the Agreement.

38.In the premises, there is no substance in the Defendant’s complaint that he was not informed of the interest rates in terms of charges and fees chargeable under the Card.

39.There is then the Defendant’s contention that the amendments constitute a new contract imposed on him in 2003 (see paragraph 3 of the Defendant’s affirmation) and he relies on the handwritten marking of “2003” on the Agreement (see Exhibit “CLK-2”) and clauses 8 and 10.1 thereof in support.  The significance of this contention, which will become apparent shortly, is that if the Agreement is indeed a new contract imposed on him in 2003, the Unconscionable Contracts Ordinance will apply to the Agreement.

40.It is stated in Chitty on Contracts, 29^th edition (2004), Vol.1, para.22-028 that:

“Substituted contract.  A rescission of the contract will also be implied where the parties have effected such an alteration of its terms as to substitute a new contract in its place.  The question whether a rescission has been effected is frequently one of considerable difficulty, for it is necessary to distinguish a rescission of the contract from a variation which merely qualifies the existing rights and obligations.  If a rescission is effected the contract is extinguished; if only a variation, it continues to exist in an altered form.  The decision on this point will depend on the intention of the parties to be gathered from an examination of the terms of the subsequent agreement and from all the surrounding circumstances.  Rescission will be presumed when the parties enter into a new agreement which is entirely inconsistent with the old, or, if not entirely inconsistent with it, inconsistent with it to an extent that goes to the very root of it.  The change must be fundamental and ‘the question is whether the common intention of the parties was to ‘abrogate’, ‘rescind’, ‘supersede’ or ‘extinguish’ the old contract by a ‘substitution’ of a ‘completely new’ or ‘self-subsisting’ agreement.”

41.The Plaintiff has produced the monthly statements of the Card dating from January 1999 up to the cut-off date of the Plaintiff’s claim.  It is clear from these statements that the amendments made during this period (see pp.7, 8, 31, 40 and 51 of Exhibit “CLK-3”) are mostly concerned with amending the charges and fees.  In my view, these changes were not fundamental or went to the root of the agreement.

42.In the premises, the Defendant’s contention that the Agreement is a new contract imposed on him in 2003 by reason of the amendments is not supported by evidence.

The amount of the Plaintiff’s claim

43.The Defendant also complains that the Plaintiff has not disclosed how the amount of its claim in the sum of $192,743.48 is arrived at (see paragraph 5 of the Defence and paragraph 5 of the Defendant’s affirmation).

44.To start with, the Plaintiff has produced the monthly statements of the Card in exhibit “CLK-3”.  All the transactions during the period from 8^th December 1998 to 8^th March 2003 including charges and fees charged are clearly have been stated in these statements.  As a further response to the Defendant’s complaint, the Plaintiff has provided a table at Exhibit “CLK-4” giving particulars of the total outstanding amounts calculated up to 8^th March 2003.

45.Defence counsel has reiterated this complaint at the hearing and further criticizes the Plaintiff for not providing the mathematical basis of the calculation.

46.The Defendant does not dispute any of the credit card transactions or cash advancements made by/to him.  The mathematical basis of the calculation of the charges and fees charged is clearly stated in clause 4.3 of the Agreement.  The Plaintiff has provided the monthly statements at Exhibit “CLK-3” and the table at Exhibit “CLK-4” to show how the amount of its claim is arrived at.  The Defendant has not attempted to illustrate by his own calculation that the Plaintiff’s calculation is in any way incorrect.

47.It is trite law that the mere assertion in an affidavit of a given situation does not, ipso facto, provide leave to defend, since the defendant must satisfy the court that he has a fair or reasonable probability of showing a real or bona fide defence, i.e. that his evidence is reasonable capable of belief (see Hong Kong Civil Procedure 2004, para.14/4/9).  The Defendant has failed to demonstrate that there is anything wrong with the Plaintiff’s calculation.  In any event, the monthly statements should be conclusive and binding on the Defendant by reason of clause 4.5 of the Agreement.  In the premises, I am of the view that there is no substance in this alleged defence.

Over-repayment

48.The Defendant then alleges that he has been repaying the Plaintiff since 1993 and until March 2003 monthly sums, which in aggregate exceed the principal sum by more than 3 times (see paragraph 5 of the Defence and paragraph 5 of the Defendant’s affirmation).

49.The Defendant has failed to provide any particulars on the alleged payments to Citibank International/Plaintiff.  There is nothing to confirm that he has paid to Citibank International/Plaintiff an aggregate amount exceeding 3 times of the principal.  More importantly, it is not apparent from the monthly statements produced as Exhibit “CKL-3” that the Defendant has been making monthly repayments to Citibank International/Plaintiff.

50.In the premises, this alleged defence of the Defendant is not supported by evidence and is clearly incredible.

Interest rates extortionate and/or penalty

51.First, the Defendant complains that apart from interest in the form of finance charge the Plaintiff is also charging overdue interest on amounts outstanding (inclusive of interest) at 3% per month.  He contends that such overdue interest is extortionate and is in essence a penalty and is thus unenforceable (see paragraph 5 of the Defence and paragraph 5 of the Defendant’s affirmation).

52.The Defendant’s above contention is not supported by the monthly statements at Exhibit “CLK-3”.  It is not apparent from those statements that the Defendant is being charged overdue interest at 3% per month in addition to finance charge under clause 4.3 of the Agreement.  This is confirmed by the table at Exhibit “CLK-4” prepared by the Plaintiff.

53.The charges and fees chargeable under the Card are set out in clause 4.3 of the Agreement.  It is also not apparent from the Agreement that the Plaintiff is entitled to charge overdue interest at 3% per month. 

54.In the premises, the Defendant’s contention that the Plaintiff is also charging overdue interest at 3% per month apart from finance charge is not supported by evidence.  His contention that such overdue interest is extortionate and a penalty therefore also fails.

55.In any event, the Defendant is paying finance charge to Citibank International/Plaintiff in return for the latter party to continue to grant credit to him.  The payment is not due to a breach of the Defendant’s contractual duty owed to Citibank International/Plaintiff.  In the circumstances, the law on penalties is not applicable (see Chitty on Contracts, 29^th edition (2004),  Vol.1, para.26-118).

56.Secondly, the Defendant complains that the interest rates (including the overdue interest) charged are extortionate and the effective interest rate exceeds 48% per annum (see paragraph 5 of the Defence and paragraph 5 of the Defendant’s affirmation).

57.The Defendant’s complaint is not supported by calculation.   The Defendant has made no attempt to confirm by calculation that the effective interest rate of the interest charged exceeds 48% per annum.  This line of defence is therefore incredible.

Unconscionable contract

58.The Defendant relies on the following grounds to contend that the agreement is unconscionable both under common law and under the Unconscionable Contracts Ordinance (“the Ordinance”) (see paragraph 5 of the Defence and paragraph 5 of the Defendant’s affirmation):

(a)  Citibank International was in a much stronger bargaining position than the Defendant;

(b)  the standard form agreement of Citibank International was drafted with no negotiation or consultation with the Defendant as the consumer and with the interest of Citibank International in mind, leaving no choice to the Defendant at all;

(c)  the terms and conditions of the agreement and the interest rates charged had not been made known to or brought to the attention of the Defendant prior to the issue of the MasterCard;

(d)  the terms and conditions of the agreement have been revised from time to time without negotiation or consultation with the Defendant; and

(e)  the interest rates including overdue interest rate charged by Citibank International are extortionate and the effective interest rate charged exceeds 48% per annum.

59.It is immediate apparent that many of the grounds alleged by the Defendant in support of his contention here have already been dealt with in the above discussion.  In particular, I have already ruled that:

(a)  Under the terms of the Application Form, the Defendant had agreed that the terms and conditions of the Card would only be supplied to him together with the Card.  Citibank International had indeed supplied the terms and conditions of the Card to the Defendant together with the Card.  By signing and using the Card, the Defendant has accepted the terms and conditions of the Card.

(b)  The charges and fees chargeable under the Card are stated in the terms and conditions of the Card supplied to the Defendant together with the Card.

(c)  By reason of clause 10 of the Agreement, the Defendant has agreed to the terms amendments.

(d)  The Defendant has failed to prove that he was charged overdue interest or that the rate of the interest charged exceeded 48% per annum.

60.Defence counsel has prayed in aid the decision of Lord Denning MR in Lloyds bank v. Bundy [1975] 1 QB 327 in support of his argument.  However, that case has subsequently been questioned by the House of Lords in National Westminster Bank plc v. Morgan [1985] AC 686 and the learned editors of Chitty on Contracts concludes (at para.7-124) that:

“It is certainly unlikely that mere inequality of bargaining power, even when this leads to the exertion of considerable pressure, will be recognized as a ground for setting aside a contract.”

61.It is stated in Chitty on Contracts, 29^th edition (2004), Vol.1, para.7-114 and 7-117 that:

“The doctrine of unconscionable bargains seems to be limited in three ways.  The first is that the bargain must be oppressive to the complainant in overall terms; the second that it may only apply when the complainant was suffering from certain types of bargaining weakness; and the third that the other party must have acted unconscionably in the sense of having knowingly taken advantage of the complainant.”

“A contract will not be set aside merely because the aggrieved party did not have independent advice and the consideration was inadequate.  It must also be shown that the other party engaged in unconscionable conduct or an unconscientious use of power.  He must have behaved ‘in a morally reprehensible manner …  which affects his conscience … The classic example of an unconscionable bargain is where advantage has been taken of a young, inexperienced or ignorant person to introduce a term which no sensible, well-advised … person would have accepted.’  If there has been no equitable fraud, victimization, taking advantage, overreaching or other unconscionable conduct, relief will not be granted … In Boustany v. Piggott (1995) 69 P&CR 298 at 303 Lord Templeman, delivering the judgment of the Privy Council, agreed in general terms with the submission of counsel for the appellant: (1) there must be unconscionability in the sense that objectionable terms have been imposed on the weaker party in a reprehensible manner; (2) ‘unconscionability’ refers not only to the unreasonable terms but to the behaviour of the stronger party, which must be morally culpable or reprehensible; (3) unequal bargaining power or objectively unreasonable terms are no basis for interference in equity in the absence of unconscionable or extortionate abuse where, exceptionally and as a matter of common fairness, ‘it is unfair that the strong should be allowed to push the weak to the wall’; (4) a contract will not be set aside as unconscionable in the absence of actual or constructive fraud or other unconscionable conduct; and (5) the weaker party must show unconscionable conduct, in that the stronger party took unconscientious advantage of the weaker party’s disabling condition or circumstances.”

62.It is apparent from the Application Form that the Defendant was a solicitor of 15 years’ standing by the time of the application and had invested in stocks, shares, the property market as well as in family business.  He had also been holding 3 other credit cards for more than 5 years.  Given the Defendant’s background, it is simply incredible that he did not understand the legal consequences of signing the Application Form upon the terms stated therein and signing and using the Card upon the terms and conditions supplied with the Card. 

63.Given the nature of the transaction between the Defendant and Citibank International, namely, an individual applying to a bank for a credit card, there is bound to be inequality of bargaining power.  Be that as it may, unequal bargaining power per seprovides no basis for interference in the absence of unconscionable or extortionate abuse.  There is simply no evidence in this case of any actual or constructive fraud or other unconscionable conduct on the part of Citibank International. 

64.The Defendant’s contention that the Agreement is unconscionable under common law therefore fails.  I shall now turn to his corresponding contention based on the Ordinance.

65.Section 4 of the Ordinance provides that nothing in the Ordinance applies to contracts made before the commencement of the Ordinance on 20^th October 1995.

66.It is common ground that the Application Form was submitted in about April/May 1993 and the Card was issued shortly thereafter.  I have already rejected the Defendant’s contention that the Agreement is a new contract imposed on him in 2003 by reason of the amendments.  As such, the Ordinance simply does not apply to the Agreement at all.

67.I shall nevertheless continue to examine the Defendant’s contention in this regard just in case I am wrong in ruling that the Ordinance does not apply to the Agreement.

68.Section 6(1) of the Ordinance provides that:

“In determining whether a contract or part of a contract was unconscionable in the circumstances relating to the contract at the time it was made, the court may have regard to (among other things)–

(a)  the relative strengths of the bargaining positions of the consumer and the other party;

(b)  whether, as a result of conduct engaged in by the other party, the consumer was required to comply with conditions that were not reasonably necessary for the protection of the legitimate interests of the other party;

(c)  whether the consumer was able to understand any documents relating to the supply or possible supply of the goods or services;

(d)  whether any undue influence or pressure was exerted on, or any unfair tactics were used against, the consumer or a person acting on behalf of the consumer by the other party or a person acting on behalf of the other party in relation to the supply or possible supply of the goods or services; and

(e)  the amount for which, and the circumstances under which, the consumer could have acquired identical or equivalent goods or services from a person other than the other party.”

69.The Defendant has not persuaded me that the Agreement is unconscionable in the circumstances of this case.  In particular:

(a)  In relation to s.6(1)(a) of the Ordinance, the unequal bargaining power is inevitable in this case given the nature of the transaction.  There is nothing wrong in this case for Citibank International to use its standard form agreements.  This is so because the Defendant had been entitled to refuse to accept the terms and conditions of the Card by not signing or using the Card after sight of the terms and conditions. 

(b)  In relation to s.6(1)(b) of the Ordinance, there is no evidence of any such conduct engaged by Citibank International.

(c)  In relation to s.6(1)(c) of the Ordinance, the Defendant should have no difficulty understanding the terms of the Application Form and the Agreement given his background.

(d)  In relation to s.6(1)(d) of the Ordinance, there is no evidence of any undue influence or pressure exerted by Citibank International on the Defendant.  The Defendant has been entitled to terminate the Agreement at any time by written notice (see clause 9.2 of the Agreement) but has apparently elected not to do so.

(e)  In relation to s.6(1)(e) of the Ordinance, the Defendant could clearly have acquired identical or equivalent services elsewhere.  He already had the use of 3 other credit cards at the time of his application.

70.Furthermore, unlike the case of Hang Seng Credit Card Ltd v. Tsang Nga Lee [2000] 3 HKLRD 33, clause 5.2 of the Agreement provides that Citibank International/Plaintiff is only entitled to reasonable fees and expenses reasonably incurred in connection with demanding, collecting or suing the Defendant other than legal fees and there is an upper limit of 30% of the original outstanding amount.

71.In the premises, I am not persuaded that the Agreement is unconscionable under the Ordinance even if the Ordinance applies to the Agreement.

Misrepresentation and/or incorporation of terms

72.Built on the aforesaid complaints/contentions, Defence counsel concludes that the terms of the Agreement are unfair, unreasonable, unconscionable and particularly onerous.  He then submits:

(a)  based on Peek v. Gurney (1873) LR 6 HL 337, that there has been a misrepresentation by omission and/or conduct on the part of Citibank International in not explaining such unfair, unreasonable and unconscionable terms to the Defendant.

(b)  based on Interfoto Picture Library Ltd v. Stiletto Visual Programmes Ltd [1989] 1 QB 433 and Tilden Rent-A-Car Co v. Clendenning (1978) 83 DLR (3d) 400, that such onerous terms have not been incorporated into the agreement between Citibank International and the Defendant because they had not been specifically drawn to the Defendant’s attention.

73.To start with, the above submissions are all premised on the contention that the terms of the Agreement are unfair, unreasonable, unconscionable and onerous.  As I have discussed above, the terms of the Agreement are not unconscionable.  There is also nothing to suggest that the terms are unfair, unreasonable or particularly onerous.

74.In any event, the Defendant had been provided with a copy of the terms and conditions of the Card together with the Card.  Given the Defendant’s background (as disclosed in the Application Form), he should have no difficulty understanding the terms and conditions.

75.The preamble of the Agreement clearly provides that:

“By signing or using the Card, the Principal Cardholder and any Supplemental Cardholder … jointly and severally agree or confirm their agreement to abide by and … be liable for any payment to the Company in connection with following terms…”

It is not the Defendant’s case that he did not have ample opportunity to peruse and consider the terms and conditions.  By signing and usingthe Card, the Defendant has elected to agree to the terms and conditions of the Card.  In the circumstances, there cannot be any question of misrepresentation or failure to incorporate the terms and conditions into the agreement between Citibank International and the Defendant.

Conclusion

76.For the above reasons, the Defendant has not satisfied me with respect to the Plaintiff’s claim that there is an issue or question in dispute which ought to be tried or that there ought for some other reason to be a trial of that claim.  I grant judgment in favour of the Plaintiff against the Defendant in terms of paragraphs (i) and (ii) of the Summons dated 28^th February 2005.

77.Based on clause 5.2 of the Agreement, the Plaintiff has applied for costs on common fund basis.  That clause provides that:

“… If [Citibank International] has incurred any legal or collection fees or other expenses for the purpose of demanding, collecting or suing to recover any sum payable hereunder from the [Defendant] or other remedies resulting from the breach or non-compliance with any terms of this Agreement, the [Defendant] will reimburse [Citibank International] all such legal fees as taxed by the court on a common fund basis (fees and disbursements which are of a reasonable amounts and reasonably incurred) unless otherwise agreed…”

78.It has been observed by Litton VP in Chekiang First Bank v. Fong Siu Kin [1997] 2 HKC at 309D-F that:

“Plainly, the exercise of the court’s jurisdiction as to costs cannot be fettered by anything in the mortgage deed.  On the other hand, where parties have contractually provided for the basis upon which costs are to be quantified, the court would in the normal course of events give effect to that: the English Court of Appeal so held in Comba Holdings v. Minories Finance [1993] Ch 171 at 191B.”

79.I make an order nisi that the Defendant do pay the Plaintiff’s costs of this action including the costs of the Plaintiff’s application for summary judgment and the costs of the Defendant’s application for adjournment pending the disposal of his intended application for judicial review and all reserved costs, to be taxed on common fund basis if not agreed with certificate for counsel.  Unless an application has been made to vary such order, such order shall become absolute 14 days after this written decision is handed down.

Mr. Anson Wong instructed by Messrs Dibb Lupton Alsop for the Plaintiff.

Mr. William Allan instructed by Messrs. Simon Chan & Co. for the Defendant.