Diners Club International (Hong Kong) Ltd v. Ng Chi Sing and Others

Case No.CACV 143/1985

Court

Court of Appeal

Date11 Apr 1986

Judge—

Case Document

100%

CACV000143/1985

IN THE COURT OF APPEAL	1985, No. 143
	(Civil)

BETWEEN

	DINERS CLUB INTERNATIONAL (HONG KONG) LIMITED	Plaintiff (Appellant)
	AND
	NG CHI SING	1st Defendant
	NG YAN KIANG	2nd Defendant (Respondent)

_______

BETWEEN

	DINERS CLUB INTERNATIONAL (HONG KONG) LIMITED	Plaintiff (Appellant)
	AND
	LAU WING KEI, DOMINGOS	1st Defendant
	NO YAN KIANG	2nd Defendant(Respondent)
	NO CHI SING	3rd Defendant

_______

Coram: Sir Alan Huggins, V.-P., Fuad & Kempster, JJ.A.

Dates of Hearing: 10 and 11 April 1986

Date of Judgment: 11 April 1986

___________

JUDGMENT

___________

Fuad,. J.A.:

1. This is an appeal from a judgment of His Honour Judge Leonard, sitting as a Deputy Judge of the High Court, in two consolidated actions concerning liability under guarantees executed by the Defendant, Mr. Ng Yan Kiang, in favour of the Plaintiff, Diners Club International (Hong Kong) Limited (" Diners Club"). The learned Deputy Judge found in favour of the Defendant and Diners Club appeals to this Court.

2. In relation to H.C.A. No. 5704 of 1984, the Defendant signed a guarantee in these terms:-

" INDEMNITY

To: DINERS CLUB INTERNATIONAL (H.K.) LTD. HONG KONG

In consideration of your making available to Mr. NG Chi-sing the facilities of a Diners' credit card, I hereby undertake to guarantee payment of all sums debited to you as the result of his use of the credit card and any subsequent cards issued."

3. The Mr. Ng Chi Sing mentioned in the body of that document is the Defendant's son, and it was signed on 29 June 1984 in Macau.

4. In H.C.A. No.5705 of 1984, the Defendant signed another guarantee on the same day in identical terms, save that it was in respect of a Mr. Lau Wing Kei who is a friend of the Defendant's son.

5. The Defendant's son, Mr. Ng Chi Sing, has held a Diners Club credit card since 19 August 1983, while Mr. Lau has had one since 28 April 1984.

6. In H.C.A. No.5704 of 1984, Diners Club obtained judgment against Mr. Ng Chi Sing for $992,602.68 with interest and costs in default of giving notice of intention to defend. In H.C.A. No. 5705 of 1984, Diners Club obtained judgment for $277,551.33 against Mr. Lau Wing Kei, again with interest and costs, under the summary procedure provided for in R.S.C. O.14. These sums were claimed against the Defendant under the two guarantees.

7. It was common ground in each case that the names of Mr. Ng Chi Sing and Mr. Lau Wing Kei appeared in a cancellation bulletin issued by Diners Card to their outlets dated 4 July 1984, instructing them not to honour cards held by them.

8. The learned Deputy Judge found on the evidence that neither card had been used after 29 June 1984 by the card-holder, although two debits relating to the earlier use of the cards came through the system on 5 July in respect of Mr. Ng Chi Sing and on 10 July in respect of Mr. Lau Wing Kei.

9. The Deputy Judge concluded that as at 29 June, the making available of facilities for the period up to 5 July was past consideration, and so, in relation to that Period, the signing of the guarantees could have had no effect. He added that if the wording of the guarantees could be construed as relating also to a promise to grant extensions of the period during which facilities would be available (and in his view they could be so construed) it was necessary to determine whether such extensions were ever granted. He was satisfied that this had not happened for the following reasons:

" Very soon after he had heard that the guarantees had been signed, probably on the morning of Saturday the 30th June or on Monday the 2nd July, Mr. David Ng of the Plaintiff company gave orders which resulted in the numbers of the relevant credit cards being included in the cancellation bulletin of the 5th July. In relation to any agreement to provide continued facilities for an extended period, there was a total failure of consideration. I have formed the view that it is highly probable that on the 29th June, even before the visit to Macau which led to the signing of the guarantee forms, a decision to withdraw facilities had already been made and the only object of the Plaintiff in obtained the guarantees was to secure the payment of past debts.

Furthermore, the evidence before the court satisfies me that Messrs. Ng, Lai and Chau of the Plaintiff company were well aware by the 29th June that LAU Wing-Kei was not in a position to pay and I find it inconceivable that they would have allowed him to retain his card. None of the witnesses who gave evidence for the Plaintiff could or would say what had happened to either credit card."

10. The Deputy Judge reached the conclusion that the guarantees failed for want of consideration. However, he went on to indicate his findings relevant to the other defences that had been raised. He rejected the defences of duress and misrepresentation, holding in respect of the latter defence, that although misrepresentations had indeed been made by the servants or agents of Diners Club, these had not been acted upon by the Defendant. He indicated, however, that the defence based on "undue influence or unfair pressure" would have succeeded. This is the subject of a Respondent's Notice.

11. It is, of course, our task to construe the guarantees according to ordinary principles; the intention of the parties must be ascertained from the language they have used, interpreted in the light of the factual situation in which the contract was made. The difficulty presented in this case arises because each so-called "Indemnity" is couched in terms more apt tothe situation when a credit card is about to be issued This is borne out both by the language used and by the fact that the printed form leaves space for "Relationship between guarantor and applicant".

12. If the learned Deputy Judge was right in concluding (and I think he probably was) that, from the wording of the documents and the surrounding circumstances, it could fairly be inferred that Diners Club were agreeing to continue making facilities available to the debtors, in my respectful judgment, he was wrong in holding that no "extensions" (as he put it) were ever granted. It is true that Diners Club may have had no practical means of withdrawing facilities after the date when the guarantees had been signed, until the appearance of the cancellation bulletin of 4 July 1984, but in my opinion the Defendant cannot successfully maintain that there was no consideration that the law will recognise.

13. However, in my view, Diners Club, on the facts found, were not entitled to judgment on their two claims against the Defendant. As we have seen the Deputy Judge found on the evidence (as he was fully entitled to do) that neither card had in fact been used after 29 June 1984. I doubt whether it would be right to read the documents as speaking of the future in the first part and of the past and the future in the second. However that may be, and whether or not there was valid consideration, as I read the guarantees, the undertakings have nothing to do with past transactions and only create liability in respect of any sums debited to Diners Club as a result of the use of the cards after 29 June 1984. One would have expected the guarantees to state that they extended to amounts already debited or to be debited to Diners Club by the previous use of the cards, if this is what the parties intended.

14. This defence was not pleaded, nor was it argued in the lower Court. Nor was it relied upon by Mr. Wong for the Defendant before interventions by members of this Court. But I agreed with my Lords that the interests of justice demanded that leave should be given to raise the point before us for the first time, and for appropriate amendments to be allowed to the Defences in each action. Like my Brothers, I was satisfied that we had before us all the facts relevant to this new contention, for there was considerable evidence on the point (and, incidentally, the express finding by the judge which Mr. Fung, for Diners Club, was no in a position to challenge). I did not consider there was any evidence that could have been adduced by Diners Club that could have prevented the point from succeeding in the Court below. This was really no more than a new argument as to the construction of the documents before the Court upon which Diners Club's claims were founded. In summary, I shared the view that to allow the new, point to be taken would be a proper exercise of our undoubted discretion in all the circumstances of this case. I would dismiss the appeal on this new ground alone.

15. In the light of the conclusion I have reached, it is not strictly necessary to decide whether or not the Defendant had made out his defence of "undue influence or unfair pressure". But in case I am wrong, and in view of the particular circumstances of this case, and the fact that the issue was fully argued both before the Deputy Judge and before us, I think it is right to address the issue.

16. On this issue, these are the Deputy Judge's findings in his own words: -

" At some time after 7 p.m. on a Friday evening, the 29th June 1984, in his own home in Macau NG Yan Kiang, a man of 60 and hard of hearing was confronted by three men who were determined to persuade him to sign the guarantees: Two came from the Plaintiff and one was LAU Wing Kei. They had travelled from Hong Kong that evening and had made no appointment so that they might take their victim by surprise. The three men did not leave until about 11 p.m. when they had achieved their object.

NG Yan Kiang was surprised and embarrassed by the visit. He had been about to go out, with his wife, at the invitation of two relatives who were at his home. Because the uninvited and unexpected callers insisted on discussings their business, he was obliged to send his relatives ahead of him to a restaurant, from which during the remainder of the evening these relatives continually telephoned him to find out when he would join them.

NG Yan Kiang told his callers that he wanted to discuss the matter with his son before he signed be they would have none of that. He had no opportunity to take independent advice, to consult his son or to think matters over and did not understand the full significance of what he was being asked to do. His visitors deliberately aroused anxiety in him (he called it fear) by suggesting that his son might be reported to the Commercial Crime Bureau (of the Royal Hong Kong Police Force) with possible disastrous consequences for the son. Lai gave evidence that the suggestion was made 'In order to make NG Yan Kiang take a more serious attitude to the matter.'

They deliberately sought to misrepresent the extent of the guarantees sought, implying that they would be of only temporary effect. They deliberately attempted to mislead him as to the size of the financial commitment he was being asked to undertake.

NG Yan Kiang was unwilling to sign, the two or three hours spent in overcoming his resistance testify to that. Finally, under the pressure exerted on him, his resistance crumbled. As he put it, he felt that he had no choice. If I may borrow a phrase from the judgment of Lord Westbury in Williams v. Bayley the signing of the forms could certainly not be described as being 'based upon the free and voluntary agency of the individual who enters into it.'"

17. I will not repeat all that the Deputy Judge said on this issue but he concluded his judgment by saying: -

"There was no doubt in my mind at the end of the trial that if he had been given any opportunity to reflect and to take advice, in full knowledge of the facts of his son's liabilities, free from illegitimate pressure, NG Yan Kiang would never have signed. He only did so because his will was overborne by the threats and pressures employed by the men who had invaded his home that night. He was a stranger to the Plaintiff. He owed the Plaintiff nothing. The conduct of the Plaintiff through its employees can only be described as disgraceful."

18. Mr. Fung, who did not appear in the Court below, did not seek to dispute the facts found by the Deputy Judge, or to defend this conduct; non did he seek to contend that there had not been "undue influence" (however termed) on the part of Diners Club. Instead, he submitted that a contract entered into under the circumstances revealed by the evidence was voidable and not void, and once the pressure had ceased, the Defendant should be held bound on the contract on the ground of ratification or assent, or for failing to seek relief in respect of the transaction in time.

19. I mean no disrespect to his submissions by contenting myself with stating that, in my view, none of the authorities he cited persuades me that anything the Defendant did or did not do disentitles him from now seeking relief from the guarantees he signed. He certainly did not expressly affirm the transactions nor did his inaction before he was sued two months or so later amount to acquiescence in the circumstances of this case. And this was not pleaded by Diners Club in the Reply or elsewhere.

20. I entertain no doubt that the Deputy Judge was right in holding that the coercion and pressure placed upon the Defendant on the evening of 29 June 1984 was of a kind that must be regarded as illegitimate and was sufficient to entitle the Court to exercise its equitable jurisdiction to deny Diners Club any rights under the guarantees. Public policy and fair play require that the Defendant should be relieved from any obligations he assumed by executing them.

21. I do not accept Mr. Fung's submission that there was insufficient material before the lower Court for this conclusion so that a re-trial is necessary.

22. Bearing in mind the need to exercise judicial moderation in language, in my respectful opinion, the Deputy Judge did not put the matter any too high by describing the conduct of the officers or agents of Diners Club towards the Defendant that night in Macau as disgraceful. So it was.

Huggins, V.-P.:

23. I, too, respectfully differ from the learned Judge when he held that the consideration for the guarantees was past. Nevertheless, for the reasons given by Fuad, J.A., I agree with the conclusion reached by the learned Judge both on the basis of the proper interpretation of the "indemnities" or guarantees and also on the basis of duress.

Kempster, J.A.:

24. I, too, agree that this appeal must fail. In the final analysis, three issues arose for our consideration. The first was whether the Plaintiff had given consideration for the guarantees sued upon; the second was a matter of the construction of the guarantees and the third, the question of "undue influence". The first two matters are closely related and the documents called "indemnities" fall to be construed in the light of the circumstances in which they came to be made, since on their face they are ambiguous, and I would construe these indemnities to read: "In consideration of your continuing to make available", for example, "to Mr. Lau, Domingos, the facilities of a Diners' credit card, I hereby undertake to guarantee payment of all sums debited to you as the result of his continued use of the credit card already in his possession, and any subsequent cards issued". Such a construction necessarily involves the conclusions that, since the facility of the credit card was not immediately cancelled on 29 June 1984, the Plaintiff gave consideration and that the guarantor's liability was limited to debts arising as a result of the use of the card after that date.

25. As to "undue influence", I would adopt a passage that appears on page 299 of the second edition of Ashburner on Equity:

"In a court of equity, if A obtains any benefit from B whether under a contract or as a gift, by exercising influence over B which in the opinion of the Court prevents B from exercising an independent judgment in the matter in question, B can set aside the contract or recover the gift."

The facts found by the learned Judge fully satisfy that test. On both grounds, therefore, the Defendant is entitled to succeed. Nothing, I should add, amounting to laches or acquiescence occurred during the two months which elapsed between the signing of the guarantees and the plea of "undue influence" in the Defence and Counterclaim.

26. In conclusion, I know my Lords share my appreciation of the judicious and disarming manner in which Mr. Fung has conducted this very difficult appeal on behalf of the Appellant.

Representation:

Mr. Alfred Fung (Henry C.K. Tung & Co.) for Appellant.

Mr. P.W. Wong (Mui & Sin) for Respondent.