STANDARD CHARTERED BANK v. LEUNG KIN KWONG

1985 No. 1792

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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ASSESSMENT OF DAMAGES

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1. The defendant was the holder of Standard Chartered Visa Card No. 4509 3610 0532 7360. That account is the basis of the contractual relationship between the plaintiff and the defendant and the terms of that relationship are governed by The Standard Bank Visa Cardholder Agreement. Paragraph 9 of that agreement makes provision for an event of default by the holder of the card and in sub-paragraph (d) thereof provides that the Bank may declare the entire amount of the holder's obligation under the contract to be immediately due and payable and the holder will pay all costs of collection including reasonable legal fees.

2. The defendant was in default of the terms of the contract between himself and Standard Chartered Visa and at the time of default the amount outstanding on his account was the sum of $8,635.52.

3. A writ was issued on 22nd March 1965 claiming, inter alia, that amount and reciting the terms of the Cardholder Agreement under which the remedy was sought. That recital is found at paragraph 3 (vi) of the statement of claim where it states The defendant agrees to be responsible for all costs of collection including reasonable legal fees".

4. That part of the statement of claim purports to quote the express provision of the Cardholder Agreement whereas a close comparison there with will show that it is not an accurate transcription but a precis thereof.

5. Having recited the basis upon which the plaintiff makes his claim the prayer for relief states, under paragraph 3 thereof, "Under paragraph 3 (vi), damages representing the plaintiff's legal costs on indemnity (SIC) for the plaintiff's full legal costs herein".

6. It will be seen that at this stage that the statement of claim inaccurately represents the terms of the contract between the plaintiff and defendant and in addition prays for a relief that is not justified either by the statement of claim itself or by the contractual agreement between the plaintiff and the defendant.

7. On the 9th April 1985, the solicitors for the defendant, Messrs. Tong & Tsoi, entered an acknowledgement of service indicating that they did not intend to contest the proceedings. It is apparent therefrom that the inconsistences between the Cardholder Agreement, the Statement of Claim and the prayer had not been apparent to the solicitors for the defendant or if they had been apparent they regarded them of little or no consequence.

8. In the absence of the intention to defend final and interlocutory judgment was entered on 17th May 1985 which judgment awarded "damages representing the plaintiff's full legal costs to be assessed". It is to be noted that the final and interlocutory judgment is in itself not in accordance with the prayer for relief in the Statement of Claim.

9. As a result of the final and interlocutory judgment the appointment for assessment of damages was made and heard by me on 7th and 24th February 1986 after which I reserved my decision to a future date.

10. In my view it falls to be determined firstly the liability of the defendant consequent upon his default in relation to the settlement of his outstanding debt to the plaintiff.

11. In the Cardholder Agreement the defendant undertook that he "will pay all costs of collection including reasonable legal fees".

12. Under paragraph 3 of the prayer for relief in the Statement of Claim the plaintiff claims "Damages representing the plaintiff's legal costs on indemnity for the plaintiff's full legal costs berein.

13. In the final and interlocutory judgment of the 17th May 1985 the defendant was adjudged to pay "damages representing the plaintiff's full legal costs to be assessed".

14. I am satisfied that, despite the plaintiff's solicitors persistent errors of transcription, it is necessary to go back to the Cardholder Agreement to determine the defendant's liability in this respect. That liability as I have repeatedly stated is to pay all costs of collection including reasonable legal fees.

15. What then are the costs of the collection of this debt? In this connection, it must be remembered that the defendant has at all times been willing, albeit unable, to pay the debt. In fact, it would appear that he settled the principal debt in two instalments and has baulked only at the payment of the costs. It has not been necessary to levy execution and, as far as can be ascertained from the solicitor's bill of costs, it was only necessary for them to receive two letters and send four letters in order to recover the full amount of the debt.

16. One element of the costs of collection is, however, "reasonable legal fees". The debt is $8,635.52. After service of the writ there was an acknowledgement of service indicating that there was no intention to defend and consequently default judgment was entered for that amount. The amount claimed is well within the jurisdiction of the District Court and the legal costs involved in obtaining a default judgment therein are $525.00. Therefore, in my view whatever the full costs of collection may be the element thereof represented by "reasonable legal fees" can only be $525.00.

17. It remains now to assess what other costs there can be in relation to the collection of this debt. As I have stated previously the plaintiff's solicitors in their attempts to recover this debt received two letters and wrote four letters.

18. In my view, for a debt of this size and having regard to the ease with which it was recovered, it is only reasonable to charge a nominal administration fee which I would say would properly be set at 5% of the principal debt.

19. Consequently, I assess "all costs of collection" to be as follows :-

20. There will be no order as to costs of this assessment.