CHIU CHIT v. BANK OF CHINA (HONG KONG) LTD

HCMP 2334/2009 &
HCMP 584/2010
(Heard Together)

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NOS. 2334 OF 2009 & 584 OF 2010

(ON AN INTENDED APPEAL FROM DCCJ NO. 4041 OF 2007)

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D E C I S I O N

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Hon Cheung JA (giving decision of the court) :

Facts

1. The plaintiff had a security trading account with a firm called TD Ameritrade, Inc (‘TDA’) in the USA.  On 4 July 2007, she wished to remit US$25,000 to TDA in order to maintain the necessary level of funds in her TDA account.

2. TDA’s bank account was with the ‘First National Bank of Omaha’, the account number was ‘1642461’.  The plaintiff’s trading account number in TDA was ‘870553955’.

3. TDA’s instructions to its client on remittance of funds as appeared in its website were :

‘ First National Bank of Omaha

1620 Dodge Street

Omaha, NE 68197

ABA# 104 000 016

Credit the account of TD AMERITRADE, Inc.

1005 N. Ameritrade Place, Bellevue, NE 68005

Account # 16424641

For further credit to: Your name

Your address

Your TD AMERITRADE account number’

4. The plaintiff went to her bank in Hong Kong, the Bank of China (‘the defendant’) and completed a Telegraphic Transfer Application Form (‘the Form’) for the purpose of remitting the money to TDA.

5. In the Form there were the printed words ‘Name of Bene’s Bank’.  The plaintiff wrote after these printed words ‘First National Bank of Omaha (‘First National Bank’) ABA^# 104000016’.  Then after the printed words ‘Name of Bene’ and ‘A/C No. Bene’, the plaintiff wrote her name ‘Cherry Chiu’ and her trading account number in TDA ‘870553955’ respectively.

6. The Form also contained a printed word ‘Other’ and the plaintiff wrote after that

‘ Credit the Account of TD Ameritrade Inc, Account^# 16424641.  Further Credit to My Account.’

7. The plaintiff claimed that the money was not transmitted to TDA and as a result TDA liquidated her account, causing her to sustain loss.  She sued the defendant to recover the loss alleging the defendant had breached its contract with her and was also negligent.

The judgment

8. The trial was heard by H H Judge Mimmie Chan.  On 21 August 2009 she held that the defendant was not liable to the plaintiff for damages for breach of contract on the ground that the remittance failed because of the incorrect information given by the plaintiff in the Form.  The transmission was made to First National Bank but it failed because there was no bank account number 870553955 at First National Bank in the name of the plaintiff.

9. But the Judge also found the defendant was negligent in that it failed to clarify with the plaintiff the contradictory or incorrect information contained in the Form.  She further held that the defendant had failed to detect the inconsistencies in the Form.  But as it was the plaintiff who substantially and materially caused the failure of transmission by her own error in naming herself as the beneficiary instead of TDA and stating 870553955 was the account number of the TDA, the Judge held that the plaintiff was 70% to blame and the defendant 30% to blame. 

10. On 27 January 2010, the Judge gave judgment on the assessment of damages.  She dismissed the plaintiff’s claim and awarded costs against her. 

Leave to appeal

11. The plaintiff sought leave to appeal out of time against the judgment on liability.  Leave was refused by the Judge.  The plaintiff renewed her application before this Court.  By the time the application came before this Court on 29 January 2010, the Judge had delivered her judgment on damages.  The Court adjourned the application to enable the plaintiff to apply for leave to appeal against the judgment on damages as well.   She did and the Judge refused her application.  She now also renews her application for leave to appeal against the assessment of damages before us.

Delay

12. The judgment on liability was dated 21 August 2009.  Under Order 58 rule 2(4)(b) of the District Court Rules (Cap. 336) the plaintiff has 28 days from the date of the judgment to apply for leave to appeal.  The plaintiff’s application for leave was issued on 15 October 2009.  There was a delay of 27 days.

Merits

13. However, we would like to deal with the application on the merits.  The plaintiff had obviously provided wrong information to the defendant on the Form.  The beneficiary referred to in the Form should be TDA and not the plaintiff herself.  Since the plaintiff had correctly named First National Bank as the beneficiary bank, she ought to have known that the reference to ‘Name of beneficiary’ is a reference to TDA and the required accounts that she should fill in should be TDA’s account with First National Bank followed by her trading account with TDA as stated in TDA’s instruction to its customers on remittance.

14. The defendant’s evidence is that in relation to the ‘Other’ item in the Form it is in respect of payment of bank charges.  This makes sense because the bottom part of the Form is as follows :

‘ Your charges o deduct from amount remitted

o debit from our Account No.

o other.’

15. In our view the Judge correctly held that there was no breach of contract in that the transmission was made according to the plaintiff’s instructions. 

16. As to the Judge’s finding and apportionment of negligence, clearly both the plaintiff and the defendant were responsible for the failure.  The apportionment cannot be faulted because the plaintiff’s error was the predominant cause of the failure.

Damages

17. The plaintiff claimed the following sums of damage :

(1)   US$35,436.60 being loss suffered in margin trading on the TDA account as a result of it being liquidated;

(2)   US$37,082.71 being estimated profit if the account was not liquidated;

(3)   US$38.50 being charged for the failed remittance;

(4)   US$2.71 being lost interest.

18. The issue before the Judge was whether the first two claims were within the reasonable contemplation of the parties and was in any event not too remote.  Having considered the authorities, the Judge decided on these two points against the plaintiff.  We entirely agree with the Judge’s view.

19. The claim for US$38.50 was also rejected because the plaintiff and the defendant had agreed on 9 July 2007 that a second remittance would be made by the defendant on the plaintiff’s behalf and without any further charges and in exchange, the plaintiff agreed not to claim for a refund of the charges for the failed remittance.  Having agreed to it, the plaintiff was not entitled to make a claim on this sum.

20. The Judge found that the plaintiff was entitled to the loss of interest on the remittance which was agreed in the sum of US$2.71.  However, since the plaintiff is 70% liable in respect of her own damages, the Judge awarded US$0.81 to the plaintiff.

21. We cannot see how the Judge’s decision on these two further sums can be faulted.

22. Since the plaintiff had effectively failed in her claim against the defendant we also agree with the Judge’s decision on costs.

Conclusion

23. As the plaintiff has failed to show that there is a reasonable prospect of success of her intended appeal, this Court will dismiss the plaintiff’s two leave applications with costs to the defendant.