XCHRCX SHERATON DESERT INN CORPORATION v. WONG HON

No. A6588 1994

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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REASONS FOR JUDGMENT

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1. This was an appeal against the decision of Master Jennings given on 19 December 1994 ordering final judgment for the plaintiff under Order 14. On 8 March 1995, I dismissed the appeal with costs, saying that I would hand down my reasons later. These are my reasons.

2. I set out the allegations in the plaintiff's statement of claim at some length because they are important -

"The Plaintiff is a company incorporated in Nevada, the United States of America, which owns inter alia the Desert Inn Hotel and Casino at Las Vegas, Nevada ("the Casino ").

On January 31 1994, the Defendant applied for, and was granted by the Plaintiff credit arrangements to gamble at the Casino ("the Agreement"). The said application is evidenced by a form dated 31 January 1994 containing the Defendant's personal details and signed by him.

Between 12th to 15th February 1994, the Plaintiff provided to the Defendant credit facilities for the purposes of gambling. On each occasion that the Defendant drew upon the credit facilities, he executed a document known as a "marker". Each marker evidences the amount of money advanced by the Plaintiff to the Defendant in the form of gambling chips and records certain terms of the Agreement. It was a term of the Agreement that the amount(s) of facilities provided by the Plaintiff would be repaid in full by the Defendant within 60 days of the date of each marker.

Particulars of Markers

The numbers and amount in respect of each marker (being 20 in total) are set out in Schedule A annexed hereto.

Each marker executed by the Defendant stated as follows:-

"I authorize completion of a payee, any missing amounts, a date and all banking information including but not limited to any bank or bank accounts that I now have or may have in the future, the bank account number thereof and the name, address and branch of any such bank. I agree to pay costs and attorneys' fees incurred in the collection of this instrument. I hereby submit to the jurisdiction of the courts of the State of Nevada in any controversy concerning this instrument."

The Agreement is and was at all material times valid, lawful and enforceable under the laws of the State of Nevada. Gambling at the Casino is and was legal under the laws of the State of Nevada.

By signing a marker in the above terms on each occasion when credit was advanced to him, the Defendant acknowledged his liability to the Plaintiff for the amounts so advanced. The amounts advanced and the Defendant's liability to repay the same are further evidenced by the following cheques drawn by the Defendant, and payable to the Plaintiff but dishonoured on presentation;

[Particulars of three cheques totalling HK$16,212,000 drawn on Hong Kong banks are given.]

During the period 12th to 15th February 1994, the Defendant obtained credit for the purposes of gambling at the Casino in the total amount of US$2,408,000. The Defendant has failed to repay any or all of the sums so advanced pursuant to the Agreement."

3. There is no dispute as to the facts set out in this statement.

4. The first argument raised by Mr Chain, who appeared for the defendant, was that, if there was a loan by the plaintiff to the defendant, it was irrecoverable by reason of the Gaming Act, 1710. This is contrary to the conclusion reached by Jones J. in GNLV Corp. v. Tseng Hsiao Tsun (Unreported, 1991 No. A4188) in which he followed the decision in Saxby v. Fulton 1909 2 KB 208. Mr Chain says I am not bound by these decisions. That is so, but, with respect, I agree with them. I do not think that, in this respect, our law seeks to govern the conduct of persons elsewhere where that conduct is unconnected with this jurisdiction.

5. The second point made by Mr Chain is that there was never any loan by the plaintiff to the defendant, and the plaintiff's claim has been put on the wrong basis.

6. The evidence of the plaintiff is that, once credit has been extended to the customer, the customer may draw money or chips, and the customer will sign, as the defendant did in this case, a "marker" which is in the form of a bill of exchange. The defendant says much the same thing. He says he was told by an employee of the plaintiff that he "would be allowed to draw any sums of money within the credit limit . . . by specifying the sum requested and signing the so-called "marker" as referred to in the statement of claim. . . The staff of the Casino also gave me a card with my name and my assigned account number on it. With that I was able to draw sums of money from the tables by signing various "markers" and were given the corresponding value of chips to gamble at the Casino . . ."

7. So, it is clear on the evidence of both parties to the transaction that the plaintiff had agreed to advance money to the defendant and the defendant was entitled to receive money from the plaintiff. The defendant agreed, of course, to repay that money. In my view, that transaction is a loan. I do not think it makes any difference that the defendant might have exchanged the money immediately for chips, even if he did not actually receive the money in his own hands before receiving the chips. It is common to incur liability under an agreement of loan without seeing the cash; as when we write a cheque to be met by a bank under a bank overdraft.

8. The substance of the plaintiff's statement of claim is the allegation of a loan. The references to the "markers" and the cheques are there as statements that the defendant accepted liability. Accordingly, I decided that the plaintiff's statement of claim was adequately pleaded, and that there was nothing in law preventing recovery of the loan.

9. Mr Chain also suggested that the three cheques mentioned in the statement of claim could be negotiated and the defendant rendered liable on them to some third party. In the circumstances of this case, I do not believe this is realistic. If this were to happen, it could only be because the plaintiff has committed a fraud and has misled this court.

10. There was a aspect of the matter raised by Mr Carolan after I had dismissed the appeal. He says that Master Jennings did not give the plaintiff judgment for the "costs and attorneys' fees" that the defendant had agreed to pay. In terms of each "marker" signed by him the defendant said - "I agree to pay costs and attorneys' fees incurred in the collection of this instrument." Mr Chain said that he had no notice of this point, and that it may be that the Master had not granted this because the plaintiff had not clearly sued on the "markers". This may be right. The defendant agreed to pay the costs and attorneys' fees incurred in collecting the money due under the bill of exchange "markers", not generally. I have been able to decide this appeal without dealing with the point, undecided as far as I know, whether a plaintiff is entitled to recover, in these circumstances, under a security drawn on a foreign bank. The authorities say he cannot do so if the instrument is drawn on a domestic bank, and it may be that the Statute of Anne is intended to cover all instruments, whether or not they are drawn for payment in the home jurisdiction. There is an added complication in this case in that the "markers" leave the name and address of the drawee blank. In any event, it seems to me that Mr Chain is right when he says that it seems that the plaintiff has deliberately avoided suing under the "markers". In this situation, I do not think it can be said that any costs or attorneys' fees have been "incurred in the collection" of the markers. But the point has not been fully argued, and I give leave for the plaintiff to bring the matter before me again if it wishes to pursue this point.