STANDARD CHARTERED BANK (HONG KONG) LTD v. LEWIS PETER JOHN

DCCJ 5479/2021

[2024] HKDC 2030

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 5479 OF 2021

--------------------

BETWEEN

--------------------

--------------------

DECISION

--------------------

Introduction and Procedural Background

1.  The Plaintiff (“P”) is a banking corporation incorporated under the laws of Hong Kong with its registered office in Hong Kong.

2.  The Defendant (“D”) at all material times was and is the holder of a credit card issued by P (“the Credit Card”).

3.  In this action, commenced by a Writ of Summons filed on 30 November 2021, P has claimed against D for the sum of HK$1,600,948.25 (being the outstanding balance under the Credit Card as at 17 November 2021), post-judgment interest at judgment rate and costs.

4.  By Summons dated 4 December 2023 (“the Summons”), P applied for: (1) final judgment against D; and (2) D’s counterclaim set out in the Defence and Counterclaim filed on 22 August 2022 (“D&CC”) be struck out; under O 14 and O 18, r 19(1) of the Rules of the District Court Cap 336H (“RDC”) respectively.

5.  Following a hearing before Master Thomas Wong (“the Master”) on 16 August 2024, the Master ordered:

(1) Final judgment be entered against D in the sum of HK$1,600,948.25 together with interest thereon at judgment rate until the date of full payment;

(2) D’s counterclaim against P be struck out and dismissed; and

(3) D do pay P’s costs of this action including the costs of the Summons, the hearings on 16 April 2024[1] and 16 August 2024 to be taxed if not agreed.

6.  By a Notice of Appeal filed on 30 August 2024, D seeks to appeal against the decision of the Master.

7.  D has been unrepresented throughout these proceedings.

8.  The hearing of D’s appeal was originally fixed for hearing on 17 October 2024 (“the Hearing”).

9.  By letter dated 8 October 2024 (“the 1^st Letter”), D first wrote to this court seeking an adjournment of the Hearing for a minimum of two and a half months. Essentially, D gave the following reasons for seeking the adjournment:

(1) As he is representing himself, he anticipated more time was required to research the various court rules and procedures, previous similar cases and to take advice on this matter;

(2) He was also considering other alternatives and options such as seeking an individual voluntary arrangement and filing for bankruptcy; and

(3) He would be away from Hong Kong from 15 December 2024 to 5 January 2025.

10.  On 14 October 2024, I directed my clerk to make enquiries with P’s solicitors as to whether they had received the 1^st Letter and what was P’s position in respect of the application for adjournment.

11.  By fax to this court on 15 October 2024, P’s solicitors confirmed that the 1^st Letter was received by them on 9 October 2024. It was further mentioned therein that by a second letter dated 8 October 2024 (“the 2^nd Letter”) from D, received by email in the late evening on 14 October 2024, D sought an adjournment of the Hearing until 6 January 2025 at the earliest on the ground that he had contracted COVID and could not return to Hong Kong to attend the Hearing. P’s solicitors indicated that whilst P objected to the application for adjournment on the grounds disclosed in the 1^st Letter, subject to medical proof to be provided by D and if an adjournment was granted P shall seek costs occasioned by the adjournment, they did not object to a short adjournment of the Hearing.

12.  On 15 October 2024, I indicated that whilst I did not accept that D required further time to prepare his submissions for his appeal, which is a re-hearing of the application which led to the order under appeal, having regard to the parties’ correspondence and the alleged physical condition of D, I was prepared to adjourn the Hearing to 8 November 2024 (“the Adjourned Hearing”). I also made it clear that no further application for adjournment would be entertained and the question of costs of and occasioned by the adjournment would be reserved.

13.  By a letter dated 15 October 2024 (“the 3^rd Letter”), D apologized that the 2^nd Letter was wrongly dated and should have been dated 14 October 2024. He reiterated again that as he was unrepresented he required longer time to prepare his submissions and this was the real reason for the request for an adjournment. However, on 16 October 2024, I refused the renewed request for adjournment.

14.  By a letter dated 6 November 2024 (“the 4^th Letter”), D wrote to this court to inform that he would not be able to attend the Adjourned Hearing. He said that at the moment he was in chronic pain and cannot walk or travel. A letter from Dr Lam Ming Kuen Joseph (“Dr Lam”) dated 4 November 2024 was enclosed. Dr Lam’s letter stated that D suffered from chronic back pain and intermittent thigh pain related to lumbar scoliosis. Recently, the pain has increased when he walks and carries weight causing difficulty in travelling. Although Dr Lam says that D has difficulty in travelling, he also mentioned that as D’s condition deteriorates, D will see a spine surgeon in the UK/Europe. D further stated in the 4^th Letter that he has filed his submissions for the appeal[2] and requested that I consider those.

15.  Given D’s alleged chronic physical condition and so not as to cause further delay to the determination of D’s appeal, on 6 November 2024, I indicated to the parties that I proposed to deal with D’s appeal by way of paper disposal on the basis of the submissions already lodged.[3]

16.  By letter dated 13 November 2024, P’s solicitors enclosed a Reply Submissions which purported to answer the submissions in D’s Submissions that the Master had misunderstood/misinterpreted D’s case at the hearing on 16 August 2024 and to assist the court’s understanding of what took place at that hearing. I took the view that it is not necessary to consider what allegedly took place before the Master and did not allow the Reply Submissions, which would have necessitated an opportunity for D to further respond by way of another round of submissions causing further delay. It is well-established that an appeal from a master to a judge in chambers is dealt with by way of an actual rehearing of the application which led to the order under appeal, and the judge hearing the appeal treats the matter as through it came before him or her for the first time. The judge will give the weight it deserves to the previous decision of the master, but he/she is in no way bound by it. The judge in chambers is in no way fettered by the previous exercise of the master’s discretion. See Hong Kong Civil Procedure 2024, Vol.1, §58/1/2.

17.  In the absence of objection to determine D’s appeal on paper, and upon confirmation from P’s solicitors on 25 November 2024 that P will not insist on leave to rely on the Reply Submissions, I now proceed to consider afresh the applications for summary judgment and strike-out on the basis of P’s Submissions and D’s Submissions only.

Applicable principles for summary judgment

18.  The applicable principles for summary judgment are well-established. In Guanghua SS Holdings Limited v Lim Yew Cheng & Another [2022] HKCFI 1052 at §13, the Hon Ng J set out the proper approach to such application as follows:

(1) The Order 14 machinery works on the basis that if the plaintiff’s application is properly constituted, it is prima facie entitled to judgment unless the defendant shows cause to the contrary;

(2) The mere assertion in an affidavit of a given situation by the defendant responding to an application for summary judgment does not, ipso facto, ground leave to defend;

(3) The burden is on the defendant to show a real or bona fide defence or some other reason for a trial. The defendant must satisfy the Court that his evidence is capable of being believed and that on the basis of such evidence, there is a fair or reasonable probability of the defendant having a real or bona fide defence;

(4) In deciding whether there is a fair or reasonable probability of the defendant having a real or bona fide defence, the Court does not isolate each factual issue and consider whether it is possible that the defendant’s story on that issue is credible. Rather, the Court must look at the whole situation;

(5) In assessing the credibility of the defendant’s factual case, while the Court will not embark upon a mini-trial on affidavit evidence, the Court is not obliged to suspend its critical faculties and assume that the defendant’s evidence is accurate;

(6) If having regard to inherent plausibility, inconsistency with contemporaneous documents and other compelling evidence, the defence is not credible, the Court must say so; and

(7) If the defendant’s evidence is incredible in any material respect, it cannot be said that there is a fair or reasonable probability that the defendant has a real or bona fide defence.

19.  In D’s Submissions, it was submitted that, “the most important rule for summary judgment is that all inferences, the weight of all evidence, and each credibility determination are to be made in favour of the non-moving party (the Defendant in this case)”. No authority was cited for this bold proposition. On the other hand, it is contrary to the approach cited above, in particular, that the court is not obliged to suspend its critical faculties and assume the defendant’s evidence is accurate or credible.

Analysis on the application for summary judgment

20.  I am satisfied that P’s application for summary judgment was properly constituted. The present action commenced by writ is one which O 14 applies. The Statement of Claim has been served on D and D has given notice of intention as required under O 14, r 1 of RDC. The affirmation in support of the application also complies with the requirements under O 14, r 2 of RDC. Thus P is prima facie entitled to judgment unless D shows cause to the contrary.

21.  In D’s affirmation, it is asserted that there is a number of serious factual disputes between the parties.

22.  Firstly, D denies that by virtue of using P’s banking facilities he undertook and agreed to be bound by P’s Credit Card Terms. In the D&CC, D has pleaded that he has no recollection nor has any record of any Credit Card Terms (or any agreement) having been signed or entered into with P. On the other hand, P’s case is that the general practice of P is that after the credit card has been issued, the credit card together with the Credit Card Terms would be mailed to the cardholder to activate and sign the credit card.

23.  I am of the view D’s assertions that he did not enter into any agreement with P and did not agree to be bound by the Credit Card Terms are not credible or believable in light of the following matters:

(1) D has admitted that he is the holder of the Credit Card. Whilst he says that he has not signed any credit card agreement with P, he must have signed on the Credit Card and activated the Credit Card which signifies his agreement to the Credit Card Terms. Clause 2.3 of the Credit Card Terms states: “The terms of our banking agreement apply to each use of a credit card. If a cardholder does not agree with those terms, they should not activate or sign the credit card or carry out any transaction.”;

(2) Whilst D asserts that he has no recollection or any record of the Credit Card Terms, it is inherently unlikely that P would have just mailed the Credit Card without any terms and conditions governing the use of the Credit Card;

(3) In any event, the monthly statements of the Credit Card stated that the Credit Card Terms can be found on P’s website and the website address was provided;

(4) In the D&CC, D has implicitly accepted that he has used P’s banking facilities (but denies by virtue of using P’s banking facilities he agreed to be bound by the Credit Card Terms). The monthly statements issued to D for the Credit Card show that the Credit Card had been used. See Clause 2.3 (quoted above) and Clause 2.4 of the Credit Card Terms which provides that when the Credit Card is first used, the terms of P’s banking agreement is accepted by the user; and

(5) The email correspondence and transcripts of the telephone calls between P and D for application for a debt restructuring plan demonstrate D’s acknowledgement that he owed P the balance due on the Credit Card and he had to make repayment of the balance (but hoped to do so by way of instalments).

24.  Secondly, D asserts that starting in November 2020, P agreed during discussions regarding the terms of a restructuring plan to freeze the account and not apply further interest, fees, penalties or charges. However, this assertion is not supported by any contemporaneous document and is incredible. At most, in one of D’s email to P dated 7 March 2021, it was mentioned that he was told P will offer to remove the interest charges and fees. (“In previous conversations you have also told me that you will offer to remove all interest charges and fees which have been added since my credit card with you was suspended several months ago. These have been accruing at more than 30% per annum and have taken my card over the limit. I wish to clarify that you will still do this?”)

25.  Furthermore, the transcript of the telephone calls between P and D demonstrates that D was told in clear terms that interest and other charges and fees were accruing on his indebtedness under the Credit Card notwithstanding D was applying for a debt restructuring plan (“DRP”). See:

(1) The telephone call on 2 March 2021: After Isabella Chan (“IC”) of P urged D to submit his DRP as soon as possible, she said: “Then I have to tell you that the interest and late charge will be accumulated this time.” D acknowledged by replying: “Well you accumulate it anyway.”; and

(2) The telephone call on 8 March 2021: IC stated: “Since we have received your email yesterday, and you have mentioned that someone told you that you will be offered to remove all interest rate fee we have added since your credit card is suspended several months ago. I found that this conversation should be made by our colleague with you on 21^st of January, and that waiver is only appropriate for the one-off settlement. So if you could repay in one shot payment, we can arrange the waiver for you. But this is not suitable for the DRP application. Okay?” D then replied “Ok”.

26.  Thirdly, in the D&CC, it is pleaded that sometime in March 2021, D received a call from IC to tell him that P would agree to reduce the amount outstanding on the Credit Card account to HK$1,300,000 if he would agree to pay this new balance in 48 monthly instalments of HK$40,000 per month (equating to interest rate of 0.35% per month). D was given until close of business on 8 March 2021 to reply. It is pleaded that D replied by email on 7 March 2021 to accept P’s restructuring plan on the terms proposed by P. However, on 16 March 2021, D was informed P’s offer had been withdrawn with no explanation.

27.  As the transcript of the telephone conversation on 2 March 2021 demonstrates, the restructuring proposal for repayment in 48 months by monthly instalment of HK$40,000 together with a good faith payment of HK$50,000 had to be submitted to P for approval but was not because D said he needed time to think about it. IC gave D a deadline before 8 March 2021 to make the application to P. It is clear from the transcript of the telephone conversation on 8 March 2021, no application had been made yet by D at that point. IC made clear that the restructuring proposal must include a good faith payment otherwise P cannot offer any DRP. Towards the end of the conversation, although IC agreed to try to seek further approval without the good faith payment, she advised that the chance of approval was low. Then by a conversation on 16 March 2021, IC informed D that the DRP application was declined. Plainly, the contemporaneous record do not support any concluded DRP.

28.  Whilst there are allegations in D’s affirmation that the telephone transcripts provided by P were selective and not full disclosure of all calls and documents including emails, I see no legal basis for any duty for P to disclose any documents in support of D’s defence. In any event, even if D believes there are other relevant documents in the possession, power or custody of P, he has not applied for specific discovery against P.

29.  For completeness, I should mention that in D’s affirmation he submitted that by waiting for more than one year to apply for judgment after P’s Reply and Defence to Counterclaim was filed strongly suggests this is not an obvious case for summary judgment or striking out. However, there is nothing to this point. There is no express provisions in RDC as to when an application for summary judgment must be made. Moreover, in Morison, Son & Jones (Hong Kong) Ltd v Yiu Wing Construction Co Ltd [1989] 1 HKLR 432, the Court of Appeal explained that summary judgment should not be denied by reason only that delay is not satisfactorily explained. Rather, the court should approach each application on the footing that if the plaintiff has satisfied it that notwithstanding the delay there is no defence to his claim, he is entitled to summary judgment, albeit subject to questions of costs on account of delay unless there are special circumstances which make summary judgment unjustifiable (see 438A-C). I cannot see how in the present case any delay has adversely affected the merits of the application for summary judgment or costs have been unnecessarily incurred as a result.

30.  Accordingly, I am of the view that there is no credible or believable evidence that D has a fair or reasonable probability of having a real or bona fide defence to P’s claim.

31.  D’s Submissions raised a number of “grounds of appeal” why the Master was wrong in granting summary judgment (such as the Master misunderstanding and misstating D’s case) and what the Master ought to have done (such as the Master should have allowed D to amend his D&CC or order discovery against P). As I have mentioned above, which D’s Submissions also accept, an appeal is dealt with by way of an actual rehearing of the application. The court does not need to consider if the Master’s decision was erroneous. For the avoidance of doubt, I have in any event considered all the submissions contained in D’s Submissions, and they do not satisfy me that D has shown cause why judgment should not be entered against him.

32.  Moreover, in so far as D has submitted that as a litigant in person with no legal expertise or training, the Master failed to “give leeway” to him or make inferences or credibility determination in his favour, as mentioned above, there is no legal basis for such duty. As the Court of Appeal in AXA China Region Insurance Company Limited v Leong Fong Cheng (unrep) CACV 113/2016, 28 October 2016 observed at §47:

“Sometimes litigants acting in person treated the court as their legal advisors and shifted the responsibility for the preparation of their case to the court. We must state categorically that a litigant in person should bear responsibility for the proper preparation of his or her own case in accordance with the rules and procedures of the court. The court’s function is to adjudicate or rule on a matter, not to give advice.”

33.  For all the above reasons, I would grant summary judgment in favour of P.

Applicable principles for strike out application

34.  The applicable principles for striking out are also well-settled. These include:

(1) The applicant bears the burden to show a plain and obvious case to strike out;

(2) The claim must be obviously unsustainable, the pleadings unarguably bad and it must be impossible, not just improbable, for the claim to succeed before the court will strike it out;

(3) However, plain is not the same as simple, and obvious is not the same as short. If, on a careful reading of the Statement of Claim (or in this case, Counterclaim) however complicated, it can be seen that there is no cause of action or that the claim will obviously not succeed, the court can and probably will order it to be struck out;

(4) There should be no trial upon affidavits. Disputed facts are to be taken in favour of the party sought to be struck out;

(5) Where the legal viability of the cause of action is sensitive to the facts or requires minute or protracted examination of the documents and facts of a case, an order to strike out should not be made; and

(6) The court should not decide difficult points of law in striking out proceedings.

See Hong Kong Civil Procedure 2024, Vol.1, §18/19/4.

Analysis on the application for striking out

35.  Despite affirmations having been filed by the parties respectively in support and opposition to the Summons (which includes the application for striking out), when considering the application to strike-out D’s counterclaim under O 18, r 19(1)(a) of RDC on the basis it discloses no reasonable cause of action, I will disregard those affirmations but proceed on the basis of the facts alleged in the D&CC are true.

36.  In D’s counterclaim, D claims that by reason of the matters pleaded in paragraphs 14 to 32 of the D&CC, P acted in bad faith, negligently and in breach of contract. D claims that P is responsible for the loss, harm and damage done to him, his business and company. Essentially, D claims:

(1) Firstly, by giving no prior notice of the closure of D’s business account held with P in breach of P’s Terms and Conditions for operation of that account: (1) with the closure of his business account, he could not pay in his income from his freelance work and self-employment, could not operate his company and suffered a loss of business and opportunities for new business; and (2) P “sabotaged” the repayment plan offered by P because D had “no mechanism” to accept the terms of the repayment plan offered by P (“the Closure of Account claim”); and

(2) Secondly, the withdrawal of the restructuring plan accepted by D on 7 March 2021 amounted to breach of contract by P (“the Breach of Contract claim”).

37.  Insofar as D’s claims are based on breach of bad faith, the basis for such duty of good faith has not been pleaded. The essential relationship between a bank and its customer is contractual. It is not a fiduciary relationship. See Paget’s Law of Banking, 16^th Edn, §4.1. Furthermore, the courts have maintained a broadly skeptical approach to allegations of implied or general duty of good faith in the banker-customer relationship: see ibid, §4.28.

38.  In any event, even on D’s pleaded, there is no plea that the failure to give prior notice to D was out of bad faith. It is pleaded that a letter dated 7 January 2021 was sent to D notifying of the closure of the account. Whilst the letter was sent to an incorrect correspondence address, as P had not updated its record, there is no plea that this was done out of bad faith. Similarly, no lack of good faith is pleaded in respect of the alleged withdrawing of the restructuring plan by P. In any event, I cannot see how any claim based on breach of good faith would add anything to D’s claim when he has already pleaded a claim based on breach of contract.

39.  As for the claims based on contract, in respect of the Closure of Account claim, whilst it is pleaded that the closure of D’s banking facilities without notice to D was in clear breach of the Terms and Conditions, it is not pleaded what loss has been suffered as a result of notice not being given.

40.  It is pleaded that D discovered P had closed his business account on 2 June 2021. It is also pleaded the letter notifying D of the closure was sent to him by email on 2 June 2021. That letter stated, “your relationship manager will be contacting you shortly to discuss the most convenient means and timing of handling the return of any account balances to you.” According to D, his relationship manager called him on around 3 June 2021.

41.  In so far as D was not able to pay any money into the business account plainly, no loss or damage to the operation of D’s business would or could have been suffered by D or his business. In respect of his or his business’ monies held in that business account, there is no plea that D was not able to withdrawn them from the account after 3 June 2021 when he had been notified about the closure and contacted by his relationship manager. There is no plea that prior to notice of the closure of the business account being given that he wished to but could not withdraw monies from that account. Whilst D has pleaded D’s income from his work dropped after the closure of the business account, there is no plea that this was as a result of the lack of notice given as opposed to the closure of the account. Any plea that the closure of the business account without prior notice caused loss or damage to D or his business is plainly unsustainable.

42.  As for the plea that D could not accept P’s repayment plan offer as a result of the closure of the business account this plea is also unsustainable when according to D, the repayment plan required good faith repayment of HK$34,000 in June 2021 (without specifying any particular date in that month). There is no plea that the lack of prior notice prior to 2 June 2021 caused D not being able to make the good faith payment in June 2021.

43.  In respect of the Breach of Contract claim, it is pleaded that but for P’s breach D would have entered into the restructuring plan which would have avoided further harm, loss and damage and costs incurred in legal proceedings involving P. No particulars are given as to what “further harm, loss and damage and costs” could have been avoided.

44.  If on D’s case there was a concluded restructuring plan and there was a breach on the part of P in seeking to renege on the parties’ agreement, D could sue P for breach of agreement by separate proceedings or, as he has done, by way of counterclaim in this action. In so far as any concluded restructuring plan affords a defence to the legal proceedings by P against him, D can or, as he has also done, raise this in defence to those legal proceedings. As for the costs, these are recoverable in the legal proceedings if D proves his case. Accordingly, the plea that “further harm, loss and damage and costs were incurred in legal proceedings involving P” is plainly unsustainable.

45.  The lack of any plea and/or the unsustainability of such plea that loss and/or damages were suffered as a result of not giving prior notice of the closure of the business account and/or the withdrawing of the restructuring plan by P also disposes of any claim based on tort. It is well-established that without damage, there is no tort. See Clerk & Lindsell on Torts, 24^th Edn, §7-06.

46.  For all the above reasons, I would exercise my discretion to strike out D’s counterclaim as I take the view that it is plain and obvious that D’s counterclaim is bound to fail.

Disposition and costs

47.  Accordingly, I would dismiss D’s appeal.

48.  Costs should follow the event. I therefore will make a costs order nisi that D should pay the costs of this appeal (including all reserved costs) to P to be summarily assessed if not agreed. If no application is made to vary within 14 days from date hereof, the costs order nisi shall become absolute and P should lodge and serve a statement of costs within 7 days thereafter. D shall submit any objections to P’s statement of costs within 7 days thereafter. There shall be a summary assessment of costs by me on paper.