AMERICAN EXPRESS INTERNATIONAL INC v. TING WAI KWAN AND ANOTHER

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

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

JUDGMENT

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

Fuad, V.-P.:

1. This is an appeal by the 2nd defendant, Tang Chi Hung, trading as Holland Electronic Trading Company, from the judgment of Liu, J. dated 20th July 1990 whereby he dismissed an appeal from the order of Master Perrior giving judgment under RSC 0.14 for damages to be assessed, in favour of the plaintiff, American Express International Inc. In dismissing the appeal, the Judge in Chambers ordered the 2nd defendant to pay the costs of the appeal to be taxed on a common fund basis.

2. On 28th July 1989 American Express issued a writ against Ting Wai Kwan as the 1st defendant, and against the 2nd defendant, claiming $74,085.72 from them both, with interest. By their Statement of Claim which accompanied the writ, they pleaded that they had agreed to issue a charge card to the 1st defendant upon the terms and conditions set out in an agreement in writing, a copy of which had been sent to the defendants with the charge card. They had agreed to issue the card pursuant to the written request of the defendants dated 2nd September 1988.

3. The Statement of Claim set out some of the terms of the agreement relied upon. It was then pleaded that in consideration of the plaintiff issuing the charge card, the defendants jointly and severally undertook to pay the plaintiff all the sums debited to the plaintiff as a result of the use of the card. It was then averred that as a result of the use of the card issued to the 1st defendant, the plaintiff had had debited to it the sum of $73,085.72 as at 16th June 1989. Despite repeated demands neither defendant had paid any part of the sum due.

4. The 2nd defendant filed a Defence on 2nd October 1989. It was amended on 25th January 1990 pursuant to an order given by Master Woolley. The 2nd defendant pleads that the request of 2nd September 1988 had been turned down by the plaintiff and he (the 2nd defendant) had never made any further request for the issuance of a card. He denies having received a copy of the alleged agreement as averred by the plaintiff.  He denies having entered into any such agreement, and denies ever having authorised the use of the card.

5. The 2nd defendant pleads, further or in the alternative, that if he is held to be bound by the terms of the pleaded agreement, by virtue of clause 11 thereof, his liability is limited to $250.00. He also avers that he informed the plaintiff as early as 23rd November 1988 of the fact that he had not authorised the use of the card and so he could not, in any event, be liable for any amounts due as a result of the use by the 1st defendant of the card after that date.

6. On 26th October 1989, the Plaintiff took out a summons under O.14, r.1 for summary judgment against the 2nd defendant. The supporting affidavit was sworn by Mr. Lung Ka Leung, who is the plaintiff's Accounts Control Analyst. It verified the amount said to be due from the 2nd defendant. He explained that the 1st defendant had applied for a credit card in the names of himself and the Holland Electronic Trading Company. The company chop was used on the application form and Tang Chi Hung had signed as General Director of the Company on the application form. He went on to say that the plaintiff had carried out a search of the Holland Company. He said that the card member agreement was printed on the card carrier enclosed with any new card sent to the card member and "by signing and using the enclosed card, one is accepting the conditions stipulated." He referred to a clause in the agreement which provided that "the Company and any Company card holders using the Card Account agree jointly and individually to be bound by the terms of this agreement." Mr. Lung continues by saying that by using and signing the card, the 1st defendant had agreed to be bound by the terms and conditions of the agreement. Furthermore, he adds, "his actions also bound the 2nd defendant." He says that all the statements of account had been sent to the company at their Tai Wo Commercial Building address in Nathan Road. All the charges were incurred before the 2nd defendant told the plaintiff to cancel the charge card on 17th December 1988. Judgment had been obtained against the 1st defendant on 29th September 1989 and he asserted that the Defence filed was not one of substance.

7. In an attempt to show cause why summary judgment should not be given against him, Mr. Tang Chi Hung made an affirmation dated 16th November 1989. He denied any indebtedness to the plaintiff. He referred to, and relied upon, what was stated in his Defence. He exhibited a letter addressed to the 1st defendant by the American Express dated 22nd September 1988 referring to their application for a credit card saying:

8. Mr. Tang further affirmed that he had not received anything from the plaintiff after this letter had been sent to the 1st defendant. In view of its contents, he had taken it that the application form he had signed had been rejected. Thus there was no agreement between his company and the plaintiff. A copy of the agreement had not been sent to him, so he could not be bound by it. He had no knowledge of the terms upon which he was said to be bound. As early as "about the 23rd November 1986" American Express had been informed on the telephone that his company would not authorise the use of the charge card.

9. Mr. Lung Ka Leung swore a second affidavit in response to Mr. Tang's affirmation, on 7th March 1990. He swore that contrary to what Mr. Tang had said "the 2nd defendant" had contacted their New Accounts Department on 4th October 1988 "and confirmed to us that his financial position had stablised." American Express had rejected his first application because he had been involved as a defendant in another case. Mr. Lung's affidavit continues "he nevertheless assured us on 4th October 1988 that the Court Action had been settled and he requested us to reconsider his application. Based on this representation, we re-opened' his account on 4th October 1988."

10. Mr. Lung exhibited a cheque dated 11th October 1988 drawn by the 2nd defendant in favour of American Express for $825. $605 of this sum was paid as joining fee and annual fee, as shown on the statement also exhibited. Mr. Lung asserted that Mr. Tang's alleged oral instruction given on 23rd November 1988 would have been ineffective in the light of a clause of the agreement which provided that all notices must be sent or confirmed by prepaid post to American Express's principal place of business in Hong Kong, and he gives the address. Mr. Lung further exhibited a letter from Mr. Tang dated 28th July 1989 informing American Express that the 1st defendant had left his company on 17th December 1988. This was the first notice American Express had of the 1st defendant's departure. Mr. Lung swore further that he had no knowledge of the receipt by American Express of any letter from the 2nd defendant dated 17th December 1988 to cancel the charge card. In addition, he drew attention to the fact that the statements of account and charge slips showed that the bulk of the indebtedness had been incurred before 17th December 1988.

11. This was the position when the matter came first before the Master and then before the Judge in Chambers.

12. The learned judge in his judgment summarised the background of the matter and was clearly greatly influenced by the fact that the 2nd defendant's cheque had been drawn to pay the joining and the annual fee totalling $605. In his words, he said this had "very special significance" and was "very telling". He pointed out that the 2nd defendant had had ample time to respond to the assertions made on behalf of American Express but had chosen not to commit himself to any stand about these crucial documents relied upon by the American Express. He was satisfied that when the card was dispatched, it was sent with a holder containing the terms of the agreement of which the 2nd defendant had knowledge. Mr. Tang had intervened himself and secured the acceptance of the application and had later paid the fees after the issue of the credit card. The alleged telephone instruction of 23rd November 1988 could not be effective to give notice that the use of the card was unauthorised. In the judge's words: "The initial application by the defendants was granted subsequently, and the 2nd defendant paid fees. There can be no doubt that he had knowledge of the issue of a card in a holder with full terms of the relationship."

13. The judge observed that while the payment by the 2nd defendant's cheque would not, per se, be a conclusive admission of liability of the contractual relationship between the plaintiff and the 2nd defendant, in the absence of any rebuttal of Mr. Lung's second affidavit, the plaintiff had succeeded in establishing that the 2nd defendant had disclosed no bona fide defence. The appeal to him had been entirely devoid of any merit.

14. Mr. So, who was the counsel who appeared before Liu, J. representing the 2nd defendant, made a valiant effort before us to salvage the position of the 2nd defendant but it seems to me that the learned judge was fully justified in attaching great significance to the fact that important averments made on oath by Mr. Lung in his second affidavit were not controverted. These were (a) that the 2nd defendant had telephoned American Express on 4th October 1988 and asked them to reconsider his application for the issue of the card despite the earlier refusal by their letter of 22nd September, and (b) that the company's cheque, signed by the 2nd defendant himself, had been used to pay the joining and the first annual fee. These facts, unchallenged by evidence, greatly supported the plaintiff's claim.

15. Mr. So has made great play of the fact that the plaintiff's pleaded case was that the request for a card was made on 22nd September 1988, whereas the plaintiff now seemed to be relying on the subsequent request of 4th October, as the foundation for a different contract. In my judgment, this does not alter the essential basis of the plaintiff's case.

16. It is only necessary for me to say that I respectfully agree with the judge that for the reasons he gave, the attempt to defend this claim on the evidence led was quite hopeless. In these circumstances the appeal must be dismissed.

Penlington, J.A.:

17. I agree that this appeal must be dismissed.

Sears, J.:

18. I also agree.

[Appeal dismissed with costs to be taxed on a common fund basis ]