WYNN LAS VEGAS, LLC v. LAM KWOK HUNG

HCA2161/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 2161 OF 2007

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REASONS FOR JUDGMENT

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1. The defendant’s application by summons dated 3 December 2007 (“the summons”) was for an order that all further proceedings in this action be stayed under the inherent jurisdiction of the Court came on for hearing before me on 15 May 2008.  Having heard arguments, I dismissed the summons with costs to the plaintiff.  I indicated at the time that I would give my reasons in writing.  This I now do.

2. The plaintiff’s claim in this action is for repayment of a loan owed by the defendant together with interest thereon.

3. The plaintiff is a company incorporated in accordance with the laws of the State of Nevada in the United States of America.  It carries on, inter alia, the business of a hotel and casino in Las Vegas.

4. On 8 August 2005 the plaintiff entered into a credit agreement (“the agreement”) with the defendant whereby the defendant was granted the privilege of receiving casino chips for the purpose of gaming at the plaintiff’s casino upon signing a credit instrument commonly known as a marker.

5. By the agreement, it was provided, inter alia, that :

“ Before drawing on my line of credit, if granted, I agree to sign credit instruments (i.e. checks) in the amount of the draw…………………………………

I agree that each draw against my credit line is a separate advance of money by [the plaintiff]. ……………………………………

I agree that Nevada law exclusively governs the terms of the credit line, advances or credit instruments.  I agree that [the plaintiff] may litigate any dispute involving the credit line, the debt or the payee in any court, state or federal, in Nevada.  I submit to the jurisdiction of any court, state or federal, in Nevada.”

6. From 30 December 2005 to 2 January 2006 the defendant was a patron at the plaintiff’s casino in Las Vegas and pursuant to the agreement he signed 2 markers to obtain gambling chips in the total sum of US$290,000.  The said sum was repayable to the plaintiff with interest.

7. The markers provided, inter alia, that:

“I acknowledge that the debt for which this instrument is issued was incurred in Nevada; agree that Nevada law governs the debt and this instrument; submit to the jurisdiction of any court, state or federal, in Nevada; ………………..”

8. The defendant made two partial repayments to the plaintiff on 14 May 2007 and 18 June 2007 respectively, totalling US$93,000.  As a result, the defendant’s indebtedness to the plaintiff was reduced to US$197,000.

9. Despite demands made by the defendant’s solicitors in Hong Kong the defendant has failed to repay the plaintiff the outstanding sum of US$197,000 or any part thereof.

10. By a writ issued on 12 October 2007 the plaintiff brought these proceedings in Hong Kong to recover the said sum with interest and costs.

11. The defendant issued the summons on 3 December 2007 seeking an order that all further proceedings in the action by stayed under the inherent jurisdiction of the Court.  Two grounds are relied on :

(1) that by the jurisdiction clause in the agreement and the markers the parties agreed to refer any dispute involving the credit line and the debt to the exclusive jurisdiction of any court, state or federal, in Nevada; and

(2) the court, state or federal, in Nevada is the appropriate forum for the trial of this action and that the Court in Hong Kong is not the forum conveniens.

Was there an exclusive jurisdiction clause?

12. I have set out the relevant provisions of the agreement and the markers on the question of jurisdiction.

13. The construction of the relevant provisions of the agreement and the markers as set out above is a matter of Nevada law.  The plaintiff relies on the expert evidence of Mr Anthony Nathan Cabot (“Mr Cabot”) an Attorney at Law practising in, inter alia, Nevada and an expert in Nevada gaming law. 

14. At paragraph 14 of his affidavit Mr Cabot stated :

“The relevant case law on forum-selection clauses provides that a mandatory forum selection clause must contain a clear language showing that litigation can only be conducted in the designated forum…………………………..”

15. And at paragraph 16 of his affidavit Mr Cabot said:

“The [agreement] and markers under such [agreement] in question do not contain any language that indicates exclusive jurisdiction.  The [agreement] and the markers also do not contain any intent to prohibit [the plaintiff] from pursuing litigation outside the state of Nevada.  As referenced by the Defendant’s Affirmations, the [agreement] that provided that “I agree to submit to the jurisdiction of any state or federal court in Nevada…” contains a permissive forum-selection clause because the language does not provide that litigation can only be conducted in the designated forum.  Indeed, all that it does is state the Defendant’s express agreement to submit to Nevada jurisdiction.”

16. It seems to me that it is clear that under the agreement and the markers the parties agreed that Nevada law should exclusively govern the transactions.  However, although there is a submission to the jurisdiction of any court, state or federal in Nevada, it cannot in my judgment be said that there is a submission to the exclusive jurisdiction of any court, state or federal in Nevada.  As Mr Houghton SC rightly, in my view, submitted, the submission to Nevada law is exclusive but the jurisdiction of the Nevada courts is permissive and not exclusive.

17. In my judgment there is no merit in ground (1) relied on by the defendant.

Forum non conveniens

18. As Lord Goff said in Spillada Maritime Corporation v Cansulex Ltd [1987] 1 AC 460 at page 476:

“The basic principle is that a stay will only be granted on the ground of forum non conveniens where the court is satisfied that there is some other available forum, having competent jurisdiction, which is the appropriate forum for the trial of the action, i.e. in which the case may be tried more suitably for the interests of all the parties and the ends of justice.”

19. It is, of course, for the defendant to show that the Court should exercise its discretion to grant a stay.  As Mr Houghton rightly submitted, the defendant is required to show that Hong Kong is not the natural or appropriate forum for the trial of the action and that there is another available forum which is clearly or distinctly more appropriate than the Hong Kong forum (Rambas Marketing Co LLC v Chow Kam Fai David [2001] 3 HKC 250).

20. As Ma CJHC (as he now is) said in Rambas Marketing at page 255 :

“The court is required to focus on the appropriateness of a forum from the point of view of the trial of the action.”

21. It is necessary to identify what the likely issues at trial will be in order to determine whether the Nevada courts are clearly or distinctly more appropriate than the Hong Kong Court for the trial of the action.

22. The defendant lists six factors at paragraph 7 of his affirmation in support of the contention that any court, state or federal, in Nevada is clearly or distinctly more appropriate than the Hong Kong Court for the trial of the action.  These are :

“    (a)    The Defendant is willing to undertake to submit to the jurisdiction of Nevada Courts for trial;

(b)  The Plaintiff is a company incorporated with limited liability according to the laws of the State of Nevada in the United States of America, and has no connection with Hong Kong;

(c)  Most of the relevant witness and documents at trial are located in Nevada;

(d)  Nevada law is the governing law of the relevant transaction or transactions with which the court will be concerned at trial.  The situs of the alleged debt owing from the Defendant to the Plaintiff is Nevada;

(e)  The alleged breach of the Agreement was made within the jurisdiction of Nevada, United State (sic) of America; and

(f)    There is in fact real controversy between the parties on Nevada law since according to Nevada Revised Statues §463.36, gambling debts are not enforceable in the State of Nevada.  I am advised by my legal advisors and verily believe that where substantial and difficult issues of foreign law are involved, the court may well be compelled to stay the proceedings where there is an appreciable risk that justice will not be done.”

23. As to (a), no issue will arise at the trial.  Both parties have submitted to Nevada jurisdiction under the agreement and the markers but, as I have held, that submission to jurisdiction is not exclusive.

24. As to (b), it is not true that the plaintiff has no connection with Hong Kong.  On the unchallenged affidavit evidence of Mr Schall, the plaintiff maintains an office in Hong Kong which provides, inter alia, supporting services to the plaintiff’s guests.  It does not seem to me that any issue will arise at the trial as to this.

25. As to (c), although a defence has not yet been served, on the material before me the defendant does not deny the loan or that there has been a partial repayment.

26. There is no hint of what evidence if any, the defendant would wish to call at trial.  On the material before me, the defendant is ordinarily resident in Hong Kong.  It seems to me that it would be convenient for him to give evidence in Hong Kong.  The plaintiff’s witnesses, if required to give evidence, are willing to travel to Hong Kong and there would be no inconvenience to the defendant if they were to do so.

27. As to (d), although Nevada law is the governing law of the transactions, the Courts in Hong Kong are well able to deal with aspects of Nevada law relating to gaming.  As Ma CJHC said in Rambas Marketing at page 266 :

“ The courts in Hong Kong (particularly the Commercial Court and the Admiralty Court), given the international identity and nature of the type of commercial litigation and litigants here, are often accustomed to dealing with aspects of foreign law.  It does not therefore follow at all that once it is shown that issues of foreign law arise, that this will necessarily be a powerful, much less a decisive, factor in favour of a stay.”

28. As to (e), although the breach of the agreement was made in the jurisdiction of Nevada, the demand for repayment was made in Hong Kong by the plaintiff’s solicitors.

29. As to (f), the defendant asserts that there is a real controversy between the parties on Nevada gaming law.  A bald assertion is made that according to Nevada Revised Statues 463.36, gambling debts are not enforceable in Nevada.  However, no expert evidence has been adduced by the defendant in support of this bald assertion.

30. On the contrary, Mr Cabot explains in his affidavit that two forms of gaming debt exist under Nevada law with different procedures for resolution under the law.  The first form arises, as in this case, where someone borrows money to participate in a wager by executing a credit instrument.  The second form arises where someone is owed money as a result of a wager and no credit instrument exists.  The first scenario is governed by Nevada Revised Statute 463.368 and the second scenario by Nevada Revised Statute 463.361.  On the facts of this case, only Nevada Revised Statute 463.368 is applicable.  The relevant provision provides that :

“1.   A credit instrument accepted on or after June 1, 1983, and the debt that the credit instrument represents are valid and may be enforced by legal process.”

31. There is no expert evidence adduced by the defendant to challenge Mr Cabot’s evidence or to show that the debts incurred by the defendant in this case are not enforceable by legal process.  It seems to me that no real issue as to this has been raised for determination at the trial of this action.

32. In Wong Hon v Sheraton Desert Inn Corp (t/a Desert Inn Resort & Casino [1995] 3 HKC 331 it was held that an action on the loan itself would succeed if the loan was valid by its governing law.  The governing law of the transaction was the law of Nevada and that law, on the evidence, recognized such loans as valid.

33. In my judgment the defendant has failed to demonstrate that the Nevada courts are clearly or distinctly more appropriate than the Hong Kong Court for the trial of this action.

34. For the above reasons the summons was dismissed.  Costs should normally follow the event.  As I saw no reason to depart from the normal rule, I also ordered that the costs of the summons be costs to the plaintiff.