THE MIRAGE CASINO-HOTEL v. TAO HIU MING WILLIAM AND ANOTHER

HCA11023/98

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 11023 OF 1998

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J U D G M E N T

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The appeal

1. The Plaintiff obtained summary judgment for the sums of US$2,966,500 and US$1,332,000 together with interest against the 1st and 2nd Defendants respectively. The Defendants now appeal against that decision.

The Plaintiff's claim

2. The sums claimed by the Plaintiff were money advanced by it to the Defendants for gambling at its casino in Nevada, United States of America. Both the Defendants signed Credit Agreements for the money advanced. In respect of the 2nd Defendant, the Credit Agreement was dated 13th May 1991 and in respect of the 1st Defendant, 24th December 1994. The Credit Agreements provided, among other things, that the Defendants agreed, "In the event a legal action is brought to collect any amount due ..... To pay interest on the amounts found due at the rate of 18% p.a."

3. Pursuant to the Credit Agreements, in April and May 1997, the Plaintiff provided to the Defendants credit facilities for the purpose of gambling. When the Defendants drew upon the credit facilities, they each executed a document known as a "marker". The marker evidenced the amount of money advanced to them in the form of gambling chips. The markers executed by the Defendants stated as follows :-

"I authorise the payee to complete any of the following items on this check, any missing accounts, my bank account number, the name, address and branch of my bank, and the date as of whatever date this check is processed for payment. In addition I waive any right, statutory or otherwise, to stop payment. In consideration of our granting you credit, you (1) acknowledge that your debt is incurred in Nevada; (2) agree to submit to the jurisdiction of any court, federal or state in Nevada to enforce this obligation and (3) agree to pay all costs of collection including attorney's fees."

4. The credit was advanced to the 1st Defendant between 20th April 1997 and 4th May 1997, in the total sum of US$2,966,500. The advance was evidenced by eight markers. The sums became due and owing on the dates on which the markers were executed, namely 20th, 21st, 26th, 27th, 28th and 29th April and 4th May 1997.

5. From 26th April 1997 to 30th April 1997, the Plaintiff advanced credit to the 2nd Defendant in the total sum of US$1,332,000 as evidenced by seven markers. The sums became due and owing on the dates on which the markers were executed, namely 26th, 27th, 29th and 30th April 1997.

Enforcement of gambling debt

6. The Plaintiff filed an affidavit from Mr Cabot, an United States attorney on, among other things, how credit was granted by casino in Nevada to customers. After a patron has been permitted credit, he may ask for money or chips with which to gamble. The casino will provide the chips or money usually upon the patron signing a counter cheque. A counter cheque or marker is a credit instrument which represents the debt which is valid and may be enforced by legal process. The customer at that point is under no obligation to the casino other than to redeem, that is to pay, his marker. He may do so by encashing the chips. Thus the giving of the chips represents a loan to the customer for the purpose of gambling and claims against the customers may be maintained for money lent. No issue is taken in the present case about the enforcement of a gambling debt.

Dates of the Credit Agreements

7. A number of defences were raised by the Defendants. I will consider them in turn.

8. The Defendants questioned the dates of the Credit Agreements they had signed. They could not understand why the documents were dated 13th May 1991 and 24th December 1994 which was 31/2 years apart. They first went to the Plaintiff's casino in May 1991. They had brought along US$20,000 for gambling. They were met by one Peter Miao ("Mr Miao") who was their host. Mr Miao asked them to fill in a form for registration as a customer. Part of the form was completed by the 2nd Defendant and signed by her. The 1st Defendant was not asked to sign any form at that time. They were under the impression that the 2nd Defendant signed a registration form and not any credit application form since they had brought cash and did not need any credit.

9. On their third or fourth visit in 1992, the Defendants increased the deposit in their account to US$500,000 for gambling. They were then taken care of by Philip Wang ("Mr Wang") who was the Vice-President of the Plaintiff. He offered to provide them with additional credit of US$500,000. They were requested to sign a document. They were told that it was a document which would provide credit of US$500,000 to them. The 1st Defendant signed and returned the document to Mr Wang. The 1st Defendant claimed that he did not understand written English and neither the 1st and 2nd Defendants read the content nor were they informed and explained about the effect of the document. They alleged the Credit Agreements were not binding on them. They denied that the two documents signed by them were Credit Agreements.

10. The Credit Agreements relied on by the Plaintiff were two forms which it described as credit application forms. According to the Plaintiff, the 2nd Defendant first went to the casino on her own. She first signed the credit application form. She had deposited with the Plaintiff US$22,000 on 31st December 1990. In about 1991, the 1st Defendant accompanied the 2nd Defendant on her gambling trips. The 1st Defendant initially gambled by using the chips obtained by the 2nd Defendant. Subsequently he decided to open an account by signing a credit application form after learning that the benefits which two persons with accounts could obtain are more than those of one person. The date on the credit application form of the 2nd Defendant was written as 13th May 1991 whereas for the 1st Defendant, this column was left blank. On the inside of this form, under the column of "Deposit/Special instructions", the date that was inserted was 24th December 1994. These dates were relied upon by the Plaintiff as the dates of the Credit Agreements.

11. It is difficult to understand the real nature of this defence. It certainly does not provide a defence to the Plaintiff's claim. It is clearly stated in the authorities that anyone who signed a document in a language he did not understand was necessarily negligent unless he had been actively misled as to its nature, see, for example, Kin Cheng Banking Corp v. Kao Yu Kuei [1986] HKC 212. In this case, the Defendants accepted that they were granted credit facilities by the Plaintiff. The date of the Credit Agreement of the 1st Defendant relied upon by the Plaintiff may well be an incorrect date, but as far as the 1st Defendant is concerned, he accepted that he had signed a document which would provide credit to them. Further, for the credit application form signed by the 2nd Defendant, it is not even part of the Defendants' case that the 2nd Defendant did not understand written English. According to Mr Wang, customers who brought along cash for gambling would also open an account with the Plaintiff by completing a credit application form. This is to enable them to obtain chips from the Plaintiff for gambling instead of carrying the cash with them. If the 2nd Defendant had merely signed a form which she thought to be a registration form, then on what basis could she be granted credit for her gambling? The credit line increase requests signed by the 2nd Defendant all referred to the same account number as stated in the credit application form signed by her. The 1st Defendant was assigned a separate account.

Consideration

12. It was argued on behalf of the Defendants that consideration needed to be pleaded and somehow the Statement of Claim was defective because it was not clear what was the consideration for the Credit Agreements. It was also argued that the consideration was past consideration.

13. The cause of action of the Plaintiff is based on the money lent by the Plaintiff to the Defendants in the form of credit granted in April and May 1997. The obligation of the Defendants to repay the money arose because they received the money from the Plaintiff. The money were advanced to them in April and May of 1997. I just cannot see how it can be said that there was no consideration or the consideration was past consideration. As pointed out in Wong Hon v. Sheraton Desert Inn Corp [1995] 3 HKC 331, by Bokhary JA (as he then was) : "As a matter of substance and reality, the defendant gambled with the plaintiff's money. And he could only do that because they had advanced it to him."

50% discount of the gambling debts

14. The real defence of the Defendants is that Mr Wang, who took care of them during their gambling trips to the Plaintiff's casino had promised that if the total loss of their gambling was US$3,000,000, they would receive a discount of 30% and a discount of 50% if their total loss exceeded US$3,000,000. Relying on the promise of Mr Wang, between 16th April and 5th May 1997 the Defendants sustained gambling loss in excess of US$3,000,000.

15. Mr Wang denied that he had made such a promise. He stated that in case of prompt payment of the debt, the discount is 5% for loss from US$50,000 to US$100,000. For loss of US$100,000 to US$1 million, the discount is 10%. A customer is entitled to 15% discount if the loss exceeded US$1 million. For example, if a customer lost US$2 million, the first US$1 million would only qualify for a 10% discount while the second US$1 million would qualify for a 15% discount. Even then, a customer still has to repay the outstanding amount without delay, i.e. within 60 to 90 days before he qualifies for the discount.

16. The Defendants disputed what Mr Wang said. In the settlement agreements furnished by the Plaintiff when it demanded repayment of US$2,966,500 and US$1,332,000, the discount that was given was based on 15% of the whole sum and not 10% on the first million and 15% on the second million.

The test

17. The test in a summary judgment application is whether the defence is credible. If it is, then leave to defend must be given. If not, then the Plaintiff is entitled to judgment : Ng Shou Chun v. Hung Chun San [1994] 1 HKC 155. While Mr Wang may be wrong in his evidence on how the actual discount was to be calculated, in my view the Defendants' defence of the 50% discount is simply incredible. On 21st May 1998, the Defendants wrote to the Plaintiff stating, among other things, that :

"... As you are aware, Philip Wang, VP of Mirage Asia marketing operation, has been our host since day one. He has assured us all along that exceptional discount on huge losses can always be negotiated and usually granted by the casino. In light of this and numerous unpleasant incidents which we have informed you, we would ask, for one time only, a 50% discount to bring this matter to a closure. In return, we are prepared to make immediate settlement upon your favorable reply. ..." (My emphasis)

After the Plaintiff rejected this proposal, the Defendants on 15th June 1998 wrote again to the Plaintiff :

"... In about April last year at the Mirage when my wife and I lost more than US$1 million, Philip Wang assured us that if we lost more, we would receive a very substantial discount from the Mirage. The assurance was clearly made to us with a view to inducing us to continue our gamble and take advantage of such very substantial discount even if we lost more at the end of the day. In reliance on such assurance, we continued our gamble and lost well over US$4 million. We would not have continued to gamble then had we not been assured by Philip Wang that we would be granted such very substantial discount.

...

In view of what we pointed out above, I reject totally your offer of 15% discount and insist on receiving a much better discount. You must be aware that all Asian countries are suffering severely from the current economic and financial crisis at this time. I, like everyone else in Hong Kong, am of no exception. Despite that, I am still in a position, at present, to settle the matter promptly on a 40% discount. If the total economy continues to slide which looks almost a certainty and is getting worse every day in Hong Kong, it is hard to predict how that down trend, coupled with the possibility of unpegging of the Hong Kong dollars, would adversely affect my ability to back up the aforesaid offer at a later date. ..." (My emphasis)

It was only in the third letter of the Defendants dated 29th June 1998 that the 1st Defendant raised for the first time the representation by Mr Wang of a 50% discount :

"... I would like to reiterate that Mr. Philip Wang, your VP who throughout my transactions with your casino held himself out having full authority to represent your casino. Prior to taking the credit, he has confirmed to me a 50% discount and based on his representation on behalf of your casino, I took the credit. Without his representation, I certainly would not have taken the credit. ..."

(My emphasis)

18. In the first two letters, the Defendants did not say that Mr Wang had agreed to give them a discount of 50%. Instead, they were asking for concessions from the Plaintiff to give them a discount of 50% as stated in the first letter and a discount of 40% as stated in the second letter. It was only in the third letter that the so-called promise by Mr Wang was introduced. The Defendants' excuse for this is that the first two letters were prepared by Mr Raymond Yung, the brother-in-law of the 1st Defendant because the 1st Defendant's command of English was insufficient and he relied on the service of Mr Yung. The 1st Defendant said :

"As is customary with the Chinese way of doing things, we took a very courteous attitude, notwithstanding that our position was very clear with regard to the 50% discount promised by Mr. Philip Wang."

19. The Defendants are obviously well versed in the affairs of the world. They were described in the credit application forms as the director and managing director respectively of a garment company. They were seasoned gamblers and highstake players. They obviously knew what they were doing. In my view, if Mr Wang had in fact promised them a 50% discount, which induced them to gamble and lost over US$3,000,000, they would have said so in the very first letter in response to the demands of the Plaintiff. This, they had not done. In deciding whether a defence is credible or not, the Court does not simply accept what is said on affidavit. It has to be tested against contemporary documents. Looking at these documents, the only conclusion that can be drawn is that there was never such a promise by Mr Wang to give the Defendants a 50% discount. He might have offered some discount at a much lower rate but this is not something relied upon by the Defendants. In any event they had rejected the offer of a 15% discount. The defence is not credible and I accordingly reject it.

Other gamblers

20. The Defendants relied on affirmations of some other gamblers who had also frequented the Plaintiff's casino. One was Mr Thomas Fung who said that he heard Mr Wang said that if the Plaintiff's customers lost large sums of money, he would give discounts on their gambling debts at the rate of 10% to 15%. Mr Fung further stated that :

"For gambling customers whose losses exceeded US$2 million or US$3 million, I understand that Philip would give them special discounts of over 20%. There were definitely different rates of discounts applied to different gamblers and to different sizes of debts. In summary, larger losses would attract larger discounts."

(My emphasis)

For some curious reason, Mr Fung did not say that this was what he heard from Mr Wang. He merely referred to his understanding of what Mr Wang would give for special discounts of over 20%. In any event, there was no reference to 50% discount being given by Mr Wang.

21. Another gambler who knew Mr Wang is Ms Annie Chia On Yee who stated that :

"I have been told by Mr Philip Wang that the more money you lose, the greater the discount that you would get. If you lose over US$1 million, you may even get a greater than 15% discount depending on who you were or how much your actual losses were."

Again what this lady said would not assist the Defendants in their claim that Mr Wang had promised them a 50% discount.

Some other reason for trial

22. The Defendants relied on Miles v. Bull [1969] 1 QB 258 and argued that because of the way the Plaintiff conducted its case, the case ought to be tried. They submitted that the informations relating to their debt are in the control of the Plaintiff and the Plaintiff ought to be put to strict proof of its claim.

23. In my view, this is not a case in which the matter should go to trial. The Defendants contended that the Plaintiff initially only produced the first page of the Credit Agreement, then later on, it produced the complete document. The Credit Agreement in fact is a single document with words on both sides. The Plaintiff in the first affidavit in support of the Order 14 application produced only the front part of this document. However, even with the other parts being disclosed, it does not affect the validity of the Plaintiff's claim or assist the Defendants' Defence.

24. It was further said that Mr Wang in his affirmation stated that the Plaintiff did not have any evidence of the actual daily losses and deposits which were made by the Defendants. Then the Plaintiff produced deposit slips and withdrawal slips signed by the Defendants during their visits to the casino. Based on these documents, the Plaintiff's solicitors had prepared summaries of the transactions. The deposits and withdrawals made by the 2nd Defendant in September 1995 were not shown in her summary. What actually happened was that the 2nd Defendant had in fact instructed the Plaintiff to transfer the credit balance of her transactions in September 1995 to the 1st Defendant's account. However, the summary of the transactions of the 1st Defendant did not show the transfer by the 2nd Defendant.

25. In my view, this matter does not assist the Defendants at all. The summaries are simply summaries prepared by the Plaintiff's solicitors. They are not contemporary statements or accounts showing the transactions of the Defendants. Hence, the omission in the summaries of the transactions of September 1995 is not a basis for having the case tried. In any event, the September 1995 transactions would have no bearing on the present claim because the Plaintiff's claim is not based on a running account between the parties. It was simply suing for the money lent to the Defendants in April and May 1997.

26. The Defendants further stated that the documents now furnished by the Plaintiff did not disclose transactions during the relevant period in April and May 1997. The Plaintiff should have disclosed documents which covered the transactions in question as well. I really fail to see the relevance of this. The Defendants had never stated that they had made deposits during this period which were not taken into account when the Plaintiff lodged its present claim. Copies of the deposit slips and withdrawal slips were already provided to the Defendants when the transactions were conducted. What they are saying is that they have not kept copies of those documents. The fact that they have not kept copies of documents does not mean the case must be tried so that they might seek discovery of these documents. Ultimately the question is still whether they have a credible defence.

27. The 1st Defendant said that the request for the issue of a marker does not represent that the customer is using the Plaintiff's credit because together with the credit he had deposits as well with the Plaintiff. Hence the request for the gambling chips does not mean the credit had been utilised.

28. The Plaintiff's evidence is that if a customer wants to use the funds he has deposited with the Plaintiff, he can draw a customer deposit withdrawal marker. If he has credit along with his own deposit, his deposit funds are always drawn down first before any credit marker is issued. Accordingly, the Plaintiff's customer's deposit and withdrawal system would not allow any credit marker to be issued if a customer has money on deposit. In short, the customers play with their money first, when that credit was depleted, then the credit line would be activated.

29. What the Plaintiff said clearly answered the point raised by the Defendants. In any event, irrespective of how the system works, the Defendants would have to repay the debt by redeeming the marker. It is apparent in this case that the markers now sued upon by the Plaintiff had not been redeemed by the Defendants. Furthermore, it can be seen from the summary of transactions that in respect of each past visit to the casino, the Defendants cleared their accounts at the end of such visit. In other words, the amount of deposits they had made to the Plaintiff would be totally withdrawn. It must be within the knowledge of the Defendants whether in April/May 1997, they had deposits which, unlike previous visits, were not totally withdrawn and could be used to set off the claim of the Plaintiff.

30. It is for the Defendants, in an application for summary judgment, to show cause that they have a defence or that there is some reason for the case to go to trial. They have failed to do so.

Counterclaim for damages

31. The Defendants counterclaimed for damages for breach of agreement and misrepresentation. No particulars were given at all of the damages. The Counterclaim must necessarily fail because of my rejection of the defence that there was an agreement in which the Defendants would be allowed 50% discount on their debt.

Conclusion

32. The appeal is accordingly dismissed. The Plaintiff is entitled to costs nisi of the appeal. The money paid into court by the Defendants as a condition of the stay of execution of the judgment is to be paid out to the Plaintiff as partial satisfaction of the Plaintiff's claim.