XCHRX THE HONG KONG AND SHANGHAI BANKING CORPORATION LTD. v. AU KING WAH

HCA4299/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO.4299 OF 2001

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J U D G M E N T

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1. This is an application by the plaintiff for summary judgment against the defendant for three sums with interest : (1) $216,172.03 under a credit card agreement, (2) 709,404.77 under an overdraft facility, and (3) $34,354.06 under a loan facility.

2. The plea in the Statement of Claim in relation to the cause of action on the credit card agreement is in my view defective. The material terms of the credit card agreement are referred to in the Statement of Claim but the terms or the effects thereof had not been set out. A copy of the credit card agreement was annexed to the Statement of Claim but it did not form part of the pleading. And it is wrong to simply annex a copy of the credit card agreement without pleading in the Statement of Claim itself the material terms relied on to complete the cause of action.

3. Mr Lee, on behalf of the plaintiff, did not seek to amend the Statement of Claim to cure the defect, and the defect in the Statement of Claim cannot possibly be cured by affidavit evidence. In such circumstances, the application for summary judgment in respect of the sum under the credit card agreement fails and that part of the application is dismissed accordingly.

4. The overdraft facility and the loan facility were granted to the defendant pursuant to two facility letters dated 24 July 1999 and 25 July 2000 respectively. The amount of indebtedness as at 18 August 2001 is not in dispute. In the letters of facility is a provision giving the bank an overriding right of withdrawal and repayment on demand. The plaintiff is now relying on this clause to demand repayment in full of the facilities granted to the defendant.

5. Mr Au appearing in person argues that this clause of overriding right of withdrawal and repayment on demand is repugnant to the other terms of the facilities. The effect of a similar term was considered recently in Hong Kong and Shanghai Banking Corporation Limited v. Ling Lee Kang & Another [2001] 3 HKLRD 255. There Deputy Judge Longley, after analysing the authorities, came to the view that it was not arguable that such a term was repugnant to other terms of the facility letters before him.

6. Mr Au refers to a particular passage of the judgment of Gibson J in William & Glyn's Bank v. Barnes [1980] Com LR 205, quoted by Deputy Judge Longley, where he said :

"...Further, in determining what the main object and intention of the transaction is, the court is not free to disregard the provision in the contract which it is sought by this doctrine to exclude : in this case, the provision for repayment on demand. The point of construction can perhaps be expressed by asking, with reference to the term in question, can the bank, in including the term in their document, reasonably have supposed that the borrower would treat it seriously? Alternatively, in the circumstances, and on the terms of the contract, must the borrower sensibly or reasonably have supposed that the bank meant the term to be effective? If those questions can be answered in the sense that the bank could not reasonably have supposed that the borrower would treat the clause seriously, and that the borrower could not sensibly be expected to have supposed that the bank did mean the term to be effective, then the law both permits and requires the court to disregard the term. The court is not forcing upon the bank a contract which it never made : the court is enforcing the real contract which the parties intended to operate between them."

7. In this case, I have no doubt that the bank had reasonably supposed that the borrower would treat the clause seriously and it cannot be said that the borrower could not sensibly be expected to have supposed that the bank did mean the term to be effective. In the letters of facility, apart from the clause in question, there is simply no other provision governing when the contract can be terminated or when the bank can demand for repayment. If the clause in question is not intended to be given full effect, it is then not clear under what circumstances the bank would be entitled to demand for repayment. In my view, the parties must have intended that the clause is to be given full effect.

8. As I have mentioned earlier, the amount of indebtedness is not in dispute. In my judgment, there is simply no defence raised by the defendant regarding the indebtedness under the overdraft facility and the loan facility. I will therefore grant summary judgment for those parts of the claim.

9. I will enter summary judgment for the plaintiff as per paragraphs (b), (c), (e) and (f) of the prayer of the Statement of Claim. The balance of the Order 14 summons is dismissed.

(Submission on costs)

10. The plaintiff shall have two-third of the costs of this application against the defendant, to be taxed if not agreed.