WONG HON v. SHERATON DESERT INN CORP t/a DESERT INN RESORT & CASINO

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JUDGMENT

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Nazareth V-P:

1. The appellant, Wong Hon ("the defendant"), appeals against the order of Findlay J dismissing his appeal against the order of Master Jennings, entering Order 14 summary judgment against him. The facts can be conveniently taken, as Findlay J did, from the plaintiff's Statement of Claim:

2. This being an appeal from an Order 14 judgment, it is only necessary for the defendant to show that he has a defence that is not plainly unarguable.

3. Mr Benjamin Chain, who also appeared for the defendant before Findlay J, submits that the defendant has three possible defences. The defence that he primarily relies upon is that there was no loan made to the defendant, a loan being the basis of the plaintiff's claim. The judge dealt with the point at p.3 of his judgment in the following way:

4. Mr Chain says that the judge was wrong. He submits that in none of the following authorities cited to the judge or to this Court, Quarrier v Colston (1842) 1 Ph 147, 41 ER 282; Saxby v Fulton [1909] 2 KB 208 and Societe Anonyme des Grands Etablissements de Touget Paris-Plage v Baumgart (1927) 96 LJKB 789 were there truly loans of money; moreover, that the three Golden Nugget cases in Hong Kong, proceeded upon the assumption that there was a loan.

5. Mr Chain places great emphasis on the facts, which I repeat are not in dispute. He emphases the following matters. It was indicated to the defendant before he went to Nevada that he would be offered a line of credit. When he arrived he went not to the gambling hall but to the office. There he filled in a form, giving his personal details, including those of his bank accounts. He was then given a card authorising a credit line of a stated limit with spaces for entry of "Checks Cashed". In the gambling hall he was able on producing it to fill in and sign "markers" for amounts not exceeding in aggregate the credit limit on his card. The markers appear to be negotiable instruments and are apparently accepted as such in the State of Nevada. The payees' names were left blank. The markers were retained by the casino against the issue to the defendant of chips equal to the amount in which the markers were drawn. The chips were used to gamble.

6. Stripped of their refinements and elaboration, Mr Chain's submissions are that on those facts, only upon the loss of a bet would the defendant incur a debt and not upon the mere placing of a bet or upon winning one. When the defendant did incur a debt, he was given credit but did not receive a loan. The chips were not money but were tokens by which a record of the defendant's gambling transactions were kept. For a loan to have been granted in the circumstances, the defendant would have to be given cash. What had happened, Mr Chain continued, was that the defendant was given credit to gamble without putting up any money. The casino was not interested in making loans, but in the gains it would make from the losses of its customers. Mr Chain was not able to find any authority that assisted or impeded the analysis he suggested of such transactions.

7. I do not accept that analysis. What he submits does not, in my view, warrant this Court disturbing the conclusions of Findlay J in the passage in his judgment that I have just quoted. The judge was in any case entitled and in my view right, on the evidence before him and for the reasons he gave, to reach those conclusions, in particular that the transaction was a loan. It follows, in my view, that the defendant's primary ground of appeal must fail.

8. It also fails, in my view, for another reason advanced by Mr Joseph Fok, for the plaintiff, upon principles embodied in Rule 200 of Dicey and Morris on Conflict of Laws, Vol.2 (12th edn) at p. 1467:

9. The governing law of the transaction is clearly the law of Nevada. By reference to the affidavit of Anthony Cabot and certain provisions of the law of Nevada, it can be seen that "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". As deposed to by Mr Cabot, the casino patron is provided with chips or money upon signing a marker or counter-check; thus, the giving of such chips represents a loan to the customer for the purpose of gaming, and claims against such customers may be maintained for moneys lent. Mr Chain, however, has fastened upon the following words in the definition of "credit instrument" in the relevant Nevada statute, i.e. "credit instrument means a writing which evidences a gaming debt ...". He submits that the markers cannot evidence gaming debts since the latter only occur subsequently. That, although superficially attractive, seems to me to be a submission that cannot prevail if the transactions are looked at as a whole, and in the face of the unchallenged evidence of Mr Cabot as a legal expert in the law of Nevada.

10. I turn then to Mr Chain's second point which is that as a result of the Gaming Act 1710 as amended by the Gaming Act 1835, even if there was a loan it would not be recoverable because the effect of those Acts is not only to vitiate cheques for gaming debts but the consideration for which they were given. The Gaming Act 1710 applies in Hong Kong by virtue of The Application of English Law Ordinance (Cap. 88) in which it appears as Item 28 of the Schedule. The material provisions of the Act are as follows:

"[1.] security given for money, etc, won by gaming or for repayment of money lent for gaming void.-From and after the first day of May one thousand seven hundred and eleven all notes bills bonds judgments mortgages or other securities or conveyances whatsoever given granted drawn or entred into or executed by any person or persons whatsoever where the whole or any part of the consideration of such conveyances or securities shall be for any money or other valuable thing whatsoever won by gaming or playing at cards dice tables tennis bowles or other game or games whatsoever or by betting on the sides or hands of such as do game at any of the games aforesaid or for the reimbursing or repaying any money knowingly lent or advanced for such gaming or betting as aforesaid or lent or advanced at the time and place of such play to any person or persons so gaming or betting as aforesaid or that shall during such play, so play or bett shall be utterly void frustrate and of none effect to all intents and purposes whatsoever any statute law or usage to the contrary thereof in any wise notwithstanding ..."

11. Clearly, therefore, as stated in Rule 200(2) of Dicey & Morris, a cheque drawn on a Hong Kong bank and given by way of security for money won by gaming or betting will be deemed to have been given for an illegal consideration and will fail unless negotiated to a holder in due course. But Mr Chain submits that it is not only cheques that are rendered unenforceable but that also the underlying consideration that is vitiated, i.e. in this case the loan transaction. The authorities he submits are divided on the point and that this Court, which has never ruled upon the matter, should prefer that line of authority that holds the underlying consideration to be vitiated.

12. However, it can be seen that with the exception of two authorities, that only lend superficial support to his contention, the legal position is that stated in Rule 200 of Dicey & Morris. That same position is also clearly stated in Chitty on Contracts (27th edn) Vol. 1 at p. 874, thus:

13. Rule 200 of Dicey & Morris and the foregoing passages from Chitty are fully supported by the authorities cited in reference to them in those works, in particular Quarrier v Colston, Saxby v Fulton and the Baumgart case. In Hong Kong a similar view has been expressly or by implication taken in the three unreported Golden Nugget cases, i.e. GNLV Corp v Tam Yiu Kuen, 1991 No. A4191; GNLV Corp v Tseng Hsiao Tsun, 1991 No. A4188, and GNLV Corp v Wong Hoi Lam, 1991 No. A4312.

14. Mr Chain, nonetheless, has sought to rely upon Carlton Hall Club Ltd v Laurence [1929] 2 KB 153. However, the reports of this decision leave so much to be desired that it cannot serve as the basis of any credible doubts as to the overwhelming authority against him (see Chitty, para.38-066 at p. 875). In addition, Carlton Hall Club Ltd v Laurence was doubted by the Court of Appeal in CHT Ltd v Ward [1963] 3 All ER 835 at 842 G-H. Mr Chain also seeks to rely upon the judgment of Sears J in Richardson Greenshields of Canada (Pacific) Ltd v Keung Chak-kiu and Hong Kong Futures Exchange Ltd [1989] 1 HKLR 476 where in dictum that is obiter he referred to the two divergent lines of authority and expressed a preference for that contrary to Rule 200 of Dicey & Morris. He relied upon Applegarth v Colley [1842] 152 ER 663, Moulis v Owen [1907] 1 KB 746 and Carlton Hall Club v Laurence. For the reasons, I have already given I do not think Carlton Hall v Laurence is of assistance. Moulis v Owen upon a close reading, in my view, does not support the divergent line contended for. Applegarth v Colley must be regarded as having been overruled in subsequent decisions particularly Saxby v Fulton.

15. In my judgment, Mr Chain's contention for the divergent line of authority is unarguable.

16. Proceeding to Mr Chain's third defence, this was put to us in a slightly different way from that formulated in the notice of appeal and Mr Chain's skeleton argument. It arises from the fact that the 20 markers were in stages surrendered or cancelled against the three cheques mentioned. The payee's name in two of these was inserted as "Rimtech". Mr Chain's point is simply that the three cheques and in particular the two, may have been negotiated and that the plaintiff, without surrendering the cheques, is not entitled to claim against the defendant. I find no merit in the point. There is not a vestige of evidence to lend any support to that possibility. The judge was entirely right in unceremoniously rejecting it.

17. For the foregoing reasons, I would dismiss the appeal.

Bokhary JA:

18. In my judgment, this is plain beyond reasonable argument to the contrary.

19. As a matter of substance and reality, the defendant gambled with the plaintiffs' money. And he could only do that because they had advanced it to him. In the present connection, I detect no gulf between, on the one hand, substance and reality and, on the other hand, the law whether here or in the State of Nevada. So, whether viewed through the eyes of our law or that of Nevada, the plaintiffs had loaned the defendant that money.

20. The gambling in which the defendant engaged with that money took place in Nevada. And the evidence establishes that such gambling is lawful there.

21. Accordingly, the plaintiffs are able to rely on the well-established principle designated rule 200(3) and succinctly stated thus in Vol. 2 of "Dicey & Morris on the Conflict of Laws", 12th ed (1993) at p.1467: "an action on [a loan for gambling] will succeed if the loan is valid by its governing law". The law which governs this loan is that of Nevada, Where it was made. And that law, the evidence establishes, recognizes such loans as valid.

22. I would accordingly dismiss this appeal.

Liu JA:

23. I agree with the conclusions of the Vice President. For the reasons he gives, I, too, would dismiss this appeal.