CITIBANK (HONG KONG) LTD v. SHUM YUET MEI

DCCJ5003/2004

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 5003 OF 2004

DCCJ5004/2004

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 5004 OF 2004

BETWEEN

D E C I S I O N

1.  This is an application by the defendants in both actions (a) for leave to appeal against my Decision dated 6 July 2005; (b) to stay execution of the summary judgments granted by Master J Ko against both defendants on 27 April 2005; and (c) to rehear both defendants’ counterclaim.

2.  I shall first deal with the defendants’ applications for leave to appeal.  The principles on which applications for leave to appeal are given are set out in Ma Bik Yung & Ko Chuen HCMP No. 4303 of 1999 citing Smith & Cosworth Casting Processes Limited [1997] 4 All ER 840 in which Lord Woolf at pages 840 to 841 provided the following guidance:

“	(1)	The court would only refuse leave if satisfied that the applicant has no realistic prospect of succeeding on the appeal.  This test is not meant to be any different from that which is sometimes used, which is that the applicant has no arguable case.  Why however this court has decided to adopt the former phrase is because the use of the word ‘realistic’ makes it clear that a fanciful prospect or an unrealistic argument is not sufficient.
	(2)	The court can grant the application even if it is not so satisfied.  There can be many reasons for granting leave even if the court is not satisfied that the appeal has any prospect of success.  For example, the issue may be one which the court considers should in the public interest be examined by this court or, to be more specific, this court may take the view that the case raises an issue whether law requires clarifying.”

3.  Section 63 of the District Court Ordinance, Cap. 336 provides that a party may only appeal from the District Court to the Court of Appeal with leave.  If a judge below refuses leave, the intended appellant may still apply to the Court of Appeal for leave. 

4.  In dealing with the applications before me today, as a matter of convenience, I adopt the abbreviations used in my Decision.  Further, similar to the hearing before me on 23 June 2005, I have granted leave for Chow to address me on behalf of Shum and himself. 

5.  I shall now deal with the application for leave to appeal against my Decision whereby I dismissed Ds’ respective appeals against judgments. 

6.  Ds’ first ground of appeal is in respect of the binding nature of T & C of Agreement.  Chow submits that by Ds’ definition, a binding agreement must be in the form of a written contract signed by both parties, and such parties must expressly agree to abide by the terms and conditions of such contract.  There is no room for any implicit acknowledgement.  Likewise, any variation should be confirmed in writing by both parties.  By such definition, Ds reject the applicability of T & C of Agreement because of the absence of their “express agreement” and “written confirmation.”

7.  Ds go on to say that because Ds at the time of the initial applications to CI for credit cards thought Finance Charge was chargeable at Rate, Late Charge was chargeable at a minimum of $50 and a maximum of $100, and there was no Over Limit Charge, Ds are not bound by the amendments. 

8.  Ds also disagree with clause 10.3 of 1^st Agreement which provides that any transaction effected by using the cards after the effective date of Amendments will be deemed to be conclusive evidence that the cardholder has accepted and agreed to such Amendments without reservation.  Ds say this is not permissible because the terms and conditions must be expressly and not impliedly confirmed.  Any silence on Ds’ part cannot be construed as acceptance. 

9.  Likewise, Ds submit there cannot be implicit acceptance of 1^st and 2^nd Amendments and 1^st and 2^nd Agreements by the receipt and use of Cards and also by the receipt of Sample Letters that accompanied such cards.

10.  For the above reasons, Ds deny that 1^st and 2^nd Agreements and 1^st and 2^nd Amendments are binding on them.  Hence, Ds are only bound by the original contract between the parties when they first applied for credit cards.

11.  As explained in paragraph 27 of my Decision, Ds’ reliance on their subjective understanding as to the proper interpretation of contract between the parties and their insistence on Ds’ signatures and written confirmations to constitute binding contracts is misconceived.  Ds have not been able to cite any authority to support such contention although Chow submits today there are many cases to such effect.  Under the principles in Ng Shou Chun, it is for Ds to raise a triable issue and an arguable defence. 

12.  There is in fact no implicit agreement as suggested by Chow.  In paragraph 27 of my Decision, I held that a binding contract can arise, as what has happened in this case, by Ds’ conduct in signing and using Cards, thereby accepting CI’s T & C of Agreement.  It is trite that an offer can be accepted by conduct to constitute a binding contract.  I need do no more than refer to Chitty on Contracts, 29th edition, volume 1, paragraph 2-002 at page 122 and paragraph 2-208 at pages 135 to 136.  I do not see any reasonable prospect of success for this ground of appeal.

13.  But Ds next argue there is no evidence to prove the existence of 1^st and 2^nd Amendments, and there is no express evidence or witness (other than P’s credit control department staff) in respect of CI’s usual practice of sending the prevailing T & C of Agreement for a new credit card.  Ds charge that P has not shown “strong” evidence that Sample Letter is “the letter that the “Ds” have used as the guidelines to confirm the cards” by producing an acknowledgement of receipt of such letters signed by Ds. 

14.  Here, P has exhibited 1^st and 2^nd Amendments in the supporting affirmation evidence.  The existence of 1^st and 2^nd Amendments as well as CI’s usual practice have been confirmed by Chan Lik-keung, P’s assistant manager, in his various affirmations.  It cannot be said that there is no evidence in support of these matters.

15.  Ds say that the evidence is not “strong.”  However, as explained in paragraph 17 of my Decision, under the applicable Order 14 principles, it is for the defendant to show that there is a triable issue or an arguable or believable defence.  Not only is P’s case supported by documentary evidence, i.e. 1^st and 2^nd Agreements, 1^st and 2^nd Amendments, Sample Letter, Statements, etc., there is no countervailing evidence other than Ds’ bare assertion of non-receipt of such documents.  Yet, Ds admit that they have received and used Cards, and P has confirmed that the cards were sent accompanied by Sample Letter.  Ds also received Statements without making protest.

16.  I have also discussed in my Decision the uncertainty in Ds’ case and the incredulous nature of Ds’ assertions of the non-receipt of 1^st and 2^nd Agreements and 1^st and 2^nd Amendments in light of P’s affirmation evidence.  Apart from repeating their contentions, Ds have not shown how, as a matter of law or of analysis, there are reasonable prospects of success for appeal on this ground.

17.  Ds then argue that the continued use of Cards does not amount to any acceptance of Amendments because Ds’ financial position does not allow them to cancel Cards.  They say that had they cancelled Cards, P would have taken steps to force Ds into bankruptcy.  Personal hardship, though unfortunate and draws sympathy, is not a sufficient answer to the objective interpretation of contract.  There is no evidence of protest by Ds even if outright cancellation is not a viable option (although today at the hearing before me, Chow submits that Ds have made enquiries and have been told that they could cancel Cards and make full payment).  This ground has no reasonable prospect of success on appeal.

18.  Ds submit that their contentions in relation to the non-binding nature of T & C of Agreement and Amendments are supported by paragraphs 6.1 to 6.7 of the Code of Banking Practice.  It should be noted that such code was not referred to at the hearing before me on 23 June 2005.  The code is not law and at best it is a professional code of practice affecting banking institutions.  No reason was given as to why the code was not referred to at the earlier hearing.  The Court of Appeal does not receive fresh evidence as of right but it can exercise its discretion to do so.  An important consideration is why the relevant evidence was not adduced at the earlier hearing (see Po Kwong Marble Factory Limited v Wah Yee Decoration Company Limited [1997] HKLRD 1341). 

19.  But even assuming that the Code of Banking Practice is receivable as fresh evidence on appeal, I do not find the provisions in paragraphs 6.1 to 6.7 of assistance to Ds.  Such provisions do not expressly require the terms and conditions of banking services to be signed by both the bank and the customer.  Instead, they provide that if there are amendments to the terms and conditions or to the charges for banking services, the bank “should adopt effective means of notification which would provide reasonable assurance that their customers will be informed of the change and which do not unduly rely on the customers’ own initiative.  Individual notification of customers (whether by written notice, statement insert or email message) is likely to be effective in achieving these objectives.”  In fact, it is P’s case all along that the prevailing T & C of Agreement were sent to Ds and, further, Amendments were sent to Ds together with Statements.  I disagree that this ground has reasonable prospect of success on appeal. 

20.  Ds say that by reason of the aforesaid arguments, Ds’ Adjustments are reasonable and appropriate and there should be similar adjustments for the period before January 2004.  Since I have concluded that the above arguments have no reasonable prospects of success, this contention also falls away.

21.  Mr Chung, counsel for P, also cited Smith’s case in his list of authorities.  Lord Woolf at page 843 said as follows:

“……. The intended respondent has no entitlement to receive reasons as to why the application has been granted, in the same way that he does not normally have the right to be heard on an application which is usually made ex parte.”

22.  Although Ds have chosen to proceed by way of inter partes summonses, Mr Chung acknowledges acknowledges the limitations to P’s role in respect of the applications for leave to appeal.  I do not consider it necessary to deal with Mr Chung’s submissions.

23.  I now turn to the appeal against the costs awarded against Shum in Judgment.  Ds accept that the two proceedings against Shum and Chow respectively have not been consolidated, and P had to prepare the court documents separately.  But Ds submit that there is substantial overlap of work by P.  Such overlap has in fact been taken to account by Master J Ko when he reduced the assessed costs payable by Shum to below that payable by Chow.  In paragraph 50 of my Decision, I have also acknowledged that some information in the two proceedings is similar and have exercised my discretion accordingly. 

24.  Hong Kong Civil Procedure 2004, volume 1, paragraph 62/1/7 at page 890 says that:

“The Court of Appeal will not interfere with the exercise of a judge’s discretion in the award of costs unless it was shown that he failed to exercise the discretion, or exercised it on a false principle, or did not exercise it judicially…… or the exercise of discretion was demonstrably flawed…….”

I have already taken into account the overlap between the two proceedings, and I see no reasonable prospects to this aspect of the appeal.

25.  Chow confirms that he and Shum have no objection to the costs order nisi granted in paragraph 63 of my Decision.  For the avoidance of doubt, I order that the costs order nisi be made absolute. 

26.  I now turn to Ds’ argument as to the relevance of DCCJ6521 of 2004 (hereinafter called “the Other Action”).  Ds say that at the earlier hearing before me, Chow has told me the action number of the Other Action and that it is a similar claim by P against another credit cardholder (hereinafter called “the Other Defendant”).  In the Other Action, the learned master on 11 May 2005 granted part judgment based on Rate, Late Charge at a maximum of $100 and no Over Limit Fee (hereinafter collectively called “Ds’ Basis”), and unconditional leave to defend for the residue of P’s claim (hereinafter called “the Master’s Decision”).  Ds say that I should have adjourned the earlier hearing before me to enable them to adduce the relevant particulars of the Other Action and it is unclear why I refused to consider the Master’s Decision. 

27.  I have in my Decision explained that, first, each case must be decided on its own facts; and secondly, the Master’s Decision is not binding on me.  More importantly, there is complete sparsity of information at the earlier hearing before me as to the reasoning or ratio of the Master’s Decision that is said to be applicable to Ds’ appeals then before me. 

28.  Had Ds wished to rely on the factual information from the Other Action, they have failed to adduce any such evidence at the earlier hearing.  There is no suggestion there is any difficulty in deposing to such evidence as Chow himself attended the hearing before the learned master in the Other Action.  Had Ds wished to cite the Master’s Decision as legal authority, they have not shown the relevancy of the reasoning or ratio of the Master’s Decision or its binding effect on me.

29.  Ds now annex copies of various documents from the Other Action as Exhibits 1 to 4 of their affirmation of 19 July 2005.  As explained above, Ds are not entitled to adduce further evidence on appeal to the Court of Appeal as of right.  They have not explained why when they have chosen to file further evidence on 31 May 2005 for the appeals from Judgments heard before me, they have not included the evidence from the Other Action when the Master’s Decision was already delivered on 11 May 2005. 

30.  Chow explains from the Bar table today that they have not got the documents at that stage but accepts that he omitted to refer to the Master’s Decision in his affirmation of 31 May 2005.  This means that P has not been alerted to Ds’ intention to refer to the Other Action at the earlier hearing before me.  There is no sufficient reason for the court to grant an adjournment as suggested by Ds, but I am prepared to assume for the purpose of discussion that the information from the Other Action is receivable as fresh evidence on appeal.

31.  Ds contend that although the affirmation of Chan Lik-keung dated 7 February 2005 in the Other Action (which is Exhibit 3 of Ds’ affirmation of 19 July 2005) claims T & C of Agreement and Amendments provide for Finance Charge and Default Finance Charge in excess of Rate, the statement of account in Exhibit “CLK-6” thereto shows that the outstanding balance is $57,844.05 as at 1 December 2004 if the rate for Finance Charge is adjusted to Rate; and the breakdown dated 18 July 2005 (being Exhibit 1 to Ds’ affirmation dated 19 July 2005) reflects the adjustments by reducing Late Charge to a maximum of $100 and Over Limit Fee to nil.  Such adjustments on Ds’ Basis result in an outstanding balance of $56,584.05 which formed the partial judgment with interest thereon at Rate until 11 May 2005 and thereafter at judgment rate granted by the learned master in the Master’s Decision.

32.  As explained above, the learned master also granted unconditional leave to defend in respect of the residues of P’s claim against the Other Defendant.  Chow submits at the hearing today that P’s solicitor at the hearing before the learned master informed the court that P would abandon the balance of the claim.  However, this does not appear in any of the affirmation evidence before me today. 

33.  But despite the aforesaid arguments, Mr Chung points out and Chow agrees that in the Other Action P has not filed any affirmation similar to the fourth affirmation of Chan Lik-keung dated 17 June 2005 in P’s claim against Chow and the third affirmation of Chan Lik-keung of the same day in P’s claim against Shum.  These affirmations set out how 1^st and 2^nd Agreements and 1^st and 2^nd Amendments were sent to Ds and how the various charges were calculated. 

34.  In the circumstances, it is not surprising that the learned master granted the Master’s Decision as he did.  It cannot be said that the factual basis for the appeals before me was on all fours with that for the summary judgment application against the Other Defendant in the Other Action.  The Master’s Decision is not directly persuasive and I have already analysed the factual evidence in relation to the appeals before me.  In my view, there are no reasonable prospects on this ground as well. 

35.  I therefore decline to grant leave to appeal, but Ds are entitled to approach the Court of Appeal for leave.

36.  As regards the application to rehear Ds’ counterclaim, they complain that Master J Ko dismissed Ds’ summonses for such counterclaim for damages on 27 April 2005 but offered no reasons.  They further claim that it will be unjust if the court refuses to rehear the counterclaims.  Upon clarification with Chow, this appears not to be a fresh application for summary judgment of Ds’ counterclaims (although Ds’ documents draw careful distinction between an appeal and a rehearing).  Chow says this is in effect an application for leave to appeal against my decision dismissing Ds’ appeal against Master J Ko’s orders.  Although the applications before Master J Ko have been ambiguously worded, Chow clarifies today that they are applications for summary judgment of Ds’ counterclaims.

37.  I have in my Decision also considered Ds’ application on the basis that they are appeals against the orders of Master J Ko.  Save for a few matters, the facts underlying Ds’ counterclaims are essentially not disputed.  In light of P’s case disclosed in P’s letter of 17 March 2003, summary judgment in respect of Ds’ counterclaim is not justified.  I do not wish to rehearse the analysis again and refer to paragraphs 57 to 61 of my Decision. 

38.  Ds have annexed a statement of counterclaim to their affirmation of 19 July 2005.  If such document is intended to be a pleading, Ds have not applied for leave to amend their counterclaims.  If such document is Ds’ statement of facts, whether such new evidence will be received on appeal will depend on the discretion of the Court of Appeal under the principles in Po Kwong Marble Limited’s case.  However, no explanation has been given as to why such evidence was not adduced at the earlier hearing. 

39.  Even assuming that such statement of counterclaim is receivable as evidence on appeal, the provisions in the Code of Banking Practice, the Citigroup Private Promise to Customers and the Personal Data (Privacy) Ordinance do not prohibit a bank from issuing cancellation letters or demand letters to its customers as distinct from disclosing the customers’ personal data to a third party.  P says that their staff brought Cancellation Letters to Ds’ home address and they were sealed.  If Cancellation Letters addressed to Ds were sealed and left at Ds’ address by P’s own staff and not by some third party agent bringing the information to some third party’s address (as is explained in P’s letter of 17 July 2003), there is no sufficient basis to support a summary judgment application for breach of privacy or statutory personal data protection.  Given that P has set out its position in its letter to Ds before the issuance of Ds’ counterclaims, the application for summary judgment is appropriately dismissed by Master J Ko.

40.  Since I am not prepared to grant leave to appeal, there is no basis for granting stay of execution of Judgments.  Even if I were wrong and had allowed the appeals, I do not think that Ds’ case is so strong as to require stay of execution.  I also dismiss the application for stay of execution.  In the circumstances, I dismiss both Chow’s and Shum’s applications before me today.

(Court discussion re costs)

41.  Chow has no objection to Mr Chung’s application for costs.  Since I have dismissed Ds’ applications, there is no reason why costs should not follow event.  I therefore order that Shum do pay P costs of her summons dated 19 July 2005, and Chow do pay P costs of his summons dated 19 July 2005, both to be taxed if not agreed.

42.  Mr Chung very fairly did not apply for certificate for counsel.

Mr Gary Chung, instructed by Messrs Tai, Tang & Chong, for the Plaintiff

Chow Chi Lit Simon, in person, present.

Shum Yuet Mei, in person, present and represented by Chow Chi Lit Simon