Aspinall's Club Ltd v Al-Zayat

Gaming Act 1968 section 16 regulates civil as well as criminal consequences of credit for gaming. Its limited cheque exceptions validate the cheque and underlying loan only while their statutory conditions are met.

A later agreement or course of dealing that extends credit for gaming losses can make an otherwise lawful cheque and loan illegal and unenforceable. Mere delay in suing may be insufficient, but continuing dealings and further credit can engage section 16(1)(b). An undated cheque is not post-dated if it bears no later date when signed and delivered. A defence based on evidence capable of establishing these matters should proceed to trial if it has a real prospect of success.

The claimant sued on a £2 million cheque representing gambling losses. David Steel J granted summary judgment under Part 24: [2007] EWHC 362 (Comm). The defendant appealed.

The defendant had exchanged four £500,000 script cheques for gaming tokens, then gave a substitute cheque after losing the tokens. He alleged that the substitute cheque was accepted on terms delaying presentation until a dispute was resolved. He also relied on the claimant’s later decision to let him continue gambling while seeking repayment. The central issues were whether these matters disclosed an arguable breach of section 16 of the Gaming Act 1968, and whether any breach affected liability on the cheque and underlying loans.

Disposition. The appeal was allowed. The defendant was permitted to defend the action at trial. All three judges accepted that the proposed defences had sufficient prospects to prevent summary judgment.

1. Statutory effect. Section 16 of the Gaming Act 1968 was not confined to criminal liability. It also affected civil rights and obligations. Section 16(1) prohibited credit both to enable gaming and in respect of gaming losses. The statutory cheque exceptions validated the whole transaction, including the underlying loan, where their conditions were met. A transaction outside those conditions was illegal and could be unenforceable.
2. Substitute cheque. An undated cheque was not a post-dated cheque where, when signed and delivered, it bore no later date than the current date. The payee could insert a date and present it promptly. However, the defendant’s evidence could support an implied agreement that the substitute cheque would not be dated or presented until the dispute was resolved. Acceptance of the cheque and return of the original cheques could amount to more than silence, and the substitution supplied consideration. The issue was sufficiently arguable for trial.
3. Illegality of the alleged arrangement. If such an agreement existed, it could amount to allowing credit in respect of gaming losses under section 16(1)(b). The cheque might be treated as a sham, comparable in principle to the cheques considered in Marcrest Properties. The reasoning in Roberts & Co v Marsh, concerning the ordinary validity of an unconditional cheque, did not answer the separate question of statutory illegality.
4. Later dealings. Nearly six years’ mere forbearance to sue might not itself establish a breach. The claimant’s continuing dealings and evidence that it allowed further gambling in the hope of recovering the £2 million were, however, capable of showing that credit was allowed in respect of gaming losses. Section 16(1)(b) could cover an extension of credit previously granted lawfully. The court disagreed with the contrary view in Ladup Ltd v Yazbeck. If the later credit was proved, both the cheque and underlying loans could become illegal and unenforceable.
5. Whether credit was also given to enable further gaming under section 16(1)(a) was left open. The estoppel defence was unnecessary to decide. The Gaming Act 1892 was subordinate to section 16 while the 1968 Act applied; it therefore required no separate consideration.

• Court of Appeal (Civil Division) — [2007] EWCA Civ 1001. Appeal allowed and the defendant permitted to defend the action at trial.
• High Court of Justice, Queen’s Bench Division, Commercial Court — David Steel J granted summary judgment on the £2 million cheque: [2007] EWHC 362 (Comm).