Edward Wong & Co Ltd v. Tung Lee Electric Wine Co and Another
Read the full judgment text of HCA 13/1978 on BabelCite. This High Court CFI judgment was delivered on 8 April 1978 before Li J.
Bills of exchange – holder in due course – post-dated cheques – value – Diamond v. Graham – summary judgment – Plaintiff sued on four cheques drawn by 1st defendant in favour of 2nd defendant, endorsed to plaintiff – Cheques dishonoured – Plaintiff claimed as holder in due course – Defendant alleged failure of consideration between drawer and endorser – Value given by Edward Wong Finance Ltd., not plaintiff – Issue 1: Whether post-dated cheques put holder on inquiry – Held: No; presumption of negotiation before overdue under s.36(4) – Issue 2: Whether holder must personally give value – Held: No; Diamond v. Graham holds value need not be given by holder – Appeal allowed; summary judgment entered – Costs to plaintiff
Legal issues: Post-dated cheques · Value given by holder
Outcome: Appeal allowed; summary judgment entered for plaintiff.
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HCA000013/1978 IN THE SUPREME COURT OF HONG KONG HIGH COURT ACTION NO. 13 OF 1978 -----------------
----------------- Coram: Li, J Date of Judgment: 8 April 1978 Lee (Fairbairn, Kwok & Wang) for plaintiff Cheung (Peter Mo & Co.) for defendant ----------------- JUDGMENT ----------------- 1. This is an appeal against the Registrar's decision giving the 1st defendant unconditional leave to defend the action. The appellant is the plaintiff in the action who sued on 4 cheques against the 1st defendant as drawer and the 2nd defendant as endorser. It is admitted that all 4 cheques were drawn by the 1st defendant in favour of the 2nd defendant who endorsed them in favour of the plaintiff. It was a general endorsement in blank. These cheques were dishonoured upon presentation for payment. 2. The plaintiff alleged that they were holder in due course and the cheques in question were endorsed over in November 1975. 3. Affirmations and affidavits have been filled for both parties in support of their contention. The affirmations and affidavits filed by one George Kern shows that valuable consideration had moved to the 2nd defendant from the Edward Finance Company Ltd. which for the purpose of this appeal should be regarded as separate and distinct person from Edward Wong & Co. Ltd. and the 1st defendant. Affidavit in support of the defence alleges that there have been total failure of consideration for these 4 cheques vis-a-vis the 1st defendant and 2nd defendant. This failure was found out in January 1976. 4. It was known to the 1st defendant the four cheques were no longer in the possession of the 2nd defendant in April 1976. Furthermore it is alleged in the defendant's affidavit that there were failure of consideration from the 2nd defendant. Soon after the 1st defendant stopped payment of these four cheques. 5. Failure of consideration between the 1st defendant and the 2nd defendant is not relevant. The plaintiff sues as holder in due course against the 2nd defendant. 6. It is not known or alleged at what time payments was stopped. As payment was stopped notice of dishonour is no longer necessary. 7. There remained two points for consideration. The first point is that these cheques were post-dated cheques and as such plaintiff should be put in enquiry. 8. Section 34(4) of the Bills of Exchange Ordinance Cap.19 provides:-
9. Subsection 4 of Section 36 provides:
10. There is evidence that the bill had been endorsed over in October/November 1975. The presumption is that the bills had been negotiated prior to the date the bills were overdue. 11. Secondly there is no evidence that value had moved from the plaintiff. 12. Section 29 Subsection (1) of the same Ordinance provides:
13. Section 27(2) provides:
14. In addition there is the case of Diamond v. Graham (1968) 1 W.L.R. to the effect that once valuable consideration had been given for those cheques it is not necessary to show that the holder is the same person. It was held that nothing in Section 27(2) which require value to be given for cheques so long value had been given. At page 1064 Lord Justice Danckwerts said:
15. In the present case there is prima facie evidence that Edward Wong Finance had given value for those four cheques now in the hand of the plaintiff. The plaintiff sues as the holder in due course. Learned counsel for the defendant in the circumstances says that some other facts would be elucidated at the trial. He further contends that there is no evidence that value had moved from plaintiff. This is answered by the decision in Diamond v. Graham. 16. I am of opinion that this does not help the defendant once value had been given for the four cheques. Perhaps I should add that at page 137 of the White Book it is stated that in an Order 14 Summons defendant must descend to particulars and to show reason why defendant has a good defence. 17. The affirmation and affidavit so far disclosed by the defendant had not shown any valid defence apart from general denial and the point that the cheques were post-dated cheques. All these difficulties had been explained by affirmation, affidavit and exhibits. There appears to be no defence available. The appeal is allowed and plaintiff is entitled to summary judgment. Costs should follow the events and be given to plaintiff. Certificate for counsel. Representation: Lee (Fairbairn, Kwok & Wang) for plaintiff Cheung (Peter Mo & Co.) for defendant |