Edward Wong Finance Co Ltd v. Ying Lun Electric Co Ltd and Another

HCA003438/1977

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

ACTION NO. 3438 OF 1977

-----------------

-----------------

Coram: Li, J. in Chambers

Date of Judgment:

-----------------

JUDGMENT

-----------------

1. This is an appeal against Registrar's decision giving the 1st defendant in this case unconditional leave to defend the action. The claim is for two dishonoured cheques of which the 1st defendant is admittedly the drawer. The 2nd defendant is sued in his capacity as sole proprietor of the Ming Fat Electrical Factory which is the payee on the face of the two cheques. The endorsement on the back of the cheques shows a chop of the Ming Fat Electrical Factory below the signature of the 2nd defendant. Before the Registrar the 1st defendant filed an affidavit denying liability on the ground that the cheque was given by the 1st defendant to the 2nd defendant for consideration which had completely failed. This is certainly no defence to a holder in due course. It is argued that the cheques were marked and crossed Account/Payee only and the cheques could not be validly negotiable. This is no defence in action of this nature and counsel for 1st defendant rightly abandoned this line of defence. In paragraph 7 of the 1st defendant's affidavit, it is alleged that he had been informed by the 2nd defendant that when the cheques were endorsed and handed over to the plaintiff, the plaintiff did not give any value or consideration for them. I am told that before the Registrar these points were not strongly pursued. But a new point is given. It is alleged that endorsements on the cheques were irregular. There was nothing to show that the 2nd defendant had authority to endorse a cheque payable to the Ming Fat Electrical Factory.

2. Counsel for the plaintiff referred me to 137 of the White Book on Order 14 Summonses. It reads:

"The defendant's affidavit must 'condescend upon particulars', and should, as far as possible, deal specifically with the plaintiff's claim and affidavit, and state clearly and concisely what the defence is, and what facts are relied on as supporting it. It should also state whether the defence goes to the whole or part of the claim, and in the latter case it should specify the part."

3. The note in the White Book is precise and clear. Learned Counsel for the 1st defendant contends that the 1st defendant is entitled to rely on the exhibits put forward by the plaintiff to show that they were irregular. Any form of reference to irregularity is a matter of submission and argument or to raise on point in law. An allegation that the cheque is irregular per se may be a point of law and matter of comment or contention. However why it is alleged to be irregular and the fact that the 2nd defendant had no authority is a matter of fact to be disclosed in the affidavit. It has not been done. I am of the opinion that the new point has never been disclosed in the affidavit. In view of the contents of paragraph 7 whatever gap left by the plaintiff has been filed by the plaintiffs by reference to the 2nd defendant saying that the plaintiff had not given consideration. By virtue of the 2nd affidavit of the plaintiff it shows that there had been consideration passing from plaintiff to 2nd defendant. The question of Obliteration is neither here nor there. This is no signature and no endorsement to any other individual shown on the back of the cheque. Thus the one point before me is the irregularity of the endorsement. This has not been shown in the 1st defendant's affidavit. Even if it has been shown the 1st defendant's affidavit has impliedly accepted that the 2nd defendant has authority to deal with the 2nd defendant's accounts (with the affairs of the Ming Fat Electrical Factory). For these reasons appeal is allowed. Summary Judgment in respect of the two cheques with costs. 

Representation: