Po Sing P.C.B. Factory (A Firm) v. Yiu Choy Bon and Others

HCA004378/1981

BETWEEN

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Coram: Hon. LIU J.

Date: 19th March, 1983.

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JUDGMENT

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1. The plaintiff's claim against the defendant firm is on two dishonoured cheques Nos. 300370 and 300371 in the respective sums of $6,581.47 and $27,976.06. The plaintiff has given credit for $2,000 as part payment and claims the outstanding balance of $32,557.53 with interests thereon and costs.

2. At the inception of the proceedings, general leave was granted by consent to as well the plaintiff as the defendant for amending all pleadings and documents filed so as to effect a correction of the designation of the defendant to "Realthing Corporation".

3. The history leading up to the issuance of the two dishonoured cheques in question involved 7 cheques, and it stemmed from goods sold and delivered in between the 2nd May to the 26th June in 1980 on some 31 invoices by Po Sing P.C.B. Factory, the plaintiff, to Realthing Electronics Limited. Although there was some initial misapprehension as to the constitution of Realthing Electronics Limited and Realthing Corporation, the evidence on that aspect was reasonably clear. Yiu Choy Lup and Yiu Choy Bon are brothers. The elder brother, Choy Lup was the director and general manager of Realthing Electronics Limited to which goods were sold and delivered by the plaintiff. The younger brother, Choy Bon was not a member of the limited company and claimed to be unconnected with it. But both brothers, Choy Lup and Choy Bon were partners together with one Lui Kwok Wah in the defendant firm, Realthing Corporation. Initially, both the Realthing Electronics Limited and the firm Realthing Corporation shared the same premises, but in November 1980, Realthing Corporation moved away. The younger brother, Choy Bon claimed to have less contact with his elder brother thereafter.

4. It must have been in or about October 1960 that two cheques were drawn by Realthing Electronics Limited in favour of the plaintiff for this quantity of goods sold and delivered in between 2nd May to the 26th June 1980. Those two cheques were dishonoured, and according to the elder brother some two weeks later but according to the younger brother in early September 1980 Mr. Kwok of the plaintiff firm approached the Yiu brothers on these two dishonoured cheques of the Realthing Electronics Limited.  As a result, four cheques were drawn by the defendant firm in favour of the plaintiff company and they were cheques Nos. 300368 to 300371 respectively for the sums of $7,000 and again $7,000, $6,581.47 and $27,976.06 totalling $48,557.53. The total amount of $46,557.53 represented the total value of the said goods sold and delivered by the plaintiff to Real thing Electronics Limited for $49,548.53 with a 2% discount.

5. According to Mr. Kwok of the plaintiff, it was a straightforward replacement of the two dishonoured cheques drawn by Realthing Electronics Limited by the defendant firm, Realthing Corporation and it was a case that "the partners of Realthing Corporation promised to pay on behalf of Realthing Electronics Limited". When Mr. Kwok was asked immediately following, whether he "promised anything in return", his reply was: "They gave me these four cheques. That is the promise". When the question was repeated, he gave an negative answer "No". Mr. Kwok testified that it was for the convenience of Realthing Corporation, and he agreed to it, that the four cheques were all postdated and that they were postdated to the 15th September, 20th September, 25th September and 30th September i.e. at intervals of every five days. The first two cheques were honoured upon presentation, the latter two cheques dishonoured. Mr. Kwok was unable to explain why the cheques for $6,581.47 No. 300370 was chopped on the reverse side with a clearance chop of the Kwangtung Provincial Bank, Kowloon City Office of the 16th January 1981. After the dishonour of the two cheques in question, so ran the evidence of Mr. Kwok, he approached the Yiu brothers for settlement. According to Mr. Kwok, the Yiu brothers gave him a cheque of $2,000 in part payment an or above the 10th of June 1981 and without further payment the writ in this action was taken out on the 27th June 1981.

6. Both Yiu brothers gave evidence. Their version was substantially different from that of Mr. Kwok's. It was common ground that the or two dishonoured cheques issued by Realthing Electronics Limited were for goods sold and delivered to the limited company on the 31 invoices from the 2nd May to the 26th June 1980 and that they were dishonoured. Both brothers maintained that that was exclusively the liability of the limited company for which Realthing corporation, the defendant firm could not be held responsible. It was claimed by the Yiu brothers that Mr. Kwok of the plaintiff, being a long-standing friend and a former partner, approached them with the two dishonoured cheques of the limited company seeking assistance on the pretext of his then financial predicament. Out of sympathy and generosity, the Yiu brothers allegedly consented to come to his rescue. It was September 1980, and four cheques were said to be issued by the defendant firm at intervals of five days each at the specific request of Mr. Kwok. It was further maintained that the defendant firm drew these 4 cheques without consideration merely for the accommodation of Mr. Kwok of the plaintiff because the original two dishonoured cheques could not be replaced by further cheques of Realthing Electronics Limited which, as Mr. Kwok was said to have explained, were no longer accepted by the plaintiff's financiers. The Yiu brothers were adamant that Mr. Kwok was expressly told and agreed not to have them cashed.

7. As I understand them, the Yiu brothers claimed that the limited company remained throughout liable to the plaintiff, but in their evidence of this meeting in September 1980, they said little on the limited company's cheques and its liability therefor. According to the Yiu brothers, each time when the first two $7,000 cheques fell due on the 15th September and the 20th September 1980 respectively, they were met on a plea of financial hardship of Mr. Kwok but Mr. Kwok was expressly reminded that he was not to present any further cheques for payment. It was further testified by the Yiu brothers that on or above the '10th of June 1981, a $2,000 cheque drawn in favour of the plaintiff was given by the younger brother to Mr. Kwok as a personal loan to meet his imminent need. Much play was made of what purports to be the presentation date of the cheque dated 25th September 1980 for $6,581.47 on the 16th January 1981, long after a fire in the Yiu brothers' premises in November 1980.

8. Coming back to the meeting in September 1980 at which subsequently the four cheques including the two sued upon in this action were drawn by Realthing Corporation, Mr. Yiu Choy Lup told the court that he agree he would make his best effort to "fix up" the two dishonoured cheques of the limited company and to make payment to Mr. Kwok. The defendant's case was that as for the cheques for accommodation Mr. Kwok agreed "only to use the cheques to survive position and would not cash them". There was no other evidence given on the liability of the limited company or the fate of these two dishonoured limited company's cheques. We know not what would happen on maturity of any or all of these subsequently given 4 postdated cheques if Yiu Choy Lup was then still unable to "fix up" the limited company's cheques and make payment to the plaintiff, when the plaintiff was supposed to fall back on these two original cheques from the limited company, whether the plaintiff was to sue for goods sold and delivered under the invoices or how the plaintiff was to arrange for the return of any of these four cheques expected to be used or deposited for money advances.

9. It seemed to have been suggested that upon maturity of each of these four cheques, it was for Mr. Kwok to put up cash or other security in payment or satisfaction of these loans. It was alleged that Mr. Kwok was in considerable difficulty, yet at the meeting in September 1980, these 4 cheques were only to be postdated at intervals of 5 days when time was allegedly for the asking. The Yiu brothers claimed that Mr. Kwok merely sought a five days' indulgence for each of these four cheques. It is inconceivable why Mr. Kwok had not requested for all these four cheques to be postdated to a more distant date so as to allow him a longer time to tie over his alleged period of difficulty, particulary when the alleged postdating of earlier cheques had been in the range of 60 - 90 days.

10. When the Yiu brothers allowed the first two $7,000 cheques to be paid, no evidence was given as to whether the original indebtedness of the limited company still subsisted or was accordingly reduced. Even according to Mr. Yiu Choy Lup upon the first cheque of $7,000 falling due, Mr. Kwok told him: "Look, this cheque is matured. I am taking it to a finance company; either you pay the full amount or clear the cheque." That hardly sounded as if Mr. Kwok had accepted a temporary personal accommodation.

11. Again, when the last $2,000 cheque was given by the younger brother, allegedly as a personal loan, there was no evidence given by any of the Yiu brothers as to what discussion, if any, the parties had as to their financial involvement including the original two limited company's cheques. The defendant's two $7,000 cheques were claimed to have been allowed to be presented and paid, and the last two cheques were allegedly presented against an undertaking; yet Mr. Kwok was said to have been given a loan despite such repeated irritation. Moreover, admittedly none of the Yiu brothers has demanded the repayment of this $2,000; nor is there a counterclaim for this sum made in this action. Finally, the $2,000 alleged personal loan was given on 10th of June 1981, and it would have been most ungrateful of Mr. Kwok to institute this action soon thereafter on the 27th of the same month.

12. It would have been unbusiness-like to permit the use of these four postdated cheques given in September 1980 for a brief duration of just five days each without the defendant securing any detailed arrangement from Mr. Kwok to put in fund at maturity from time to time.  On the plaintiff's part, if the Yiu brothers were to be believed, it would have been incredible for Mr. Kwok to go through such intricate agreement on the force of such close past relationship just to obtain a momentary reprieve of five days each on each postdated cheque. The arrangement described by the Yiu brothers was unorthodox and involved with no clear arrangement or solution for the liability of the limited company to be ultimately satisfied. The letter dated the 23rd January 1981 from Mr. Kwok to Mr. Yiu Chop Bon as Mr. Yiu Junior, enclosing copies of the two dishonoured cheques was hardly consistent with the defendants' version as told to the court. That letter was in the following terms: "Herewith photostat copy returned cheque. Please do not forget us." It is therefore, hardly surprising for this court to lean in favour of Mr. Kwok's simpler and less entangled assertion of a settlement by the defendant firm on behalf of the limited company in respect to the indebtedness of the two originally dishonoured cheques.

13. I prefer and accept Mr. Kwok's evidence. I find that the four cheques given in September 1980 by the defendant firm was for the consideration and in the manner as related to this court by Mr. Kwok.

14. At the conclusion of the proceedings, Mr. Lai for the defendant submitted that it was incumbent upon the plaintiff to prove due notice of dishonour. In the course of his submission, counsel for the plaintiff applied for the case to be reopened so that further evidence might be adduced. The proceedings were thus adjourned for a further date to be fixed.

15. At the adjourned hearing, Mr. Smith for the plaintiff led me through a passage at page 336, marginal reference 18/13/5 of the white Boon 1982 Volume I and Arab Bank Limited v. Ross. ⁽¹⁾ The case was no longer sought to be reopened.

16. In 18/13/5 of the white Book, it is stated under the heading "Traverse must be specific, not general":

"In an action on a bill of exchange, promissory note or cheque, a defence in denial must deny some matter of fact, e.g. the drawing, indorsing, accepting, presenting, notice of dishonour of the bill or note".

17. At page 224 of Arab Bank, Somervell L.J. reiterated the predecessor of our 0.18 r. 13(3) R.S.C. and at page 231 Romer L.J. emphasized special the need for a specific denial in running a particular line of defence. The learned Lord Justice observed that "the necessary inference from the fact that the defendant on his defence was challenging the plaintiffs' claim to be holders in due course on certain specific ground, was that he was not seeking to challenge it on any other grounds". In the instant case, the defendants' sole allegation was that the cheques were given without consideration for the plaintiff's own accommodation on the express condition of the same never "to be encashed". There was no issue joined on the alleged notice of dishonour, and the defendants must be taken as not seeking to challenge the plaintiff's claim on any other grounds. In my view, the defendants have not put the plaintiff to proof in the alleged giving of notice of dishonour which must therefore be taken as admitted.

18. Counsel for the plaintiff relied on a casual answer of the plaintiff in cross-examination at page 15 of my notes as indicative of the state of the defendants' account at the time when the $27,976.06 cheque was dishonoured. In reply to the question of "Why was it returned?", the plaintiff said "No money". It is unclear whether that came from hearsay information, speculation or actual personal knowledge. Mr. Yiu Chop Lup explained in cross-examination that payment of the cheques would be stopped unless arrangements were otherwise made. See page 31 of my notes. Mr. Yiu is disbelieved, and little can be made capital of one of his explanations given in support of a rejected version advanced. There has been no or no satisfactory evidence of "insufficient fund" or "countermand".

19. It remains for me to give judgment with costs in favour of the plaintiff as claimed with interests thereon at 10% per annum from the date of writ to the date of judgment and from the date of judgment until payment.

Representation:

Mr. C.L. Smith instructed by Messrs. John Ip & Co. for the Plaintiff.

Mr. Thomas Lai instructed by Messrs. J.S.M. for the 1st named Defendant.

(1)    [1952] 2 Q.B. 216