Dharmvir Madnani v. Assan C. Datwani
Read the full judgment text of HCCL 65/1980 on BabelCite. This HCCL judgment.
1. This action has been going on since 1980 and has taken up three full days of court time. As my mind has been made up quite clearly on the evidence which I have heard I do not intend to reserve my judgment. I apologize therefore in advance if it is not as grammatically perfect as I would like it to be, nor as precisely set out.
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HCCL000065/1980 IN THE SUPREME COURT OF HONG KONG HIGH COURT 1980, No. CL-65 BETWEEN
____________________ Coram: The Hon. Sears., J. in Court Date: of hearing: 15th - 17th of April, 1986. Date of delivery of judgment: 17th April, 1986. __________ JUDGMENT __________ 1. This action has been going on since 1980 and has taken up three full days of court time. As my mind has been made up quite clearly on the evidence which I have heard I do not intend to reserve my judgment. I apologize therefore in advance if it is not as grammatically perfect as I would like it to be, nor as precisely set out. 2. This action, as I said, involves an occurrence in February 1980 when the defendant drew a cheque, which is exhibited in the bundle of agreed documents as document No. 1, for a large amount of money US$73,250 in favour of gentleman called Salem. The cheque in fact was made payable to cash for that amount of money and this action arises out of the plaintiff coming into possession at some later time of that cheque. The claim as originally put, is in two ways, it is firstly suggested that his was indeed a Bill of Exchange and the plaintiff was the lawful holder or a holder in due course of this bill and he can sue on it and the cheque in fact having been dishonoured. Payment has been countermanded on the cheque and the plaintiff says he can sue on it by virtue of that. Alternatively he says that if it is not such a Bill of Exchange there was some contractual obligation on the part of the defendant which makes the defendant liable to payment. 3. As I said earlier I have listened to a great deal of evidence in this case, a lot of it is peripheral and does not go to the particular issue. The facts are relatively short and the facts I find indeed are these. On the 11th of February the defendant did draw this cheque and gave it to the gentleman he knew as Salem, although apparently the full name is Salem Abuklekhil. He said then he knew him as Salem and he had been carrying on business with his company in Tripoli. He said that he was exporting garments to Tripoli and had been paid by letters of credit and that his nephew was negotiating contracts. There were seven contracts in all totalling something about US$2,000,000. He was having difficulties with some of the contracts and three letters of credit had been opened. Position was indeed difficult. Only part shipment had been made and there were certainly guarantees outstanding. He met Salem in Hong Kong towards the end of January 1980 and on the 11th of February when they discussed money he decided to pay 5% of a sum of money which he calculated at 1.465 million, and the cheque represents 5% of that figure, $73,250. He said he wrote down on a small piece of paper how this sum indeed was calculated and he gave it to Salem. He tells me that Salem asked for the money and gave no reason for wanting it. I asked the defendant why he gave the money; there appears to have been no satisfactory explanation of that. That however, in my judgment in no way affects the decision I arrive at in this case. One thing I can say safely is that I think I have not been told the full story by either party in this case but at any rate the cheque was handed over to Salem on the 11th of February. Mr. Salem then appears, from the evidence I have heard, to have gone straight round to the plaintiff and sought to obtain a cheque in exchange. The plaintiff, when he gave evidence, said that, "Salem brought in this cheque on the 11th, he asked me to cash the cheque and he wanted to be sure he got paid, he wasn't sure that he would come back to Hong Kong." And the plaintiff said, "That is why I gave him my cheque." That cheque is document No. 2 in the agreed bundle of documents. He was asked why he had done this and he said he thought it the right thing to do, he trusted him and he thought the defendant was a person of commercial respectability, obviously good for money and he gave his own cheque to Salem and said that he took the defendant's cheque in exchange; he said that he believed the defendant to be a rich man. The answer to this problem as I said, although the case has extended to some three days of evidence, is to be found really in a couple of questions and answers which were put in cross-examination of the plaintiff. The plaintiff explained his relationship with Salem and he said these words or similar words:
And I accept that indeed amongst the Indian Community in Hong Kong no doubt traders are known to each other. And he said that,
4. So what had happened, as I hold, was that on that day the plaintiff indeed did exchange the cheques believing as he said that the cheque he was getting was as good as cash. The fallacy of that of course is as a matter of law that the cheque is a cheque made payable only to cash, not made payable to a specified person and clearly it was not as good as cash. So as I said before the plaintiff put his case in two ways, firstly he said that this is a bill of exchange and as a lawful holder he is entitled to sue on it. As far as that is concerned I hold as a matter of law that this is not a bill of exchange. It does not comply with. Section 3 Cap. 19 - Bills of Exchange Ordinance; it is not addressed to a specified person; that is a corresponding provision to Section 3 of the Bills of Exchange Act. I have been referred to a variety of authorities, all are consistent witha cheque made payable to cash indeed not being a negotiable instrument and there are a variety of cases starting with the North and South Insurance Corporation v. National Provincial Bank(l), Orbit Mining and Trading Co. Ltd. v. Westminster Bank Ltd.(2), amongst no doubt other authorities which could be found. Those authorities have stood for a number of years and I have not been shown any instance where those authorities have been questioned at all. In my judgment this is not a bill of exchange and therefore the first ground of the plaintiff's claim fails. 5. The plaintiff therefore put his claim in an alternative manner. He says that there was a contractual obligation on the part of the defendant to pay this sum of money by virtue of a telephone conversation which occurred. I should at this stage perhaps have interpolated one matter, the statement of claim as originally drafted had asserted in paragraph 5 that the exchange of cheques which took place was known to the defendant the words are "At all material time the defendant was aware of the aforesaid exchange and raised no objections in respect of the same. " I find there was no evidence for that at all, indeed the evidence of the plaintiff himself does not in any shape or way bear it out. I therefore hold that the defendant was not aware of the exchange' that occurred. 6. The only matter therefore remains, as I have said a moment or so ago, is whether or not there is some contractual obligation that has been spelt out whereby although the defendant is not legally liable to pay on the cheque, nevertheless he contracted in such a way as to take that liability upon himself and is under an obligation to pay the plaintiff and as he has not paid it the plaintiff is entitled to sue him. That claim is spelt out in paragraph 7 of the statement of claim which reads as follows:
This claim, involves really an issue of fact, although there could well be some superimposed issues with regard to law, depending upon the facts which I will find. 7. The plaintiff gave evidence about this telephone conversation and said as follows:
Then the plaintiff said that he said to the defendant, "You're a rich man. " The defendant said that he had certain financial difficulties, he had drawn certain bill and letters of credit to guarantee. He was expecting funds by the end of February, that he would then pay the cheque. The plaintiff said, "I said, 'Fine'. " Then we had some short business conversation. "I agreed to give him time to the end of February" and he also added in the course of this part of his giving evidence, "the defendant promised to pay me by the end of February. " What he was suggesting was that although he was in possession of a cheque which indeed was not negotiable, nevertheless he was told by the defendant that if he did not present it to the bank at that time, as it might well be dishonoured, that if he waited and presented it at a later time the defendant would indeed honour the cheque. The defendant gave evidence that there was no such conversation and said that there was a telephone conversation when he phoned the plaintiff because Salem had said he had left a message with the defendant and he wanted to know why he had not delivered the message. And he said, "the plaintiff said he had telephoned me and was told I wasn't in Hong Kong and said Salem had left a message with him that the cheque should be stopped;: Salem had lost it; and he categorily denies that there was any conversation between himself and the plaintiff whereby he promised to pay the plaintiff the sum of money represented in the cheque. 8. The chronology of this matter is important. From the evidence, the facts I find are that the cheque that was given by the plaintiff to Salem was on the 16th of February. The plaintiff says that the day Salem would be leaving he would collect his cheque and therefore on the 16th, I gave him my cheque. " Indeed when one looks at the cheque, cheque No. 2, it has the date of the 16th February, 1980. On the 15th of February, that is the day before this occurred and this is a fact (which is agreed or indeed can be verified) between the 15th and 20th of February the defendant was out of Hong Kong within the Chinese New Year. And the next fact I find is that on the 22nd of February that is two days after he returned to Hong Kong, that he stopped the cheque. 9. The defendant's account is that on the 20th of February he returned. On the 21st he went back to his office and on the 22nd, he said at about 6 o'clock in the evening Mr. Salem telephoned him and said that he had lost the cheque in Hong Kong and told him to stop payment. He said that Salem said he had lost it in his hotel or someone's office in Hong Kong. There is no doubt that there is an order to stop contained in a document, and it is often very important, when considering issues of facts and assessing which evidence I prefer to examine the documents and there is no doubt the document No: 15 is a cable sent on Cable & Wireless from the defendant to the Standard Chartered Bank in New York, quoting his account number, and dated the 22nd of February and is timed at 18:44, nearly a quarter to seven in the evening and the defendant said to his bank, "Please note my cheque No. 106 dated 11th of February, $73,250 has been lost, therefore please do not pay if presented." So by the 22nd of February the cheque had been stopped by the defendant. 10. Assuming any problems of law in favour of the plaintiff, for the plaintiff to succeed, the burden of course being upon him to satisfy me on the balance of probabilities, he would have to satisfy me that there had indeed been a telephone conversation prior to the 22nd whereby the defendant had indeed promised to pay by the end of February. In my judgment on the probabilities that is unlikely; the account which the defendant gives in my judgment is a much more likely account - that he was notified by Salem, who appears to have been the cause of all the problems in this matter, that the cheque had been lost and it was immediately cancelled. I have had also the opportunity to listen carefully to the evidence which has been given in this case and have regard to the manner in which the evidence was given and I must admit that I was impressed by the evidence of the defendant. I thought he gave his evidence in a business-like manner, and his evidence accords in my judgment with the probabilities of this series of events. The cheque was indeed presented by the plaintiff on the 5th of March of 1980 and that was some time after the cheque had been stopped. Now, in my judgment what had really happened here was simply this - I have indeed the greatest sympathy for the plaintiff who had been put into a position whereby he was treating with a man known to him for some time, Salem, although as was pointed out by Mr. Westbrook, a slightly odd situation to part with a large sum of money when there was nothing taken in return-as was put to me there was no pre-existing obligation to pay the money, and there was no reason why he should pay that sum of money, but I do have sympathy with him because I do hold that the cheque which is in the bundle No. 2 payable to Salem was indeed paid by the plaintiff. There is firstly the evidence of the plaintiff himself, although he has not produced any bank statement, but I also have the evidence of Mr. Kai Wing Chit, officer in charge of the Hong Kong Bank. He says when he looks at the cheque that the indication of the cheque is that it has been paid, there is no indication that it hasn't been paid; also there is Section 85 of the Bills of Exchange Ordinance, which says:
I hold as a matter of fact that the cheque No. 2 in the bundle of documents, was drawn by the plaintiff and encashed by Salem. As I said earlier I have the greatest sympathy for the plaintiff who appears to have paid out a large sum of dollars to Salem, and of course it is perhaps not surprising that he hasn't taken any action against Salem who appears to be a man who has as it were gone to ground - no one has seen him at all. One's sympathy is aroused by that situation and one compares it with the defendant who had deliberately drawn the cheque for the same large sum of money and given it to Salem. In other words, it clearly implied that he had some good reason to pay it. So when one has the position that the plaintiff is out of pocket for that sum of money, but the defendant isn't out of pocket for a similar amount of money which he should have been, it raises one's sympathy, but it in no way should prevent me from examining the legal position between the parties. This is not a court of morals and I give no pronouncement on any of the moral rights or wrongs in this ease. 11. All I am concerned with is whether or not the plaintiff has established some legal liability for the defendant to pay him this sum of money. On those matters therefore where there is any discrepancy between the evidence of the plaintiff and the evidence of the defendant particularly insofar as the telephone calls are concerned in or about the third week of February, I prefer the evidence of the defendant. It may well be that the plaintiff's recollection is slightly muddled on this. There is no doubt at all that after that date he was pressing in a variety of ways to get the defendant to pay him that sum of money and again that is the situation which can be readily appreciated, because he considered that there were some moral obligation upon the defendant to pay, as he himself had paid out that large sum of money. When one looks at the evidence of all these telexes, all the comings and goings between intermediaries, in my judgment it merely confirm my opinion that the plaintiff was indeed seeking to persuade the defendant to pay him a sum of money which he was not really legally liable so to do. I do not examine in depth, as I have said, all the evidence which has been given in this case, a lot of it not really assisting me insofar as the real issues of the case are concerned. There is no doubt that the cheque when presented was not paid but I hold there was no obligation, on the defendant to pay the plaintiff. The defendant's evidence about the cheque, again, as I said is a matter of fact, he said that Dayal came to see him- this is the gentleman who is a social friend, I think, of the plaintiff and also has some relationship as the wife's cousin of the defendant. Mr. Dayal, as I hold, did go to see the defendant, and it was at the first meeting, the defendant tells me, that he told Mr. Dayal the whole story and he appeared surprised. A few days later at the second meeting, Dayal came again and said that what had happened was the plaintiff had given his cheque in exchange for the defendant's cheque, and he brought a photocopy of the front of D.2 with him. He also brought a copy of a telex, D.14, a telex which on any view may have a variety of meaning but does not really assist me at all in deciding this case. What Salem had sent by telex merely proves that he sent him telexes and the defendant's evidence, which I do accept on this point, is that the first time he heard about the cheque D.2 was indeed at that meeting. Now that in my judgment, again, confirms the view that I have come to about this case which is there had been no conversation of the sort which the plaintiff has told me about in evidence. The plaintiff, as I said, may be muddled over those telephone conversations; what happened here was the defendant was now being shown, as I hold, for the first time the existence of the plaintiff's cheque. He said, "I was surprised to see the cheque in Salem's full name. " And so, in my judgment, there was no contractual obligation spelt out in any shape or form that the defendant would indeed pay the plaintiff this large sum of money. Mr. Bokhary has addressed me on the law and submitted that if I were to find in favour of the plaintiff on this issue of fact that that conversation would in itself be sufficient to found such a claim and he referred me to the various authorities on forbearance to sue and also to Chitty, Volume One General Principles, paragraph 176 on forbearance to sue. I pointed out in the course of argument that this really was not a forbearance to sue, it was a forbearance to pay a cheque, but it is not necessary for me to make any concluded judgment on that matter. This case really does involve a relatively short issue of fact and insofar as the facts are concerned I resolve those facts in favour of the defendant and the result is that the claim should be dismissed.
(1) (1936) 1 K. B. 328 (2) (1963) 1 Q.B. 794 in the Court of Appeal Representation: Mr. Kemel Bokbary, Q.C. and Mr. Kumar Ramanthan instructed by M/S Hoosenally & Neo for the Plaintiff. Mr. Simon Westbrook, instructed by M/S Hasting & Company for the Defendant. |