Benny Chang v. Bestline (HK) Corporation (A Firm)
Read the full judgment text of HCA 5247/1979 on BabelCite. This High Court CFI judgment.
1. This is an appeal from the decision of a Registrar given on the 14th November 1980 whereby he dismissed the Plaintiff's application under Order 14 for summary judgment.
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HCA005247/1979 Bill of Exchange - Economic Duress - whether drawer of bill has shown cause on Order 14 summons that his engagement to pay is vitiated by duress.
IN THE SUPREME COURT OF HONG KONG HIGH COURT -----------------
----------------- Coram: Mr. Commissioner Litton, Q.C. in Chambers. Date of Judgment: 19th December, 1980. ----------------- JUDGMENT ----------------- 1. This is an appeal from the decision of a Registrar given on the 14th November 1980 whereby he dismissed the Plaintiff's application under Order 14 for summary judgment. 2. The Plaintiff brings proceedings as the holder and payee of a cheque for $21,975.57 dated 20th November 1979 drawn by the Defendant. It is not denied that the cheque was duly presented for payment and was dishonoured. Due notice of dishonour was given. 3. Under Section 55(1)(a) of the Bill of Exchange Ordinance the drawer of a bill, by drawing it, engages that on due presentment, it shall be accepted and paid according to its tenor, and that if it is dishonoured he will compensate the holder ....... provided that the requisite proceedings on dishonour are duly taken. 4. Prima facie, therefore, the Plaintiff is entitled to judgment. 5. The Defendants say that they are entitled to have leave to defend the action because, as is put by the Defendant's manager in his affidavit filed yesterday, para. 15, the Defendants were "blackmailed" into issuing the cheque. Now, the Defendant does not "show cause" under Order 14 Rule 4 by simply labelling a transaction "blackmail", just as the Plaintiff does not discharge his burden of proof by saying that he "verily believes" the Defence to be a "sham" Defence, as the Plaintiff's solicitor has done in para. 6 of his affirmation of the 21st October 1980. 6. Counsel for the Defendants puts his case on 2 grounds:
Economic duress 7. Counsel for the Defendants says that in the transaction, there was such commercial pressure applied on the Defendants as to amount to duress or at least the matter is arguable. The primary facts on which the Defendants rely are as follows:
Analysis of Defendant's Allegation of Duress 8. "Commercial pressure" is a nebulous concept. In a business transaction it would be unusual to find the parties in a completely equal bargaining position. Where parties engage in a series of transaction (as the parties did in this case) the situation may not be static and the respective bargaining positions will shift from time to time. It would be difficult for a court, analysing the facts after the event, to come to an accurate assessment as to where the advantage lies at a particular point. Thus it is that despite repeated attempts by litigants to introduce the notion of "inequality of bargaining power" into disputes concerning commercial transactions, it has never taken root in the law. Parties enter into commercial transactions for the advantages they perceive for themselves: it is seldom the case that they are constrained by circumstances to do so. The position is different in a consumer sale context where the supplier can sometimes say to the buyer "take it or leave it" and the buyer has no choice because the supplier has a virtual monopoly. Thus the provisions of section 57(5)(a) of the Sale of Goods Ordinance may require a court to assess "the strength of the bargaining positions of the seller and buyer relative to each other": a factor which would normally be irrelevant in a commercial transaction between parties at arms length. 9. When I look at the argument presented by Mr. Tong, Counsel for the Defendants in this case, I keep in mind this basic fact: when the Plaintiff and the Defendants entered into contract No. BSF 127, they did so at arms length, each seeking an advantage. There is nothing to suggest that the Defendants had a greater need to sell the 250 dozen jeans to the Plaintiff than the Plaintiff had to buy them from the Defendants. The jeans arrived in the USA some time in September 1979: if the Defendants were unable to draw on the Letter of Credit, so the Plaintiff on his part was unable to take delivery of the goods. The Defendants were clearly not going to release the shipping documents until they had been paid. There was an impasse. If the Defendants were in a quandary because of their prior contractual obligations in respect of those goods, (they do not say so in their affidavits) in all probability the Plaintiff was in a similar position. Normally, if an exporter has obligations to his suppliers an importer has obligations to his subpurchasers. How then is this a situation for "blackmail" as suggested in the affidavit of Ewan Chow (para. 15)? 10. On the facts as presented by Mr. Tong my mind hovered over the question whether they disclosed an arguable case for the Defendants. The line between "commercial pressure" and duress is indistinct and whether it has been crossed or not depends very much upon the facts of the case. Mr. Tong argues quite rightly that the facts are for the Judge at the trial, and so long as there is some material to suggest that the matter requires investigation then his clients are entitled to leave to defend. 11. When I look at the further facts as presented by Mr. Hoo, Counsel for the Plaintiff - facts which are unchallenged - then I find my mind quite made up. They are these:
12. Now the memorandum and the note are statements of the Defendants and are clearly admissible in refutation of the Defendants' case. When these further facts as outlined by Mr. Hoo are examined, it seems to me plain that the suggestion of duress is without foundation. "Economic duress", I accept, may (arguably) vitiate a transaction because it may be shown that the act of the "victim" was not a voluntary act. In this context there may be no difference between a contractual situation as in the case of North Ocean Shipping - v - Hyundai Construction Company (1979) 3 WLR 419 - and a case like the present where the act is the drawing of a bill of exchange. Although Mr. Tong was unable to refer me to any case where the drawer's engagement under section 55 of the Bill of Exchange Ordinance (or it's equivalent in other jurisdictions) has been held vitiated by "economic duress", I do not think it is conclusive on the matter: at least, not on an Order 14 summons. Further, again for the purpose of the Defendants "showing cause", I am prepared to accept that economic duress is arguably part of English law. 13. But looking at the affidavit evidence here, how can it be suggested that there was such compulsion or coercion that the Defendant's engagement to be liable for the amount of the cheque was vitiated? Mr. Wong Hing Bong in para. 11 of his affidavit says:
14. The expression "he would not make payment to the Defendant for contract No. BSF 127" is slightly misleading. By itself that passage suggests that the Plaintiff had received the goods and was withholding payment. That was untrue. The Plaintiff did not have the goods. 15. In para. 14 of Ewan Chow's affidavit filed yesterday she says: "As the sum due under contract No. BSF 127 was so much larger than the sum demanded by the Plaintiff for compensation for the first contract I had no alternative but to issue a post dated cheque to the Plaintiff which is the subject matter of this action." The truth is that the Defendant had an alternative (albeit an expensive one): to have the goods sold to someone else. 16. I find it unnecessary in this judgment to go into the case of Pao On - v - Lau Yui Long (1979) 2 WLR 435 although the passage in Lord Searman's judgment at 450 D-E is of interest. Accepting as I do for the purposes of this matter that "commercial pressure" may constitute duress, I find no basis for suggesting in this case that the will of the Defendants in drawing the cheque was subject to coercion. The proposition that the engagement of the Defendants to pay under the cheque was vitiated is, in my judgment, not arguable. Total Failure of Consideration 17. Although this was, I understand it, the main argument put before the Registrar, it was only adumbrated in Counsel's submission before me. What is suggested is this:
It follows, Counsel argues, that there was no consideration for the cheque. 18. The fact that there were complaints relating to the goods supplied under the first contract is admitted: Wong Hing Bong's affidavit para. 10 refers to the Plaintiff's complaint about "the variety of colours"; Ewan Chow's affidavit para. 14 says the complaint was that the colours were "not quite matching". 19. In the memorandum of 25th October 1979 signed by the Defendants there is an implied admission that the complaint had some foundation. As Mr. Hoo points out, the cheque for $21,975.57 was part of a larger transaction in which the Plaintiff's claim under the first contract was compromised. Quite apart from the Plaintiff's engagement to extend the validity period of the Letter of Credit No. 58579 which in itself is sufficient consideration, there was a forbearance to sue. How then are the Defendants to set up a case based on total failure of consideration? 20. I hold that there are no grounds for such a defence. In my judgment the Defendants have no defence to this claim. 21. The order of the Registrar made on the 14th October 1980 is set aside. Judgment is hereby given for the Plaintiff in the sum of $21,975.57 and interest at 8% from the date of the Writ November 1979 and costs. There will be a certificate for Counsel.
Representation: Mr. Alan Hoo (Hastings & Co.) for Appellant (Plaintiff). Mr. Ronny Tong (Johnson, Stokes & Master) for Respondent (Defendant). |