Ncnb National Bank v. Gonara (HK) Ltd
Read the full judgment text of HCA 13900/1983 on BabelCite. This High Court CFI judgment was delivered on 12 March 1984.
1. On the 16th January 1984 I dismissed the appeal of the Defendant against the order of Master Betts on the 19th December 1983 giving summary judgment under O.14 to the Plaintiff for the sum of US$1,839,420 or the Hong Kong dollar equivalent together with interest claimed by the Plaintiff in respect of a dishonoured bill of exchange. Shortly after dismissing the appeal my attention was drawn to a number of South African cases cited in Cowen on the Law of Negotiable Instruments in South Africa (
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HCA013900/1983 Bills of Exchange Ordinance (Cap. 19) sections 3 and 11: Instrument purporting to be a bill of exchange and expressed to be payable "At 120 days D/A sight" held to be a bill of exchange within the meaning of sections 3(1) and 11(1)(a) of the Ordinance: Korea Exchange v. Debenham [1979] 1 Lloyd's Rep. 548 (C.A.) followed and Keung Kam-chuen v. Miyazaki Bank Ltd. [1981] HA.L.R. 10 (C.A.) considered. Bills of Exchange Ordinance, section 2: definition of "holder" held to include payee and indorser of a bill who has indorsed the bill specially and delivered it to the indorsee and subsequently recovered possession of it from the indorsee. Definition of "holder" not construed restrictively but in the light of section 59(1)(b) of the Ordinance which contemplates an indorser who has paid on the bill being remitted to his former rights as regards the acceptor or antecedent parties and being entitled, if he thinks fit, to strike out his own and subsequent indorsements, and again negotiate the bill. Payee and indorser in possession of bill after recovery of bill from indorsee held entitled to sue as"payee and holder" on bill still bearing payee's special indorsement to indorsee and entitled to strike out indorsement at hearing of application for summary judgment under O.14: Harrop v. Fisher (1861) 10 C.B. (N.S.) 196 distinguished: Mayer v. Jadis (1833) 1 M & Rob. 277 applied: dicta in Dugan v. United States (1818) 3 Wheat 173 and decisions in Johnson v. L'Heureux[1914] 27 W.L.R. (Can) 21 and Rat Portage Lumber Co. v. Margulius [1914] 15 DLR 577, [1914] 16 DLR 477 followed: South African authorities considered.
BETWEEN
________ Coram: Hon. Clough, J. Dates of Hearing: 12, 13, 16 and 21 January 1984 Date of Delivery of Judgment: 12 March 1984 ___________ JUDGMENT ___________ 1. On the 16th January 1984 I dismissed the appeal of the Defendant against the order of Master Betts on the 19th December 1983 giving summary judgment under O.14 to the Plaintiff for the sum of US$1,839,420 or the Hong Kong dollar equivalent together with interest claimed by the Plaintiff in respect of a dishonoured bill of exchange. Shortly after dismissing the appeal my attention was drawn to a number of South African cases cited in Cowen on the Law of Negotiable Instruments in South Africa (4th edition). As some of the cases referred to in Cowen seemed to favour the arguments which had been advanced on behalf of the Defendant on the appeal I restored the matter for further argument on the 21st January 1984 but, after hearing counsel on both sides, I adhered to my previous decision and left my order dismissing the appeal undisturbed. I reserved my reasons for my decision. I now give them and express my regret that they are so belated due to the exigencies of the interlocutory list. 2. By its specially endorsed writ issued on the 15th November 1983 the Plaintiff claimed as holder in due course of a bill of exchange dated the 17th February 1983 drawn by N & J International Ltd. on the Defendant in the sum of US$1,839,420 payable to the order of the Plaintiff "120 days after sight". The Plaintiff pleaded in the Statement of Claim that on or about the 24th February 1983 the Defendant accepted the bill to mature on the 21st of June 1983 and for payment at Banque Nationale De Paris, Hong Kong ("B.N.P."). The Plaintiff further pleaded that the bill was presented for payment on the 21st June, 1983 but was dishonoured. Thereafter allegations of extensions of time are pleaded, followed by the pleading of notice of dishonour by a letter dated the 24th September 1983 written by the Plaintiff's solicitors to the Defendant followed by non payment. 3. Notice of intention to defend was given by the Defendant on the 30th November 1983 and on the 5th December 1983 the Statement of Claim was amended without leave pursuant to O.20 r.3 so as to alter the capacity in which the Plaintiff was suing from that of holder in due course to "payee and holder". 4. On the 6th December 1983 the Plaintiff issued a summons for summary judgment under O.14 for the amount claimed in the Amended Statement of Claim with interest and costs. The verifying affidavit was that of Mr. Burns the Plaintiff's solicitor. In his affidavit Mr. Burns deposed specifically that the Plaintiff was the payee and holder of the above mentioned bill of exchange. He exhibited a copy of the bill to his affidavit and verified the particulars of the Plaintiff's claim contained in the Amended Statement of Claim. The affidavit is in the usual forensic form concluding with the expression of the deponent's belief that there is no defence to the action. 5. The bill is made out on a printed form. It is dated the 17th February 1983. At the top right hand part of the bill there appear the following type written words -
In the body of the bill the printed words are "At ......... of this First of Exchange ......... pay to the order of .............. the sum of ............" The space immediately after the word "At" has been completed by the insertion of the following type written words - "120 days D/A sight" and the name of the payee has been type written as "(North Carolina National Bank, Hong Kong)" which was the former name of the Plaintiff. It suffices for the purposes of this appeal to state that the material words appearing in the bill are therefore -
6. On the back of the bill there is an indorsement in favour of B.N.P. by the Plaintiff and it also appears from further words on the back of the bill that it was received by B.N.P. on the 24th February 1983. 7. In opposition to the Plaintiff's application the Defendant filed an affidavit of Mr. Anderson, its solicitor, on the 15th December 1983. Mr. Anderson deposes that he has advised the Defendant that under the relevant provisions of the Bills of Exchange Ordinance Cap. 19, the Plaintiff "has no title to sue on the Bill of Exchange which is the subject matter of this action". Exhibited to Mr. Anderson's affidavit is a copy of a letter received by the Defendant from B.N.P. on the 12th December 1983. That letter which is headed "Confirmation for Audit Purposes" in substance requests the Defendant to state whether or not it agrees that at the close of business on the 31st October 1983 the amount of the bill was outstanding with the Defendant. 8. On the 19th December 1983, which was the date of the hearing of the Plaintiff's O.14 summons, it filed an affidavit made by Mr. Herbst, a senior vice president of the Plaintiff in which he deposed that the bill had been discounted by the Plaintiff under a bill discounting facility enjoyed by the drawers N & J International Limited as customers of the Plaintiff. He further deposed that the bill had been accepted by the Defendant for payment at B.N.P., Hong Kong and that accordingly the Plaintiff endorsed the bill in favour of E.N.P. as agents for collection. He added that no value was given by B.N.P. for the bill. 9. Mr. Herbst deposed that on the 8th November 1983, B.N.P. had returned the bill to the Plaintiff and that thereafter the Plaintiff or its solicitors had retained possession of it. He went on to depose that he was advised that the Plaintiff was at the commencement of this action the holder of the bill and entitled to sue on it and to maintain this action notwithstanding the endorsement in favour of B.N.P.. He concluded by deposing that he was advised that, if necessary, the endorsement in favour of B.N.P. could be struck out and he was authorised by the Plaintiff to do so. 10. Master Betts, after argument, made an order to the effect that, on the Plaintiff's authorised signatory striking out the indorsement to B.N.P. on the bill, there be judgment for the Plaintiff for the principal and interest claimed in the Amended Statement of Claim. On the same day Mr. Herbst made a second affidavit in which he deposed that pursuant to the Order of Master Betts he had struck out the relevant indorsement and he exhibited a copy of the bill showing the indorsement as struck out. Accordingly on the same day a formal order was made by the Master ordering that judgment be entered for the Plaintiff against the Defendant in respect of the principal and interest claimed by the Plaintiff in the Amended Statement of Claim under the bill. 11. This being an appeal under 0.58 is by way of actual re-hearing. However the matter came before me on the same evidence as was before Master Betts. I am not sure whether the original of the bill was produced before the learned Master but it was produced on the appeal. 12. Mr. Dicks for the Defendant advanced the following four grounds of appeal:-
13. As to the Defendant's first ground of appeal, the relevant provisions of the Bills of Exchange Ordinance to be applied in order to determine whether the instrument dated the 17th February 1983 is a bill of exchange are sections 3(l) and (2) and 11(l). These provisions are as follows:
14. In this case the material wording of the relevant instrument is for a11 practical purposes:- 15. "At 120 days D/A sight ........ pay" 16. In reliance upon Korea Exchange v. Debenham [1979] 1 Lloyd's Rep. 548 (C.A.) Mr. Dicks contended that the failune to comply with s.11(1)(a) in the instrument by including the words "after sight" and by inserting "D/A" produced the result that the Ordinance had not been complied with. If, he submitted, the statutory form had not been complied with it might be that evidence would assist but in the absence of evidence of usage there was not a sufficient degree of certainty here for the purposes of Order 14. He also cited the decision of the Hong Kong Court of Appeal in Keung Kam-chuen v. Miyazaki Bank Ltd. [1981] H.K.L.R. 10 (C. A.) for the purpose of distinguishing it on its facts from the present case because, as he rightly pointed out, there was certainty in that case regarding the actual date of payment. Following the reasoning of Megaw L.J. in the Korea Exchange case at p.552, column l, I consider that the Plaintiff must be able to show that the relevant instrument comes within s.11(1) of the Ordinance because that provision stipulates the circumstances under which a bill is payable "at a determinable future time" within the meaning of the Ordinance and therefore explains and amplifies s.3(1). 17. The reference to "sight" precludes reliance upon s.11(1)(b) because sight cannot be a specified event which is certain to happen. The question therefore can be reduced to one of whether the Plaintiff has shown that the relevant instrument is expressed to be payable at a fixed period after sight for the purposes of s.11(1)(a). 18. In the Korea Exchange case the Court of Appeal held that the statutory phrase "expressed to be payable ......... after sight" could not be interpreted as though it permitted the bill to be expressed otherwise than by the use of the word "sight". However the Court of Appeal did not decide that compliance with the provisions of s.11(1)(a) of the English Bills of Exchange Act 1882 could only be achieved by the use of the actual words contained in that provision. The use of the word "sight" was considered to be essential but the court had first examined and considered the meaning of the words actually used in the bill before them and they concluded (see the dictum of Megad L.J. at p.553, column 1,) that -
19. In my judgment, in the light of the views expressed by the Court of Appeal in the Korea Exchange case, if a bill is not expressed in the precise words of s.11(1)(a) it is necessary to ascertain the meaning and efffect of the words actually used in the bill and to decide whether the meaning expressed by those words is that the bill is payable at a fixed period after sight. 20. Approaching the matter in this manner I treat the expression "D/A" (generally accepted in commercial usage to mean "documents against acceptance") as being in parenthesis or in the margin of the bill and as being no part of the drawer's order to the drawee. On this point this bill is on all fours with the bill under consideration by the Court of Appeal in the Korea Exchange case in relation to which Megaw L.J. observed at p.552, column 1 -
21. In that case the plaintiffs had adduced expert evidence of bankers in an attempt to establish accepted commercial usage requiring that some special meaning should be given to the expression "D/A" appearing in the body of a bill of exchange but the Court of Appeal held that such evidence had not succeeded in displacing the normal commercial usage referred to by Megaw L.J. in the passage I have just cited above. The expression "D/A" was treated in the same manner, when appearing in a bill of exchange, by the Hong Kong Court of Appeal in Keung Kam-chuen's case (supra). 22. Once the expression "D/A" is eliminated from the relevant passage in the bill now under consideration, the relevant words for interpretation are "At 120 days sight ........... pay". I have no difficulty in concluding that the natural and obvious interpretation of those words is that payment is to be made 120 days after sight. In the Korea Exchange case the crucial word "sight" had been omitted as well as the word "after". Here the crucial word "sight" is included and the omission of the word "after" is not, in my judgment, fatal because the only sensible construction to be put on the words "At 120 days sight pay" in a commercial document purporting to be a bill of exchange is that payment is to be made at a 120 days after sight. No other interpretation seems possible. 23. In arriving at this conclusion I am fortified by the observation made by Donaldson J. (as he then was) in the Korea Exchange case which is quoted by Megaw L.J. at p.551, column 2. Referring to the bill which was under consideration in that case, Donaldson J. observed -
24. Furthermore I have myself had at least one case before me in Hong Kong where a bill of exchange was drawn in precisely the same terms as this bill and no point was taken regarding the character of the instrument. Indeed I have noted that in the American case of Dugan v. United States (1818) 3 Wheat. 173, which was cited to me in this case on another point, the bill of exchange drawn on the 22nd December 1801 is reported to have been expressed to be "payable at 60 days sight". 25. Accordingly I do not consider that Mr. Dicks' submission that the instrument in this case is uncertain in its terms is sustainable. Its meaning is, in my judgment, sufficiently clear and evidence of commercial usage is not required for its interpretation. In the Korea Exchange case evidence of alleged commercial usage was introduced in relation to the expression "D/A" in order to attempt to establish a special meaning for that expression displacing its ordinary meaning when appearing in a bill of exchange. In this case no attempt has been made by the Plaintiff, for obvious reasons, to take a similar course and I do not consider that expert evidence on commercial usage is required for the interpretation of the instrument before me which I hold to be a bill of exchange within the meaning of the Bills of Exchange Ordinance. 26. As to the Defendant's second ground of appeal (challenging the Plaintiff's right to sue on the bill), Mr. Dicks contended that the Plaintiff could not be a holder for the purposes of the definition of that expression in s.2 of the Ordinance because on the face of the bill itself the Plaintiff, as payee, had specially indorsed it to B.N.P.. At the time of the indorsement which clearly had been accompanied by delivery the bill had been negotiated to B.N.P. and it had never been indorsed back to the Plaintiff who could not therefore be said to be the holder at the time the action began or at any time thereafter until the indorsement to B.N.P. had been struck out after the summary judgment given by Master Betts on the 19th December 1983. If a cause of action arose when B.N.P.'s indorsement was struck out, Mr. Dicks argued, it arose too late for the purposes of the O.14 application. 27. The argument of Mr. Dicks amounted to the proposition that a payee who has negotiated a bill and therefore parted with possession of it ceases to be the holder for the purposes of the Ordinance and can never recover the capacity of holder except by way of indorsement back to him by another holder. Mr. Dicks further contended that in so far as the Plaintiff may have recovered possession of the bill it could only thereby be in the position of an equitable assignee entitled to the rights conferred by s.31(4) of the Ordinance and he cited the passage in Halsbury's Laws of England, 4th Edition, Volume 4 at para. 393 for the proposition that in such circumstances the plaintiff could not sue on the bill except in the name of B.N.P. The authority for that proposition cited in Halsbury is Harrop v. Fisher (1861) 10 C.B.(N.S.) 196. 28. The above mentioned passage cited from Halsbury by Mr. Dicks does not however support his argument because the circumstances of this case are clearly distinguishable from those which obtained in Harrop v. Fisher (1861) 10 C.B. (N.S.) 196. In that case the payee had not indorsed the bill before he delivered it to the transferee. The transferee indorsed it subsequently in the name of the payee but it was held that the mere act of delivery to the transferee did not confer upon him authority to make the indorsement. The transferee was therefore in the position of an equitable assignee but could not sue on the bill in his own name. In the present case the Plaintiff is not only in possession of the bill but he is named as the payee on the face of it. 29. The considerable industry of experienced counsel was not able to produce any English or Hong Kong authority covering the precise circumstances of this case. However, in my judgment, the definition of holder in s.2 of the Bills of Exchange Ordinance is to be interpreted in the light of the long standing principle recognised and perpetuated by s.59(2)(b) that where a bill is paid by an indorser the party paying it is remitted to his former rights as regards the acceptor or antecedent parties, and may, if he thinks fit, strike out his own and subsequent indorsements, and again negotiate the bill: c.f. Story on Bills of Exchange, 4th Edition (1860) at s.209: see also the passage in s.224 of the same work to the effect that where a principal indorses a bill without restriction or qualification in favour of his agent the latter takes no property whatsoever in a bill and the principal may revoke the authority and reclaim the bill from the agent as long as it remains in his possession. 30. The Ordinance itself provides, in s.59(l)(b) a clear instance in which an indorser may be remitted to his former rights as a holder without any requirement for any indorsement back to him from a subsequent holder. It must follow that if a payee in possession (and as such a holder) indorses the bill to an indorsee and subsequently pays on the bill and recovers possession of it he is remitted to his former rights as holder notwithstanding the existence of his own and any subsequent indorsements. He may strike those indorsements out or not as he thinks fit. 31. It seems to me clear that if the definition of holder in s.2 of the Ordinance is to be interpreted consistently with s.59(1)(b) it must be interpreted without reading into it any implied restriction precluding a payee, who has indorsed away the bill and delivered it to the indorsee, from restoring himself to the capacity of holder as payee in possession by the mere recovery of possession of the bill in the ordinary course of business. 32. I accept the argument of Mr. Ribeiro for the Plaintiff that the contention that there must be indorsement back to the payee before he can revert to the capacity of holder is commercially unrealistic since it ignores the fact that in practice an indorsee, particularly if he is a mere agent who has not received value, may not be disposed to incur the liabilities of an indorser under s.55(2) of the Ordinance when delivering a bill back to his principal indorser after the latter has specially indorsed it to him for the purposes of collection. However, I prefer to rest my decision against the restrictive interpretation of the definition of holder in s.2 of the Ordinance upon the reasons I have set out above. 33. In my judgment the Plaintiff has pleaded its claim for payment under the bill adequately. The plea that the Plaintiff is the "payee and holder" necessarily implies that the Plaintiff claims to be in possession as payee of the bill. It has therefore pleaded the capacity in which it makes its claim and I do not consider that it is required to plead the precise circumstances under which it became the holder: see Byles on Bills of Exchange, 25th Edition at p.359 and c.f. Bullen & Leake and Jacob's Precedents of Pleadings at p.255 and form 71 on p.260. 34. Then it was argued on behalf of the Defendant that questions of title arose because the special indorsement in favour of B.N.P. remained on the bill and B.N.P.'s letter to the Defendant dated the 10th December 1983 indicated that it was asserting that title at the date of that letter. As far as the evidence goes it is clear that B.N.P.'s letter referred to a claim outstanding at the close of business on the 31st October 1983 against the Defendant and that the uncontroverted evidence of Mr. Herbst in his first affidavit filed on the 19th December 1983 was to the effect that the bill had been recovered by the Plaintiff on the 8th November 1983 and thereafter retained in the possession of the Plaintiff or its solicitors. Mr. Herbst's evidence was filed late, presumably at the same time as the hearing before Master Betts, but, under 0.58, it is the practice to let in further evidence in the absence of special circumstances and certainly there was no attempt made at the hearing of the appeal before me to file evidence to controvert that of Mr. Herbst regarding possession of the bill at all material times since the issue of the writ in this action on the 15th November 1983. 35. Mr. Ribeiro contended, and I agree, that the existence of the indorsement in favour of B.N.P. did not affect the Plaintiff's right to sue in the capacity of holder. The fundamental reason for this is, as emphasised in Chalmers on Bills of Exchange, 13th Edition at pp.8 and 128, that the holder of a bill of exchange is merely the mercantile owner of the instrument who may or may not be the legal owner of it: see also Halsbury's Laws of England, 4th Edition, Vol. 4, para.500; Riley on Bills of Exchange in Australia, 3rd Edition, p.105 and Cowen at p.252. 36. Thus the holder may be the agent of a principal who has specially indorsed the bill to him for the purposes of collection and he may have no proprietary interest in the instrument whatsoever. However s.38(a) of the Ordinance entitles him to maintain an action on the bill in his own name against any of the parties liable under it unless it is shown that he holds the bill adversely to the true owner see Agra and Masterman's Bank v. Leighton (1866) L.R. 2 Ex. 56 at pp. 63-65. 37. Furthermore, as Mr. Ribeiro rightly contended, the fact that the bill is specially indorsed in favour of B.N.P. does not by itself imply ownership in the proprietary sense of the bill in B.N.P. There is nothing to prevent a principal from making a special indorsement of a bill in favour of his agent and if the latter gives no consideration for the bill the proprietary interest in it remains with the indorser: see Story at s.224. In the present case there can therefore be no question of estoppel arising against the Plaintiff and, in any event, there is no evidence of any reliance upon any alleged representation or of consequential detriment. 38. In my judgment it is implicit from the pleading of the Plaintiff of its capacity as payee and holder that it is claiming to be a holder in the ordinary course of business with the right to sue on the bill under, s.38(a) of the Ordinance as the mercantile and not the proprietary owner of the bill. The indorsement in favour of B.N.P. does not in itself indicate that the Plaintiff holds the bill adversely to the true owner. If the Defendant seeks to contend that is the position then the onus is upon the Defendant to estbalish that fact. It is not for the Plaintiff to anticipate any possible defence in its Statement of Claim. If that were the position in relation to bills of exchange it seems to me that it would destroy their commercial value as the equivalent of cash. 39. Mr. Dicks relied on the authorities of Davis v. Reilly (1898) 1 Q.B. 1 and Re A Debtor (1908) 1 K.B. 344 but it seems to me that they are no more than authority for the proposition that an action for an original debt is suspended if a bill which has been taken on account of the debt is outstanding or was outstanding at the commencement of an action on the debt although recovered by the time of the trial: see Byles at p.141. 40. Mr. Dicks also contended that the Plaintiff, by producing evidence to the effect that B.N.P. was only the agent for collection of the Plaintiff, was seeking to rectify the bill by extrinsic evidence because the bill was specially indorsed in favour of B.N.P. whereas there should have been a restrictive indorsement under s.35(1) of the Ordinance if B.N.P. had been intended to be merely the collecting agent of the Plaintiff. He further contended that the striking out of the indorsement in favour of B.N.P. had come too late to establish the Plaintiff's title to sue for the purposes of the O.14 application. In my judgment this is not a sustainable argument because, as Mr. Ribeiro pointed out, there is no rule against a special indorsement by a principal in favour of its agent. 41. Mayer v. Jadis (1833) 1 M. & Rob. 247 establishes that a holder may at any time, even at the trial, strike out any indorsement which is not necessary to his title and so, in the present case the striking out authorised by Master Betts was, in my judgment, a mere formality and fully justified. 42. I am fortified in the decision I have arrived at on the second ground of appeal raised by the Defendant by the obiter dictum of the Supreme Court of the United States delivered by Mr. Justice Livingston in Dugan v. United States (1818) 3 Wheat. 173 (cited in Chalmers at p.118) at p.183 in the following terms:-
43. I am also fortified by two Canadian decisions allowing the enforcement of payment of promissory notes which had been specially indorsed to banks by a payee and indorsee respectively, notwithstanding the fact that the special indorsements had not been cancelled before action. In both cases the plaintiff's capacity as holder was upheld notwithstanding the special indorsement which he was permitted to strike out at the trial. The Canadian legislation that was applied appears to be at least in part materia with the Bills of Echange Ordinance. The two cases are Johnson v. L'Heureux [1914] 27 W.L.R. (Can.) 21, a decision of the Saskatchewan District Court of Prince Albert made on the 21st January 1914 and a decision on the following day in Rat Portage Lumber Co. v. Margulius [1914] 15 D.L.R. 577 made by MacDonald, J. in the Manitoba King's Bench. The latter case went on appeal to the Manitoba Court of Appeal and was dismissed without counsel for the respondent being called upon: see [1914] 16 D.L.R. 477. 44. The decisions cited in Cowen on the Law of Negotiable Instruments in South Africa, 4th Edition indicate divergences of judicial opinion in the Provincial Divisions of the Supreme Court in the Republic and Cowen does not cite any decision of the Appellate Division of the Supreme Court. There is evidently a procedural rule applicable in both the Supreme Court and in the Magistrate's court precluding the obtaining of certain forms of summary judgment unless the plaintiff is able to establish that he is the holder of a bill ex facie the instrument and the pleadings. It seems to follow that if a bill is on the face of it specially indorsed in favour of a bank or some other indorsee the original payee who has recovered possession of the bill is precluded from obtaining judgment in the summary form. Many of the decisions cited in Cowen are adverse to the plaintiff for this reason. 45. In Odes v. O'Kennedy (1931) C.P.D. 415 a decision of Gardiner, J.P, and Jones, J. in the Cape of Good Hope Provincial Division of the Supreme Count, which appears to have been an appeal from a decision of a Magistrate's court after a trial the payee under a promissory note who had indorsed it specially to a bank nevertheless succeeded in an action on the instrument against the maker, despite the fact that at the time when the action was brought the special indorsement to the bank had not been cancelled. 46. The judgment of the court was delivered by Gardiner, J.P. who held that the plaintiff, by virtue of being the original payee in possession was the holder in terms of the statutory definition which appears to have been identical with the definition of holder in s.2 of the Ordinance in Hong Kong. Gardiner, J.P. observed of the plaintiff as follows:-
47. The approach of Gardiner, J.P. and Jones, J. appears to have been almost identical to that of the reasoning in the Canadian courts in the cases cited above and I respectfully regard these decisions as a fortification of my own. 48. I should emphasise that in Round v. Klopper (1957) (4) S.A. 688 (T) decided in the Transvaal Provincial Division, De Wet and Hiemstra, JJ. disagreed with the reasoning in Odes v. O'Kennedy (supra). However that was a case concerned with summary judgment and the decision is clearly justified on the footing that ex facie the note the plaintiff was no longer entitled to be paid. Furthermore, as Cowen points out at p.254, the South African courts appear to accept, even in cases where forms of summary judgment are being obtained, that if the special indorsement has been cancelled before the commencement of the action the plaintiff may sue without the formality of obtaining an indorsement in his favour from the special indorsee: see Brokensha & Co. v. Hattingh (1919) N.P.D. 30; Blackrod Holdings (Pty.) Ltd. v. Pimhill Investments (Pty.) Ltd. (1960) (1) S.A. 820 (W); and Abraham v. Du Plessis [(1962) (3)] T.P.D. 162. 49. Making due allowance for the procedural complexities I do not feel deterred from my decision in this case by any of the South African reports which were helpfully cited to me by counsel. 50. As to the Defendant's third ground of appeal namely that the Plaintiff had not satisfied the requirements of O.14, having concluded, for the reasons given above, that the Plaintiff is only obliged to plead the capacity in which he is suing and not his proprietary title, at least until such stage as a defence is raised against it, I consider that the Plaintiff in this case did plead all material matters in its Statement of Claim to entitle it to maintain its action. The contention that it did not have a maintainable right of action until the special indorsement in favour of B.N.P. was struck out is, in my judgment, fallacious. 51. Likewise the argument, which is the basis of the fourth ground of appeal, that the Plaintiff sought to rectify the bill by the inadmissible evidence of Mr. Herbst as to the agency of B.N.P. is not, in my judgment, sustainable because the Plaintiff was entitled to maintain its action notwithstanding the continuing existence of the special indorsement on the bill and counsel for the Plaintiff made it clear that he stood by the Statement of Claim which did not place any reliance on any restrictive indorsement or allegation of agency on the part of B.N.P. 52. It goes without saying that it is only in clear cases that summary judgment should be given under O.14. However, as Somervell, L.J. observed in Arab bank Ltd. v. Ross [1952] 2 Q.B. 216 (C.A.) at p.224 a defendant sued on the bill must allege the facts on which he relies in disputing his liability on the bill or note and it is for the defendant to make out a defence. He cannot simply put the plaintiff to the proof. 53. Having rejected the arguments on behalf of the Defendant regarding the Plaintiff's title to sue I could not see that the Defendant, by its evidence or otherwise had made out any triable issue or "real" defence in the sense contemplated by Bramwell B. in Agra and Masterman's bank Ltd. v. Leighton (1866) L.R. 2 Ex. 56. 54. The questions of law raised in this case are of some complexity but, in my judgment, on final analysis they raise a clear cut and fundamental issue which can properly be decided in O.14 proceedings. If leave had been given to defend as matters stood it seemed to me that the arguments would simply be rehearsed all over again at the trial. Having regard to the observations of Robert Goff L.J. in European Bank v. Punjab Bank (No.2) (1983) 1 W.L.R. 642 (C.A.) at p.654. I considered that Master Betts had been right in giving summary judgment in this case to prevent delay in an action on a bill of exchange where there seemed to be no real defence.
Representation: Mr. Robert Ribeiro instructed by M/s Johnson, Stokes & Master for the Plaintiff. Mr. Anthony Dicks instructed by M/s Herbert Smith & Co. for the Defendant. | |||||||||||||||||||||||||||||||||||||||||||