Kao, Lee & Yip v. Euro Treasure Ltd.

CACV000189/1984

BETWEEN:

Coram: Roberts, C.J. McMullin, V.P. & Silke, J.A.

Date of judgment: 15th & 16th January, 1985.

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JUDGMENT

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Roberts, C.J. -

1. This is the judgment of the court, in an appeal against an order of a district judge dismissing an application by the plaintiff for summary judgment.

2. It appears that the plaintiff, a solicitor's firm, practising in Hong Kong, performed during 1984 professional services for six different companies and also for a Mr. LO Por Kit, who was a director of each of those six companies and of the defendant until shortly before the date on the disputed cheque.

3. According to the third affidavit of Miss LEUNG Man-wah, an assistant solicitor in the employment of the plaintiff, on 1st June, 1984, Mr. Chan Chuen Tak, a director of the defendant company, Euro Treasure Ltd., which was not one of the companies for whom services had been performed by the plaintiff, telephoned to her and said that he was sending by messenger a cheque in payment of the money owed by the six companies and by Mr. Lo to the plaintiff. Mr. Chan asked Miss Leung to send to him in return copies of the relevant debit notes and signed receipts for the amounts owed.

4. In consequence of this call, a cheque for $43,595.50, which was the amount due for services rendered to Mr. Lo, in his personal capacity, and to the six companies, was sent to the plaintiff's office. Receipts for these amounts were signed on behalf of the plaintiff for the various amounts. The messenger, sent by Mr. Chan, took them away with him. The receipts were not made out in the name of the defendant, but in the name of each of the individual debtors. The bills which had been prepared were, with the exception of Mr. Lo's personal bill, all addressed to the debtor company, care of Euro Treasure Ltd., that is to say the defendant.

5. On 2nd June, the cheque was presented and dishonoured, the reason being "refer to drawer". Notice of dishonour was duly given to the defendant in respect of this cheque on 28th June.

6. The defence put forward on behalf of the defendant simply amounts to a plea that, if the various  services covered by the cheque had been rendered, as to which the plaintiff was put to proof, they had not been  rendered at the request of the defendant or on the defendant's behalf.

7. We have had, as often happens in interlocutory appeals, to deal with the matter on the basis of less evidence than we would like to have had. The only evidence which has been furnished on behalf of the defendant is an affidavit sworn by Mr. Chan, who repeated the contents of the defence and admitted that he had instructed the bank on which the cheque was drawn to stop payment on the ground that consideration for the cheque had wholly failed. He repeats the assertions that there was no antecedent debt or liability owed by the defendant to the plaintiff and that no service was ever rendered by the plaintiff on the defendant's behalf or on behalf of anyone else on the instructions of the defendant.

8. There is nothing in the affidavit to suggest any other grounds of defence.

9. We thus have to decide whether, on the evidence which is available to us and on the pleadings, the defendant could be said to have an arguable case. The defendant, to succeed, needs to establish no more than that.

10. The doctrine of consideration, and the way in which it operates in relation to negotiable instruments, are matters of some difficulty, not assisted by the fact that it is a somewhat artificial conception and that from time to time the courts have attempted to avoid its application, on grounds which seem to derive more from sympathy than from principle.

11. The first main question which we have had to consider is whether there is an arguable defence that valuable. consideration, as this is defined in the Bills of Exchange Ordinance, has been given. By section 27(1) -

12. In relation to antecedent debt or liability, there are two lines of authority, one exemplified by Oliver v. Davis⁽¹⁾, in which it is said that if an alleged consideration for a bill of exchange is not an antecedent debt or liability of the drawer or acceptor but a third party, there must be shown to be a consideration which is sufficient to support a simple contract.

13. So if there were no evidence of any consideration as between the drawer of the cheque and the plaintiff, on the authority of Oliver v. Davis⁽¹⁾, this would provide an arguable defence.

14. Diamond v. Graham⁽²⁾, however, suggests that it is sufficient if consideration has been given to a third party, and that value need not be given by the holder of the cheque, so long as value has been given for it.

15. If we were forced to reach a conclusion as to which line of authority should be followed, we would probably have been inclined to take what seems to us the broader view, expressed in the later case of Diamond v. Graham⁽²⁾, though Oliver v. Davis ⁽¹⁾ does not appear to have been considered by the Court of Appeal in Diamond v. Graham ⁽²⁾. We have this preference in spite of Hasan v. Willson⁽³⁾ in which Goff, J. preferred the reasoning of Oliver v. Davis⁽¹⁾.

16. However, we do not think it is necessary to make a choice between the two lines of authority, because on general principles, and on any reading of the facts as we have them, there was consideration between the parties.

17. This can be found either in the giving of receipts by the plaintiff, in return for the cheque drawn by the defendant, since the handing over of the receipts constituted something of value. The authorities are clear that so long as consideration has some value, its worth is immaterial.

18. The giving of the receipts also constituted detriment to the plaintiff, since by granting them he had acknowledged that the debts which were due to him from the third parties had been satisfied.

19. Furthermore, the general rule is that, while consideration must move from the promisee, it need not move to the promisor. Therefore, the requirement of consideration is satisfied if the promisee, that is to say the plaintiff in this case, suffers detriment, at the promisor's request, even though this confers no corresponding benefit on the promisor.

20. By issuing receipts, the plaintiff conferred substantial benefit upon the former debtors; this he did at the defendant, or promisor's request. We see no reasonable argument to the contrary on the evidence available to us.

21. For these reasons, we do not think that there was open to the district judge any course other than to have given judgment for the plaintiff under rule 27 of the District Court Civil Procedure Rules.

22. Perhaps I should mention that, after argument, we admitted a further affidavit by Miss Leung on behalf of the plaintiff dated 10th January. We should make it clear that, although her affidavit was of assistance as clarifying certain aspects of the matter, we would have reached the same conclusion without it, by inference from the earlier affidavits.

23. We think that the district judge was wrong, that his order should be quashed, and that summary judgment should be entered for the sum claimed for the. plaintiff, namely, $43,595.50, plus interest since 1st June, 1984 until payment, with interest at 13½%. The plaintiff should have the costs here and below.

(1)    [1949] 2 K.B.727 C.A.

(2)    [1968] 1 W.L.R.1061 C.A.

(3)    [1977] 1 Lloyd's L.R. 431

Representation:

E.C. Mumford (Mui & Sin) for Plaintiff/Applicant

I. Pennicott (Deacons) for Defendant/Respondent