CHIN SHU HUEY v. OFELIA BENNETT and Another

IN THE COURT OF APPEAL

1995, No. 105
(Civil)

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J U D G M E N T

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Litton, V.-P.:

1. This is yet another interlocutory appeal before this court.

2. The appellant Mr Anthony Bennett is the 2nd defendant in an action brought by madam Chin Shu-huey, the plaintiff. The 1st defendant in the action is Ofelia Bennett, the 2nd defendant's wife.

History of proceedings

3. A brief history of the proceedings will illuminate the matter before us.

4. On 24 October 1994 the plaintiff issued her writ and this was followed by the Statement of Claim in which she claimed (a) as against the 1st defendant various sums of money lent; (b) as against the appellant: (i) as guarantor of his wife's debts or (ii) on the amounts of eight cheques, each for $30,000 with dates ranging from 5 February 1994 to 5 September 1994 which were dishonoured on presentation for payment. The cheques totalled $240,000.

5. On 17 November 1994 the plaintiff took out an Order 14 summons for summary judgment against the appellant.

6. On 7 December 1994 the appellant responded with a summons purportedly under Order 18 rule 19 of the Rules of Supreme Court to have the plaintiff's claim against him struck out on the ground that it disclosed no cause of action or was "scandalous, frivolous or vexatious": a surprising application on the face of things as the appellant, being the drawer of the eight cheques, had given an unconditional promise to pay the amounts of the cheques on due date and was prima facie liable to pay. This application was accompanied by an affidavit in which the appellant asserted in essence that he had been misled into writing out those eight cheques by the plaintiff and his wife; he thought when he wrote out the cheques that it had something to do with a business venture but he was misled; his wife had later told him that it was in fact because she had incurred gambling debts in Macau. The affidavit goes on to say that when he, the appellant, learnt this he countermanded payment on the cheques.

The Master's order

7. On 14 February 1995 Master Woolley heard the two summons together. The plaintiff was unrepresented. The appellant was represented by counsel. He acceded to the appellant's Order 18 rule 19 application and ordered that the claim against the appellant be dismissed and he gave the costs on the two applications to the appellant.

Re-hearing by Yam J

8. The plaintiff then appealed to a judge in chambers and by his order of 9 March 1995 Yam J allowed the plaintiff's appeal. He set aside Master Woolley's order and dismissed the appellant's application brought under O18 r19. But on the plaintiff's summons for summary judgment he gave the appellant unconditional leave to defend the action.

9. As to the costs Yam J. varied the Master's order to the extent that the appellant should have the costs of the hearing before the Master in any event and further ordered that the costs before him should be costs in the cause. This would seem on the face of things a reasonably satisfactory outcome for the appellant. But by his notice of appeal dated 22 March 1995 he seeks in effect an order from this court to restore Master Woolley's order.

10. There is a subsidiary question which focuses on the costs order made by Yam J.

Is the plaintiff's claim bad in law?

11. The key question however before us is this: Was the plaintiff's claim against the appellant liable to be struck out under O18 r19? Clearly the claim is not liable to be struck out under para 1(a) of r19, for on the face of the statement of claim the plaintiff has a perfectly viable cause of action against the appellant on the eight cheques.

12. When the appeal was first opened I had assumed that counsel for the appellant was going to rely in the alternative upon para 1(b), that the claim was somehow was "scandalous, frivolous or vexatious": that is what the appellant's own summons says. But this has been expressly disavowed by counsel and we are told that reliance is now placed instead upon para 1(c): that, somehow, the averments, whatever they may be in the statement of claim, may "prejudice, embarrass, or delay the fair trial of the action". Alternatively counsel relies upon the inherent jurisdiction of the court. I cannot begin to understand how reliance can be placed upon para 1(c). As to the inherent jurisdiction of the High Court, it is a jurisdiction which in essence exists to protect the court's own process, to enable justice to be properly done between the parties. I cannot see how it can be argued that a plaintiff who comes to court to sue the drawer of dishonoured cheques can, on the face of things, be said to be abusing the process of the court.

13. The argument then focussed upon the question of the alleged gambling debts incurred in Macau. The matter is pleaded thus on behalf of the appellant in the draft defence in para 5:

"5. Further and/or in the alternative, subsequent to the matters referred to in paragraph 3 hereof [that is to say the circumstances under which the cheques were drawn], the 1st Defendant confessed to the 2nd Defendant that she was indebted to the Plaintiff in respect of gambling debts incurred jointly by the Plaintiff and the 1st Defendant in Macau. The 1st Defendant further told the 2nd Defendant that the Plaintiff had borrowed money from a Chit fund in order to pay the 1st Defendant's gambling debts."

14. It is not our function in this court to try anything between the parties at this stage. But assuming that every averment in para 5 of the draft defence were established, all that means is that a court would have been satisfied that is what the appellant's wife had "confessed". The "confession" as a confession would have been proved. How that might in law have the effect of extinguishing the appellant's liability on the cheques I cannot begin to understand. It is however not our function to adjudicate upon the matter between the parties at this stage. But plainly the reliance upon O18 r19 or the inherent jurisdiction to have the plaintiff's claim struck out is, in my judgment, wholly misplaced.

Costs

15. I then come to the last matter before us which is the question of costs. Apparently, shortly before the matter was heard by Yam J, the plaintiff's counsel told the appellant's counsel that the O14 summons was no longer being pursued. I do not understand this to be an admission of any kind that the application for summary judgment ought never to have been taken out in the first place. It seems to have been a sensible course for counsel to take, in view of the disputed issues of fact before the court. And acceding to that view, the judge quite rightly gave unconditional leave to the defendant. In so ordering he determined that the costs should be in the cause. This is the normal order for costs when a judge gives unconditional leave to defend under O14.

16. Had the judge thought fit to dismiss the O14 application he could well have, in so dismissing, ordered the plaintiff to pay the costs. That is not what he did and nothing before us suggests that he erred in that regard.

17. In my judgment, this appeal must be dismissed.

Godfrey, J.A. :

18. I agree that this appeal must be dismissed.

19. The plaintiff brought the action upon 8 dishonoured cheques issued by the 2nd defendant. This is a typical case for which O.14 proceedings are suitable. But the 2nd defendant put in evidence to the effect that he was induced to draw the 8 cheques by misrepresentations made to him by the plaintiff as to the purpose for which they were wanted. The 2nd defendant found out only later that the cheques were required to pay the 1st defendant's gambling debts; but he says this discovery affords him an unanswerable defence since the law is that cheques given to settle gambling debts cannot be sued upon.

20. Whether on these facts the 2nd defendant is entitled to rely on that point is an issue which ought, in my judgment, to go to trial. Indeed, the facts of the matter require proper investigation at a trial anyway. So, in the end, this is not a suitable case for summary judgment for the plaintiff. Nor, however, is it a suitable case for dismissal of the plaintiff's O.14 proceedings on the ground that they were misconceived. The right course, so far as the O.14 proceedings are concerned, was the course taken by the judge, that is to say, to give the 2nd defendant unconditional leave to defend the action, which will accordingly go to trial.

21. So far as the costs of the O.14 proceedings are concerned, when a summons for summary judgment has been taken out by a plaintiff who knows, when he does so, that the defendant has a defence to the action, it is, as my Lord, the Vice-President, has pointed out, open to the judge to dismiss the summons and order the plaintiff to pay the costs forthwith: see O.14 r.7. But this is not such a case. The judge made an order that the costs should be costs in the cause; and I would not wish to interfere with his discretion in that matter. Indeed, it seems to me to have been the right order to make; and it accords with the usual practice. There is, then, nothing in the 2nd defendant's point about the judge's order as to costs.

22. As to the 2nd defendant's application to have the plaintiff's claim struck out, it seems to me plain beyond a peradventure, for the reasons I have given, that this is not a case in which the plaintiff's action can be stigmatised as an abuse of the process of the court. There can be no justification whatever for striking it out.

23. For these reasons, I agree as I have said that this appeal must be dismissed.

Mayo, J.A.:

24. I agree and have nothing to add.

Litton, V.-P.:

25. The appeal is dismissed. The appellant will pay the costs of the appeal on a common fund basis, to be taxed and paid forthwith.