XCHRX BRIGHTFORD LIMITED v. CHAN WAH TAT t/a CITY DRAINAGE CLEANING SERVICE

1994, No.3497

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

(CIVIL JURISDICTION)

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J U D G M E N T

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1. The plaintiff claims for $200,000 as the result of two cheques of $100,000 each being dishonoured. They were respectively dated 25th December 1993 and 25th January 1994. The first cheque was countermanded by the drawer. For the second cheque the bank stated the usual reply of "refer to drawer".

2. When the matter came before the learned Master for Summary Judgment, he gave judgment for the first cheque only but not for the second cheque.

3. The plaintiff alleged at that stage that notice of dishonour in respect of the first cheque is dispensed with by viture of s.50(2)(c)(v) of the Bills of Exchange Ordinance, Cap. 19. In respect of the second cheque, the plaintiff pleaded that a notice of dishonour was given on 9th April 1994. The defendant submitted that the notice of dishonour was not given within a reasonable time after the second cheque was dishonoured.

4. The hearing before the learned Master was on 6th June 1994. Thereafter on 15th June the plaintiff amended the statement of claim and pleaded that notice of dishonour for the second cheque for lack of fund in the defendant's account is dispensed by viture of s.50(2)(c)(iv) of the Bills of Exchange Ordinance. This subsection provided that notice of dishonour is dispensed with under (c)(iv) where the drawee or acceptor is as between himself and the drawer under no obligation to accept or pay the bill. It has been decided by the Court of Appeal in Thong Ko Sine v. Wilkinson and others, Civil Appeal No.30/1988, that if a plaintiff wishes to allege that notice of dishonour is not required, then this must be specifically pleaded. Further in the judgment of Rhind, J. at page 4, he said:-

"As everyone knows 'refer to drawer' is a euphemism meaning that there are insufficient fund in the drawer's account and that the cheque is being rejected for that reason. Authority on the meaning of 'refer to drawer' can be found in Jayson v. Midland Bank Limited [1968] Lf.L.R. 489".

Further page 5:-

"What section 52(c)(iv) means in plain English is that if the bank on which the cheque is drawn has not been put in funds and no arrangements had been made for a sufficient overdraft, then the bank is not obliged to pay on the cheque and it is not necessary for any payee wanting to sue on the cheque to give notice of dishonour."

5. Mr Lai for the defendant submitted that the only fact that the bank stated the reason for dishonour as "refer to drawer" is not sufficient for me to decide that it means insufficient funds. To my mind, when the bank stated "refer to drawer" or "not arranged for", it can only mean there is insufficient funds or payment has been countermanded by the drawer. If there is a countermand the usual banking practice is to state "payment countermanded by the drawer" which was the case for the first cheque.

6. In my view, the learned Master was right in refusing Summary Judgment since dispensation of the notice of dishonour had not been specifically pleaded. Now the statement of claim has been properly amended, I can see no reason for refusing judgment on the second cheque. Accordingly, I would allow the appeal and give judgment for the plaintiff in the further sum of $100,000 together with interest at 9.5% per annum from 25th January 1994 up to today. The learned master has already awarded costs to the plaintiff after giving judgment for the first cheque. There was no further order for cost in respect of the other cheque for which the defendant was given unconditional leave to defence. I think the proper order of costs before me is just to say costs of the Appeal and the action be to the plaintiff, to be taxed if not agreed.