XCHRX THE DAIWA BANK LTD. v. POON KUN t/a FU YAU TRADING CO.

HCA 15111/1998

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 15111 OF 1998

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J U D G M E N T

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1. I am satisfied that the defendant has no defence to this action and I will give summary judgment in favour of the plaintiff accordingly for the amount of the cheques of the defendant on which the plaintiff sues (which have been dishonoured), interest and costs.

2. The cheques were given to a company called Senon International Limited ("Senon"); they were post-dated cheques and were endorsed in blank. As I see it, the cheques were negotiated to the plaintiff, which is a holder in due course of the cheques; it has given value for the cheques in crediting them in reduction of Senon's indebtedness to the plaintiff, relying on an assurance from Senon that the cheques related to goods sold and delivered by Senon to the defendant.

3. The defendant denies that the goods were ever so delivered, but while this may give the defendant a claim for breach of contract, or even a claim in fraud, against Senon, there is no evidence at all that the cheques were negotiated to the bank in bad faith so as to affect the plaintiff's title to the cheques.

4. The cheques were negotiated to the plaintiff on 24 July 1996 and the fact that a winding-up petition against Senon was presented to the court on 12 September 1996 (on the basis of which Senon has since been wound up) is irrelevant to the validity of the plaintiff's claim.

5. The plaintiff's appeal is therefore allowed and it will have judgment as already indicated. The defendant's appeal against the order giving it only conditional leave to defend will be dismissed.