XCHRX HON YIN INTERNATIONAL ELECTRONIC LTD. v. FULL HING INTERNATIONAL LTD.

HCA 12637/97

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. A12637 OF 1997

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J U D G M E N T

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1. This is an appeal by way of re-hearing against Master's decision in which the Master gave unconditional leave to defend in respect of an Order 14 application by the Plaintiff concerning a dishonoured cheque in the sum of $120,000.00

2. The main defence is that there was a total failure of consideration, alternatively a quantified partial failure of consideration.

3. In opposing the application the Defendant by its director and major shareholder Siu Wai Bun filed a very lengthy affirmation consisting of 47 paragraphs with exhibits totalling 271 pages. It sets out the relationship of, Siu and members of the Plaintiff and the relationship between the Plaintiff and the Defendant.

4. To put it in a nutshell the Defendant helped the Plaintiff to set up its business and had sold the Plaintiff's products to its clients in its own name. When it received payments it would account to the Plaintiff. When the relationship between Siu and Wong Hon Yin (director of the Plaintiff) turned sour there was a meeting on or about 2nd March 1997 between Wong, Siu and his brother, his sister-in-law and Defendant's company secretary Ms. Tang.

5. The question of outstanding unsettled accounts were discussed. As the outstanding amount due from its customers to the Defendant could not be ascertained at that meeting he agreed to Wong's proposal for the Defendant to provide the Plaintiff with 3 post-dated cheques of $120,000 each. This cheque (subject matter of this application) was the 3rd cheque the 2 previous cheques had been honoured.

6. In other words the said cheque was for payment of the unsettled accounts the Defendant had with the Plaintiff.

7. At para 43 Siu set out the outstanding balance of sum due by the Defendant to the Plaintiff which is as follows: -

	Amount (HK$)
Purchase price for the Plaintiff's goods received from the customers	$1,880,162.80
Less:
Amount due to the Defendant from the Plaintiff as per Paragraph 22 above	$566,937.87
Purchase price received by the Defendant and later repaid to the Plaintiff as per Paragraph 26 above	$1,070,069.32
Sales discount	$12,717.96
Total accumulated value of returned goods referred to above (including those discovered after the issue of the last cheque)	$210,496.00
Balance due to the Plaintiff:	$19,941.65

8. Para 43 only sets out the price the Defendant received not the total amount outstanding.

9. As can be seen at para 43 as on the 18th February 1998 still outstanding balance had not been ascertained. Even then Defendant admitted a balance of $19,941.65 due to the Plaintiff.

10. The statement made by Siu at para 42 that "the sums due from customers should (my emphasis) have been much less than expected by reason of a large amount of rejected goods" is merely a bare assertion with no supporting evidence.

11. Although Mr. Vaughan of counsel for the Defendant tried to argue based on para 43 that there is a quantified failure of consideration, I do not see how the failure of consideration can be quantified when there is an unquantified outstanding debt together with that $19,941.65.

12. In my judgment the cheque had been given for consideration.

13. As cheques are always treated as cash, in an action on dishonoured bill of exchange, a wholly different practice prevails so far as setting up the defence of set off or counter claim is concerned. (See Order 14/3-4/14)

14. In James Lamont & Co Ltd v. Hyland Ltd [1950] 1 KB 585 CA it was held that where an action is between the immediate payments to a bill of exchange and the matter relied on by the Defendant afford no defence under the Bills of Exchange Act the judge in chambers, in proceeding under Order 14 may properly, in the exercise of the powers vested in him, give liberty to the Plaintiff to sign immediate judgment.

15. In the premises the appeal is allowed and there be judgment for the Plaintiff in the sum of $120,000.00 together with interests at 10 % p.a. from date of writ to judgment. Costs of here and below to Plaintiff.