XCHRX KA WO (HONG KONG) LTD. v. HONG KONG TEXTILES EXCHANGE LTD.

HCA 18883/1998

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 18883 OF 1998

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J U D G M E N T

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Godfrey, J.A. :

1. This case has been very well argued on both sides. It is an application for summary judgment on a number of dishonoured cheques given by way of payment for goods sold and delivered to the defendant, not by the plaintiff (the payee named in the cheques) but by third parties for whom the plaintiff was duly authorised to act as agent to receive payment on behalf of the third parties. Since the cheques have been dishonoured, the third parties no doubt have a claim against the defendant for whatever is due to them in respect of the goods sold and delivered to the defendant. But that is not a claim with which the court is presently concerned; the only claim with which the court is presently concerned is the plaintiff's claim on the dishonoured cheques. These were given for good consideration, the sale and delivery of the goods but (says the defendant) that was a consideration moving, not from the plaintiff, but from the third parties who supplied the goods and cannot therefore be regarded as a good consideration for the cheques. I consider this point to be at least arguable; if it is a good point, it would seem at first blush to defeat the plaintiff's claim on the cheques. But the plaintiff says that it is sufficient that its principals gave consideration for the cheques, relying on s.27(2) of the Bills of Exchange Ordinance, Cap. 19. I consider it, again, at least arguable whether s.27(2) operates in favour of the plaintiff, which is an immediate party to the cheques and can therefore sue (if it can sue at all) in its own name without the assistance of s.27(2). Finally, the plaintiff says that the plaintiff itself did give consideration for the cheques, since it accepted them pursuant to a compromise it had made with the defendant to accept these cheques in place of certain earlier cheques which had themselves been dishonoured. I do not consider the evidence before me on this aspect of the case to be so clear as to entitle me on this application for summary judgment to find that the cheques on which the plaintiff now sues were in fact given to the plaintiff in pursuance of a concluded compromise agreement made between the plaintiff and the defendant for the settlement of the plaintiff's claim on the earlier dishonoured cheques.

2. In these circumstances, I will give the defendant unconditional leave to defend the action and I will order that the costs of the application be costs in the cause.