DHARMVIR MADNANI v. ASSAN C. DATWANI

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JUDGMENT

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Kempster, J.A.:

1. During February 1980 Mr. Dharmvir Madnani, the plaintiff in these proceedings, came into possession of an order for US$73,250 drawn by the defendant, Mr. Assan Datwani, on the New York Branch of the Standard Chartered Bank and dated 11th of that month. It instructed the bank to "Pay to the Order of Cash". The word "Cash" was in handwriting and the words "Pay to the Order of" were in print. On March 5th the plaintiff requested his bankers in Hong Kong to present the order for payment but by the time their correspondents had done so the defendant had countermanded his instructions. It was returned with the indorsement "Payment Stopped". On 29th May the plaintiff brought an action against the defendant on the instrument claiming it to be payable to bearer and that he was a holder in due course. Following protracted delays this cause of action, together with an alternative claim in contract with which we are not now concerned, came on for trial before Sears J. between 15th and 17th April of this year. He held that the order did not constitute a bill of exchange and, by necessary inference, that the plaintiff was not a holder in due course within the meaning of section 29 of the Bills of Exchange Ordinance and, therefore, not entitled to sue on the instrument. Against that finding the plaintiff appeals to this Court. Doubtless it was accepted that had it constituted a bill payable to bearer it would have been negotiated by delivery as provided by section 31(2).

2. Further relevant provisions of the ordinance are as follows:-

3. Subject to the express exception provided by section 7(3) it is reasonably apparent that the word "bearer" must appear on the instrument before it can qualify as a negotiable bill. As Sellers L.J. said in Orbit Mining and Trading Co. Ltd. v Westminster Bank Ltd. ⁽¹⁾ in relation to the equivalent provisions of the Bills of Exchange Act 1882:-

and, at p.822,

The judgments of Harman and Davies L.JJ. were to like effect. Branson J. had already so held in North & South Insurance Corporation v National Provincial Bank ⁽²⁾ and, at p.336 following established authority that written or typed words prevail over print, that

The bank, which had paid such "bearer", could thus not be faulted for complying with the customer's instructions. We would disregard the words "to the order of" and adopt the same construction in relation to the document presently sued upon.

4. In Orbit Mining and Trading Co. Ltd. v Westminster Bank Ltd. ⁽¹⁾ it was held that a bank honouring such a document is entitled to the protection of section 4(1) of the Cheques Act 1957. Section 86 of the Bills of Exchange Ordinance is in identical terms. In the event these authorities, which offer comfort to bankers, cannot assist the plaintiff. The order was not payable to "bearer" within the meaning of the ordinance so as to make the instrument a bill of exchange and give him a right of action.

5. It is suggested that in Canada it has been held not only that a cheque payable to "cash or order" needs no indorsement by the maker but also that it is payable to bearer. Judmaier v Standard Bank ^(3).. Neither the report nor the relevant statute has been made available to us and I am by no means satisfied that the document considered by the Alberta Court was held to be a negotiable instrument.

6. Be that as it may I would not readily and do not differ from the conclusion of the English Courts on this matter of general commercial principle. I would dismiss the appeal.

Sir Alan Huggins, V.-P.:

7. I agree. The mandate to the bank to "Pay to the Order of Cash" was countermanded and against the bank by the drawer for having wrongly made payment to the bearer (as was the case in North and South Insurance Corporation Ltd. v National Provincial Bank Ltd.⁽²⁾）or with a claim in conversion by the drawer against a bank which collected the amount of the order on behalf of the bearer (as in Orbit Mining & Trading Co. Ltd. v Westminster Bank Ltd.⁽¹⁾): we are concerned with a claim on the instrument itself by a transferee of the instrument against the drawer. This distinction explains the passage in the judgment of Sellers, L.J. at 1963 1 Q.B. 811 on which Mr. Bokhary has heavily relied:

In my view the authorities clearly show that an order to pay "cash" is not an order to pay a specified person or bearer and is not a bill of exchange and therefore not a cheque. An order to pay "to the order of cash" suffers from the same defect and cannot give the holder any rights against the drawer. At best it may be strong evidence of some existing liability of the drawer to the person to whom the instrument was first delivered.

(1)    (1963) 1 Q.B. 794 at pp. 811 & 812
(2) (1936) 1 K.B. 328
(3) [1927] 1 WWR 270

Penlington J.

8. I agree with the judgments just delivered and also would dismiss this appeal.