Delta Asia Credit Ltd. v. Wang Chong Hong Co. Ltd.

DCCJ2709/2002

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 2709 OF 2002

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J U D G M E N T

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1. This is the plaintiff's application pursuant to Order 14 of the Rules of the District Court for summary judgment against the defendant for payment of the sum of HK$469,350 together with interest thereon and costs.

2. The plaintiff is a finance company. The plaintiff's claim is in respect of two dishonoured cheques Nos. 555701 and 555702 dated respectively 17 March 2002 and 16 April 2002, drawn by the defendant for the respective sums of HK$264,150 and HK$205,200. The cheques were made payable to Trillion Trading Limited ("Trillion").

3. The two cheques were issued by the defendant and delivered to Trillion on 17 January 2002. The plaintiff discounted the cheques for Trillion and in consideration of the sum of $463,676.36, Trillion endorsed the cheques to the plaintiff. The plaintiff says that it has therefore become a holder in due course of the cheques. Documents evidencing the discounting of the cheques have been exhibited to the Affidavit of Chan Chi-wing, Ringo, an accounts manager of the plaintiff.

4. The defendant has admitted the issuance of the two cheques to Trillion. Further, the defendant has not raised any issue to challenge the plaintiff's status as a holder in due course of the cheques. The two cheques were presented for payment on their respective due dates. Both cheques were dishonoured, marked "payment countermanded by the drawer".

5. In its Defence and affirmation in opposition to the application, the defendant has raised two matters. Firstly, the defendant alleges that the two cheques were issued to Trillion for the purchase of goods, namely, a large quantity of beer, but Trillion failed to deliver the goods. Hence, the defendant says that it was entitled to countermand the cheques.

6. Section 38(b) of the Bills of Exchange Ordinance, Cap. 19, provides that where the holder of a bill is a holder in due course, he holds the bill free from any defect of title of prior parties, as well as from mere personal defences available to prior parties among themselves, and may enforce payment against all parties liable on the bill.

7. In my judgment, the defendant's allegation regarding non-delivery of the goods, even if established, would only amount to a personal defence against Trillion and would not amount to a defence against the plaintiff's claim on the two cheques. By conferring on the holder in due course the right to enforce the bill despite defects in the title of previous parties and regardless of personal defences available against them, Section 38(b) enables bankers and other financial institutions to discount cheques and other commercial bills without assuming the risk of becoming involved in disputes concerning the underlying business transaction.

8. Secondly, the defendant alleges that it had no knowledge that Trillion would transfer the two cheques to the plaintiff for negotiation. I am not aware of any legal requirement that negotiation of cheques by the payee requires notice to, or consent of the drawer. For this reason, the alleged lack of knowledge on the part of the defendant does not constitute a defence.

9. For these reasons, I am not satisfied that there is in this action any issue or question in dispute which ought to be tried, or that there ought for some other reason to be a trial. I will therefore allow the plaintiff's application for summary judgment against the defendant.

10. The order I make is as follows: final judgment be entered against the defendant for payment of the sum of HK$469,350, together with interest on the sum of HK$264,150 at prime rate from 17 March 2002 to the date hereof, and interest on the sum of HK$205,200 at prime rate from 16 April 2002 to the date hereof.

(Discussion re costs)

11. Costs of the action and the costs of and incidental to this application be to the plaintiff, to be taxed if not agreed.