Yee Teck Fah v Lee Chee Meng (WA-22NCC-362-07/2019)

The Plaintiff in this suit filed an application pursuant to Order 14 rule 1 of the Rules of Court 2012 for a summary judgment to be entered against the Defendant as found in enclosure 6. At the conclusion of the hearing, this Court allowed the application. The following are the Grounds of Judgment of this Court. 2

The Plaintiff in this suit is a payee of a Public Bank cheque bearing number 913675 dated 19.6.2019 in the sum of RM 17, 800, 000.00 while the Defendant is the drawer (“the Cheque”).

The consideration for the Cheque is the loan of RM 9, 500, 000. 00 granted by the Plaintiff to the Defendant and the extension of time granted by the Plaintiff to the Defendant to repay the loan with interest and reward.

Upon due presentation of the Cheque by the Plaintiff for payment on 20.6.2019, it was dishonoured for the reason “Payment Stopped”.

The Cheque remain unpaid regardless of due Notice of Dishonour dated 25.6.2019 issued by the Plaintiff to the Defendant hence the filing of this suit. The Defendant consequently filed his defence and counterclaim. Enclosure 6 was later filed by the Plaintiff for a summary judgment to be entered against the Defendant for the sum of RM 17, 800, 000.00.

The Plaintiff submitted that cheque is a bill of exchange which is to be treated as cash and payable on demand. The Cheque had been given by the Defendant for a valuable consideration as required under the law. It was further submitted that despite the 3 allegations proffered and counterclaim filed by the Defendant, the Defendant has no defence as total failure of consideration is the only defence in an action for a dishonoured bill of exchange or cheque.

The Defendant on the other had argued that the amount of loan granted by the Plaintiff was only RM 4, 500, 000. 00 and not RM 9, 500, 000. 00 as claimed by the Plaintiff. The Defendant did not deny that he issued post dated cheques with interest and reward to the Plaintiff, including the Cheque which is the subject matter of this suit. Nevertheless, it was argued that he was forced by the Plaintiff to issue those cheques.

The Defendant maintained that the loan was not a friendly loan but a moneylender‟s loan. Hence, for the Defendant, the whole transaction was illegal for being contrary to the Moneylenders Act

Arguments put forward by both the Plaintiff and the Defendant will be examined below.

The cause of action in this suit is an action for a dishonoured cheque. During the hearing of the application, the Plaintiff argued that he was entitled to sue the Defendant on the Cheque issued by the Defendant to him. As the holder of the said Cheque, he 4 deposited it into his account but was informed by the bank that the Cheque was dishonoured.

A cheque has certain unique characteristics that is distinctive of a bill of exchange. The Bills of Exchange Act 1949 (“the Act”) is the governing law with respect to bills of exchange. The Act was revised in 1978 and came into operation on 29.4.1978.

In the recent Court of Appeal decision of Kum Hui Bing v Premium Plaza Sdn Bhd [2018] MLJU 979, Badariah JCA described a cheque as follows: “[23] At the outset it is noteworthy that the cheque is a specie of a bill of exchange which is a negotiable instrument. Historically the bill of exchange was developed to ease commercial transactions. While all negotiable instruments are contracts in writing and the law relating to contract applies to them, they are subject to certain requirements. Thus, a cheque has certain unique characteristics that is distinctive of a bill of exchange. In this respect there are certain exceptions to the common law requirements of contract that is statutorily provided by the Bills of Exchange Act, 1949. In particular, while common law requires that consideration must move from the promisee, there is no such requirement in a valid bill of exchange.”

In Leong Yew Chin v Hock Hua Bank Bhd [2008] 3 MLJ 340 Abdul Malik Ishak explained bills of exchange as follows: 5 “WHAT ARE BILLS OF EXCHANGE?

They are instruments by means of which a series of debts may be discharged without the use of transactions conducted domestically and in international trade.

A cheque, for instance, can be said to be a special form of a bill of exchange which is drawn on a banker payable on demand and is normally intended for the immediate discharge of a single debt.

that the instrument is freely transferable;

that the transferee of a negotiable instrument is entitled to sue on the instrument, as a matter of course, in his own name; and

that if the instrument comes into the hand of a bona fide transferee for value, then the transferee is said to have a better title than that of the transferor. [24] The English law constitutes part of the common law. In England, the law concerning bills of exchange, cheques and promissory notes has been codified and it is now embodied in the Bills of Exchange Act

Our Malaysian Bills of Exchange Act 1949 is in pari materia with 6 the English Bills of Exchange Act 1882. Even the English Cheques Act 1957 are incorporated into our Malaysian Bills of Exchange Act 1949. A good example would be this. That ss 1 to 4of the English Cheques Act 1957 are to be found in ss 82 to 85 of the Malaysian Bills of Exchange Act 1949. section 101(2) of the Malaysian Bills of Exchange Act 1949 preserves the continued applicability of the English common law. It must be borne in mind that the English mercantile law constitutes part and parcel of the English common law and that too has been preserved in our Malaysian Bills of Exchange Act 1949. [25] No precise form of words is essential to the validity of a bill of exchange. Thus, the order to pay need not be in any particular form. Any expression amounting to an order (Morice v Lee (1725) 8 Mod 262) or direction is sufficient. It is not necessary to use the word 'pay' because any synonymous or equivalent expression like 'credit in cash' would suffice. In Ellison v Collingridge (1850) 9 CB 570, the phrase, 'I promise to pay or cause to be paid' is said to be a good note. It is said to be an alternative expression importing the same thing (Lovell v Hill

6 C & P 238). The person who gives the order to pay and who signs the bill of exchange is called the 'drawer' while the person to whom the bill of exchange is addressed is called the 'drawee'. The person named in the instrument to whom or to whose order the payment is made to is known as the 'payee'.” (Emphasis added) Relevant provisions of the Act considered by this Court [14] It is pertinent to highlight the applicable provisions that this Court took into account in considering the summary judgment application. 7 A cheque [15] A Cheque is defined under section 73(1) of the Act as “a bill of exchange drawn on a banker payable on demand.” The provisions of the Act applicable to a bill of exchange payable on demand apply to a cheque. [16] A bill of exchange on the other hand is defined in Section 3(1) of the Act as “… an unconditional order in writing, addressed by one person to another, signed by the person giving it, requiring the person to whom it is addressed to pay on demand or at a fixed or determinable future time a sum certain in money to, or to the order of, a specified person, or to bearer.” Holder for value [17] A person who is possession of a cheque holds it for value. This effectively means that the cheque drawn out on his name as payee by the drawer, is entitled to rely on the value of the said cheque. Section 27(2) of the Act provides that, “where value has at any time been given for a bill the holder is deemed to be a holder for value as regards the acceptor and all parties to the bill who become parties prior to such time”. [18] The person whose signature is on the said cheque is prima facie deemed to become a party thereto for value. Put in another way, the drawer who issues the cheque for the value of the cheque issues it for the value it carries. Section 30(1) of the Act provides 8 “every party whose signature appears on a bill is prima facie deemed to have become a party thereto for value”. [19] In Kum Hui Bing, the interlink between section 27(2) and section 30 (1) was succinctly explained as follows: “[25] It is clear therefore that the holder for value must in the first place be a holder. But he himself need not have given value, because the phrase “at any time” clearly suggests that someone before him may have given value. [26] In the case of Diamond v Graham [1968]2 AER 909, the English Court of Appeal had occasion to interpret section 27(2) of the English Bills of Exchange Act ,1882 (which is in pari materia with our section 27(2) of the Act) in the following terms: “There was nothing in s. 27(2) of the Bills of Exchange Act, 1882, which required the value for the bill should have been given directly to the holder (in this case by D), as long as value had been given for the cheque, consideration had been given by D to H for the bill, as a result of which D acquired possession of the bill and thus became “holder” of it within s.2 of the Act.” [27] In addition, section 30(1) of the Act provides that, “every party whose signature appears on a bill is prima facie deemed to have become a party thereto for value”. Thus the 1st Defendant whose signature appears on the cheque as a drawer is prima facie deemed to have become a party thereto for value.” 9 Consideration [20] In the Court of Appeal case of Ong Guan Hua v Chong [1963] 29 MLJ 6, Thompson CJ distinguished the position in a bill of exchange from a contract in the following terms: “In an action based on a contract it is for the Plaintiff to prove consideration, in an action on a negotiable instrument consideration is presumed and it is for the maker of the endorser of the instrument if he wishes to defend the action to prove that there was no consideration.” [21] Therefore, unlike a consideration in contract where the duty is on the Plaintiff to prove consideration, in a bill of exchange, the consideration is presumed. Cause of action [22] Once a cheque is dishonoured, the holder of the cheque will have a cause of action against the drawer of the cheque. This is expressly provided in section 43(2) which provides that “Subject to this Act when a bill is dishonoured by non-acceptance, an immediate right of recourse against the drawer and indorses accrues to the holder, and no presentment for payment is necessary”. [23] A holder of cheque may sue on the cheque under his name. This is provided under section 38(1) which reads “a holder may sue on the bill in his own name”. 10 [24] A holder is defined in section 2 as “the payee or indorsee of a bill or note who is in possession of it, or the bearer thereof”. [25] The liability of drawer or indorser is found in section 55(1) of the Act where it provides: 1) The drawer of a bill by drawing it – a) engages that on due presentment it shall be accepted and paid according to its tenor, and that if it be dishonoured, he will compensate the holder or any indorser who is compelled to pay it, provided that the requisite proceedings on dishonour be duly taken;

is precluded from denying to a holder in due course the existence of the payee and his then capacity to indorse. Applying the provisions of the Act to the facts [26] In the affidavit of the Plaintiff filed in support of the application, it was averred by the Plaintiff that the Defendant was indebted to the Plaintiff for the sum of RM17,800,000.00 being the value of the Cheque. [27] The Plaintiff then stated in the said affidavit that on 20.6.2019, he presented the Cheque for payment but was informed that the cheque was dishonoured by reason of “Payment Stopped”. Subsequent to the failure, he instructed his solicitors to issue a notice of dishonour. The said notice was served on to the Defendant. 11 [28] Several demands were made to the Defendant to remedy the matter. The Plaintiff claimed that the Defendant failed to pay the amount of the cheque. This culminated in the Plaintiff filing the current suit against the Defendant. [29] The Defendant then filed his Defence and a counter claim against the Plaintiff. The Defendant raised a myriad of issues which traced back the historical background of the relationship between the parties. It provided a synopsis of how the relationship between the parties begun with the various ventures they embarked together. It was also highlighted that Plaintiff who is an Advocate and Solicitor, had acted on behalf of the Defendant in 18 court actions. The relationship between the two (2) parties then deteriorated resulting in an acrimonious dispute between them. [30] In the Defendant‟s Affidavit in Reply, the Defendant repeated in general, the factual background of the Defence. It was submitted by the Defendant that the claim by the Plaintiff originated from a loan which the Defendant argued was made by the Plaintiff in contravention of the Moneylenders Act 1952. The amount of loan originally given by the Plaintiff was also disputed by the Defendant. The Defendant also claimed that he was forced to issue cheque by the Plaintiff. [31] The Plaintiff then gave his version of the dispute and provided his version of the issues raised by the Defendant. It was a blow by blow account of him disputing the averments of the Defendant. 12 [32] Not to deny the Defendant the right to challenge the application, this Court endured the submissions of both parties. This Court then allowed the Order 14 application by the Plaintiff. [33] This Court in allowing the application remained itself of the cause of action brought by the Plaintiff against the Defendant. It was a purely an action for a failure on the part of the Defendant to honour a cheque issued by him. [34] As discussed above, the Plaintiff holds the cheque as a holder for value as proved for under section 27(2) of the Act. The cheque was issued in favour of the Plaintiff. He is the holder of the cheque within the definition of a “holder” as per section 2 of the Act. [35] The Defendant who is the owner of the cheque as evidenced by his name printed on the cheque, signed the cheque. Therefore he is prima facie deemed to become a party thereto for value in accordance with section 30(1) of the Act. [36] In Ng Choh Leng V Loh Che Kwet [2002] 1 CLJ 31, Low Hop Bing J (as he was then) held as follows: “In resisting the plaintiff's application for summary judgment, the defendant relied on the absence of consideration and contended that the plaintiff is not a holder for value. This is the sole issue raised for the defendant in the defence. The short answer to the issue raised for the defendant is to be found in s 30(1) of the BILLS OF EXCHANGE ACT 1949 (ACT 204) which provides that every party whose signature appears 13 on a bill is prima facie deemed to have become a party thereto for value. As the defendant's signature appears on all the aforesaid 8 cheques, the defendant is prima facie deemed to have become a party thereto for value. And pursuant to s 30(2), ibid, the plaintiff who is the holder of these cheques is prima facie deemed to be a holder in due course. These statements of the law had been stated with complete clarity by Thomson, CJ (as he then was) in the Court of Appeal judgment in Ong Guan Hua v Chong [1963] 20 MLJ 6 and by Choor Singh, J of the Singapore High

Court in Liang Tai Trading Company Ltd. v Toh Thye Guan [1970] 2 MLJ ” [37] Therefore, it cannot be denied that the Plaintiff was a holder of the cheque within the meaning of section 43(2) and section 55(1) of the Act. [38] In the Court of Appeal case of Ong Guan Hua v Chong [1963] 29 MLJ 6, it was held that the consideration for issuing the cheque is presumed and it is for the maker of the endorser of the instrument if he wishes to defend the action to prove that there was no consideration. [39] Be that as it may, the Plaintiff contended in the Second Affidavit in reply that the cheque was given in consideration of a loan in the sum of RM 9, 500, 000. 00 that he gave to the Defendant. From the submissions and the affidavit of the Defendant, it is apparent that the issue of consideration was not challenged by the Defendant. 14 [40] In fact, with respect to the issuance of the cheque, all that was raised was the Defendant‟s contention that he was forced into issuing the said cheque by the Plaintiff. [41] When the cheque was presented for payment, it was dishonoured. This attracts the provision of section 43(2) of the Act where an immediate right of recourse against the Defendant as the drawer arises. This provision confers the Plaintiff with the cause of action to initiate the suit. [42] The Plaintiff thus, was not wrong to sue the Defendant on his own name as provided under section 38(1) of the Act. The liability of the Defendant as a drawer is per section 55 of the act where once the cheque is dishonoured, the Defendant is required to compensate the Plaintiff as the holder. Whether there are any triable issues [43] All that the Defendant is required to show to this Court is a triable issue. This would then defeat the application of the Plaintiff (see Bank Negara Malaysia v. Mohd Ismail & Ors [1992] 1 CLJ 627 and Voo Min En & Ors v. Leong Chung Fatt [1982] 1 LNS 47; [1982] 2 MLJ 41). [44] As stated above, the cause of action is for a dishonoured cheque. It is not for any other issues. This was clearly pleaded by the Plaintiff in the Statement of Claim. This Court finds that the Defendant has not raised any triable issues with regard to the 15 issuance of the cheque. If at all, it was claimed by the Defendant that he was forced by the Plaintiff to issue the cheque. [45] This with respect, does not amount to a triable issue. It merely was an argument to rebut the Plaintiff‟s contention. It does not rebut the prima facie presumption that the Defendant is a party thereto for value or the Plaintiff is a holder in due course. [46] The Defendant raised issues in the counterclaim which went beyond the ambit of the original claim. The Plaintiff rightfully argued that it had nothing to do with the present claim of the Plaintiff. Not only did it introduce facts which were unrelated to the Plaintiff‟s original claim, it also was seeking relief against parties unrelated to the original suit. [47] It is instructive to refer to Halsbury’s Laws of Malaysia Vol.7(2) Reissue where at page 836 it states as follows : “In an action on an action for a dishonoured bill of exchange or cheque, the plaintiff is entitled to judgement on his claim without stay of execution pending trial of a counterclaim for damages for breach of another contract or the commission of a tort, for a bill fi exchange is to be treated as cash unless there is an arguable case based on total failure of consideration” [48] A counterclaim is not a defence to an action involving a bill of exchange. In Yeo Hiap Seng v Australian Food Corp Pte Ltd & Anor [1991] 3 MLJ 144, the plaintiffs produced 10,500 cartons of fruit juice drinks and supplied the same to the first defendants' 16 customer in Taiwan on 29 July 1989. Upon presentation of the cheque at the DBS Bank, the cheque was dishonoured and the plaintiffs were requested by the bank to „refer to drawer‟. The plaintiffs therefore claimed against the first defendant for the proceeds of the cheque. A counterclaim was filed by the Defendants. The Court held as follows: “The counterclaim raised by them did not relate to the plaintiffs’ claim but was a separate action altogether and therefore the facts alleged by the first defendants were wholly irrelevant to the issue before the Court. Even if the first defendants could succeed in their counterclaim, in an application for summary judgment against a defendant on the proceeds of a dishonoured cheque, the defendant will not be allowed to set up by way of a set-off a counterclaim for damages for breach of the underlying contract and the plaintiffs were entitled to judgment for the amount of their claim without a stay of execution. A cross-claim relating to the transaction in which the action on a bill of exchange arose is not a defence to the action on the bill of exchange.” (Emphasis added) [49] In Glennie v Imri 3 Y&C. Ex 440 the following was held by the Court that “if an action is brought by him on this bill of exchange, and he was to set up this case by way of defence, Court of law would say to him, you cannot reduce the contract, you must pay the bill and bring on an action for fraud”. [50] As such, this Court is not swayed in any manner with the counterclaim filed by Defendant as it does not relate to the action on a bill of exchange such as the cheque. 17 [51] In Wong Fook Heng v. Amixco Asia Pte Ltd [1992] 1 SLR 654, it was held that a bill of exchange is to be treated as cash and must be honoured unless there was some good reason to the contrary. This principle emanated from a host of early English cases emphasising this principle. In Brown Shipley & Co v Alicia Hoisery [1966] Vol.1 Lloyds Reports 668, the Court of Appeal held that “in an action between immediate parties to bill of exchange, judgment should be given to the bill of exchange as for cash and it was not to held by virtue of some counterclaim”. See also Cebora S.N.C v SIP (Industrial Products) Ltd C.A [1976] Vol.1 Lloyd’s Law Rep. 271 which endorsed Brown Shipley. [52] This Court is of the view that a cheque must be treated as cash as it is a promise to pay. Once it is issued, the holder holds it for value and is entitled to treat it as good value to discharge any debt or sums owing between the parties. It is therefore only to be expected that the recourse against the drawer of a cheque that is dishonoured be dealt firmly by this Court consistent with the provisions of the Bills of Exchange Act 1949. Conclusion [53] This Court would like to conclude this Grounds of Judgment by referring to Low Hop Bing J in Ng Choh Leng (supra) where His Lordship held as follows: “The defendant's affidavit affirmed on 31 October 2000 was to the effect that these 8 cheques were given to the plaintiff as a result of an antecedent debt or liability in relation to the shares trading transactions 18 of the aforesaid Lee Nyonya and Ong Chian King, but all these transactions appear to be disputed by the defendant. The allegations of facts or denials do not in my view rebut the prima facie presumption that the defendant is a party thereto for value or that the plaintiff is a holder in due course. In the light of this finding, I do not feel the necessity to consider other submissions which were outside the pleadings, but would nevertheless record a word of commendation for the efforts of learned counsel. In the circumstances, I am of the view that there is no triable issue and that the decision of the learned magistrate giving summary judgment.” (Emphasis added) [54] In the same vein, this Court does not find that any triable issues have been raised by the Defendant. It is unnecessary for this Court to traverse the other factual issues raised by the Defendant and the responses of the Plaintiff thereto as they were not relevant for the determination of this application for summary judgment. [55] The summary judgment application in enclosure 6 is therefore allowed with costs. (AHMAD FAIRUZ BIN ZAINOL ABIDIN) Judge High Court of Malaya Kuala Lumpur Dated: 17th April 2020 19 Counsels Dato‟ Yee Teck Fah for the Plaintiff Messrs Yee Teck Fah & Co Peguambela & Peguamcara 705, Block E, Phileo Damansara 1 Jalan 16/11, Section 16 46350 Petaling Jaya Selangor Darul Ehsan Mahinderjit Singh for the Defendant Messrs Mahindarjit & Co No. 30-2, Jalan PJU 5/11