Banking Law
| Citation | (2004) 5 SAL Ann Rev 63 |
| Date | 01 December 2004 |
| Published date | 01 December 2004 |
4.1 When a bank is confronted with conflicting claims over a bank account, it is entitled by way of an interpleader to have the ownership of the account determined by the courts. In Australia and New Zealand Banking Group Ltd v Ding Pei Chai[2004] 3 SLR 489, the Australia and New Zealand Banking Group Limited (‘ANZ Bank’) issued an interpleader summons after it received conflicting instructions from the parties controlling an Asian Currency Unit (‘ACU’) account. Belinda Ang Saw Ean J granted the relief after reviewing the evidence presented by the parties. The three key persons interested in the account, Ding Pei Chai (‘Ding’), Phua Swee Khiang (‘Phua’) and Lee Wan Hoi (‘Lee’) were business associates who came together to invest and develop certain properties in Melbourne, Australia. Part of the proceeds from the sale of the properties was deposited into an ACU account kept in the name of Gracedale Technology Limited (‘Gracedale’), a British Virgin Islands company. The interests in the account were represented by two groups. The account required two signatories, with one signatory coming from each of the groups. In Group A, the signatories were Lee and his wife, Cheng Wai Yong (‘Cheng’) and in Group B, the signatories were Phua and Soh Yoke Mui, Ding”s nominee. The bank later received conflicting instructions from Ding and Phua and Lee and Cheng as the persons authorised to operate the account. Touching on the issues raised by the parties, Ang J at [3] said:
Seen in this light, the single question for determination from the point of view of ANZ Bank is: who is lawfully authorised to give instructions to the bank on behalf of Gracedale? In answering this single question, I have to consider whether or not Lee agreed to cede control of Gracedale and the ACU account to Ding and Phua. If the answer is yes, then there is the question of whether or not the issuing of additional bearer shares and the resolution dated 1 May 2002, contravened the articles of association of Gracedale or the laws of the British Virgin Islands or both. If the answer is no, it follows that the original mandate to ANZ Bank continues to apply.
4.2 After reviewing the evidence Ang J made the following order at [61]:
In view of my finding that there was an agreement to entrust control of Gracedale and the ACU account to Ding and Phua, I am accordingly satisfied that the just thing to do in the circumstances of this case is to make the following orders:
(a) The moneys in the ACU deposit account no 468488 are to be retained in the account until further order.
(b) Both parties are to have general liberty to apply in connection with the order made pursuant to this judgment.
4.3 The most valuable right a holder of a negotiable instrument has is the right to bring an action on the instrument in his own name. In an action based on a negotiable instrument, the courts will in practice give summary judgment to the plaintiff unless the defendant is able to raise a defence impinging directly on the contract relating to the instrument. Section 30(2) of the Bills of Exchange Act (Cap 23, 2004 Rev Ed) makes a prima facie presumption that every holder of a bill of exchange is a holder in due course. This prima facie title is sufficient to allow a holder of the instrument to successfully bring an action on the instrument unless there is a defect in the title to the instrument. There is no need for a holder to assert that he is a holder in due course if no defect in title to the instrument is put in issue. However, in Sutanto Henny v Suriani Tani[2004] SGHC 7, Belinda Ang Saw Ean J decided, inter alia, that there was nothing in the Bills of Exchange Act to preclude the payee of a cheque from asserting that he was a holder in due course of the cheque. The plaintiff granted loans amounting to $670,000 to the first defendant, Suriani Tani (‘Suriani’). The second defendant was the owner of a sole proprietorship, known as Global Standard Marketing (‘Global’). As partial repayment of the plaintiff”s loans, Suriani gave the plaintiff five cheques. Two cheques, totalling $150,000, were drawn by Suriani on his bank account. The other three cheques for sums totalling $515,000 were post-dated and drawn on Global”s account. Suriani was an authorised signatory of Global”s bank account. The second defendant had the plaintiff”s claim struck out on the grounds that it disclosed no reasonable cause of action, was frivolous and vexatious and an abuse of process. He relied on two main grounds. First, that he was not the drawer of the three cheques as he was not the signatory. Second, there was no consideration for the cheques as he did not borrow money from the plaintiff. The plaintiff”s appeal was
allowed by the court on the ground that Suriani was an authorised signatory of Global”s account and this fact was not challenged by the second defendant. The court further decided that there was sufficient consideration for the cheques arising from the plaintiff”s forbearance to sue on the post-dated cheque. Ang J said at [14]:
When a cheque has been post-dated, in the absence of express evidence, it is possible to imply a promise to forbear from claiming the debt from the drawer until the date of the post-dated cheque. That forbearance is sufficient consideration.
4.4 The court went on to find that the plaintiff was a holder in due course of the cheques. Ang J cited the dictum of Fletcher Moulton L J in Lloyd”s Bank, Limited v Cooke[1907] 1 KB 794 at 807—808:
It is suggested, however, that these conclusions are negatived by the language of s. 29, sub-s. 1, which states the conditions under which a person is a ‘holder in due course.’ I can find nothing in the language of that subsection which throws any doubt on the view that ‘holder in due course’ would include a payee who has given value in good faith, unless we are to construe the word ‘negotiated’ as being merely equivalent to ‘indorsed’. But, when the definition of ‘negotiation’ given by s. 31, sub-s. 1, is looked at, it appears clear that the Legislature intended to make it apply also to the original operation of transferring the bill to the payee. It lays down that ‘a bill is negotiated when it is transferred from one person to another in such a manner as to constitute the transferee the holder of the bill.’ It carefully abstains from prescribing that the transferor must be a ‘holder.’ All that is necessary to constitute ‘negotiation’ of the bill is that it should have been transferred from one person to another in such a manner as to constitute the transferee the ‘holder of the bill,’ i.e. — if we replace ‘holder’ by its definition in the Act —‘payee or indorsee who is in possession of the bill.’ A cheque, therefore, payable to a particular person, which is handed by the drawer to that person for value, would be ‘negotiated’ within the meaning of the Act.
4.5 The court”s decision raises a number of interesting issues. First, the court held that consideration for a post-dated cheque could come from the payee”s implied forbearance to sue the drawer before the due date of the post-dated cheque. This approach is rather novel even though consideration for a cheque may be constituted by the presence of a past debt. Under s 27(1)(b) of the Bills of Exchange Act, past consideration constitutes good...
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