City Hardware Pte Ltd v Goh Boon Chye

• Jurisdiction: Singapore
• Judge: V K Rajah J
• Judgment Date: 31 January 2005
• Neutral Citation: [2005] SGHC 25
• Date: 31 January 2005
• Subject Matter: Whether plaintiff effecting proper presentment of cheque on defendant or defendant's bank qua agent,Sections 45(1), 45(2), 46(3)(c) Bills of Exchange Act (Cap 23, 1999 Rev Ed),Plaintiff's bank returning cheque without physical presentment to defendant's bank,Whether defendant prejudiced or inconvenienced by failure to serve timeous notice of dishonour,Cheque truncation,Sections 89, 90 Bills of Exchange Act (Cap 23, 1999 Rev Ed),Section 50(3)(c)(iv) Bills of Exchange Act (Cap 23, 1999 Rev Ed),Bills of Exchange and Other Negotiable Instruments,Whether notice of dishonour dispensed with,Whether requirement of presentment excused where drawer having no reason to believe bill would be paid if presented,Whether bills of exchange must be presented for payment to engage payment undertaking of drawer or indorser,Duties of holder,Whether burden on defendant to satisfy court that presentment of cheque would have been appropriate and meaningful,Presentment for payment,Whether Cheque Truncation System modifying contractual obligations or liabilities on instrument intended to be negotiable instrument,Presentation for payment,Notice of dishonour,Cheques
• Docket Number: Suit No 179 of 2004
• Published date: 01 February 2005
• Defendant Counsel: James Goon Hoong Seng and Sham Chee Keat (Ramdas and Wong)
• Court: High Court (Singapore)
• Plaintiff Counsel: Peter Gabriel, Ismail bin Atan and Calista Peter (Gabriel Law Corporation)

31 January 2005 Judgment reserved.

V K Rajah J:

1 This judgment ought to be read in conjunction with my judgment in City Hardware Pte Ltd v Kenrich Electronics Pte Ltd [2005] SGHC 24 (“the Kenrich proceedings”). The plaintiff in these proceedings claims against the defendant on a cheque signed by him. The factual matrix can be stated in a brief compass.

2 In or about March 2000, the defendant visited the plaintiff’s office. To reassure the plaintiff of his personal backing and support for business to be transacted with Kenrich Electronics Pte Ltd (“Kenrich”), the defendant handed the plaintiff’s managing director, Lau Chui Chew (“LCC”), a blank cheque (“the Cheque”) which he had signed. According to LCC, the defendant, who was the managing director of Kenrich, informed him that the plaintiff was entitled to complete the Cheque and present it for payment in the event Kenrich defaulted in its payment obligations to the plaintiff. The plaintiff asserts that it accepted the Cheque as security for outstandings due from Kenrich should Kenrich default on its repayment obligations.

3 When Kenrich did in fact default on its repayment obligations, the plaintiff completed the Cheque on or about 30 June 2003 by dating it, naming itself as payee and stating the amount due to it, that is to say, the sum of $576,621.54.

4 On 30 June 2003, the Cheque was deposited with the plaintiff’s bank for clearance. The plaintiff’s bank, however, returned the Cheque the next day without arranging for the physical presentation of the Cheque to the defendant’s bank. The Cheque did not conform to the then approved format for automated clearance and could not be electronically processed. It appears that since July 2002, cheque clearances in Singapore have been automated and a system of online image-based clearance procedures named the “Cheque Truncation System” (“CTS”) has been implemented in banking on an industry-wide basis. The plaintiff made no further attempts to present the Cheque through manual clearance. Subsequently, the plaintiff served a notice of dishonour on the defendant on 3 October 2003. It is undisputed that the defendant did not have, at all material times, sufficient funds in his bank account to meet the amount claimed.

5 The defendant, in his original affidavit of evidence-in-chief, admits handing over the Cheque to the plaintiff. He, however, emphatically denies legal responsibility. He states:

This was given at the request of the plaintiff to facilitate payment of any part of the said interest for outstanding loans should I be out of Singapore. At that time, neither Aloh [another company owed by the defendant] nor Kenrich had started a current account. The said blank cheque was a temporary arrangement. [emphasis added]

6 In a supplementary affidavit which was adduced only after the trial had commenced, the defendant dramatically changed his tack and adduced several new layers of facts and contentions in an attempt to refute liability. The relevant portions of this affidavit are reproduced:

3. The said instrument was a temporary arrangement and was meant to be obsolete when Kenrich or Aloh could use their bank accounts to pay the Plaintiffs.

4. The said instrument was only meant for any debt due and payable when the said instrument was given, and it was agreed by the Plaintiffs’ Lau Chui Chew, that before presenting the said instrument, he would inform me of the amount and the intended presentment to enable me to arrange for sufficient funds to meet the amount concerned.

5. When Kenrich and Aloh subsequently began operating their respective bank accounts, I informed the said Lau Chui Chew in or about the middle of 2000 that I would not be using my DBS account no 0290097577 any more, for purposes of the business with the Plaintiffs.

6. In any event, when the new Cheque Truncation System (“CTS”) came into being in or about July 2002, I assumed, from the Plaintiffs’ conduct in not asking from me a fresh signed instrument which would comply with the CTS, that the Plaintiffs would no longer ask for payments from me.

Evaluation of evidence

7 I first consider the conflicting evidence relating to why the Cheque was given to the plaintiff by the defendant. In the Kenrich proceedings which were heard concurrently, I found the defendant to be an unsatisfactory witness. His testimony, in so far as it was relevant to these proceedings, was fraught with contradictions and discrepancies and only served to fortify my view that he lacked credibility.

8 The defendant had initially asserted that the Cheque was a “temporary arrangement” merely to service interest in the event it remained unpaid. This was obviously a tenuous concoction designed to buttress his principal line of defence – namely, that the transactions between Kenrich and the plaintiff were de facto moneylending transactions. In reality, amounts owing to the plaintiff on the invoices had never been apportioned. There were no known instances of “interest” per se being separately invoiced, apportioned or paid. Indeed, in his supplementary affidavit, such a contention was muted, if not altogether mute. He stated therein that the Cheque was meant to cover “any debt due and payable” [emphasis added] when it was given. In the face of such glaring contradictions the defendant was compelled to reluctantly concede that his earlier assertion that the Cheque was meant to cover only interest is “not true”.

9 Soon after the initial exchange of affidavits of evidence-in-chief, the plaintiff’s counsel specifically queried the defendant as to when Kenrich had opened its banking account. The defendant thereupon abruptly changed his stance and now asserts that the Cheque was given in February 2000 and not in March 2000 as earlier contended. It had become amply clear by then that Kenrich had opened a bank account from 11 February 2000. It also emerged during the hearing that Aloh had an operating account from January 2000.

10 The defendant’s claim that the Cheque was given only as security for moneys “due and payable when the instrument was given” was another feebly conceived afterthought. The first transaction on which any moneys were due occurred only around 10 March 2000. The defendant ultimately acknowledged in cross-examination that the Cheque was “payment for anything which I [sic] owe to” the plaintiff.

11 The defendant also alleged that he later informed LCC sometime in the middle of 2000 not to present the Cheque as he “would not be using [his personal] account … any more”. This assertion appears odd, to say the least. Firstly, his personal account continued to be in operation until at least July 2003. Secondly, even if he had informed LCC of this, he could not have unilaterally changed the basis on which the Cheque had been given and the understanding that the parties had, as long as the plaintiff continued to transact business with Kenrich. Thirdly, the defendant could not satisfactorily reconcile this version of events, which only emerged during the actual trial proceedings, with his earlier statement that the Cheque was only a temporary arrangement. When pressed to explain the various discrepancies in the various affidavits he had affirmed, he was at a complete loss for words and was incapable of giving a coherent response. All he managed was: “I don’t know how to explain. I leave it to your Honour to decide, I don’t know how to explain.” The defendant found himself hoist by his own petard.

12 It appears to me that as evidence as to the true state of his personal as well as his companies’ accounts slowly but surely crystallised, he attempted to clumsily tiptoe around inconvenient facts by throwing up alternative explanations in the desperate hope that at least one of his explanations would be accepted. I categorically reject each and every one of these variegated explanations as futile. I prefer instead the evidence of LCC who rendered his version of events in an entirely straightforward manner, remaining resolutely firm and convincing even in cross-examination.

13 The defendant’s final abortive attempt in explaining his conduct came as a tepid attempt in contending that the CTS allegedly “modified” his agreement with the plaintiff. He states that he had assumed soon after the CTS was introduced that the plaintiff would no longer rely on the Cheque. This explanation again flies in the face of his original explanation that the Cheque was a “temporary arrangement”. If the arrangement was of a temporary nature, it is strange that he should continue to give this matter any further consideration or thought whatsoever.

14 The defendant further alleges in his supplementary affidavit that there was an agreement that the plaintiff would inform him of the amount stated in the Cheque before it was presented. If indeed there was such an agreement, I have no doubt that the defendant would have raised this at the outset; not at the eleventh hour through his supplementary affidavit. Such a term would have been a vital point in any alleged agreement the parties had – a condition precedent. Instead, it was only pleaded after the trial had commenced. It also appears to me that if the Cheque was indeed meant to cover solely interest, as the Defence originally contended, there could be no mistake as to the defendant’s maximum liability for each transaction. There was no need for any prior notification. I...