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Abigail Liu resists summary judgment application in dispute that hinged on the purpose of a HK$1 million dishonoured cheque

The Plaintiff lent various loans to the Defendant, who later issued a HK$1 million cheque payable to the Plaintiff as a token of sincerity and assurance but not – as the Plaintiff asserted – for repayment. When the cheque bounced, the Plaintiff sought to recover the HK$1 million.

Despite the existence of a signed memorandum of understanding between the parties acknowledging the debts, the learned Master held that triable issues exist as regards the cheque’s purpose and the loan’s amount, and that the Defendant raised a bona fide defence. Dismissing the summary judgment application entirely, the Court granted the Defendant costs of the application and leave to amend the defence. Abigail Liu acted for the Defendant.

Factual Background

The Defendant (“D”) is a 70-year-old woman who ran up huge debts. She sought help from the Plaintiff (“P”), a conveyancing clerk, who made a series of loans to D.

Subsequently, at P’s request, D signed a memorandum of understanding (“MoU”) acknowledging certain loans. On the same day, D issued a cheque for $1 million payable to P.

When P tried to deposit the cheque 5 months later, the cheque bounced. Therefore, P issued legal proceedings to recover the money owed and applied for summary judgment against D.

Purpose of cheque in dispute

The parties are in dispute over the purpose of this cheque. P alleges that, having signed the MoU, D wrote the cheque for the objective of repaying the loan.

However, D’s case is that the cheque was issued purely as a token of sincerity for the P to continue to lend money to D – it was not intended for payment nor for P to deposit the cheque, and P understood this.

Court’s decision – Triable issues raised

The Court recognised that summary judgment concerning dishonoured cheques would only be refused in exceptional circumstances. In the present case, the learned Master decided that there were triable issues as regards the cheque’s purpose and the loan’s amount, and refrained from granting summary judgment.

Specifically, the learned Master accepted the submissions of Counsel for D and was satisfied that D raised a bona fide defence, inter alia, based on s. 21(2)(b) of the Bills of Exchange Ordinance (Cap. 19), which provides that delivery of a bill “may be shown to have been conditional or for a special purpose only, and not for the purpose of transferring the property in the bill …”.

In addition to dismissing P’s application for summary judgment entirely, the Court also granted leave for D to amend the defence. Furthermore, D obtained costs of the summary judgment application with certificate of counsel.

Representation:

Abigail Liu acted for the Defendant.


Abigail Liu

Abigail joined Chambers in 2019 and is developing a broad civil and criminal practice, with experience in various areas such as family and matrimonial matters, public law, land, tort, personal injuries, employee compensation, commercial litigation, trusts and probate.


Recently, she resisted a claim for allegedly due loan repayments in Yuan Yuqin v. Cheung Hiu Yan, Fion and Another [2020] HKCFI 1419 (with Mr. Simon Wong), and defended an election petition in 董健莉 吳定霖及另二人 [2021] HKCFI 514 (with Mr. Jeffrey Tam) where the Court interpreted section 51 of the District Councils Ordinance (Cap. 547) for the very first time.


Disclaimer: This article does not constitute legal advice and seeks to set out the general principles of the law. Detailed advice should therefore be sought from a legal professional relating to the individual merits and facts of a particular case. The photograph which appears in this article is included for decorative purposes only and should not be taken as a depiction of any matter to which the case is related.