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[Sam Eleanya, Agboola Omolola Oluwafolakemi, Eleanya Kalu Vincent, Eleanya Ugochi Vine]
Bill of Exchange-Action on-Defence of total failure of consideration Whether sustainable-Bill of Exchange Act 5.3,73.
GEORGE, J.:-On the application of the Plaintiffs, pursuant to Order III rule 9 of the rules of the Old Supreme Court (Civil Procedure Rules), this suit was entered or hearing in the “Undefended List,” for the 9th March, 1970.
On the 4th of March, 1970, the defendants’ solicitor filed a “Notice of Intention to Defence” supported by an affidavit sworn to by one Ado Ibrahim a director of the defendant Company.
The Plaintiffs’ Writ of Summons is specially endorsed as follows:
Statement of Claim
20th November, 1969 £1,000. 0s. 0d.
15th December, 1969 £1,000. 0s. 0d.
30th December, 1969 £1,410. 15s. 3d.
and the Plaintiffs claim against the defendants as drawers the total sum of £3,410.15s.3d.
The Plaintiffs exhibited the three dishonoured cheques referred to in their Statement of Claim, and filed an affidavit sworn to by a clerk in the Chambers of their Solicitor, stating the facts complained of in their Statement of Claim.
The defendants, while admitting in their affidavit that the dishonoured cheques were drawn by them in favour of the Plaintiffs, denied liability to honour them on the ground that no consideration was given for them.
Counsel for the Plaintiffs urged this court to refuse to grant the Defendants leave to defend on the ground that they had no valid defence. His argument, stated syllogistically, is as follows:
“A cheque is a Bill of Exchange.
A Bill of Exchange has always been regarded as cash. There can, there-fore, be no defence to the Plaintiffs obtaining cash given him by the defendants.”
Counsel for the defendants on the other hand contended that since there had been a total failure of consideration the defendants were entitled to defend the action.
The real point in issue is where the defendants have filed a valid ground of defence to the action. In this respect, it is pertinent to note that Counsel for the defendants in course of his address said the defendants had filed an action claiming £5,000 damages in Suit No. LD.133/70. It appears that counsel for the defendants is in doubt as to whether the proper procedure is to counter-claim for the sum of £5000 or to bring a cross action, hence he has filed one. Nevertheless, he contended that since there has been a total failure of consideration the defendants were entitled to defend the action. He cited the 3rd Edition of Halsbury’s Laws of England Volume 3 page 177 paragraph 293 which reads:
“Where the consideration for which a party signed a bill or note consists of a definite sum of money or for something the value of which is definitely ascertained in money, and it was either originally absent in part, or has subsequently failed in part, the sum which the holder standing in immediate relation in such part is entitled to receive from him, is pro tanto reduced. But a remote party who has gained value for the instrument may be entitled to receive payment in full.”
The above passage does not, in my view, support the contention of counsel that he is entitled to be granted leave to defend; his claim for a set off is for labour and materials, amounts which are not definite in value. Apart from this the Authority cited by the learned authors of Halsbury’s for this proposition Harris and Co. v. Vallaran & Co. 1940 1 A.E.R. page 185 does not support the proposition of the author himself.
Counsel for the plaintiffs drew my attention to the case of James Lamount and Co. Ltd. v. Hyland Ltd. which was approved in the recent case of Brown, Shipley, and Co. Ltd. v. Alicia Hoserey Ltd. 1966 1 L.L.R. page 668. The position is made clear in the judgement of Lord Denning, M.R., where at page 669, he says:
“For many years the courts of this country have treated Bills of Exchange as cash. In James Lamount and Co. Ltd. v. Hyland Ltd. 1950 1 K.B. 585, this court declared that where there is an action between the immediate parties to a Bill of Exchange, then in the ordinary way, judgement should be given upon the Bill of Exchange as for cash, and it is not to be held up by virtue of some counter-claim which the defendant may assert, even, as in that case the counter-claim relating to the specific subject matter of the contract. Here the counter-claim is in relation to a different contract altogether from that which initiated the Bills of Exchange.
“It seems to me, in following that case and refusing a stay of execution, that the Judge here was following the ordinary practice of court in Bills of Exchange matters. I do not say that there may not be some cases in which the court may in its discretion grant a stay of execution. I think it is possible but as Sir George Jessel, M.R., said in an earlier case that is. only. In exceptional circumstances.” …. . . …. .. .
It is thus clear from this judgement that a Bill of Exchange has always been regarded as cash in the hands of the holder. The defendants in this case issued three cheques to the plaintiffs. Our own Bill of Exchange Act makes the position of a cheque quite clear in Section 73 where it says:
“A cheque is a Bill of Exchange drawn on a Banker payable on demand. Except as otherwise provided in this part, the provisions of this Act applicable to a Bill of Exchange payable upon demand apply to a cheque.
By section 3 of the same Act a Bill of Exchange is defined as:
“An unconditional order in writing, etc., addressed by one person to another 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 or to the order of a specified person or to bearer.”
From the foregoing it will be observed that when, as admitted by the defendants in paragraph 2 of his affidavit, they issued three cheques to the plaintiffs, they actually gave the plaintiffs a Bill of Exchange which in the judgement of Denning, M.R., should be interpreted as meaning cash in the hands of the plaintiffs. A set-off or counter-claim is not a defence to this action.
I am aware of the fact that Order III Rule II says that if the party served with the Writ of Summons and an affidavit, delivers to the Registrar a notice in writing that he intends to defend the suit then the suit should be entered in the general list. This, however, is subject to his filing an affidavit setting out the grounds of his defence. The defendants in this case have set out what they claim as their ground of defence, but the grounds stated in their affidavit are not valid. In my view, Order III Rule II does not mean that when-ever a defendant delivers a ground of defence however frivolous it may be, then he is entitled to defend. The defendants have given the plaintiffs what in the eye of the law is cash and it is not a defence whatsoever to their obtaining that cash that there was no consideration.
The defendants are, therefore, refused leave to defend the action and judgement is entered for the plaintiffs in the sum of £3,410.15s.3d. With costs assessed at 60 guineas to the Plaintiffs.
Leave to defend refused: Judgement for Plaintiffs.