HIGH COURT, ACCRA
DATE: 9 OCTOBER 1967
BEFORE: AMISSAH J.A.
CASES REFERRED TO
(1) Solly v. Hinde (1834) 2 Cr. & M. 516; 2 L.J.Ex. 151; 4 Tyr; 305; 149 E.R. 865.
(2) Glennie v. Imri (1839) 3 Y. & C. Ex. 436; 3 Jur. 432; 160 E.R. 773.
(3) Warwick v. Nairn (1855) 10 Exch. 762.
(4) Court v. Sheen (1891) 7 T.L.R. 556.
(5) Lamont (James) & Co., Ltd v. Hyland Ltd. [1950] 1 K.B. 585; [1950] 1 All E.R. 341; 66 T.L.R.
(Pt. 1) 937; 94 S.J. 179; 83 L1.L. Rep. 477, C.A.
(6) Newman v. Lever (1887) 4 T.L.R. 91, D.C.(7) Anglo-Italian Bank v. Weels; Anglo-Italian Bank v. Davies (1878) 38 L.T. 197, C.A.
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NATURE OF PROCEEDINGS
APPLICATION by the defendants for leave to defend an action based on a bill of exchange, and by the plaintiffs for leave to sign final judgment. The facts are sufficiently stated in the ruling of Amissah J.A. sitting as an additional judge of the High Court.
COUNSEL
S. Okudzeto for the plaintiffs.
Danso-Mainoo (for Ohene-Ampofo) for the defendants.
JUDGMENT OF AMISSAH J.A.
The plaintiffs have sued the defendants on a bill of exchange. After the defendants appeared to the specially endorsed writ, the plaintiffs took out a summons for final judgment. Instead of the defendants showing cause against such application by affidavit, as is provided by Order 14, r. 3 (a) of the Supreme [High] Court (Civil Procedure) Rules, 1954 (L.N. 140A), they filed a defence to the claim and they appeared by counsel to argue their case for leave to defend. It is important, I think, that the rules be obeyed. In this case, however, no objection was taken to the course adopted by the defendants and they were heard on this motion as if the defence filed complied with the affidavit required of them by the rules.
I therefore propose to ignore the technical breach of the rules for the purposes of this ruling. But that is not to be taken as saying that this court will take such a benevolent view of future breaches of the rules, even where no complaint is made about them by the other party. The sole question for determination therefore is whether the cause shown by the defendants is sufficient to persuade me to exercise my discretion to grant them leave to defend the action.
As I said earlier, the plaintiffs have sued the defendants on a bill of exchange. Learned counsel for the plaintiffs in moving for final judgment argued that in an action based on a bill of exchange, the defence can be granted leave to defend only if they can show either that they did not draw the bill or alternatively if they can show fraud. I think counsel has taken a rather restricted view of the instances where a defendant will be allowed to resist an action brought upon a bill. For example, Order 21, r. 2 of the Supreme [High] Court (Civil Procedure) Rules, 1954 (L.N. 140A), governing this court provides that:
“In actions upon bills of exchange, promissory notes, or cheques, a defence in denial must deny some matter of fact, e.g. the drawing, making, endorsing, accepting, presenting, or notice of dishonour of the bill or note.”
If any of these defences were put up in this case, I should be inclined to grant leave to defend. There is of course the defence of fraud also,
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which is so notorious that no authority need be cited to show that a defendant who alleges it ought to be given his opportunity of resisting the action. And authority exists to the effect that in the absence or subsequent failure of consideration, the bill or note is invalid as between the immediate parties to the instrument. In Solly v. Hinde (1834) 2 Cr. & M. 516 the executors of one Underdown sued the executorsnof Chandler on a promissory note payable on demand and expressed to be for value received. TheNdefendants adduced evidence to show that Chandler, being very ill, made his will and stated that he hadleft Underdown £100 for his trouble in acting as his executor. Three days later Underdown said to Chandler that as he was to have £100 for acting as his executor, it would save the legacy duty if Chandler would then sign a promissory note for the amount. Chandler accordingly did so. But he recovered from his illness and Underdown died in his (Chandler’s) lifetime. It was argued that this evidence was not admissible in an action on such a note. It was, however, held that the evidence was admissible, as showing a total failure of consideration, and that the executors of Underdown were not entitled to recover on the note.
If the defence to be put up, therefore, is one of total failure of consideration, I would have thought that the defendants were entitled to leave to defend. The submission of learned counsel for the defendants attempted to put the defence on this basis. He said that the bill was made to cover a mould which had not materialised and therefore there was no consideration. The question is whether the matters alleged in the defence, which is herein taken as the necessary affidavit, support this contention. Paragraph (1) denies that the defendants owe the plaintiffs the amount claimed on the writ and further denies that the plaintiffs are entitled to any interest. But it is to be noted that there is no denial that the defendants owe any sum other than that claimed. The next four paragraphs are of considerable importance in the determination of the nature of the defence, and I think ought to be quoted in full. They are as follows:
“(2) The plaintiffs well know that the bill has not been paid because the parties have not agreed on the exact amount to be paid since the plaintiffs failed to supply a good jewel mould which put the defendants to extra expense in trying to put the mould into shape.
(3) When all efforts have failed, the jewel mould was returned to the plaintiffs and the defendants lost tremendously because it [sic.] could not fulfil its [sic.] contracts according to schedule and lost thereby.
(4) After protracted negotiations the plaintiffs agreed in their letter of 7 April 1969 proposed [sic.] that the defendants
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should deduct £500 or N¢1,000.00 but the defendants in their letter of 9 May 1967 said they
were entitled to a deduction of £G798 10s. plus general damages for the breach of contract of sale in delivering a defective jewel mould.
(5) The defendants therefore say that this action is premature and that accounts have to be completed between the parties.”
Whatever this defence may amount to, and I must confess that I have had some anxious moments trying to determine what it is, I do not think it amounts to an allegation of total failure of consideration. It seems to me that what the defendants are saying is that because a jewel mould which the plaintiffs were obliged to deliver to them was defective when delivered, this has occasioned loss (the exact amount of which has yet to be determined) to the defendants.
Nowhere in the defence is it stated that the jewel mould was the consideration for the bill. Had it been so stated, I think, it would have been necessary to go further to say whether it was the total consideration for the bill. The bill itself does not state anywhere that it was given for a jewel mould. I am therefore left to conjecture that this jewel mould was some measure of consideration to the bill. In this effort I cannot help noticing from the particulars of special damage given in the defendants’ counterclaim that the cost of the jewel box mould is stated to be £G577 19s. 3d., a figure totally different from the amount of £1,416 5s. payable on the bill. Thus assuming that if the jewel mould was to be given in consideration of the bill at all, it seems to me that this is not a case of total failure of consideration. If that is the case then the authorities are against the defendants being allowed to deny the plaintiffs’ liberty to sign final judgment: see Glennie v. Imri (1839) 3 Y. & C. Ex. 436 and Warwick v. Nairn (1855) 10 Ex. 762.The position would have been different if it had been alleged that the goods tendered had not been of the contract description and had been rejected. For then there would have been a total failure of consideration, which, as I have said, is a defence to an action on a bill. But in the present case it is not so alleged in the defence. What is alleged is that by the plaintiffs’ conduct in delivering a defective mould some loss had been occasioned to the defendants which should entitle them to a reduction, now undetermined, in the price. In that case the defendants are at liberty to sue on their alleged breach independently of the action on the bill.
The next point made on behalf of the defendants was that they had brought a counterclaim made up of £G798 10s. (N¢1,597.00)
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special damages, obviously the amount they claim the bill should be reduced by, and £G1,000 (N¢2,000.00) general damages. That as the total amount on the counterclaim was larger than the amount claimed on the bill, they should be given leave to defend the plaintiffs’ action. In support of the counterclaim the allegations made in the paragraphs of the defence which have been quoted above have been repeated. There is the case of Court v. Sheen (1891) 7 T.L.R. 556, which seems to support the defendants’ contention. The plaintiff in that case claimed £G700 for money lent, and it was stated the cheques as to most of the amount that were producible. The defendant admitted certain items to the amount of over £G100, but set up a counterclaim to a much larger amount.
The judge in chambers made an order for unconditional leave to defend. Upon appeal by the plaintiff, the court took the view that the plaintiff was not entitled to immediate judgment to the amount admitted, as it was only admitted subject to the counterclaim which might turn out to be larger in amount. But Roxburgh J. reading the judgment of the Court of Appeal in Lamont & Co., Ltd. v. Hyland Ltd. [1950] 1 K. B. 585, C.A. criticised this decision on the ground that it was shortly reported and that it was difficult, if not impossible, to say on what ground it proceeded. Further Newman v. Lever (1887) 4 T.L.R. 91, D.C., is direct authority for the proposition that leave to defend an action on an undisputed bill will not be given unless there are very strong reasons for doing so. In Anglo-Italian Bank v. Weels; Anglo-Italian Bank v. Davies (1878) 38 L.T. 197, C.A. Jessel M.R. discussing the effect of a counterclaim on actions upon bills said this at p. 199:
“The defendant says, as regards the deed, that there is another covenant in that deed which you, the plaintiffs, have broken, and that by reason of your breach of that covenant, I am entitled to claim damages from you; and if I establish the breach and get the damages, I may be entitled to set off those damages against the sums claimed in the action. I must remark that, as regards that form of defence, it is not necessarily a defence under this order. It is quite true that you may, by way of counterclaim, bring forward, under the pleading rules, a defence of set-off of damages, but even that is in the descretion of the judge. He may strike out the counterclaim when it is there, “if in the opinion of the court or judge such set-off or counterclaim cannot be conveniently disposed of in the pending action, or ought not to be allowed.’
So that it is merely a right depending on the discretion of the judge. It is not an absolute right to set off damages against a debt; and I must say, speaking for myself
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that I should hesitate long before I allowed a defendant in an action on a bill of exchange to set up a case for damage by reason of the breach by the plaintiff of some other contract or the commission of some tort. I do not say that there cannot be a case where the two transactions may not be so connected, but at present I cannot even imagine the existence of such a special case.”
In the instant case we have an undisputed bill of exchange. The defence to the claim on it is not one ofthose mentioned in the Bills of Exchange Act, 1961 (Act 55), nor does it allege any other fact which would incline me to allow leave to defend. The counterclaim does not improve matters because it does not give me any compelling reason why the plaintiffs’ judgment should be postponed. That the defendants might be able to prove their entitlement to general damages for breach of the contract for sale in delivering a defective mould is certainly no such reason.
I have had to rely almost exclusively on the English authorities on this point because no local ones have been cited to me and I have not been able to find any from my independent researches. However these English authorities must be given the highest respect as our Bills of Exchange Act and the rule under which the proceedings are moved are modelled on the English legislation. In the event I refuse the defendants leave to defend and give the leave sought by the plaintiffs to sign final judgment. The counterclaim should proceed separately.
DECISION
Leave to defend refused.
Leave to sign final judgment granted.
Counterclaim to proceed separately.
S.E.K.
