Court strikes out defence and counterclaim on cheque mistake, allowing judgment for full amount.

[*88] 1979 Oct. 5

(HJITSANGARIS, S.D.J.)

IN THE DISTRICT COURT OF LIMASSOL

Ghorayeb Clearing and Forwarding Co.

Plaintiffs,

v.

Naktrans Inter-Continental Co. Ltd.,

Defendants.

(Action No. 2614/78)

Civil Procedure - Practice - Striking our defence and and counterclaim - Claim based on cheque - Grounds on which it may be disputed - Fraud, duress, invalidity or a consideration which has failed – Defence of mistake not coming within these exceptions - Order striking out defence and counterclaim.

S. McBride, for Applicants-Plaintiffs.

A. Boyadjis, for Respondents-Defendants.

RULING

The following ruling was delivered by:-

HJITSANGARIS, S.D.J.: On 10.8.78 the Defendants [*89] drew a cheque in favour of the Plaintiffs in the sum of C£6,820. They defaulted in their obligation under the aforesaid cheque and the present action was instituted by the Plaintiffs for the recovery of money owing under the said cheque. The Defendants, after an application for summary judgment was withdrawn by the Plaintiffs on 18.1.79, put in a defence alleging mistake on their part in signing the cheque for the sum of C£6,820 whereas their true indebtedness was only for C£4,332. 633 mils.

On 19.5.79 the Defendants submitted to judgment in the sum of £4,332.633 mils, the amount which they agree was owing by them to the Plaintiffs but they insisted on their defence for the remaining sum of £2,486.367 mils. Counsel for the Plaintiffs on that date agreed to the above course being followed but at the same time fully reserved his rights to proceed in any way he thought best for the balance claimed.

On 18.6.79 the present Application was filed by the Plaintiffs who are praying for orders striking out the Counterclaim and part of the Defence and, at the same time insisting that Judgment should be signed for the whole amount of the claim. Counsel for the Plaintiffs based his claim on the following authorities: Newman v. Lever (1887) 4 T.L.R., 91, Jackson v. Murphy (1887) 4 T.L.R. 92, James Lamont Co. Ltd., v. Hylands Ltd. (1950) 1 All E.R., 341, Fielding v. Pratt (1969) 2 All E.R., 150 and Birmingham Estates Co. v. Smith 13 Ch. D 509. [*90]

The tenor of the above authorities suggests that as a matter of proper practice a party suing on a cheque or a bill of exchange should be allowed to sign Judgment, except where the Defence relates to the execution of the chaque itself and, therefore, the issue is limited to an inquiry regarding the validity of the cheque itself. It is explained that a cheque or a bill of exchange is the equivalent of cash and any obligation undetaken by virtue of such instruments should be treated as such.

Counsel for the Defendants argued to the contrary and, amongst other things, maintained that the Plaintiffs cannot at this stage strike our parts of the Defence and the Counterclaim as they abandoned these rights when withdrawing their application for summary judgment.

In a recent decision of the House of Lords, Nova Knit Ltd. v. Kammgarn

(1977) 2 All E.R., 463, it was established that an action for negotiable instruments such as bills of exchange and cheques represents in a way deferred instalments of cash. Therefore, a claim based on such a document may possibly be disputed in some cases on the ground that its acceptance has been procured by fraud, duress, invalidity, or a consideration which has failed. It must be stressed moreover that such defences should unequivocably and specifically be pleaded and particulars be given thereof. Any other issue must be pursued by cross-action.

The Court feels that it should not only be guided [*91] by the above decisions but I believe that it is difficult for anyone to doubt the wisdom behind these principles of practice. Any other approach would have seriously weakened the value of negotiable instruments and would on the whole undermine trading, which is a matter of great significance to the wellbeing of any country.

In the present case the defence put forward by the Defendants is to the effect that by mistake the relevant cheque was issued for the sum of C£6,820 whilst the real balance between the parties was C£4.332. I am of the opinion that this defence of mistake does not and cannot come within the exceptions to the authorities cited above for disputing the claim. Furthermore, the Plaintiffs cannot be estopped from pursuing the present Application by the fact that the Defendants submitted to Judgment for part of the amount claimed as this would allow the defeat of the rule through the back door. The Plaintiffs anyway reserved their rights when obtaining Judgment for the amount submitted by the Defendants.

The Countercalim in the present action is closely interlinked with the Defence put forward. Therefore, the correct way is to strike out not only the Defence but the Countclaim as well and let the Defendants pursue the remedies, if any, which they seek by separate action. This is warranted also by the fact that they Defendants, before being allowed to pursue an action, have to pursuade the Court that the issue may properly be litigated in Cyprus [*92] and leave may have to be obtained for service of the writ out of the jurisdiction. A counterclaim is substantially a cross-action; not merely a defence to the plaintiff’s claim. It must be of such a nature that the Court would have jurisdiction to entertain as a” separate action. (Bow Maclachlan & Co. v. The Camosun (1909) A.C., 597.

In the result, Judgment will be given for the Plaintiffs as per para. (c) of the Application with costs to be

assessed by the Registrar. The Defence and Counter claim will be struck out as per paras. (a) and (b) of the prayer of

the Application.

The authorities clearly indicate that no stay of execution should be granted save in exceptional

circumstances (James Lamont & Co. Ltd. v. Hylands Ltd., (supra)), and no such circumstances have been shown here to exist. Stay of

execution is refused.

Judgment for plaintiffs.

Defence and counterclaim

struck out.