Summary judgment dismissed because plaintiff's affidavit deponent lacked competency and unliquidated cross-claims cannot offset bill of exchange claims.

[*176] 1983 Oct. 31

(BOYADJIS, P.D.C. )

IN THE DISTRICT COURT OP NICOSIA

P.M. & C. Stavrinides Clothing

Industries Ltd.,

Plaintiffs,

v.

Kyriacos Onisiforou (Paraikka)

and Another,

Defendants.

(Action No. 4955/82).

Civil Procedure - Summary judgment - Order i 8,rule 1 of the Civil Procedure Rules - Claim based on cheques - Advocate for plaintiffs not a person who may swear positively to the requisite facts - His affidavit insufficient to support an application for summary judgment and confer to the Court jurisdiction to give judgment under the above rule.

Civil Procedure - Counterclain - Claim on a bill of exchange - Unliquidated cross-claims cannot be relied on by way of extinquishing set-off against a claim on a bill of exchange.

L. Kalogerou for X. Xenopoulos, for Applicants- Plaintiffs.

St.Kittis, for Respondents-Defendants.

RULING

The following ruling was delivered by:-

BOYADJIS. P.D.C.:- The plaintiffs in this [*179] of goods agreed to be sold by the plaintiffs to the defendants and that after the goods were delivered it was revealed that part thereof did not correspond to the sample and the terms of the agreement regarding their quality and the size. No reference is made to the quantum of the alleged damage suffered by the defendants so as to compare it with the amount of the plaintiffs' claim against them. There is also a general allegation to the

effect that, inasmuch as the cheques were issued in part payment of these goods, the defendants have a good defence to the action, though it is

not stated whether the alleged defence goes to the whole or to part only of the plaintiffs' claim.

At the hearing of the application which took place before me on 27.10.1983 both counsel relied on their respective affidavits and addressed the Court. Mr. Kittis for the defendants has argued that the plaintiffs’ affidavit is clearly insufficient because of the incompetency of the deponent Mr. Xenopoulos to swear positively to the requisite facts. He further argued that, if the Court rules against the defendants on this matter, sufficient cause is shown in the two affidavits sworn by the defendants and a good defence is sufficiently disclosed therein to entitle them to unconditional leave to defend.

Regarding the sufficiency of the plaintiffs' affidavit, [*180] Mr. Kalogerou, on the other hand, has submitted on behalf of the plaintiffs that its deponent Mr. Xenopoulos must be considered a competent deponent covered by the words "ay other person who can swear positively to the facts" in 0.18, r.l and referred the Court in this respect to the Annual Practice 1952, page 174 and the case of Hallett v. Andrews (1892)

42 S.J. 68 cited therein. Regarding the cause shown by the defendants in their two affidavits Mr. Kalogerou has argued that no defence is disclosed to the plaintiffs' claim which is based on bills of exchange, and that the claim of the defendants for unliquidated damages must form the subject of a new action.

It follows from the above that there are two issues involved in this application, the first being whether the Court has jurisdiction to give judgment under 0.18, r.l in view of the person of the deponent and the contents of the plaintiffs' affidavit; the second issue which arises only if the first issue is decided in favour of the plaintiffs, is whether on the merits the Court should in the proper exercise of its discretion give or refuse leave to the defendants to defend the action either with or without any conditions.

I propose to deal first with the issue of jurisdiction.

Our Order 18, rule 1 upon which the applicants rely [*181] corresponds to the English Order 14, r.l before the latter was recast by R.S.C. (Rer.) 1962, and it reads as follows:-

"l-(a) Where the defendant appears to a writ of summons specially indorsed under Order 2, rule 6, the plaintiff may on affidavit made by himself, or by any other person who can swear positively to the facts, verifying the cause of action, and the amount ' claimed (if any) , and stating that in his belief there is no defence to the action, apply for judgment for the amount so indorsed, together with interest (if any), or for the recovery of the land (with or without rent), or for the delivering up of a specific chattel, as the case may be, and costs. And judgment for the plaintiff may be given thereupon, unless the defendant shall satisfy the Court that he has a good defence to the action on the merits, or disclose such facts as may be deemed sufficient to entitle him to defend."

Though the procedure laid down by order 18 is necessary and useful in

certain it is nevertheless an extraordinary one in that judgment precedestrial instead of Having a trial first ahd then judgment. The power given

to the Court thereby is strictly restricted to the cases which clearly come under the rule, and, before the plaintiff succeeds, he must himself comply strictly with all prerequisites and conditions laid down in the rule. [*182]

The Court is vested with a discretion to give or refuse the defendant leave to defend either unconditionally or subject to certain conditions, depending on the cause shown by the defendant in his affidavit or his oral evidence given with the leave of the Court. Before, however, the cause shown by the defendant is examined and evaluated, the Court should as a rule examine whether the affidavit supporting the application is being sworn by a person who can swear positively to the facts. If the answer to this question is in the affirmative, the Court should proceed to examine further the sufficiency of this affidavit and in particular to examine whether the cause of action and the amount claimed, if any, are verified and whether it contains a statement regarding the affiant's belief that there is no defence to the action. The above matters should be determined on the basis of the affidavit or affidavits filed by the plaintiff by the end of the day and independently of the affidavit filed by the defendant. This was decided in Les Fils Dreyfus et Cie Societe Anonyme v. Clarke (1958) 1 All E.R. 459 as subsequently explained in Spyros Stavrinides v. Ceskoslovenska Obchondi Banka A.S. (1972) 1 C.L.R. 130. If, upon a consideration of the above, the affidavit supporting the application is found to be insufficient or as falling short to that envisaged in the Rule, the Court has no jurisdiction to give judgment under Order 18, rule 1 at all. [*183]

That matters pertaining to the sufficiency of the affidavit relied upon by the plaintiff and to the competency of the deponent are matters which go to the jurisdiction of the Court to give judgment under Order 18 and that such sufficiency and competency are conditions precedent to the exercise in the first

place of any discretion under the Rule, and that any defects in this respect may, of course, be cured at any time before

the end of the day though the swearing of a supplementary affidavit by a competent deponent, was very clearly laid down in Stavrinides case (supra).

Foccussing again my attention on the

affidavit sworn by Mr. Xenopoulos, it is very clearly apparent that he acquired knowledge of the facts deposed therein

from information and instructions subsequently received from his clients in his capacity as their counsel. A solicitor or his clerk or indeed any other person may, of course, be a perfectly good witness from his own knowledge of the facts. The mere fact, however, that such deponent is either the solicitor or the solicitor's clerk cannot make his information or belief any better than that of any other person. This is clear from the following words of Farwell L.J., in Lagos v. Grunwaldt (1910) 1 K.B. 41:"To say that a solicitor can take his client's instructions and then swear 'positively' that they are true seems to me an extravagant proposition". This passage was cited with approval in the Stavrinides case (supra). It should [*184] further be born in mind in tills respect that not only the deponent must clearly be in a position to swear positively to the facts, but also the affidavit must show this. According to Order 39, rule 2, which deals with the contents of affidavits, all affidavits, with the exception of affidavits in interlocutory applications where statements on information and belief with the sources and grounds thereof are allowed, must be confined to those facts which the witness is able of his own knowledge to prove.

In the circumstances of the present case I am satisfied that Mr. Xenopoulos is not a person who may swear positively to the requisite facts and I rule his affidavit insufficient to support the present application and confer to the Court the jurisdiction to give judgment under Order 18, rule 1 as applied for by the plaintiffs. The plaintiffs could, if they so wished, cure the defect by causing a supplementary affidavit to be sworn by a competent affiant, but they ommitted to do so.

For the above reason i rule for the defendants on the question cf jurisdiction for the lack of which the plaintiffs' application is dismissed with costs in favour of the defendants.

It is pertinent, however, to express an opinion on the merits of the application since the issue was argued before me, in order to avoid retrial of the

applicatior with all [*185] consequential delay and expense in case my ruling on the question of jurisdiction is found to be wrong on appeal.

Very relevant on this issue is the tenor of the two affidavits sworn by the defendants. The onus is on the defendants to show either that they have a good defence to the action on the merits, or to disclose such facts as may be deemed sufficient to entitle them to defend.

In the very recent case Hermes Insurance Co, Ltd. v. Joulios Theodorides (1983) 1 C.L.R. 333 where the defendants were refused leave to defend the plaintiff's claim against them which was based on two cheques drawn by the defendants and subsequently dishonoured, the Supreme Court, dismissing the appeal, reiterated the need and duty of the defendants to "condescend upon particulars" and to comply with paragraph (b) of rule 3 of Order 18 by stating in the affidavit whether the defence

goes to the whole or to part only of the plaintiff's claim. The defendants failed to do this. In the same case, Loris J.,

delivering the unanimous judgment of the Supreme Court, adopted the principles approved in Nova (Jersey) Knit Ltd. V. Kammgarn Spinnerei GmbH (1977) 2 All E.R. 463 in connection with the limited defences open

to actions on bills of exchange and described them as not being new but as having been pronounced in earlier English authorites and he added that they are in fact expressed in section 30 of our Bills [*186] of Exchange Law, Cap. 262. The principles pronounced in previous English authorities including Warwick v. Nairn (1855) 10 Exch. 762, James Lament & Co. Ltd. v. Hyland Ltd. (1950) 1 All E.R. 341, Agra and Masterman's Bank v. Leight n (1866) L.R. 2 Exch. 56, and Shipley & Co. Ltd. v. Alicia Hosieri Ltd. (1966) 1 Lloyd's Rep. 668, and authoritatively settled by the House of Lords in the case of Nova Knit Ltd.

V. Kammgarn (supra), are best expressed in the following extract from the opinion of Lord Russel of Killowen in Nova case (supra) at pages 479, 480:-

"It is in my opinion well established that a claim for unliquidated damages under a contract for sale is no defence to a claim under a bill of exchange accepted by the purchaser; nor is it available as set-off or counterclaim. This is a deep rooted concept of English commercial law. A vendor and purchaser who agree on payment by acceptance of bills of exchange do so not simply on the basis that credit is given to the purchaser so that the vendor must in due course sue for the price under the contract of sale. The bill is itself a contract separate from the contract of sale. Its purpose is not merely to serve as a negotiable instrument; it is also to avoid postponement of the purchaser's liability to the vendor himself, a postponement grounded on some allegation of failure in [*187] some respect by the vendor under the underlying contract, unless it be a total or qualified partial failure of consideration".

It follows from the above that unliquidated crossclaims cannot be relied on by way of extinguishing set-off against a claim on a bill of exchange. As between the immediate parties, a partial failure of consideration may relied on as a pro tanto defence but only when the amount involved is ascertained and liquidated.

in the Nova case (supra) the issue was whether unliquidated damages could be raised by way of defence, set-off or counterclaim to an action on a bill of exchange and, there - fore, could be used to create a "dispute" on a bill of exchange within the meaning of section 1(1) of the English Arbitration Act 1975, and it was held that they could not be so used.

Bearing in mind the intrinsic nature of a bill of exchange (the cheque is a bill of exchange under section 73 of Cap. 262), and the fact in this case the defendants who admit issuing and signing the cheques seek to dispute the plaintiffs' claim based thereon by an unascertained and unliquidated cross-claim which is not based either on fraud [*188] or invalidity or failure of consideration or any other defence set out in section 30 of our Bills of Exchange Law, I rule that the defendants are not entitled to leave to defend the action. If I were, therefore, to decide this application on its merits I would, in the proper exercise of my discretion, have given judgment thereon in favour of the plaintiffs without any stay of execution or other conditions. I might have considered the granting of a stay of execution pending the determination of the defendants’ crossaction if I had some evidence before me regarding the, quantum of the alleged damage or claim of the defendants with a view of comparing it with the amount of the judgment.

Be that as it may, for the reasons already stated, this application is dismissed for want of jurisdiction with costs against the plaintiffs.

Application dismissed.