JUDGMENT

Lord Devlin:

The judgment of the Lords of the Judicial Committee of the Privy Council was delivered by,

This is an appeal from a judgment of the Court of Appeal at Kuala Lumpur setting aside an order of the High Court that the defendants, the present respondents, should pay the plaintiff, the present appellant, the sum of $31,112.06 in respect of dishonoured cheques drawn by the defendants and payable to the plaintiff.

The plaintiff and the defendants carry on business at Kuala Lumpur, the one as a wholesale dealer in textiles and the other as a manufacturer of rubber shoes. Their dealings together, which they have had since 1954, appear to have been financial rather than commercial and arose, perhaps, from the fact that the defendants' cashier was the plaintiff's nephew. In this action the plaintiff is suing the defendants on sixteen cheques drawn by the defendants in February and March 1958, in favour of the plaintiff and on presentation dishonoured.

The cheques were given to the plaintiff in the course of certain transactions whose nature it is necessary to investigate and determine. The investigation is made difficult by the fact that at the trial neither side told the truth. The trial Judge found that the two chief witnesses for the defendants, their managing partner and cashier, were "entirely unworthy of credit"; he was not impressed by the demeanour of the plaintiff and on one important issue he expressly rejected his evidence. Fortunately, in regard to the first eight cheques, D3-10, a number of essential facts was not in dispute and their Lordships will, therefore, consider first the evidence relating to the cheque D3, the first of this group.

In the course of his business the plaintiff received from his customers a number of out-station cheques which would take several days to clear - between seven and ten according to the station from which they came; and the plaintiff could not draw on them until they were cleared. The defendants, however, had a special arrangement with their bank whereby for a special charge they were allowed to draw on the credit of such cheques at once. Accordingly, on a number of occasions in and after 1954 the plaintiff endorsed over to the defendants a quantity of his out-station cheques and the defendants gave him their own cheque in exchange. On 17 February 1958 the plaintiff gave to the defendants fifteen out-station cheques, totalling $6,964.33 and in exchange the defendants gave him their cheque for the like amount post-dated to 24 February 1958. This is the cheque D3. Seven other similar transactions took place between 21 and 28 February. In each case the plaintiff got a cheque postdated by about a week.

So far the evidence is agreed. But while the plaintiff says that the post-dating of the cheques did not matter to him since the out-station cheques in his account would have taken several days to clear, the defendants say that the plaintiff charged them interest. Whether the interest was payable in respect of the whole period of the post-dating or only for the extra days, if any, over and above the time taken for clearance when the plaintiff was actually out of his money, when and how the interest was paid and at what rate were matters which the defendants' witnesses left uncertain. In the type of transaction which characterised the second group of cheques, the defendants say that the plaintiff charged interest at the rate of 8 cents per $100 per day. But these points are not now of much importance, for the trial Judge expressly rejected the whole of the defendants' evidence (which the plaintiff had denied) relating to the payment of interest.

In relation to the second group of cheques, D11 to D18, there was a sharp conflict of evidence. The plaintiff said that these cheques were given to him as the price of goods sold: this was the pt of the plaintiff's evidence that the trial Judge expressly rejected. The defendants said that these transactions also related to out-stat