Hassan Ali Bin Ali Al-Muslimani v Hrach Ghazarian

On an application for strike-out or summary judgment, the court may determine a clear issue of law or contractual construction, but must not conduct a mini-trial. A cheque drawer ordinarily cannot rely on want of notice of dishonour where, when the cheque was supplied and presented, insufficient funds meant that the drawee bank was under no obligation to pay. The court must nevertheless refuse summary judgment where the defendant has a real prospect of establishing that a later agreement superseded the cheque obligations, particularly where the agreement’s terms, surrounding circumstances or factual matrix remain uncertain. An alternative claim based on that later agreement should be properly pleaded so that the defendant has a fair opportunity to respond.

The claimant sought judgment or summary judgment for £310,000 said to be due under a cheque supplied by the defendant in December 2017. The cheque was dishonoured, and the defendant argued that the claimant had failed to give sufficient notice of dishonour.

The claimant also relied on the absence of funds in the defendant’s account and contended that notice was dispensed with under the Bills and Exchange Act 1882. The defendant further argued that written agreements made in 2019 superseded the cheque obligations and created a separate instalment regime. The central issues were whether the notice requirement applied, whether the 2019 arrangement replaced the earlier obligations, and whether the claimant should be permitted to amend its case.

1. Notice of dishonour. The defendant had no real prospect of establishing that notice of dishonour was required. At common law, notice could be dispensed with where the drawer had no reasonable expectation that the cheque would be met on presentation. Section 50(2)(c)(iv) of the Bills and Exchange Act 1882 made the position firmer by dispensing with notice where the drawee was under no obligation, as between drawee and drawer, to accept or pay. The limited account balance supported that conclusion.
2. Alleged agreement not to present the cheque. The defendant’s recent evidence did not raise a real prospect of success. It did not assert that the claimant had agreed not to present the cheque, the assertion had not appeared in the defence, and the alleged arrangement appeared commercially unlikely on the evidence.
3. Construction of the 2019 agreement. Summary judgment was inappropriate. Applying the approach in Arnold v Britton and BNY v Cine-UK [2022] EWCA Civ 1021, construction required consideration of the words, the agreement as a whole, the factual matrix and commercial purpose. There was a real question whether the written document contained all the agreed terms and whether matters connected with the bankruptcy proceedings formed part of a wider agreement. It was also reasonably arguable that the 2019 agreement superseded the cheque and created a new regime enforceable only on its own terms.
4. Case management. The claimant was given permission to amend to plead an alternative claim based on the 2019 agreement. The defendant could make consequential amendments, but any wider amendment required permission. The summary-judgment application was adjourned rather than dismissed, pending the amendments and subsequent case-management decision.