B. Sirley & Co. V. Tanganyika Tegry Plastics Ltd,., Civ. Case 42-D-67, 5/1/68, Saidi J.

B. Sirley & Co. V. Tanganyika Tegry Plastics Ltd,., Civ. Case 42-D-67, 5/1/68, Saidi J.

Plaintiff an advocate, sued defendants to recover Shs. 23,486/- plus interest, alleged to be due on a promissory note drawn by defendants in favour of Polypen Ltd. and endorsed by the latter to plaintiff. The day before the making of the note, Polypen Ltd. had issued a pro-forma invoice for a large number of ball – pen refills to be supplied to defendants in consideration for the amount of the note; the words “Pro-Forma Invoice of 3. 10. 66. for 3355 gross refills” appeared on the note itself after the words “for value received.” The note was discounted to plaintiff in consideration of a cheque for Shs. 18,000/- drawn on his clients account. Plaintiff denied that the funds had come from the account of Polypen Ltd. itself, which was one of his clients, and said that he had previously transferred funds from his personal account to his clients account to cover the cheque. Defendant gave notice for production of the relevant books  of account, but plaintiff refused to produce them on the ground that they weighed forty pounds, and that their production might jeopardise his work. There was also evidence that in addition to being the advocate for Polypen Ltd., plaintiff formed the company, was one of the two subscribers to the memorandum and articles of association, and had for a considerable time been one of its directors.

            Held: (1) Plaintiff was the holder of the note and had duly presented it for payment. (2) Although consideration was originally given for the note by Polypen Ltd., to defendants, it eventually totally failed, due to the non-delivery of the goods for which it had been given. (3) Every holder of a note or bill of exchange is prima facie deemed to be a holder in due course and the onus of establishing otherwise is on the person challenging such allegation. [Bills of Exchange Ordinance, Cap. 215, s. 30 (2)]. However, the presumption may be negatives by the relevant surrounding circumstances of the particular case or the admissions and conduct of the holder. (4) Considering the close connection of plaintiff with Polypen Ltd., as its founder, a shareholder, a director for a considerable time and its advocate; and further, considering the fact that the note contained the words “Pro-forma Invoice … for 3355 gross refills,” that plaintiff’s cheque to Polypen Ltd.,  was drawn on the account in which the kept clients’ funds, and that plaintiff refused to produce his books of accounts, there is a preponderance of evidence in favour of defendants. “Viewing the evidence as a whole, I am not persuaded that the plaintiff is a holder in due course for value without notice of the defect in the title of Polpen Limited ….” Plaintiff’s claim dismissed.