Bank of Credit and Commerce International (Overseas) Ltd ((in Liquidation)) v Habib Bank Ltd

JurisdictionEngland & Wales
Judgment Date24 June 1998
Date24 June 1998
CourtChancery Division
[CHANCERY DIVISION] BANK OF CREDIT AND COMMERCE INTERNATIONAL (OVERSEAS) LTD. (IN LIQUIDATION) v. HABIB BANK LTD. 1998 June 5, 8; 24 Park J.

Practice - Judgment by default - Application to set aside - Irregularity in writ or judgment - Overstated debt - Judgment substantially correct - Whether to be set aside - R.S.C., Ord. 13, r. 9 - Insolvency - Winding up - Set-off - Creditor not contesting rejection of proof - Whether entitled to claim set-off in subsequent proceedings - Insolvency Rules 1986 (S.I. 1986 No. 1925), r. 4.90

The plaintiff, which was in liquidation, served a writ upon the defendant claiming payment of three debts and in default of defence entered judgment for a single sum. The defendant issued a summons under R.S.C., Ord. 13, r. 9F1 to set the judgment aside ex debito justitiae on the ground that the main debt claimed in the writ had been overstated. A master dismissed the summons.

On appeal: —

Held, dismissing the appeal but varying the judgment, that the court would not set aside a default judgment where there had been irregularities in the writ or the judgment or both if the substantive content of the judgment was right; that where the amount in the default judgment was wrong, if the court was satisfied from the affidavits and exhibits as to the correct amount to be inserted, it would vary the judgment appropriately; that, so far as the defendant asserted rights of set-off capable of being decided on material before the court, the court would decide them; and that the defendant was not entitled to set off debts pursuant to rule 4.90 of the Insolvency Rules 1986 which it claimed were owed to it by the plaintiff, proofs for which had been rejected by the liquidators, where no appeal had been pursued by the defendant under rule 4.83 (post, pp. 46D–G, 48E–G, 49F–50E).

Brandon v. McHenry [1891] 1 Q.B. 538, C.A. and Stein v. Blake [1996] A.C. 243, H.L.(E.) applied.

Per curiam. In so far as some of the plaintiff's rights against the defendant may have vested in the United States government pursuant to a forfeiture order made by a United States district court, the defendant might discharge its liability under the order of the High Court by making payment to the United States marshal (post, p. 48A–D).

The following cases are referred to in the judgment:

Alpine Bulk Transport Co. Inc. v. Saudi Eagle Shipping Co. Ltd. [1986] 2 Lloyd's Rep. 221, C.A.

Ban Hin Lee Bank Berhad v. Sonali Bank (unreported), 9 November 1988; Court of Appeal (Civil Division) Transcript No. 927 of 1988, C.A.

Bank of Credit and Commerce International S.A. (No. 3), In re [1993] B.C.L.C. 106; [1993] B.C.L.C. 1490, C.A.

Brandon v. McHenry [1891] 1 Q.B. 538, C.A.

Debtor (No. 1 of 1987), In re A [1989] 1 W.L.R. 271; [1989] 2 All E.R. 46, C.A.

M.S. Fashions Ltd. v. Bank of Credit and Commerce International S.A. [1993] Ch. 425; [1993] 3 W.L.R. 220; [1993] 3 All E.R. 769, Hoffmann L.J. and C.A.

R.P. Electromechanical Enterprise Ltd. v. Brewer (unreported), 11 February 1993; Court of Appeal (Civil Division) Transcript No. 165 of 1993, C.A.

Stein v. Blake [1996] A.C. 243; [1995] 2 W.L.R. 710; [1995] 2 All E.R. 961, H.L.(E.)

The following additional cases were cited in argument:

Amalgamated Investment and Property Co. Ltd., In re [1985] Ch. 349; [1984] 3 W.L.R. 1101; [1984] 3 All E.R. 272

Browne & Wingrove, In re; Ex parte Ador [1891] 2 Q.B. 574, C.A.

Cushla Ltd., In re [1979] 3 All E.R. 415

Appeal from Master Bragge.

By a writ issued on 2 July and served on 29 October 1997 the plaintiff, Bank of Credit and Commerce International (Overseas) Ltd. (in liquidation), claimed against the defendant, Habib Bank Ltd. (a company incorporated in Pakistan with limited liability), inter alia, (1) U.S.$8,400 and £3,670 as sums owed by the defendant to the plaintiff in respect of traveller's cheques sold, and (2) $683,062.10 as sums owed by the defendant in respect of certain foreign documentary bills provided by the plaintiff in or about or before June and July 1991. On 25 November 1997, in default of any notice of intention to contest those claims, the plaintiff entered judgment for £418,962.55 plus £13,406.80 interest. On 26 November 1997 the defendant issued a summons to set aside that judgment, which Master Bragge dismissed on 5 December 1997. By a summons dated 26 November 1997 and amended on 25 March 1998 the defendant appealed.

The appeal was heard and judgment was given in chambers. The case is reported by permission of the judge.

The facts are stated in the judgment.

Roland Higgs for the defendant.

Robin Dicker for the plaintiff.

Cur. adv. vult.

24 June. Park J. handed down the following judgment.

A. Abbreviations; the parties; the history of the case

I refer to the parties as “B.C.C.I.(O.)” and “Habib Bank.” B.C.C.I.(O.) is the plaintiff in the action and the respondent on this appeal. Habib Bank is the defendant in the action and the appellant on this appeal. B.C.C.I.(O.) is a company incorporated in the Cayman Islands. It is in liquidation. The liquidations commenced on 14 January 1992. It is not the same company as Bank of Credit and Commerce International S.A. (which I shall refer to as “S.A.”): that is a Luxembourg company, also in liquidation. The two liquidations are very much involved one with the other, in a manner which has been explained in other cases which have been reported. Habib Bank is a bank incorporated in, and with headquarters in, Pakistan.

The precise way in which this matter comes before me is as follows. (1) On 2 July 1997 a writ was issued for a claim by B.C.C.I.(O.) against Habib Bank for debts of three specified figures, namely U.S.$8,400, £3,670 and $683,062.10. Henceforth in this judgment, I ignore the 10 cents. The writ was served on 29 October 1997. (2) Habib Bank did not give notice of intention to defend within the 14 days specified by the Rules of the Supreme Court. (3) On 25 November 1997 B.C.C.I.(O.) entered judgment in default of a defence, expressed wholly in sterling: £418,962.55, plus interest. (4) On 26 November 1997 Habib Bank took out a summons to set the judgment aside. (5) Habib Bank's application was heard by Master Bragge on 5 December 1997 and dismissed. So the judgment stood for £418,962.55. I have no note of any reasons which the master gave. (6) Habib Bank appealed to the High Court, and the appeal came before me in early June 1998. There were a lot of additional affidavit evidence and exhibits before me which had not been before the master.

Habib Bank want me to set the default judgment aside and effectively require B.C.C.I.(O.) to start again. I am not going to do that, but I am not going simply to uphold the default judgment either. I am going to vary it in three respects. (1) I am going to reduce it in amount. (2) I am going to express it partly in sterling and partly in U.S. dollars. (3) I am going to add a proviso as to the manner in which the judgment may be satisfied.

B. General background

From time to time in this judgment I shall have to go into particular aspects of the facts in a little detail. At this stage I say only this about the general background. The circumstances surrounding the crash of the two B.C.C.I. companies are well known and, as I have said, recorded in other cases some of which have been reported. The liquidations are enormous operations. In the course of them the liquidators of B.C.C.I.(O.) have to collect in debts owed to B.C.C.I.(O.) and also have to deal with debts owed by B.C.C.I.(O.). The liquidation is pursuant to an order of the Grand Court of the Cayman Islands, but that court has directed that in general the liquidation is to be conducted in accordance with the Insolvency Rules 1986 which apply in England and Wales. So it is a Cayman Islands liquidation, but in most respects rules of English law apply to it.

When B.C.C.I.(O.) was in active operation as a bank it, like banks generally, was regularly engaged in business transactions which involved other banks. By one route or another, and in the ordinary course of banking, other banks owed money to B.C.C.I.(O.) and B.C.C.I.(O.) owed money to other banks. One such other bank was Habib Bank. B.C.C.I.(O.)'s claim against Habib Bank in this case is one whereby the liquidators of B.C.C.I.(O.) seeks recovery of debts owed to B.C.C.I.(O.) by Habib Bank. There are some questions about whether they are owed, and Habib Bank also introduces into the case issues of whether B.C.C.I.(O.) owed debts in the opposite direction to it (Habib Bank), being debts which it can set off against whatever it owes to B.C.C.I.(O.). In the insolvency field the concept of set-off is, of course, fundamental.

There are two more detailed points which it is convenient to make now about events which directly led to this case. First, B.C.C.I.(O.) chose to bring this action in the English courts because Habib Bank has branches and assets in this country, whereas it does not in the Cayman Islands. Second, the reason why Habib Bank did not serve notice of intention to defend within the time limit was because there were misunderstandings and oversights within Habib Bank. There was nothing wrong with B.C.C.I.(O.)'s service of the writ.

C. The court's approach to...

To continue reading

Request your trial
17 cases
  • Witech Sdn Bhd v BHR Group Ltd
    • Malaysia
    • Court of Appeal (Malaysia)
    • Invalid date
  • John Doyle Construction Ltd ((in Liquidation)) v Erith Contractors Ltd
    • United Kingdom
    • Court of Appeal (Civil Division)
    • October 7, 2021
    ...against a liquidator's decision, he cannot thereafter challenge that decision or assert his claim by way of set-off: BCCI v Habib Bank [1999] 1 WLR 42. There is, therefore, a mechanism within the Insolvency Rules for a liquidator's decision on a proof to become final. There is no equivalen......
  • Cooperatieve Centrale Raiffeisen-Boerenleenbank BA (trading as Rabobank International), Singapore Branch v Motorola Electronics Pte Ltd
    • Singapore
    • High Court (Singapore)
    • March 8, 2010
    ...to C, even if B and C are related companies: Bank of Credit and Commerce International (Overseas) Ltd (In Liquidation) v Habib Bank Ltd [1999] 1 WLR 42. Prima facie, as the plaintiff argued, there was no mutuality between the debt owed by the defendant to JHT and the debt owed by JHT to MTC......
  • Mercurine Pte Ltd v Canberra Development Pte Ltd
    • Singapore
    • Court of Appeal (Singapore)
    • September 8, 2008
    ...for instance, by admitting its liability under that judgment (see, eg, the decision of the English High Court in BCCI v Habib Bank [1999] 1 WLR 42). With regard to the defendant’s undue delay (if any) in filing its setting-aside application (see item (c) above), we would reiterate that such......
  • Request a trial to view additional results
1 books & journal articles
  • LAST FLIGHT OF THE EAGLE: NEW PRINCIPLES GOVERNING THE SETTING ASIDE OF JUDGMENTS IN DEFAULT
    • Singapore
    • Singapore Academy of Law Journal No. 2009, December 2009
    • December 1, 2009
    ...150 As pointed out by the Court of Appeal at [2008] 4 SLR 907 at [98]. 151 [2008] 4 SLR 907 at [92], [98]. 152 See BCCI v Habib Bank[1999] 1 WLR 42, in which an irregular judgment was not set aside because the defendant admitted liability. Although Faircharm is not mentioned in the judgment......

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT