Habibsons Bank Ltd v Standard Chartered Bank (Hong Kong) Ltd
| Jurisdiction | England & Wales |
| Judge | Lord Justice Moore-Bick,Lord Justice Rix |
| Judgment Date | 24 November 2010 |
| Neutral Citation | [2010] EWCA Civ 1335 |
| Docket Number | Case No: A3/2010/0861 |
| Court | Court of Appeal (Civil Division) |
| Date | 24 November 2010 |
[2010] EWCA Civ 1335
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE (COMMERCIAL COURT)
(Mr. Justice Cooke)
Before: Lord Justice Rix
and
Lord Justice Moore-Bick
Case No: A3/2010/0861
Mrs. Teresa Rosen Peacocke (instructed by Hugh Cartwright & Amin) for the appellant
Mr. Christopher Harris (instructed by Hogan Lovells International LLP) for the respondent
Hearing dates: 11 th October 2010
Lord Justice Moore-Bick:
This is an appeal against the order of Cooke J. refusing the appellant permission to amend its particulars of claim. As a consequence of that refusal the claim stands dismissed under an order made by Teare J. on 20 th August 2009.
Background
The proceedings arose out of the insolvency in September or early October 2008 of a Dutch bank, N.V. De Indonesische Overzeese Bank, generally known as Indover Bank (“Indover”). On 9 th May 2008 Indover entered into a Facility Agreement with a number of lenders under which it borrowed sums totalling US$117,500,000 for a period of one year. Standard Chartered Bank (Hong Kong) Ltd (“SCB (HK)”) was one of the original lenders. The Facility took the form of a typical syndicated loan agreement, under which an agent was appointed to perform various tasks on behalf of the parties. The agent in this case was a German bank, Bayerische Landesbank (“BL”).
As is usual in such cases, the Facility Agreement provided for the transfer by the original parties of all or part of their rights to third parties. In effect, they were given the power to sell the whole or part of their interests in the loan to other banks, thus taking advantage of the secondary market in loans of this kind. The Facility Agreement provided as follows:
26 Changes to the Parties
26.1 Assignments and transfers by the Lenders.
Subject to this clause 26, a Lender (the “Existing Lender”) may:
(a) assign any of its rights; or
(b) transfer by novation any of its rights and obligations
under any Finance Document to another bank or financial institution … which is regularly engaged in or established for the purpose of making, purchasing or investing in loans, securities or other financial assets (“the New Lender”).
Conditions of assignment or transfer
(a) The consent of the Borrower is not required for an assignment or transfer by a Lender.
(b) …
(c) An assignment will only be effective on:
(i) receipt by the Agent of written confirmation from the New Lender … that the New Lender will assume the same obligations to the other Finance Parties as it would have been under if it was an Original Lender;
(ii) the performance by the Agent of all necessary “know your customer” or other similar checks relating to any person that it is required to carry out in relation to such assignment to a New Lender …
(d) A transfer will only be effective if the procedure set out in Clause 26.5 (Procedure for transfer) is complied with.
…
26.5 Procedure for transfer
(a) … a transfer is effected in accordance with paragraph (c) below when the Agent executes an otherwise duly completed Transfer Certificate delivered to it by the Existing Lender and the New Lender. The Agent shall, subject to paragraph (b) below, as soon as reasonably practicable after receipt by it of a duly completed Transfer Certificate appearing on its face to comply with the terms of this agreement, execute that Transfer Certificate.
(b) The Agent shall only be obliged to execute a Transfer Certificate … once it is satisfied it has complied with all necessary “know your customer” or similar other checks under all applicable laws and regulations in relation to the transfer to such New Lender
(c) On the Transfer Date:
…
(iv) the New Lender shall become a Party as a “Lender”.
The Agreement provided for a form of transfer certificate and the “Transfer Date” was defined as the later of the proposed transfer date specified in the transfer certificate and the date on which the Agent executed the transfer certificate.
On 22 nd September 2008 Standard Chartered Bank (the parent company of SCB (HK)) offered Habibsons Bank (“Habibsons”) a share in the Indover loan. In the event Habibsons agreed to purchase US$2 million of the loan and a trade confirmation form and transfer certificate were created for that purpose. They provided for a settlement date and Transfer Date of 8 th October 2008. However, someone at Standard Chartered Bank realised that the trade should have been carried out by SCB (HK) as the party to the Facility Agreement. As a result on 6 th October a new trade confirmation form in the name of SCB (HK) was sent to Habibsons by e-mail. The trade confirmation form recorded a transaction on the terms of the Loan Market Association Standard Terms and Conditions for Par Trade Transactions (“the LMA Conditions”). Habibsons signed the documents and returned them by fax to an address in Hong Kong, as requested. It seems likely that they were not received until some time on 7 th October local time. Both the new trade confirmation and the transfer certificate provided for a settlement date of 16 th October; there was also an alteration to the settlement price to take account of the later date.
At 10.20 pm on 6 th October 2008 the District Court of Amsterdam made an administration order in respect of Indover under which it declared that it was subject to the provisions of certain emergency regulations made under the Dutch Financial Supervision Act. One effect of those regulations was to put administrators appointed by the court in charge of the bank's affairs. The order took effect immediately on being pronounced. Indover was insolvent and has been unable to meet its obligations, including its obligations under the Facility Agreement.
On 8 th October SCB (HK) tried to persuade Habibsons to bring forward the settlement date to 10 th October, but Habibsons declined to do so. However, later that day Habibsons received from BL in connection with a request for signature authorisation a copy of a transfer certificate bearing a settlement date of 10 th October. Someone at SCB (HK) had apparently copied or re-printed the transfer certificate bearing the signature of Habibsons and had altered it using correction fluid before sending it to BL.
On 8 th October 2008 Habibsons made a formal objection to the transaction in accordance with the Loan Market Association rules and on 9 th October instructed BL not to proceed without further instructions. BL agreed not to do so, but on 15 th October it signed the Transfer Certificate which Habibsons had returned to Hong Kong on 6 th October and which correctly reflected the transaction entered into on 6 th October. Habibsons nonetheless continued to dispute the transaction and failed to pay the amount due in settlement. The settlement amount was deducted by Standard Chartered Bank in New York (“SCB (NY)”) from funds held in an account maintained with it by Habibsons.
The proceedings
On 4 th February 2009 Habibsons started these proceedings by Part 8 claim form. Quite why the Part 8 procedure was used is unclear. Since the claim potentially raised issues of fact which, if it were to proceed to trial, would necessitate the service of statements of case, the proceedings ought to have been started under Part 7 of the Civil Procedure Rules. On 30 th April 2009 the action was transferred to the Commercial Court and an application was made by SCB (HK) for an order striking out the claim, or in the alternative, for summary judgment. Habibsons applied for permission to amend its claim form to join BL and permission to amend its particulars of claim. The applications all came on for hearing before Teare J. on 20 th August 2009, but in the event he was able to hear argument only in relation to the existing claim and was unable to deal with the application to amend. He ordered that the claim be struck out, but that the order should not take effect before the hearing of Habibsons’ application to amend, or further order.
The matter came back before Cooke J. on 26 th March 2010. By that time the position had changed to some extent. Habibsons sought permission to serve a different form of particulars of claim and to amend the claim form in order to join as defendants both SCB (NY) and BL. In a reserved judgment delivered on 30 th March the Judge refused permission to make any of the amendments and accordingly the claim stood dismissed. On 2 nd June Etherton L.J. directed that there be an oral hearing of Habibsons’ application for permission to appeal with appeal to follow if permission were granted.
The appeal
It is necessary to begin by dealing with the approach the court ought to take on an application for permission to amend, since Mrs. Rosen Peacocke made a number of criticisms of the way in which the judge dealt with the application. She submitted that he had applied the wrong test when deciding whether to permit the amendments and that his refusal to allow the claimant to plead any part of its case was antithetical to the overriding objective of dealing with cases justly and fairly. She also complained that he had disregarded the principal factors relevant to giving permission to amend at an early stage in the proceedings, namely, whether the defendant can understand the case it has to meet, whether the case to be raised by the amendment is real and arguable, and whether the proposed amendments would cause prejudice to the...
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