Habibsons Bank Ltd v Standard Chartered Bank (Hong Kong) Ltd

A party seeking permission to amend must show that the proposed case is arguable and has a realistic prospect of success. A contract for the transfer of loan rights may become binding when the parties execute the relevant trade confirmation, even if earlier negotiations or documents were defective. An event of default does not automatically discharge obligations where the contractual terms preserve them. Foreign law relied on to establish the effect of a foreign court order must be specifically pleaded and supported by evidence. The rule in Pigot’s Case is confined to its proper scope. An alteration to an inchoate copy of a transfer document does not invalidate the operative contract or an unaltered transfer instrument.

The claimant sought permission to replace an earlier draft amendment to its claim concerning the purchase and transfer of a tranche of a syndicated loan. The defendant opposed the application, relying on the dismissal of the claim by Teare J and arguing that the revised case disclosed no viable cause of action.

The claimant alleged, among other things, that the transaction was ineffective because of defects in the trade documents, the effect of an Amsterdam administration order, the defendant’s conduct in seeking an earlier settlement date, and an altered transfer certificate. The central issue was whether any proposed allegation had a realistic prospect of success.

1. Permission to amend refused. The proposed amendments were either bad in law or speculative and unsupported by evidence. The claim therefore remained dismissed against the defendant.
2. The parties entered into a binding contract, at the latest, when both executed the LMA Trade Confirmation and Transfer Certificate on 6 October 2008. Any earlier uncertainty was immaterial, and execution of the documents accepted their terms or waived errors in them.
3. The allegations concerning misrepresentation, failure to disclose information and the proposed change of settlement date could not succeed. The contract had already been concluded, no variation had been agreed, and the relevant LMA terms excluded the proposed basis of liability.
4. The Amsterdam order did not establish that performance was legally impossible. Foreign law was a question of fact which had to be specifically pleaded and proved. No Dutch law or expert evidence was supplied. Under the contractual scheme, an administration order constituted an event of default, but did not automatically cancel the loan or relieve the parties of their obligations. The LMA conditions expressly preserved those obligations after an event of default or potential event of default.
5. The rule in Pigot’s Case had to be confined to cases within its proper ambit. The altered document was at most an inchoate copy prepared while an earlier settlement date was being proposed. It was not used after the claimant refused consent, and the operative 16 October transfer certificate remained unaltered. In any event, invalidity of the altered instrument would not invalidate the underlying trade confirmation or the earlier operative instrument. The reasoning in Raiffeisen Zentralbank v Cross Seas Shipping and Co-operative Bank v Tipper supported that conclusion.
6. The proposed claim against the defendant’s New York affiliate was parasitic on the claim against the defendant and could not succeed if the transfer price was due.

The judgment records that the proceedings began in the Chancery Division and were later transferred to the Commercial Court.

• High Court, before Teare J: the existing claim was dismissed on 20 August 2009, subject to determination of the claimant’s then-pending amendment application.
• High Court (Commercial Court), Cooke J: permission to pursue the revised amendments was refused, and the earlier dismissal took effect.