Australia and New Zealand Banking Group Ltd v Bombay Talkies (S) Pte Ltd and another

Edmund Leow JC:

[2] The first and second defendants in Suit No 512 are Bombay Talkies (S) Pte Ltd and its director and shareholder, Mr Ramesh Mohandas Nagrani (“the Defendants”). On 10 July 2007, banking facilities were extended to the first defendant, with the second defendant standing in as the guarantor. The banking facilities were amended by four supplemental letters in 23 July 2008, 30 January 2009, 24 November 2010 and 9 November 2011.

[3] When the banking relationship began, the bank that granted the facility letter was not the Plaintiff but ABN AMRO Bank NV (“ABN Amro”). In late 2007, the Royal Bank of Scotland (“RBS”) acquired ABN Amro and its related businesses. This was reflected in the second supplemental letter which ABN Amro sent to the Defendants on 30 January 2009. This letter was sent by ABN Amro but carried RBS’ logo on the letterhead. In May 2010, RBS’ business was in turn acquired by the Plaintiff, which issued the supplemental letters dated 24 November 2010 and 9 November 2011 to the Defendants. Both supplemental letters were clearly accepted by the Defendants, as evidenced by the signature of the second defendant on his and his company’s behalf.

[4] In this context, the relevant provisions that governed the banking facilities were RBS’ General Facility Provisions. Briefly, cl 7 states that the default interest rate shall be 3% above the interest rate charged on the facilities. Clause 11 provides for the bank’s legal fees to be paid on a full indemnity basis. Further, cl 13 allowed the bank to assign, transfer or novate its rights to any other person. The use of the word “bank” in the facility provisions referred to RBS, its successors and assigns. The guarantee entered into by the second defendant also states, inter alia, that he is not released from the guarantee by “the transfer or assignment of the benefit of these presents to any person or corporation” and it continues to be “valid and binding for all purposes”.

[6] Before the assistant registrar, the Plaintiff submitted that it had established a prima facie case on the basis of the documents. It highlighted the “course of conduct over a period of years” showing that the Defendants had accepted the various facilities (including the subject of Suits No 511 and 513) and took the benefit of them without protest until it filed the lawsuits.

[7] The Defendants argued, inter alia, that the Plaintiff was not entitled to enforce its rights under the banking facilities because of issues related to the assignment from ABN Amro to RBS and subsequently, the Plaintiff. They also pointed to issues related to missing documents. For example, the facility letter from ABN Amro to the Defendants in July 2007 referenced ABN Amro’s General Facility Provisions and Trade Finance Supplement, but these were not displayed in the affidavits. The Defendants further argued that the RBS’ General Facility Provisions (see [4] above) that the Plaintiff relied on were irrelevant and that even RBS’ General Facility Provisions had an express prohibition that barred a third party from enforcing any term of the contract.

[8] The Defendants also asserted that the claimed amount was inaccurate. The partial payments totalling $8,000 (see [5] above) were not reflected in the spreadsheet exhibited in the Plaintiff’s affidavit, which showed the breakdown and calculation of the claimed amount. The interest computed also failed to factor in the partial payments and a sum of $16,829 (the $16,829 was an instance of the Plaintiff setting off the credit balance in the first defendant’s account against the money owed to it under the banking facilities). The Defendants also took issue with the inconsistent interest rates – either 9% or 10% – that had been used by the Plaintiff.

[9] Besides ABN Amro’s General Facility Provisions and Trade Finance Supplement, the Defendants also alleged that other necessary documents were missing, including some statements of accounts and the Plaintiff’s trade financing terms for the trade finance loan applications.

[10] The learned assistant registrar found that the Plaintiff had established a prima facie case for all three suits, including Suit No 512. She found that the missing documents were not necessary for the Plaintiff to establish its claim, which was based on the assignment of the banking facilities from ABN Amro to RBS and then to ANZ. Neither did those documents go towards any disputed issue between the parties. She then turned to whether there were any triable issues or bona fide defences raised by the Defendants and found none. First, the contractual exclusion of the Contracts (Rights of Third Parties) Act (Cap 53B, Rev Ed 2002) did not prevent rights under a contract from being assigned to other parties. Second, she found that any allegations of invalid assignment of the banking facilities from ABN Amro to RBS and subsequently, to the Plaintiff, had “no solid footing”. It could not be seriously disputed that ANZ had acquired RBS and its related businesses, and that RBS had previously acquired ABN Amro and its related businesses. Nothing suggested that the banking facilities had been excluded during the process of acquisitions. In fact, the documentary evidence, in particular the various supplemental letters, showed the opposite. There was also no legal authority that required the consent of a bank’s customer to be obtained before an assignment of contractual rights could be valid, where there was no contractual term that prohibited assignment. Third, she found that there was no vitiating factor such that the second defendant was not bound by the guarantees he had signed. Lastly, she noted that the defendants had taken issue with the inconsistencies in the Plaintiff’s position in regard to the applicable interest rate on the facilities and the calculation of the amounts owing. However, she considered, inter alia, that the defendants took no position on what the interest rate or correct amounts should be. Neither had they made any contemporaneous objections when they received their statements of account. On the other hand, the Plaintiff had explained its calculations on affidavit and its basis for relying on an interest rate of 9%. In the premises, she found that the Plaintiff had made out its case on the amounts owing and applicable interest rates on a balance of probabilities.

[11] Therefore, she gave summary judgment on all three suits, pursuant to O 14 of the Rules of Court (Cap 322, R 5, 2006 Rev Ed). In relation to Suit No 512, she ordered that the Defendants pay the Plaintiff $363,761.54 being the sum due under the banking facilities as at 27 May 2013 and interest on all outstanding sums at the rate of 9% per annum accruing until full date of payment.

[13] I first lay out the relevant law before proceeding to consider the evidence and arguments that the parties had placed before me, which were largely a repeat of their arguments below. Under O 14 r 3(1) of the Rules of Court, the court may give summary judgment for the plaintiff in relation to its claim unless it dismisses its application or the defendant satisfies the court that there is an issue or question in dispute which ought to be tried or that there ought, for some other reasons, to be a trial. To obtain summary judgment, the plaintiff first shows that it has a prima facie case for judgment. Once it has done that, the burden shifts to the defendant, who must establish that there is a fair or reasonable probability that he has a real or bona fide defence, in order to obtain leave to defend: see, eg, Associated Development Pte Ltd v Loong Sie Kiong Gerald (administrator of the estate of Chow Cho Poon, deceased) and other suits [2009] 4 SLR(R) 389 at [22].

[14] The following extract from Republic Airconditioning (S) Pte Ltd v Shinsung Eng Co Ltd (Singapore Branch) [2012] 2 SLR 601 at [11], which was recently cited in Oversea-Chinese Banking Corp Ltd v Ravichandran s/o Suppiah [2015] SGHC 1 at [23], was also relevant:

[15] I agreed that the Plaintiff had shown a prima facie case based on the documents that supported its affidavits. This was obvious from the factual background that I had laid out above. To recap, the Plaintiff, after acquiring RBS (which had previously acquired ABN Amro), sent supplemental letters to the Defendants in November 2010 and November 2011. Except to the extent that those letters revised the original facility letter issued by ABN Amro in July 2007, the terms of the facility letter and related security documents were to continue “in full force and effect”. The guarantee provided by the second defendant to ABN Amro was also to remain valid and binding in favour of any successor and assign; it was not discharged by the transfer of the benefits of the guarantee to another entity.

[16] The Defendants did not merely sign their acceptance to the Plaintiff’s letters. They conducted themselves in a way that unequivocally showed that they had a banking relationship with the Plaintiff, pursuant to the banking facilities (see [5] above). There was no evidence that the Defendants ever disputed their liabilities under the banking facilities, whether in principle or quantum, until the start of the court proceedings. In other words, the Defendants knew they were dealing with the Plaintiff but never objected. Rather, their response to the outstanding amount demanded was a proposal to seek refinancing with another bank. As the Plaintiff summarised, “such conduct was inconsistent with there being any bona fide defence to the Plaintiff’s claim”.

[17] I thus turned to the Defendants to consider if there was a reasonable probability that they had any real or bona fide defences raising triable issues, instead of just mere assertions.

[18] The Defendants’ arguments on appeal could be broadly divided into three grounds for all three suits, including Suit No 512. First, there was invalid assignment between the banks, which meant that the Plaintiff had no right to sue the Defendants. Second, there were missing documents in the Plaintiff’s case, which contravened O 14 r 2(8) of the Rules of Court that affidavits must contain “all necessary evidence in support of” the claim. Third, the Defendants contended that there was a discrepancy in the numbers. While the assistant registrar had adequately – and correctly, in my view – addressed these arguments, I deal with them in turn.

[19] On the issue of invalid assignment, the Defendants essentially made the point that the Plaintiff had wrongfully based its claim on ABN Amro’s original facility letter, as the letter specified that the entity with the right to declare outstanding amounts due and payable was ABN Amro. The Defendants also referred me to provisions that prohibited a third party from having rights of enforcement under the Contracts (Rights of Third Parties) Act (Cap 53B, Rev 2002) (“CRTPA”).

[20] I did not agree that any issue of invalid assignment existed. In my view, it was sufficient for the Plaintiff to include RBS’ General Facility Provisions in its affidavits, notwithstanding that ABN Amro’s facility letter referenced ABN Amro’s General Facility Provisions. As between ABN Amro and RBS, the second supplemental letter to the Defendants on 30 January 2009 was sent by ABN Amro but carried RBS’ logo on the letterhead (see [3] above). This must mean that no real assignment of the banking facilities had to take place – they were the same entity. Even if they were different entities and an assignment was necessary, there was no suggestion that ABN Amro’s General Facility Provisions included non-standard terms that prohibited a right to assignment. And in the absence of any objection from the Defendants at the time, RBS’ General Facility Provisions must be taken to have been accepted by them. As between RBS and ANZ, RBS’ General Facility Provisions conferred on it a right of assignment (see [4] above).

[21] Any provision that excluded the rights of third parties to enforce the terms of the banking facilities was of no relevance. The CRTPA makes provision for the enforcement of contractual terms by third parties. It follows that the exclusion of the CRTPA means that third parties cannot enforce the terms of the banking facilities. But the Plaintiff was not a third party – by virtue of its acquisition of RBS, it had become a party to the contract.

[22] The Defendants provided a list of missing documents. They asserted that these constituted evidence that was “necessary as it is part and parcel of the claim”. Otherwise, the Plaintiff would not have pleaded and affirmed affidavits making reference to the documents. The documents included ABN Amro’s General Facility Provisions and Trade Finance Supplement, which I did not consider necessary (see [20] above). Other missing documents included the ANZ Trade Terms booklet and any other applicable trade agreements. These documents were again, unnecessary for the Plaintiff to establish its claim. The Plaintiff had already produced copies of a sample Trade Finance Application form and two completed application forms. These fulfilled the purpose of showing that the first Defendant had applied to the Plaintiff to draw down on its banking facilities in August and December 2011, long after the Plaintiff had acquired RBS’ business in May 2010. Lastly, the Defendants also pointed out that the statements of accounts – for Singapore and United States currency denominations – were incomplete. The first defendant received monthly account statements. Their contents were not hitherto objected to. The Defendants pointed out that the Singapore denomination statements of accounts displayed by the Plaintiff did not include the July 2011 statement. But statements were displayed for August 2011 all the way until May 2013. The displayed statements fulfilled their purpose in showing me when the relevant loans were drawn, and that the Defendants’ had acknowledged their debts without dispute at all material times, by making partial payments in the form of cash deposits totalling $8,000 on 11 June 2012 and 25 January 2013, and by transferring $156,497.80 into its current account associated with the facilities “to offset our overdraft account with immediate effect”. As for the missing statements of account (USD Denominations), they were not necessary as there was no activity in that account. The balance remained at zero up till May 2013.

[23] The last issue concerned the calculation of the amounts claimed by the Plaintiff. The Defendants contended that the Plaintiff’s interest rate was inconsistent. Essentially, the letters of demand sent by the Plaintiff on 21 February 2013 had computed the outstanding amount based on an erroneous default interest rate of 10%. In RBS’ General Facility Provisions, cl 7 states that the default interest rate shall be 3% above the interest rate charged on the facilities. The Plaintiff had arrived at 10% because it had erroneously stated in its letters of demand that the default interest rate was 4% above the applicable interest rate specified in the facility. This resulted in an accrued interest of $31,200.60 on the amount due of $344,192.79 on 21 February 2013. However, this mistake had clearly been rectified by the Plaintiff. In the conclusion to its statement of claim, it prayed for interest at 9%. This was repeated in its reply to the defence, and in its affidavits. Specifically, the Plaintiff’s spreadsheet in its second affidavit used 9% in showing the breakdown and calculation of the claimed amount. As such, it was clear the Plaintiff based its claim on a 9% interest rate.

[24] The Defendants also brought up various discrepancies in the calculations from which the amount claimed was derived. The Plaintiff had on 21 March 2014 generated computation tables for reference at the hearing below. These tables showed, in some detail, the sums claimed, the interest calculations and amounts set off by the Defendants’ part-payments for Suit No 512 as well as the other two suits. The Defendants on 31 March 2014 responded to the computation tables, and alleged that the Plaintiff had changed its pleaded position by submitting the tables. The Plaintiff addressed the Defendants’ concerns on 7 April 2014. I disagreed with the Defendants that the Plaintiff had departed from its pleaded position simply by submitting tables that explained how they arrived at their final calculations. Before me, the Defendants repeated their assertions that the Plaintiff’s figures were clearly wrong, but they could not explain the basis of their assertions or state what the correct figures, in their view, should be. Their claims remained mere assertions.

[25] I therefore concluded that the Defendants had not crossed the threshold of raising a triable issue – there was no bona fide defence to the claim on the merits: Habibullah Mohamed Yousuff v. Indian Bank [1999] 2 SLR(R) 880 at [21].