Essar Steel Ltd v Bayerische Landesbank and Others

Kan Ting Chiu J:

[2] The plaintiff borrowed US$40m from a consortium of nine banks including the five defendant banks under a syndicated loan agreement (“the agreement”).

[3] When the defendant banks transferred their portions of the loan to an entity called the Argo Fund (“Argo”), the disputes leading to this action arose.

[4] The plaintiff disputes the validity of the transfers on the grounds that:

(a) Argo is not a bank or financial institution to which the loans can be transferred under the terms of the agreement; and

(b) payment to Argo would render the plaintiff liable to criminal penalties under the laws of India. (The plaintiff is a company in India.)

[5] The plaintiff commenced this action against the defendant banks for, inter alia, a declaration that the transfers to Argo “are void and of no legal effect and that the Defendants continue to hold the legal and beneficial interest in their respective outstandings”.

[6] In response to the plaintiff’s action, the first, second and third defendants filed a counterclaim that in the event that the transfers are void or ineffective, the defendants remain parties to the agreement and are entitled to the rights and benefits thereof as if the transfers had not been effected, including the right of repayment.[1]

[10] It can be seen that in the developments described above, the agreement is an essential element in:

Each part of the case relates to and arises from the agreement.

[11] The assistant registrar did not strike out the counterclaim. It was not for him to make a final determination on whether it would succeed. He was asked to strike it out on the ground that the first, second and third defendants cannot rely on the agreement to make the counterclaim, but he declined to do that.

and this view was reflected in Singapore Civil Procedure 2003 (Sweet & Maxwell Asia, 2003) at para 55B/1/3.

[16] The plaintiff then applied to me for leave to appeal against my decision under O 56 r 3 of the Rules of Court (Cap 322, R 5, 1997 Rev Ed) and s 34 of the Supreme Court of Judicature Act (Cap 322, 1999 Rev Ed).

[17] In an affidavit in support of the application, Mr Sunil S Gill, counsel for the plaintiff, deposed that:

and that:

[18] These are repetitions of the arguments made before the assistant registrar and me. The only reference to the merits of the application for leave to appeal to the Court of Appeal is that:

[19] Section 34(2) of the Supreme Court of Judicature Act stipulates that:

[20] The Court of Appeal had in Lee Kuan Yew v Tang Liang Hong [1997] 3 SLR 489 held at [16] that:

[21] The judgment cited and approved Lai Kew Chai J’s judgment in Anthony s/o Savarimiuthu v Soh Chuan Tin [1989] SLR 607, where he said at 608, [2] that:

[22] In Abdul Rahman bin Shariff v Abdul Salim bin Syed [1999] 4 SLR 716 Tay Yong Kwang JC (as he then was) also referred to Anthony s/o Savarimiuthu and stated at [30] and [31]:

[24] There appears to be some uncertainty whether a prima facie case of error is sufficient basis for granting leave, as suggested in Anthony s/o Savarimiuthu, or whether that should be limited to errors of law as stated in Abdul Rahman.

[25] There is something to be said for both propositions. Where a judgment is the result of an error of fact, it would be a denial of justice to refuse leave to appeal. On the other hand, if any alleged error of fact can be relied on to seek leave to appeal, that would result in the virtual appeal hearings being conducted at the leave stage to establish whether there has been an error of fact.

[26] It is possible to accommodate both concerns. We can avoid shutting out all errors of fact and also avoid having virtual appeal hearings in applications for leave by restricting such errors to those that are clear beyond reasonable argument, for example, where undisputed evidence that a notice was served on 1 June was wrongly taken to have been served on 1 July. Where it is demonstrated that a clear error of fact has contributed or led to a judgment, the aggrieved party should be allowed to rely on it to seek leave to appeal. Other complaints, for example, that a judge had erred in accepting the evidence of one witness over that of another, or had erred in drawing an inference or coming to a conclusion, will not be considered.

[27] When I heard the application for leave, I examined it against the tests for granting leave:

(a) Is there a prima facie error of law or fact? I think the assistant registrar did not make any error of law or fact. He was entitled to exercise his discretion in the way he did.

(b) Does the decision touch on a general principle decided for the first time? It may be that this question is decided for the first time, but it does not involve any question of general principle. The issue is peculiar to the particular facts of the case and is not likely to arise in other cases.

(c) Does it touch on a question of importance on which further argument and the decision of the Court of Appeal would be to the public advantage? I do not think that whether the plaintiff should pay standard or indemnity costs is a question of such importance.

[29] Having found that the application failed to satisfy any of the tests, I declined to give leave to appeal. The plaintiff has now applied to the Court of Appeal for leave to appeal.

[1]See Amended Defence and Counterclaim of 1st to 3 Defendants, para 28

[2]Plaintiffs’/Appellants’ submissions dated 8 March 2004, para 12

[3]Affidavit of Sunil S Gill filed 19 March 2004, paras 14(a) and (b)

[4]Affidavit of Sunil S Gill filed 19 March 2004, para 18

[5]Affidavit of Sunil S Gill filed 19 March 2004, para 16