BANK OF CREDIT AND COMMERCE HONG KONG LTD. v. BARNSBURRY TRADING PTE LTD.

IN THE COURT OF APPEAL

1995, No. 73
(Civil)

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J U D G M E N T

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Litton, V.-P.:

1. This is an interlocutory appeal. The question before us broadly is whether the matter should go to trial.

2. The appellant is Barnsburry Corporation Pte Ltd. formally known as Barnsburry Trading Pte Ltd. the defendant in the court below. The plaintiff is the Bank of Credit and Commerce Hong Kong Ltd. (in liquidation). By a writ dated 4 December 1993 the plaintiff brought proceedings against the defendant for US$773,166.40 and interest calculated from 23 November 1993 at 11% per annum. The claim amounting to US$773,166.40 is particularised in a schedule to the statement of claim and consists of outstanding loans and interest less re-payments.

3. On 19 July 1994 the plaintiff took out an Order 14 summons for summary judgment for the amount claimed. Master Cannon acceded to the plaintiff's application. On appeal Mayo J dismissed the defendant's appeal. Hence the appeal to this court.

4. The defendant does not deny that subject to the matters raised in defence the plaintiff is entitled to its claim, but in its affidavits to show cause under Order 14 rule 4(1) the defendant says in effect as follows:

(1) The defendant's liability to the bank was originally secured by a pledged deposit which, as at 23 May 1991, amounted to A$1,389,013.79. This deposit, in the name of Loi Kum Lin and/or Cheng Kim Poh, had been agreed by the parties to be held as security for all the outstanding indebtedness of the defendant company and it is the defendant's case that by arrangement between the parties this was to be applied in extinguishment of the outstanding liabilities.

(2) When, on 8 July 1991 a sum of S$200,000 was transmitted to the defendant, this effectively extinguished all outstanding liability; it is the defendant's case that as from that date, there was nothing further owing to the bank.

5. The question before us quite simply is whether the defendant has shown by the evidence placed before the court that it has an arguable defence to the claim as outlined above.

6. The defendant's case is supported by an affirmation made by Mr Andy Lam Yiu Chung, the former Manager of the Yaumatei branch of the plaintiff bank where the defendant's various accounts and the pledged security account were operated. For all practical purposes Mr Lam represented the bank in its dealings with the defendant.

7. The history of the matter has been set out in two affirmations: that of Mr William Cheng Wee Liang representing the defendant and in Mr Lam's affirmation. The documentary evidence starts with a fax from the bank to the defendant dated 23 May 1991 where, after setting out the various loan accounts, the pledged deposit in A$, and the credit balance in the current account, the bank said this:

"In view of the above, it is clearly indicated that there is a clean exposure for at least HKD884,660.91 ... and most of the loan has expired. Under these circumstances, kindly remit sufficient fund to us immediately for settlement of the expired loan outstandings and accrued interest."

8. This was followed a month later by a fax from the defendant to the bank dated 29 June 1991 where the bank was told that the defendant intended to remit S$200,000 in early July 1991.

9. According to Mr Lam, as he understood it, this was an expression of the defendant's intention to settle the balance of the loan accounts. Mr Lam then went on to say in para 8 of the affirmation:

"8. A few days later, I received a telephone call from Mr Cheng who informed me again to offset the pledged deposit against the Defendant's outstanding loans. After checking with my colleagues, I orally confirmed that the sum of S$200,000.00 should be sufficient to cover the total balance in the loan accounts (after deduction of the pledged deposit). The line was later transferred to Miss Cheng, the holder of the pledged deposit to confirm the said decision to offset.

9. The sum of S$200,000.00 was received by our bank on 8th July 1991."

10. The question broadly is whether, arguably, by these arrangements the defendant's liability to the bank has in fact been discharged by payment; or alternatively that the bank is thereby estopped from denying that such liability has been discharged by payment.

11. Mr Faulkner, counsel for the bank, puts up the attractive argument that before the S$200,000 was received there could not have been any discharge of the defendant's liability, since the A$ deposit was held as security, and it was insufficient to discharge the outstanding liability by itself: therefore it could not have been applied in discharge on the loans, leaving the bank with a balance of unsecured debts.

12. There is no denial however that the sum of S$200,000 was received and it is common ground that this was an approximate equivalent of the amount said to be outstanding, namely HK$884,660.91.

13. On these facts it seems to me at least arguable that by the parties' arrangements, as confirmed in the ex-bank manager's own affirmation, when the S$200,000 was received the effect in law was that the indebtedness of the defendant was discharged. It matters not at this stage whether this result is reached by a robust view of "payment" - as referred to in the case of Laroque v. Beauchemin [1897] AC 358 at 365 - or by the operation of the equitable doctrine of estoppel. Since we are not making findings of fact of any kind it will not be appropriate for this court to subject the issue to any finer analysis. Having reached this point, in my judgment, the appeal must be allowed. The judgment in favour of the plaintiff against the defendant must be set aside and we will need to hear counsel as to the appropriate orders that we should make.

Liu, J.A.:

14. I too would allow the appeal and set aside the judgment.

Keith, J.:

15. I agree that this appeal should be allowed for the reasons given by Litton V-P. However, this is a case in which what was actually said in the telephone conversations between Andy Lam ,William Cheng and Becky Cheng in early July 1991 is unusually important in determining what the proper legal analysis of the arrangements between the plaintiff and the defendant actually was, and for that additional reason there should, in my judgment, be a trial of the action.