Re Carrian Investments Ltd
Read the full judgment text of CACV 59/1989 on BabelCite. This Court of Appeal judgment was delivered on 17 October 1989.
1. In this appeal the Appellants are the joint liquidators of Carrian Investments Ltd (CIL), and the respondents are three associated Bumiputra companies, namely, Bumiputra Malaysia Finance Ltd (BMFL), the original Hong Kong deposit taking company; Bank Bumiputra Malaysia Berhad (BBMB), the Malaysian parent of BMFL; and Petroliam Nasional Berhad (Petronas) BBMB's present parent company. The appeal is brought against Jones J's refusal on 9 March 1989 to strike out the Points of Claim filed by the
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CACV000059/1989 No 59 of 1989 IN THE SUPREME COURT OF HONG KONG COURT OF APPEAL ------------
------------------------ Coram: Hon Silke, V-P, Hunter & Penlington, JJA Date of Hearing: 28 - 29 September 1989 Date of Handing down: 17 October 1989 ---------------------- J U D G M E N T ---------------------- Hunter, JA : (giving the judgment of the court) 1. In this appeal the Appellants are the joint liquidators of Carrian Investments Ltd (CIL), and the respondents are three associated Bumiputra companies, namely, Bumiputra Malaysia Finance Ltd (BMFL), the original Hong Kong deposit taking company; Bank Bumiputra Malaysia Berhad (BBMB), the Malaysian parent of BMFL; and Petroliam Nasional Berhad (Petronas) BBMB's present parent company. The appeal is brought against Jones J's refusal on 9 March 1989 to strike out the Points of Claim filed by the respondents in support of their claim to be entitled to prove in the liquidation of CIL. 2. The Points of Claim assert (and for present purposes it must be assumed assert correctly) that between 20 January 1982 and 17 February 1982, a total of US$97m was paid by BMFL to CIL, that a further sum of US$3.5m was paid on 30 June 1982; and that only US$7.5m was repaid. The document goes on to plead in detail the circumstances alleged to give rise to the right of BMFL (subject to the assignments herein after referred to) to prove in the liquidation of CIL for the sum of US$93.5m upon four different bases, namely, constructive trust arising in two different ways money had and received; and money lent. 3. In essence the history of the matter can be summarised thus. CIL, and its associated company, Carrian Holdings Ltd (CHL) were wound up on 17 November 1983. None of the respondents then sought to prove in the liquidation of CIL, but BMFL appear to have proved for this sum in November 1983 in the liquidation of CHL. 4. There followed next the two equitable assignments which explain the presence of the other respondents. The first assignment dated 31 December 1983 was made by BMFL as assignee to BBMB as assignor. Its material terms were : -
5. In Schedule 1 this entry appears
6. The second assignment dated 17 September 1984 was made between BBMB as assignor and Petronas as assignee. It is unnecessary to repeat any of its provisions because it is common ground that in language and effect it is identical to the first assignment. 7. The respondents first sought to prove in the liquidation of CIL for the sum of US$90.0m by an affirmation of Lim Boon Kick made 10 June 1985. The basis of claim was the fourth alternative above noted, money lent. In reliance upon the said assignments, which were exhibited thereto, the proving creditor was Petronas. But this paragraph appeared : -
8. On 30 July 1985, in answer to a specific enquiry from the appellants, the respondents then solicitor confirmed that the only proving creditor was Petronas and that BMFL and BBMB had joined in the proof as necessary parties. 9. On 23 July 1987 the appellants gave notice of rejection of the proof. The last of a large number of grounds of rejection was that the two assignments were ineffective to assign any indebtedness of CIL to the assignees. Shortly thereafter the joint liquidators filed a long affidavit by one of their number, Mr Robinson, explaining the grounds of rejection and repeating this point. 10. On 15 February 1988 two affirmations were made on behalf of the respondents by Mohd Khamil Bin Jamil. In the first he dealt in part with Mr Robinson's affidavit and said : -
11. In the second affirmation of the same date the Proof of Debt dated 10 June is sought to be amended. In this instance the heading is extended to include the names of all three respondents. In the body of the affirmation all three respondents express the wish to advance a claim for the original US$90m and an additional claim for US$3.5m on the grounds of money had and received. This amended proof was likewise rejected. 12. By a third affirmation of Mohd Khamil Bin Jamil made on 28 April 1988 the respondents sought to amend the Proof of Debt by adding the alternative claims in constructive trust above referred to. 13. On 8 March 1988 the first step was taken in the present litigation, when the respondents (as applicants) collectively applied to the' court for an order that the decision of the joint liquidators rejecting what was described as "the proof" and "the amended proof" of "the applicants" dated 10 June 1985 and 15 February 1988 may be reversed and for the admission of the amended proof in full in the liquidation. 14. On 25 November 1988, by consent, Jones J made an order on that summons which is likewise headed, granting the respondents (applicants) leave to amend the Proof of Debt in the manner requested on 28 April 1988, and giving directions for pleadings including : "(i) The applicants file and serve Points of Claim within six weeks". 15. The Points of Claim were duly filed in the names of all three respondents pursuant to this direction. They set out in detail the circumstances in which BMFL claim to be entitled to prove. By paragraph 13, BBMB and Petronas were said to be necessary parties to the proceedings by reason of the two assignments which are pleaded in paragraph 142. The prayer seeks an order :
16. On 17 February 1989 the joint liquidators issued a summons inviting the court to strike out the Points of Claim on the grounds : -
17. Secondly the summons sought the dismissal of the appeal against the rejection of the said proof. On 8 March 1989 the respondents filed a further affirmation by Mohd Khamil Bin Jamil asserting that BMFL and BBMB were, and had since February 1988 been, alternative proving creditors. 18. When dismissing the appellant's summons on 19 March Jones J gave a brief oral judgment principally rejecting the appellant's argument upon the construction of the assignments. Before this court the argument may have extended more widely three questions having been canvassed in particular. 19. The first question was whether the true construction of these assignments was a matter of real interest, and concern to the appellant liquidators or whether the judge should have dismissed their application as being an exercise in futility. This issue on construction is a matter for the parties themselves and can only give rise to a true issue or lis between such parties. The substantial issue raised by the Points of Claim is whether BMFL had, on the date of the winding up order, a right to prove in the liquidation of CIL. If the answer is yes, then one of the respondents must succeed. It is only at that point that the assignments become relevant and then only to determine the identity of the successful respondent. If they are valid it is Petronas; if they are invalid the right remains with BMFL. This subsidiary issue is immaterial to the liquidators. Their sole legitimate concern is to avoid double proof. So long as they are only liable to admit one respondent to proof and so long as the other claims are abandoned or dismissed, the identity of the successful claimant is immaterial. 20. It was at one time suggested that the presence of Petronas as a claimant prejudiced the liquidators because this company was not as exposed to the effects of the rule in Cherry v Boultbee (1839) 4 My and Cr 442 as BMFL would be. This was denied by the respondents, who undertook to amend the reply which has now been delivered, if inadvertently it had made any such suggestion. In our view the point is clearly untenable. Assignees take subject to equities. This rule is such an equity. If it is held hereafter to be applicable on the facts, it would reduce BMFL's ability to prove as at the date of liquidation. The consequential effect upon the subsequent assignees would be identical. 21. The appellants no longer contend that the Points of Claim should be struck out, only that paragraphs 13 and 142 should be deleted together with all references to Petronas and BBMB. But it is clear that if any such order was made the three companies could enter into "perfected" assignments the next day and have the present position restored. 22. We therefore conclude that this application could and should have been dismissed as an exercise in futility. 23. The second question was whether the application is in any event made too late. Paragraph 6 of the affirmation of 10 June 1985 made BMFL and BBMB parties to the Petronas proof. This was necessary because it was common ground that the assignments were equitable, and that both BMFL and BBMB were necessary parties both to support the Petronas' claim, and to protect the appellant liquidators as against double proof. 24. This position radically changed when the validity of the assignments was challenged. Throughout only one, claim derived from BMFL, has been asserted by the respondents. If the assignments were ineffective, this claim had to remain in BMFL. The response in paragraph 11 of the first affirmation of 16 February 1988 was not precisely accurate. But its intent was obvious. The appellants challenge inevitably served to convert BMFL and BBMB from supporting parties to alternative claimants. This was made clear by the terms of the amending affirmations of 16 February and 20 April 1988. 25. We accept Mr Crystal's submission that there is no precise similarity between proofs and writs and that in these situations it is the form of the proceedings before the court which matters. Here the terms of the summons of 8 March 1988 and of the consent order of 25 November are quite unequivocal. The Points of Claim comply precisely with this order. In our view they are not demurrable and it is too late to seek to strike them out by resort to the original ipsissima verba of the affirmation of 10 June 1985. 26. Thirdly and finally there was the question of the true construction of the assignments. Since this was fully argued we think it right to express our view. Ultimately the argument narrowed down to the meaning to be given to the concluding words of clause 1, namely:-
27. It is clear that the earlier words in this clause are apt to pick up the basic contractual rights and obligations arising from the scheduled debts. Mr Crystal's initial submission that these alone were assigned, really gave no meaning to the latter words. This he recognised, and later suggested that they simply picked up post-agreement - post 31 December 1983 - interest. But this submission in turn gave no weight to "including without limitation". These words plainly cover more than interest. 28. This was an assignment between banks. It is we think by no means unknown for banks to discover that attempts to enforce supposed contractual rights by way of loan, may be met by a variety of factual defences, which facts result in different and additional causes of action being asserted, possibly against additional parties, to enable the bank to recover a sum of money shown in its books as a debt paid to and owing by a particular creditor. Such alternative methods of recovering which the respondents are advancing in the Points of Claim here, can we think properly be described as "other rights ... held ... in relation to the debts" shown in the books. 29. There are two other considerations which lend support to this conclusion - although these may in truth be different ways of expressing the same concept. First, we think it permissible to look to the recitals for assistance upon this point of construction, and the broad words in recital 1, which in many respects are reflected in clause support this conclusion. Secondly, it is right to put a sensible commercial meaning upon a document such as this. It is, we think, plain that the commercial intention transfer to the assignee the whole benefit (for what it was worth) of the Carrian Group portfolio with no intent to retain any residue or interest in the assignee. 30. For these reasons the appeal fails and must be dismissed. We make an order nisi that the appellants do pay the respondents costs of the appeal. Representation: Michael Crystal, QC, Michael Bunting (M/s Baker & McKenzie) for Carrian Investmet Limited (in liquidation)/Appellant Edward Evans-Lombe, QC, William Stone (M/s Robert W.H. Wang & Co.) for Petroliam National Berhad/Respondent |
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