Ayala International Finance Ltd and Republic National Bank of New York v. Caine Tai Investment Co Ltd and Others
Read the full judgment text of HCA 3243/1983 on BabelCite. This High Court CFI judgment.
1. This is an appeal under Order 58 from a Decision of Master Hansen of 5th July 1983 whereby he gave judgment in favour of the Plaintiffs under Order 14 against each of the three Defendants. The Writ was issued on 19th March 1983 and was a claim on a loan of 14th January 1982 as valid by two agreements of the 15th of July and the 3rd December 1982 as against the 1st Defendant, and as against the 2nd and 3rd Defendants under 2 separate guarantees. Mr. Sakharanl advanced two reasons why he said l
Cited by 5 cases
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HCA003243/1983
BETWEEN:-
________________________ Coram: The Honourable Mr. Justice Jackson-Lipkin in Chambers. Date: 27th July, 1983 at 2.15 p.m.
___________ JUDGMENT ___________ 1. This is an appeal under Order 58 from a Decision of Master Hansen of 5th July 1983 whereby he gave judgment in favour of the Plaintiffs under Order 14 against each of the three Defendants. The Writ was issued on 19th March 1983 and was a claim on a loan of 14th January 1982 as valid by two agreements of the 15th of July and the 3rd December 1982 as against the 1st Defendant, and as against the 2nd and 3rd Defendants under 2 separate guarantees. Mr. Sakharanl advanced two reasons why he said leave to defend should be given. Before I go into them he urged upon me that if I did grant leave to defend, it ought, by the nature of this appeal, to be unconditional. Each of the points that he raised, by way of appeal from the Master's Decision and in favour of giving leave to defend was a point of law and was either arguable or unarguable. And if it were arguable then on the basis M.V. Yorke Motors (a firm) v. Edwards [1982] 1 W.L.R. 444, such leave to defend should be unconditional. With that much of his proposition, I agreed. 2. The first of Mr. Sakhrani's submissions depended on section 22 of the Deposit-Taking Companies Ordinance. There is a proviso to section 22(1) which makes the sub-section inapplicable to:-
On that proviso, Mr. Sakhrani takes a number of points. The first one that he takes, and I am not setting them out in this judgment in the order in which he advanced them, is that the word "transactions" refers to transactions under section 22(1) itself, and that, therefore, the guarantee acceptable to the Commissioner should be a guarantee to conver only those transactions: And that it ought not to be a blanket approval, but ought to be a form of guarantee considering specific transactions. In my judgment, reading proviso (b), in the context to the whole section, that is section 22, it is open to the Commissioner to accept a form of guarantee to cover all transactions by the deposit-taking company, and, therefore, it is not fatal to the Plaintiffs' case if the guarantee given by it was accepted by the Commissioner to cover all these transactions. 3. The second point to which I will refer as I have said it is not the first in time, is this: On the 30th March 1976, and particularly on the 8th April 1976, Mr. Ockenden, then the Commissioner, wrote certain letters to the Plaintiffs, to the 1st Plaintiff's parent company and to the 1st Plaintiff indicating that a guarantee offered to him in a letter of 25th March 1976 was "acceptable". The letter of 26th March 1976 is Exhibit C.P.T.P.-3 to an affidavit of Peter Cheung Pi-tak, which he swore on 16th May 1983. The relevant paragraph reads as follows:
The answers from the Commissioner of Banking, to which I have referred, and the Commissioner of Banking, of course, is also the Commissioner under the Deposit-Taking Companies Ordinance, were as follows: That of the 30th March reads:-
The second letter reads as follows, that is the one of 8th April 1976:-
the letter to which Mr. Ockenden was referring in his letter of 8th April was a letter of 31st March from the parent company which read as follows:-
Mr. Sakhrani urges upon me this contention. I should look at the two letter written by the 1st Plaintiff and its parent company respectively and I should come to the conclusion on those letters that there was an arguable case that they were not guarantees such as contemplated in section 22 of the Ordinance, and they were guarantees in the form which could not reasonably be acceptable to the Commissioner. In that respect, he drew my attention to passages in a very useful book: It is the 4th Edition of Foulkes, Introduction to Administrative Law. pages 151-153. In my judgment, none of the passages there assist me here: In no way was the Commissioner failing to exercise discretion, in no way was he fettering the exercise of his discretion, in no way was he laying down a policy which he would follow blindly regardless of the nature and quality of the application before him. and, in my judgment, his decision was a proper and lawful one which he was able to make and did make. Acceptable to the Commissioner means acceptable to the Commissioner. He found this form of guarantee acceptable, and I can see no arguable defence on the basis that it ought not to be acceptable. Clearly, it can not be argued that it was not acceptable, because the Commissioner has accepted it in express terms. And for my part, I can not see an arguable defence on the basis that the Commissioner was wrong in treating it as acceptable to him. It was a lawful exercise of his statutory power. He exercised his discretion in good faith and for a proper purpose, and, in my judgment, it is not open to the Defendants to avoid their obligations under the loan agreement, or under the guarantees, by seeking to say that the Commissioner ought not to have done what he quite clearly did do. I should say, at this point, Mr. Sakhrani also invited my attention to paragraphs 19 and 20 on page 21 of Volume 1 of the 4th Edition of Halsbury's Laws of England. The correspondence put before me extends well into 1982, but as I felt (happily both leading Counsel agreed with me) I should look only at the 1976 guarantee and acceptance by the Commissioner and not at those of dates subsequent to the loan agreement which is a document unhappily marked ''A" instead of with initials and a number to the first affirmation of Peter Cheung Pi-tak which he swore on the 19th of April 1983. Mr. Swaine did concede that if the guarantee were struck down, he would have to accept that section 22(1) bit and that he would no longer be able to support his application for summary judgment. I have found that there is nothing wrong with the guarantee, or with the acceptance by the Commissioner of that guarantee, and so that point does not arise. The second ground that Mr. Sakhrani advanced arose from section 25 of the Money Lenders Ordinance, and in that respect he asked me to say that he should have leave to defend in order to ask the Court to re-open the transaction so as to do justice between the parties having regard to all the circumstances. The first two sub-paragraphs of section 25(1) of that Ordinance are conjunctive and not disjunctive, and, therefore, an obligation lay upon the Appellant here to shew me that the transaction was extortionate. In order to do that Mr. Sakhrani relied upon paragraphs 6, 7, 8, 9, 10 and 11 of an affirmation sworn on 2nd May 1983 by Kenny Leung Kin-man, the Deputy General Manager of the 2nd Defendant, which company controls the 1st Defendant. He was affirming that on behalf of all three Defendants. In considering section 25(1), I had to look at sub-sections 2, 3, 4, 5 and 6, and Mr. Sakhrani invited my attention particularly to sub-section 4(a), sub-section 5(b) in relation to the 2nd and 3rd Defendants and sub-section 6(a). To do that, he had to rely upon paragraph 6 of Mr. Leung's affirmation and the details that follow. He very properly upon examination promptly abandoned sub-paragraph (a) of paragraph 6 of that affidavit. Upon further analysis, he abandoned sub-paragraph (b). Sub-paragraph (c) was his mainstay, but he again, very properly as one would expect from him, abandoned the second half of that, namely the close connection between the 1st, 2nd and 3rd Defendants and relied upon the over-security of the loan, and he also relied upon sub-paragraph (d). Dealing with (c) first, on the evidence before me, there was nothing on which I could possibly say the loan was over-secured because over-security in itself is not a ground for re-opening a transaction. The degree of risk having regard to the nature and value of the security is a method, but over-security per se is not. It is a matter of common knowledge and Judges have had it over and over again before them, daily, that loans are over-secured, that it would be a very foolish bank or deposit-taking company that offered loans that were just covered. The allegation of the loan being over-secured must, therefore, be read as meaning the loan was unreasonably over-secured. Neither on that wording nor on the wording of sub-section 6(a) of section 25 of the Money Lenders Ordinance, can I say that. There is no evidence before me of what is the reasonable extent of over-security and there is no evidence in that affirmation of unreasonable over-security, so that ground fails. I was then left with the-allegation of the undue pressure. That is put very high because sub-section 5(b) of section 25 of the money Lenders Ordinance does not recite the word "undue". It says:-
Paragraph 6(d) of Mr. Leung's affirmation does not relate to the 1st Defendant, it only relates to the 2nd and 3rd Defendants. And the explanation of pressure appears in the paragraphs I have mentioned; the historical events in paragraphs 8, 9, 10 and 11 of the affirmation. Paragraph 11 relates to the event of the 3rd of December, and I was told that paragraph 6 of Mr. Leung's affirmation related only to the agreement of July. I agreed at once that there was a degree of bad luck and misfortune in what happened, but I can not see on an analysis of paragraph 8 that there was any financial pressure to enter into the guarantees such as would afford that the 2nd and the 3rd Defendants an arguable defence to this claim on the guarantees that they voluntarily chose to give in support of the loan to the 1st Defendant. In those circumstances, I dismiss this appeal and find that the Master's Decision was correct. Before the adjournment Mr. Swaine who is now had to go to another place made an application for costs which I apprehend can not be resisted in the circumstances. Sakhrani tells me very properly he can not resist that. I understand that Mr. Mayne has an application to make. (Mr. Mayne made an application for a Certificate for two counsel).
Representation:
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