Essar Steel Ltd v Bayerische Landesbank and Others

• Jurisdiction: Singapore
• Judgment Date: 04 May 2004
• Date: 04 May 2004
• Docket Number: Suit No 913 of 2003 (Registrar's
• Court: High Court (Singapore)

Essar Steel Ltd

Plaintiff

and

Bayerische Landesbank and others

Defendant

[2004] SGHC 90

Kan Ting Chiu J

Suit No 913 of 2003 (Registrar's Appeal No 410 of 2003)

High Court

Civil Procedure–Appeals–Leave–Principles governing discretion to grant leave to appeal to Court of Appeal–Civil Procedure–Costs–Loan agreement providing for payment of costs where legal fees incurred in enforcing loan–Whether award should be made where rights to payment in dispute–Courts and Jurisdiction–Appeals–Appeal from registrar's decision–Role of appellate judge–Circumstances warranting judge's interference

The plaintiff, Essar Steel Limited (“Essar”), was a company in India. Essar borrowed US$40m from a consortium of nine banks including the five defendant banks under a syndicated loan agreement (“the agreement”). The defendant banks transferred their portions of the loan to the Argo Fund (“the Fund”). Essar sought a declaration that the transfers were void and of no legal effect, on the grounds that the Fund was not a bank or financial institution to which the loans could be transferred under the terms of the agreement. The payment to the Fund would render Essar liable to criminal penalties under the laws of India. In response, the first, second and third defendants filed a counterclaim. They claimed that if the transfers were void, they remained parties to the agreement and were entitled to the rights and benefits thereof, including the right of repayment. Essar sought to strike out the counterclaim on the basis that the first, second and third defendants, having executed the transfers, could not rely on the agreement to make a counterclaim.

Essar's application to strike out the defendants' counterclaim was dismissed by the assistant registrar. The assistant registrar took into account cll 18.1 and 25.3 of the agreement which provided for the payment of indemnity costs to the defendants where legal fees were incurred to enforce the repayment of the loan. The assistant registrar awarded costs to the first, second and third defendants on an indemnity basis fixed at $10,000.

Essar appealed to the High Court against the order on costs, contending that the first, second and third defendants were not entitled to indemnity costs as they had admitted that they were no longer parties to the agreement and should not be entitled to the benefit of any part of the agreement. Essar further applied for leave to appeal to the Court of Appeal, under s 34 (2) of the Supreme Court of Judicature Act (Cap 322, 1999 Rev Ed) (“the SCJA”), in the event the judge was to dismiss the appeal.

Held, dismissing the appeal and declining to grant the application for leave to appeal to the Court of Appeal:

(1) The costs awarded to the defendants were related to the counterclaim to enforce the repayment of the loan. As the assistant registrar declined to strike out the counterclaim filed by the first, second and third defendants, it could not be said that the assistant registrar acted without basis in awarding indemnity costs under cll 18.1 and 25.3 of the agreement. The uncertainty and delay which would have resulted if the assistant registrar had deferred making the order for indemnity costs until after the court determined that the defendants were entitled to invoke the agreement militated against the making of such an order: at [11] to [13].

(2) A judge in chambers generally would not allow an appeal from a registrar's costs order unless it was unreasonable or the Registrar had erred in law: at [14].

(3) In determining whether to grant leave to appeal to the Court of Appeal under s 34 (2) of the SCJA, the court would consider whether the decision to be appealed against touched on a general principle decided for the first time or whether the decision touched on a question of importance on which a decision by the Court of Appeal would be to the public advantage. In addition, the court would consider whether there were any prima facie errors of law or any errors of fact which were clearly beyond reasonable argument and which had contributed or led to a judgment. The court would also take into account the value of the proposed appeal and the costs and time burdens the appeal would place on the parties and the Court of Appeal: at [23], [26] to [28].

Abdul Rahman bin Shariff v Abdul Salim bin Syed [1999] 3 SLR (R) 138; [1999] 4 SLR 716 (folld)

Anthony s/o Savarimiuthu v Soh Chuan Tin [1989] 1 SLR (R) 588; [1989] SLR 607 (folld)

Goh Kim Heong v AT and J Co Pte Ltd [2001] 3 SLR (R) 167; [2001] 4 SLR 262 (folld)

Hoddle v CCF Construction Ltd [1992] 2 All ER 550 (folld)

Lee Kuan Yew v Tang Liang Hong [1997] 2 SLR (R) 862; [1997] 3 SLR 489 (folld)

Rules of Court (Cap 322, R 5, 1997 Rev Ed) O 56 r 3

Supreme Court of Judicature Act (Cap 322, 1999 Rev Ed) ss 34, 34 (2)

Damodara Suresh and Sunil S Gill (David Lim & Partners) for the plaintiff

Andre Yeap SC and Adrian Wong (Rajah & Tann) for the first, second and third defendants.

Kan Ting Chiu J

1 Idismissed an appeal by the plaintiff, Essar Steel Limited against an order of costs of an assistant registrar, and refused its application for leave to appeal to the Court of Appeal.

Background

2 The plaintiff borrowed US$40m from...