Habib Bank Ltd & Anor (Respondent) v Bank of South Australia No. Scgrg-96-1565 Judgment No. 6309 Number of Pages 7 Banking and Financial Institutions - [1997] SASC 6309

IN THE SUPREME COURT OF SOUTH AUSTRALIA

WILLIAMS, J

CATCHWORDS:

Banking and financial institutions - banker and customer and business of banking generally - letters of credit - appeal against Master's refusal to order summary judgment in favour of defendant - operation of Letters of Credit discussed - parties to Letters of Credit deal in documents and not goods - purchaser of goods appropriate defendant and not defendant bank - appeal allowed. Supreme Court Rule 25.04, referred to. Ian Stack v Barker Bosby
(1958) 2 QB 130; Equitable Trust Co of New York v Dawson Partners Ltd (1926) 27 Ll L Rep 49, applied.

HEARING:

ADELAIDE, 10 March, 3 April, 22 July 1997 (hearing), 26 September 1997 (decision)

#DATE 26:9:1997

#ADD 7:10:1997

Appearances:

Appellant:

Counsel: Mr M Rice

Solicitors: Thomsons

Respondent:

Counsel: Mr N Morcombe QC

Solicitors: Cowell Clarke

Order: appeal allowed.

WILLIAMS J:

This is an appeal by the defendant against the refusal of a Master to order summary judgment in favour of the defendant (or alternatively to strike out the statement of claim as disclosing no reasonable cause of action).

The first plaintiff Habib Bank is a banker in Pakistan; the second plaintiff Arzoo is its customer and carries on an exporting business in Pakistan. The defendant (a South Australian banker) has been sued upon letters of credit issued on 10 December 1993 and 11 February 1994 to Habib at the request of its customer Arzoo in respect of the supply of goods by Arzoo to the defendant's customer G & R Wills Holdings Ltd, (a South Australian company).

I have reached the conclusion that (on any possible view of the facts and the law) the plaintiff cannot succeed. It is my view that the plaintiff is pursuing the wrong party and in the course of this exercise has sought to spell out of the documents a cause of action which flies in the face of settled commercial practice. I am conscious of the great care needed in any decision to enter summary judgment upon a defendant's application, particularly where there is - as in this case - a degree of complexity to the matter. Nevertheless unless I proceed in this way - where I am convinced as to the inevitability of the eventual outcome - the parties are going to be put to considerable expense without resolving the real dispute. Instead of a claim against the defendant Bank based upon the Letters of Credit, the proper claim (if any) should be upon the underlying transaction by the vendor Arzoo against G & R Wills Holdings Ltd, the buyer of the relevant goods. However, in my view the plaintiffs' present claim is not sustainable.

The essence of the plaintiff's claim is a reliance upon terms which are to be implied in the letters of credit. When one looks beyond the pleading to the nature of a banker's business - to deal in money and in documents - the claimed implication will be seen to be untenable.

The…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

AGLC: Habib Bank Ltd & Anor (Respondent) v Bank of South Australia No. Scgrg-96-1565 Judgment No. 6309 Number of Pages 7 Banking and Financial Institutions [1997] SASC 6309
Case: [1997] SASC 6309
Decision Date: 26 September 1997

CaseChat Overview and Summary

The case involves an appeal by the defendant, Bank of South Australia, against the refusal of a Master to order summary judgment in their favour or to strike out the plaintiffs' statement of claim. The plaintiffs, Habib Bank and its customer Arzoo, claim against the defendant bank regarding letters of credit issued for the supply of goods from Arzoo to G & R Wills Holdings Ltd. The court needed to determine the appropriate party to be sued based on the nature of letters of credit and the implications of the Trust Receipts. The appeal was allowed by the court, which concluded that the plaintiffs were pursuing the wrong party and had misconstrued the operation of the letters of credit. Instead of suing the defendant bank, the proper claim should have been against G & R Wills Holdings Ltd, the buyer of the goods, by the vendor Arzoo. The court emphasized that the defendant bank's business involves dealing in documents rather than goods, and it had no obligation to re-establish control over the goods once they were released for inspection. The final orders included allowing the appeal, granting summary judgment in favour of the defendant bank, joining G & R Wills Holdings Ltd as a defendant, and directing the plaintiffs to file a new statement of claim against Wills.

Orders