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Gallego Resources Ltd v Westpac Banking Corporation [2015] SBHC 102; HCSI-CC 269 of 2015 (30 November 2015)

IN THE HIGH COURT OF SOLOMON ISLANDS

CIVIL JURISDICTIONS

Civil Case No. 269 of 2015

BETWEEN:

GALLEGO RESURCES LIMITED
Claimant

AND:

WESTPAC BANKING CORPORATION
Defendant

Date of Hearing: 25th November 2015
Date of Ruling: 30th November 2015

Mr.R. Kingmele for the Claimant or Respondent
Mr. A. Radclyffe for the Applicant

KENIAPISIA, PJ:

RULING ON AN APPLICATION TO SUBSTITUTE A PARTY

1. This is an application for substitution of a party. That Bank of South Pacific Limited ("BSP"); the Applicant replaces the defendant, WestPac Banking Corporation ("Westpac"). The application was filed by Counsel Radclyffe acting for BSP. The application was filed on 3/11/2015.

2. The basis for the application is already public knowledge. BSP has now taken over the banking business of the defendant bank in Solomon Islands branch. That take over was made pursuant to a sales agreement dated 30/10/2015[1]. Together with the sales agreement, a Litigation Assignment Deed ("LAD"), was also executed the same date[2] between the defendant bank and BSP.

3. The facts are largely not contested by Counsel for the claimant, Mr. Kingmele. The claimant is however concerned about documents. That document relevant for use in this proceeding may not have passed from the defendant to BSP. That such document if not passed to BSP by the defendant, then the claimant may face difficulty in chasing relevant documents later at discovery stage. Claimant may end up incurring huge costs trying to obtain orders for third party disclosure. Third party may mean the defendant's head office in Australia. So the defendant must not be removed till after discovery stage.

4. The applicant rely on a sworn statement (ss) made by Elliot Griffin filed on 3/11/2015. Mr Griffin is the most Senior Manager of the defendant Company, Solomon Islands branch. He is the Acting General Manager of WestPac, Solomon Islands branch.

5. The same ss by Griffin is also relied on by the applicant in other cases, in which BSP is applying to replace WestPac. Those other cases are: Civil Case No. 147 of 2014; Civil Case No. 368 of 2011; Civil Case No. 453 of 2009 and Civil Case No. 218 of 2014. The Court's file in Civil Case No. 218 of 2014 is missing. I reserved to make orders for substitution, subject to my perusal of the missing file. For the other civil cases, I granted order to substitute BSP in place of West Pac, as claimants. In those other cases the application was simple, not contested and the facts are public knowledge (BSP takeover of WestPac). In those other cases, I used the same statement by Mr. Griffin as the basis for granting the substitutions orders sought across the board.

6. In this case however, what appears to be a simple application was contested by Counsel Mr. Kingmele, for the claimant. Counsel Kingmele submitted that this case is different from the others: this case is about negligence not debt recovery; this case West Pac is the defendant not claimant. For those reasons the ss by Griffin cannot be used in this case. This case is different and new evidence must be adduced, to enable justice to be done to the application and the concerns submitted by the claimant, on third party likely disclosure difficulties. Concerns on whether or not the relevant documents in this proceeding have passed from the defendant to BSP. If not passed then claimant may face difficulty and huge expenses trying to obtain third party disclosure, at discovery stage. Third party may mean obtaining relevant documents from Westpac's head office in Australia. Mr. Kingmele however did not produce evidence to substantiate his client's concerns. Filing of a ss would suffice to anchor the concerns.

7. Nevertheless, I took time to consider Mr. Kingmele's concerns from the evidence that is before the court. The ss evidence by Griffin. I find that there are assurances that would satisfy the claimant's concern on documents. The LAD dated 30/10/2015, provided adequate assurances to the claimants concerns on documents. These assurances are found in clauses: 1:1 (b); 4; 9 and 12; as well as Recital A.

8. In Recital A, WestPac (Assignor) has transferred all its "Claim Rights" and BSP (Assignee) has taken over those "claim rights" and other obligations associated with such "claim rights".

9. In clause 1.1 (b) "claim rights" means the assignor's legal and beneficial rights, title and interest in connection with its rights of action against the claimant. Now interests, rights and titles in connection with this case would to my mind include the relevant file and documentations like: the cheques complained about[3], the claimant's account and account documents which formed the contract between the claimant and the defendant. These documents would include the authorised signatures. In other words, the file that relates to this case would have passed from WestPac to BSP as of 30/10/2015 or there about. The claimant has not produced contrary evidence that the file and other documents relating to this case may likely not transferred from WestPac to BSP.

10. As if this clause 1.1 (b) is not enough assurance, we turn to clause 4 – we see repetition again that the "claim rights" in relation to court cases (interests, rights and titles) in connection with this case and other High Court cases, would have passed from West Pact to BSP on the effective date[4] been 30/10/2015. We know from normal company law take overs that a takeover include taking over of assets and liabilities.

11. As if clause 4 is not enough assurance, in clause 9, we see that BSP actually indemnifies WestPac against any liability that may arise in connection with the "claim rights" that BSP has inherited under the LAD. This indemnity puts a burden on BSP that it must ensure all relevant documents in this case are handed over from WestPac. If it turns out at trial that relevant documents are not available then that will put to question the professional discharge of duty by BSP, detrimental to its image in this proceedings. If that is to be the case BSP will be seen to be a careless banker, and under this indemnity clause it cannot pass that blame to Westpac.

12. As if there is not adequate assurance in clause 9, there are further assurances to be found in clause 12. That each party must do all that is necessary including executing of documents to give full effect to the LAD and the transactions contemplated by it. To my mind, I am satisfied under this clause, executing of documents to give effect to the LAD and the transactions contemplated by it, would entail the passing of the relevant file plus the relevant documents from Westpac to BSP[5]. Those documents with the defendant would have passed to BSP under the LAD. The court can now take directions because pleadings have closed. By doing that the claimant's concerns may be put to rest from list of disclosures and if not satisfied the claimant may request documents after inspection, if Mr. Griffin is still around. At time of delivery of oral ruling (30/11/15), a further ss by David Anderson filed 30/11/15, had deposed that BSP received all the documents relevant to this file. David is the Country Manager for BSP. This addressed the claimant's concerns.

13. In view of the assurances contained in the provisions of the LAD discussed in the preceding paragraphs, the court is satisfied that concerns raised by counsel Kingmele for the claimant are in safe hands. The lawyers involved in the sale were wise enough to have given a special treatment to High Court cases through the execution of the LAD. There is no evidence on who the lawyers are, but I heard from the Bar table that Counsel for BSP had said Sol-law were the lawyers involved in the sale. Counsel Mr. Kingmele of Sol-law – a partner did not dispute this.

14. In conclusion, let me just say that one would not be wrong to say that among the core business activities/assets that BSP bought from WestPac is "accounts of customers". Accounts of customers would undoubtedly comprise all the relevant documents on each account, but more so, accounts that have disputes in the High Court are treated with special care under the aforementioned LAD. That special care is to facilitate the safe transfer of the file in this case from Westpac to BSP.

15. Again I am satisfied that the concerns raised by the claimant are taken care of under the LAD. I therefore order that BSP be made a party to this proceeding replacing Westpac. After all there will be no more Westpac branch in this jurisdiction under this takeover. Westpac may start new who knows. But the Westpac we used to see in red at point cruz, is now in green – BSP colour. The other orders sought are also granted.

16. To complete the ruling the court also order that:

1. BSP is the defendant in this case, in place of Westpac.

2. Requirements of Rules 3.11 and 3.12 are dispensed with.

3. Costs in the cause[6].

THE COURT

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JOHN A. KENIAPISIA
PUISNE JUDGE

^[1] See paragraph 2 of sworn statement (ss) by Mr. Griffin filed in support of the application – filed 3/11/15.
^[2] See Exhibit EG 1 of ss by Griffin as read with paragraph 4.
^[3] I have read the claim and there seem to be 3 cheques complained about. Cheques with huge sums of money.
^[4] See clause 3 as read with clause 2.1 of the LAD. Paragraph 2 of ss shows that sale agreement was completed on 30/10/15. LAD will take effect from that same date on the basis of clause 3 read with 2.1. See ss by Griffin.
^[5] Court noted that the defendant has the relevant file – See paragraphs 13 and 15 of defense filed 13/07/15.
^[6] Agreed by both counsels in oral submissions from bar table at time of oral ruling delivery.