Case No: A3/2010/0861
Neutral Citation Number: [2010] EWCA Civ 1335
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE (COMMERCIAL COURT)
(Mr. Justice Cooke)
[2010] EWHC 702 (Comm)
Royal Courts of Justice
Strand, London, WC2A 2LL

Date: 24 November 2010
Before :

LORD JUSTICE RIX
and
LORD JUSTICE MOORE-BICK
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Between :

	HABIBSONS BANK LTD	Claimant/
Appellant	
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	STANDARD CHARTERED BANK (HONG KONG) LTD	Defendant/Respondent	

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Mrs. Teresa Rosen Peacocke (instructed by Hugh Cartwright & Amin) for the appellant
Mr. Christopher Harris (instructed by Hogan Lovells International LLP) for the respondent

Hearing dates : 11th October 2010
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Judgment
Lord Justice Moore-Bick : 
1.	This is an appeal against the order of Cooke J. refusing the appellant permission to amend its particulars of claim. As a consequence of that refusal the claim stands dismissed under an order made by Teare J. on 20th August 2009.
Background
2.	The proceedings arose out of the insolvency in September or early October 2008 of a Dutch bank, N.V. De Indonesische Overzeese Bank, generally known as Indover Bank (“Indover”). On 9th May 2008 Indover entered into a Facility Agreement with a number of lenders under which it borrowed sums totalling US$117,500,000 for a period of one year. Standard Chartered Bank (Hong Kong) Ltd (“SCB (HK)”) was one of the original lenders. The Facility took the form of a typical syndicated loan agreement, under which an agent was appointed to perform various tasks on behalf of the parties. The agent in this case was a German bank, Bayerische Landesbank (“BL”).
3.	As is usual in such cases, the Facility Agreement provided for the transfer by the original parties of all or part of their rights to third parties. In effect, they were given the power to sell the whole or part of their interests in the loan to other banks, thus taking advantage of the secondary market in loans of this kind. The Facility Agreement provided as follows:
26	Changes to the Parties
26.1	Assignments and transfers by the Lenders. 
	Subject to this clause 26, a Lender (the “Existing Lender”) may:
	(a)	assign any of its rights; or
	(b)	transfer by novation any of its rights and obligations
	under any Finance Document to another bank or financial institution . . . which is regularly engaged in or established for the purpose of making, purchasing or investing in loans, securities or other financial assets (“the New Lender”).
26.2	Conditions of assignment or transfer
	(a)	The consent of the Borrower is not required for an assignment or transfer by a Lender.
	(b)	. . .
	(c)	An assignment will only be effective on:
		(i)	receipt by the Agent of written confirmation from the New Lender . . . that the New Lender will assume the same obligations to the other Finance Parties as it would have been under if it was an Original Lender;
		(ii)	the performance by the Agent of all necessary “know your customer” or other similar checks relating to any person that it is required to carry out in relation to such assignment to a New Lender . . .
	(d)	A transfer will only be effective if the procedure set out in Clause 26.5 (Procedure for transfer) is complied with.
. . .
26.5	Procedure for transfer
	(a)	 . . . a transfer is effected in accordance with paragraph (c) below when the Agent executes an otherwise duly completed Transfer Certificate delivered to it by the Existing Lender and the New Lender. The Agent shall, subject to paragraph (b) below, as soon as reasonably practicable after receipt by it of a duly completed Transfer Certificate appearing on its face to comply with the terms of this agreement, execute that Transfer Certificate.
	(b)	The Agent shall only be obliged to execute a Transfer Certificate . . . once it is satisfied it has complied with all necessary “know your customer” or similar other checks under all applicable laws and regulations in relation to the transfer to such New Lender
	(c)	On the Transfer Date:
	. . . 
		(iv)	 the New Lender shall become a Party as a “Lender”.
4.	The Agreement provided for a form of transfer certificate and the “Transfer Date” was defined as the later of the proposed transfer date specified in the transfer certificate and the date on which the Agent executed the transfer certificate.
5.	On 22nd September 2008 Standard Chartered Bank (the parent company of SCB (HK)) offered Habibsons Bank (“Habibsons”) a share in the Indover loan. In the event Habibsons agreed to purchase US$2 million of the loan and a trade confirmation form and transfer certificate were created for that purpose. They provided for a settlement date and Transfer Date of 8th October 2008. However, someone at Standard Chartered Bank realised that the trade should have been carried out by SCB (HK) as the party to the Facility Agreement. As a result on 6th October a new trade confirmation form in the name of SCB (HK) was sent to Habibsons by e-mail. The trade confirmation form recorded a transaction on the terms of the Loan Market Association Standard Terms and Conditions for Par Trade Transactions (“the LMA Conditions”). Habibsons signed the documents and returned them by fax to an address in Hong Kong, as requested. It seems likely that they were not received until some time on 7th October local time. Both the new trade confirmation and the transfer certificate provided for a settlement date of 16th October; there was also an alteration to the settlement price to take account of the later date.
6.	At 10.20 pm on 6th October 2008 the District Court of Amsterdam made an administration order in respect of Indover under which it declared that it was subject to the provisions of certain emergency regulations made under the Dutch Financial Supervision Act. One effect of those regulations was to put administrators appointed by the court in charge of the bank’s affairs. The order took effect immediately on being pronounced. Indover was insolvent and has been unable to meet its obligations, including its obligations under the Facility Agreement. 
7.	On 8th October SCB (HK) tried to persuade Habibsons to bring forward the settlement date to 10th October, but Habibsons declined to do so. However, later that day Habibsons received from BL in connection with a request for signature authorisation a copy of a transfer certificate bearing a settlement date of 10th October. Someone at SCB (HK) had apparently copied or re-printed the transfer certificate bearing the signature of Habibsons and had altered it using correction fluid before sending it to BL.
8.	On 8th October 2008 Habibsons made a formal objection to the transaction in accordance with the Loan Market Association rules and on 9th October instructed BL not to proceed without further instructions. BL agreed not to do so, but on 15th October it signed the Transfer Certificate which Habibsons had returned to Hong Kong on 6th October and which correctly reflected the transaction entered into on 6th October. Habibsons nonetheless continued to dispute the transaction and failed to pay the amount due in settlement. The settlement amount was deducted by Standard Chartered Bank in New York (“SCB (NY)”) from funds held in an account maintained with it by Habibsons. 
The proceedings
9.	On 4th February 2009 Habibsons started these proceedings by Part 8 claim form. Quite why the Part 8 procedure was used is unclear. Since the claim potentially raised issues of fact which, if it were to proceed to trial, would necessitate the service of statements of case, the proceedings ought to have been started under Part 7 of the Civil Procedure Rules. On 30th April 2009 the action was transferred to the Commercial Court and an application was made by SCB (HK) for an order striking out the claim, or in the alternative, for summary judgment. Habibsons applied for permission to amend its claim form to join BL and permission to amend its particulars of claim. The applications all came on for hearing before Teare J. on 20th August 2009, but in the event he was able to hear argument only in relation to the existing claim and was unable to deal with the application to amend. He ordered that the claim be struck out, but that the order should not take effect before the hearing of Habibsons’ application to amend, or further order.
10.	The matter came back before Cooke J. on 26th March 2010. By that time the position had changed to some extent. Habibsons sought permission to serve a different form of particulars of claim and to amend the claim form in order to join as defendants both SCB (NY) and BL. In a reserved judgment delivered on 30th March the Judge refused permission to make any of the amendments and accordingly the claim stood dismissed. On 2nd June Etherton L.J. directed that there be an oral hearing of Habibsons’ application for permission to appeal with appeal to follow if permission were granted.
The appeal
11.	It is necessary to begin by dealing with the approach the court ought to take on an application for permission to amend, since Mrs. Rosen Peacocke made a number of criticisms of the way in which the judge dealt with the application. She submitted that he had applied the wrong test when deciding whether to permit the amendments and that his refusal to allow the claimant to plead any part of its case was antithetical to the overriding objective of dealing with cases justly and fairly. She also complained that he had disregarded the principal factors relevant to giving permission to amend at an early stage in the proceedings, namely, whether the defendant can understand the case it has to meet, whether the case to be raised by the amendment is real and arguable, and whether the proposed amendments would cause prejudice to the defendant that cannot be remedied in costs.
12.	In my view these criticisms of the judge are wholly unfounded. He was well aware of the importance, particularly when an application of this kind is made at an early stage in proceedings, of allowing a claimant to put forward any case that has a genuine prospect of success. The difficulty, as he saw it, was that none of the arguments which Habibsons sought to raise in its amended particulars of claim had any real chance of success. Whether the matter is raised on an application to strike out under CPR Part 3.4, or on an application for summary judgment under Part 24, or on an application for permission to amend, the court will not allow a party to pursue a case that has no real prospect of success, because to do is unfair to the other party and leads to nothing but a waste of costs and valuable court time. Nor do I think there is any force in the suggestion that the judge failed to recognise the need to proceed on the assumption that the claimant will be able to establish the facts on which it relies, unless, that is, the contrary is clear. However, every case must be pleaded in sufficient detail to enable the other party to understand the case it has to meet. If a party seeking to amend is unable or unwilling to provide proper particulars of any allegation, it is not right to require the other party to deal with it as best he can. It will be necessary to return to this question when I come to consider the appellant’s case in relation to the Dutch administration order.
The transaction
13.	Although agreement was reached on 24th September that Habibsons would purchase US$2 million of the Indover loan from Standard Chartered Bank, that agreement was superseded on 6th October when it was realised that the correct seller was SCB (HK). In my view the communications between the parties and the signature and return of a new trade confirmation gave rise to a binding contract between SCB (HK) and Habibsons on the terms set out in it, which included a settlement date of 16th October. Indeed, I did not understand Mrs. Rosen Peacocke to suggest otherwise.
14.	The precise order of events on 6th and 7th October 2008 is open to debate. Mrs. Rosen Peacocke submitted that it was not clear whether the trade confirmation was signed before or after the administration order was made, and if before, whether it had been faxed to Hong Kong before or after the order was made. The trade confirmation was signed on behalf of Habibsons by Mr. Syed Mehdi, who had made a statement in support of the application. He does not say when he signed it or when it was faxed to Hong Kong (although he could presumably have done so, if the matter were thought significant), but for reasons I shall explain, I do not think that the precise sequence of events is of any importance.
15.	By its amended particulars of claim Habibsons seeks to recover the amount debited from its account with SCB (NY) on the grounds that the transaction was not completed or was rendered void by the alteration of the transfer certificate.
The administration order
16.	The primary basis on which it is said that the transaction was not completed rests on two propositions: (a) that since the transfer of part of the loan involved a partial novation of the Facility Agreement, it was necessary to obtain Indover’s consent to the transaction; and (b) that the effect of the administration order was to vest entire control over the bank’s affairs in the administrators, who never gave their consent to it. In the draft amended particulars of claim the matter is pleaded as follows:
“36.	The Dutch Administration Order was (under relevant European legislation and domestic law) binding upon the parties to the Facility Agreement and HB, and had the effect of
a.	Freezing the assets of Indover; and
b.	Prohibiting any transfer by novation of any part of Indover’s liabilities under the Facility Agreement without the agreement of the Administrator appointed by the District Court on 6 October 2008.
37.	From the date (and in consequence) of the Dutch Administration Order, SCB (HK) was unable to transfer any part of the Indover loan.”
17.	The judge described that as an “extraordinary” plea. As he pointed out, it contained no reference to any specific provision or principle of Dutch or European law that would have the consequences pleaded, nor was it supported by any expert evidence, despite the fact that the claimant had had over a year since the judgment of Teare J. in which to formulate its case.
18.	The fact that Habibsons had not produced any expert evidence in support of its case by the time the matter came before the judge is perhaps understandable, given the stage in the proceedings at which the application was being made, but there can be no excuse for the failure to give sufficient particulars of Dutch law to enable the defendant to understand the nature of the case made against it. Moreover, in the light of the judge’s criticisms it is surprising that there has been no attempt before us to demonstrate, by reference to expert evidence or otherwise, that the plea is well-founded. In the circumstances the judge was entitled, in my view, to hold that the case as pleaded was the best that Habibsons could do and that as such it was inadequate and embarrassing. That remained the position at the time of the hearing of the appeal. Mrs. Rosen Peacocke drew our attention to the terms of the administration order and the emergency decree to which Indover became subject, but she was not able to point to any provision of Dutch law which even arguably has the effect alleged in the draft amended pleading. For this reason alone the judge was right in my view to refuse permission to amend in respect of this part of the case.
19.	The matter does not end there, however, because there is in my view no reasonable prospect of persuading a court that the administration order was effective to prevent the novation of the loan. It is trite law that novation, which involves the addition or substitution of a new party to an existing contract, requires the consent of all existing parties as well as that of the new party himself. The only question that arises in this case is whether it was necessary to obtain the specific consent of Indover (and hence, after the administration order, of the administrators) to each transfer of any part of the loan.
20.	The submission that such consent was required inevitably runs up against the terms of clause 26.2(a) of the Facility Agreement, which provides that the consent of the borrower is not required for an assignment or transfer by a lender. However, Mrs. Rosen Peacocke submitted that that provision was ineffective and in support of her argument drew our attention, as she had that of Cooke J., to the case of Goodridge v Macquarrie Bank Ltd [2010] FCA 67, in which the Federal Court of Australia held that a provision in a loan agreement entitling the lender to novate the contract in favour of a third party without the consent of the borrower was ineffective to provide the borrower’s consent to the novation and amounted to no more than an agreement to agree. However, although at various points the judge appears to be resting his decision on the general principles relating to novation, there are several indications that it was the terms of the agreement that ultimately proved to be decisive, since he referred on more than one occasion to respects in which the effect of a novation was potentially uncertain. Moreover, he distinguished cases of unilateral contract, exemplified by Carlill v Carbolic Smoke Ball Co [1893] 1 Q.B. 256, on the grounds that the nebulous words of the clause in question did not identify any particular contractual relationship and referred to non-existent future transactions on uncertain and unidentified terms (paragraph 120).
21.	In the present case the commercial purpose of the clause headed “Changes to The Parties” is quite clear: it is to enable the lenders to transfer freely their interests in the loan to other banks and financial institutions which regularly engage in investing in assets of this kind. There is no uncertainty about the scope or terms of the contract created by the novation: it gives rise to exactly the same rights and obligations as existed under the original contract, but between different parties. Any suggestion that clause 26.2(a) is inconsistent with the general law relating to novation results from a failure to understand the nature and purpose of clause 26 as a whole. It does not seek to dispense entirely with the requirement of consent. All that it seeks to do is to make it clear that transfers may be made in the manner prescribed in the agreement without needing to obtain the express consent of the borrower to each transfer individually, its consent to all such transfers (subject to any prescribed restrictions) being contained in the Facility Agreement itself. 
22.	Although there has been some discussion in the authorities about the principles involved, there has hitherto been no real doubt that under English law a party to a contract may effectively give consent in the contract itself to a subsequent novation. The point was touched on in The Argo Fund Ltd v Essar Steel Ltd [2005] EWHC 600, also a case relating to a syndicated loan, in which it was common ground between the parties that terms similar to those of clause 26 in the present case were effective to achieve the parties’ object. The analysis proposed in that case was that of unilateral contract (see paragraphs 51-52), which I find persuasive. I do not think that the judge in Goodridge entirely rejected that as a possibility, since he distinguished Carlill v Carbolic Smoke Ball Co on the grounds that the clause he had to consider was too nebulous, but if he did, I agree with Cooke J. that the decision does not represent English law. The provisions of clause 26 in this case cannot possibly be described as nebulous and there is no uncertainty about the terms of the contract to which a novation gives rise. 
23.	By entering into the Facility Agreement the lenders provided consideration for a standing offer on the part of Indover to contract by way of novation with any financial institution of a kind falling within clause 26.1(b) which might comply with the transfer provisions. As a result the offer was irrevocable without the consent of all those who were lenders from time to time. Habibsons does not plead that the effect of the administration order was to revoke the offer, but in any event it is difficult to see how that order could have done so, given that the contract is governed by English law. In my view, therefore, it matters not whether the administration order was made before or after the contract on 6th October; nor, for that matter, is it of any significance that the administration order was on any view made before the transfer certificate was signed by the agent, since it could not affect rights and obligations arising under the Facility Agreement as a result of the operation of the transfer mechanism in which Indover had no further part to play.
The alteration of the transfer certificate
24.	The following plea is to be found in paragraphs 56 and 57 of the draft amended particulars of claim:
“56.	The deliberate alteration of the Transfer Certificate in material respects by or on behalf of the obligee, SCB (HK), without the consent of the obligor, HB, avoided the purported trade and rendered the entire transaction ineffective.
57.	Thereafter the proposed trade was completely void and incapable of being effected . . . ”
25.	The foundation for this contention is what is known as the rule in Pigot’s Case (1614) 11 Co. Rep. 26b. The principle is described in Chitty on Contracts, 30th ed. paragraph 25-020 as follows:
“If a promisee, without the consent of the promisor, deliberately makes a material alteration in a specialty or other instrument containing words of contract, this will discharge the promisor from all liability thereon, even though the original words of the instrument are still legible.”
The authorities cited in support (in addition to Pigot’s Case itself) include Master v Miller (1791) 4 Term Rep. 320, Sellin v Price (1867) L.R. 2 Ex. 189, Re Howgate and Osborne’s Contract [1902] 1 Ch. 451 and Lombard Finance Ltd v Brookplain Ltd [1991] 1 W.L.R. 271 [274]. The rationale for the rule is said to be twofold: that 
“no man shall be permitted to take the chance of committing a fraud, without running any risk of losing by the event, when it is detected” (Master v Miller);
and that
“the effect of the alteration renders the deed or instrument “no longer the deed or instrument of the party charged.”” (Raffeisen Zentralbank Osterreich A.G. v Crossseas Shipping Ltd [2000] 1 W.L.R. 1135, 1143.
26.	The judge was satisfied that the altered transfer certificate was sent to the agent at a time when SCB (HK) was hoping to persuade Habibsons to agree to bring forward the settlement date to 10th October and in order to enable the transfer to proceed promptly if Habibsons proved willing to do so. When it did not agree, the document was discarded and the transaction was completed using the original transfer certificate containing the settlement date of 16th October. He rejected the argument on the grounds that no use had been made of the altered certificate, which in the event became irrelevant. Nonetheless, Mrs. Rosen Peacocke submitted that each copy of the transfer certificate was to be treated as an original and that as a result of the alteration of one copy the transaction as a whole became void.
27.	Pigot’s Case concerned a claim on a bond given by Henry Pigot in the sum of £60 for the appearance of one George Watkins before the court of King’s Bench to answer a plea of trespass. The jury found that after it had been delivered the bond had been altered by the addition of the name of the Sheriff of Oxford who sought to enforce it. The court held that the alteration of the deed rendered it void and that Pigot was entitled to rely on the defence of non est factum. That does not seem surprising since the obligation on which he was sued was contained in the deed itself which had been altered in a material respect. It was no longer the deed executed by Pigot.
28.	Master v Miller concerned a claim on a bill of exchange. The bill had been drawn on 26th March 1788 payable at three months from its date. It was duly accepted by the defendant and indorsed by the payee to the plaintiff. While in the payee’s hands the date was altered without the defendant’s agreement to 20th March, making the bill payable six days earlier.  The court held that the principle of Pigot’s Case applied equally to other instruments, including bills of exchange. Lord Kenyon C.J. thought that the policy behind the rule lay in ensuring that no one should be allowed to take the chance of committing a fraud without running the risk of losing by it if detected. He considered that the rule applied to bills of exchange because he could see no distinction in principle between obligations created by deeds and obligations created by other kinds of written instruments. (In the case of bills of exchange the position is now governed by section 64 of the Bills of Exchange Act 1882, which provides that a material alteration of a bill without the assent of the parties renders it void. For this purpose, material alterations include any alteration of the date, the sum payable, the time of payment, the place of payment, and, where a bill has been accepted generally, the addition of a place of payment without the acceptor’s assent.)
29.	Sellin v Price concerned a deed of arrangement made between a bankrupt, a surety and various creditors expressed to be named in a schedule. When the deed was executed it contained no schedule, but one was attached later. The court held that the attachment of the schedule altered the deed in a material particular and rendered it void.
30.	In Suffell v Bank of England (1882) 9 Q.B.D. 555 the question arose whether the alteration of serial numbers on a banknote issued by the Bank of England was sufficient to prevent the holder from recovering against the Bank. The court held that it did. Brett L.J. expressed the view (page 568) that the rule in Pigot’s Case applies to written instruments of all kinds and that the rule could be formulated in terms that whenever any instrument is purposely altered by a person in lawful possession of it in a material part of it, the instrument is void for the purpose of enabling any person to sue on it or to defend himself by using it as a direct defence depending on its obligatory force as an instrument.
31.	In Re Howgate and Osborne’s Contract the abstract of title delivered to the purchaser on a sale of freehold property commenced with a mortgage to three persons, of whom the third was described as “William” G. It appeared from the original deed that at some time after its execution the name “William” had been erased and the names “Edward Thomas” substituted. It was proved that the person described as William G. was really Edward Thomas G. and that the misdescription had been due to inadvertence. The alteration was held not to be material and not to render the deed void. 
32.	Lombard Finance Ltd v Brookplain Ltd concerned a guarantee of a company’s obligations executed by two of its directors. In the document the company was described as “Brookplain Trading Company Ltd”, whereas its correct name was “Brookplain Trading Ltd”. The guarantee was altered by someone other than the two sureties by deleting the word “Company.” One of the directors sought to avoid liability, relying on the rule in Pigot’s Case. The argument failed because the alteration was not material. As Dillon L.J. pointed out, the company referred to in the guarantee must have been the company of which the two sureties were directors and that was Brookplain Trading Ltd. There could not have been another company with the name Brookplain Trading Company Ltd and therefore there was an immaterial misdescription which could have been cured by evidence. The alteration to correct the company’s name made no difference.
33.	These and other authorities were considered in some detail in Raffeisen Zentralbank Osterreich A.G. v Crossseas Shipping Ltd. In that case a guarantee contained a provision for service of proceedings against the guarantor on an agent, but at the time of execution the name of the agent had not been filled in. Subsequently the creditor inserted the name of an agent for service. The surety sought to avoid liability on the grounds that there had been a material alteration within the scope of the rule in Pigot’s Case. This court rejected that argument on the grounds that the alteration to the service provision had not altered or accelerated the surety’s liability under the guarantee and was therefore immaterial. The discussion of the authorities in that case was directed primarily to the need to establish that the alteration relied on as discharging the instrument is material and what amounts to materiality for these purposes. However, for the purposes of the present case it is sufficient to note that Potter L.J. (with whom the other members of the court agreed) considered that the decision in Suffell v Bank of England supported the conclusion that, even where an alteration does not affect the contractual or other rights of the parties to the instrument, it may still be regarded as material if it would adversely affect the utility of the instrument when used for an ordinary business purposes.
34.	As the authorities show, the rule in Pigot’s Case is concerned with the validity of written instruments. It therefore follows that if an instrument which creates obligations is rendered void by the alteration, the obligations to which it gives rise are also rendered void. However, it is not uncommon for parties to enter into contracts under which a written instrument of some kind, signed by both parties, which does not itself give rise to the obligations is to be used for the purposes of carrying out the contract, or some aspect of it. The unauthorised alteration of such an instrument in some material respect could no doubt invalidate it, but one finds nothing in the authorities to suggest that it would automatically render the underlying transaction void.  In my view there are good reasons for that. First, unlike the deed or contract in writing, such an instrument does not itself embody the parties’ rights and obligations, so the defendant cannot be sued on it directly and, if sued, cannot say “This is not the contract I made.” He may, however, say “This is not a good instrument” and challenge its effectiveness. Whether the claimant can at that stage obtain and make use of a valid instrument will depend on the terms of the contract. In many cases it will be too late for him to do so. Moreover, it does not follow that making a material alteration to such an instrument will never result in the discharge of the contract, since the alteration may itself amount to conduct which entitles the other party to treat it discharged.
35.	As the judge emphasised in this case, the draft amended particulars of claim contain no allegation of fraud or misconduct in relation to the altered copy of the transfer certificate. He thought that the altered document had probably been sent to the Agent in connection with negotiations that were going on between Habibsons and SCB (HK) for an earlier settlement date and there is evidence which tends to support that conclusion. Whether that was so or not, however, the case that Habibsons seeks to make is very simple, namely, that the mere fact of the alteration of the document was sufficient to render the transaction as a whole void. For the reasons I have given I am unable to accept that argument. I do not think that there is much doubt that the alteration of a document, the effect of which is to bring forward the date at which a transaction is to be completed and payment made, even by only a few days, is on the face of it a material alteration and I would therefore accept that the alteration of the settlement date in this case rendered that certificate void. It simply did not comply with the contract. However, that is not, as Mrs. Rosen Peacocke submitted, to confuse executory and executed contracts; it is to distinguish between documents which contain or evidence the transaction (in this case the trade confirmation) and documents which are required to carry it into effect (the transfer certificate). In the absence of fraud or misconduct of some kind I can see no basis in principle or authority for holding that the contract itself was thereby discharged. On the face of it the opportunity remained to tender a certificate which complied with the parties’ agreement, and that is what SCB (HK) in fact did. 
BL’s  failure to comply with Habibsons’ instructions
36.	Habibsons seeks to argue that once it had lodged an objection under the LMA Conditions and had expressly instructed BL not to sign the transfer certificate without further instructions, BL had no authority to sign the transfer certificate giving effect to the transaction. It also seeks to argue that BL had no power to sign the transfer certificate because it had not complied with its “know your customer” obligations under clauses 26.2(c) and 26.5(b) of the Facility Agreement. In my view neither of these arguments has any prospect of success.
37.	The function of the agent under clause 26 of the Facility Agreement is to act on behalf of the borrower, the existing lenders and the new lender to bring about a transfer of rights and obligations in relation to part of the loan. The mechanism by which that is to be achieved is set out in the Facility Agreement and is not one that gives the agent a discretion whether to implement it or not. On receipt of a duly completed transfer certificate it must execute it as soon as reasonably practicable, subject only to its right to satisfy itself that it has complied with its duty under any relevant laws to carry out checks on the new lender. Whether it is so satisfied would seem to be a matter for the agent itself, but in any event Habibsons has not identified any respect in which BL had failed to comply with its obligations under any relevant law at the time when it signed the transfer certificate. Any such assertion therefore remains merely speculative and does not give rise to a case that has any real prospect of success. By agreeing to the transaction SCB (HK) and Habibsons both bound themselves to operate the transfer mechanism provided by the Facility Agreement and to accept the fulfilment by the agent of its functions in accordance with its terms. Subject only to its right to satisfy itself that it had complied with its obligations, the agent was under a duty to execute the transfer certificate and neither party to the transaction could unilaterally revoke its authority to do so. In those circumstances Habibsons’ attempt to revoke BL’s authority was ineffective, notwithstanding that BL may have agreed to await further instructions. 
38.	For these reasons I am satisfied that none of the ways in which Habibsons seeks to put its case against SCB (HK) has any real prospect of success.
Claim against BL
39.	Habibsons seeks to amend its claim to join as defendants both BL and SCB (NY). As far as BL is concerned, its primary case rests on the allegation that no duly completed transfer certificate appearing on its face to comply with the terms of the Facility Agreement was delivered to it, which rests in turn on the allegation that the settlement date in the first transfer certificate delivered to BL on 8th October had clearly been altered. For the reasons given earlier, I do not think that is of any relevance. The transfer certificate that was ultimately executed had been duly completed and corresponded to the terms of the contract. Moreover, it was entirely a matter for BL whether it was satisfied that it had carried out the necessary checks on Habibsons to comply with the requirements of any relevant laws.
40.	In the alternative Habibsons seeks permission to pursue a case against BL that it acted unlawfully in executing the transfer certificate which correctly reflected the terms of the transaction. This somewhat surprising argument is based on allegations that BL had failed to make adequate enquiries into Indover’s solvency before 6th October 2008, failed to share any information it had about Indover with Habibsons, failed to ask Habibsons whether it agreed to its executing the altered transaction certificate and failed to honour its undertaking not to execute any transaction certificate without Habibsons' express authority.
41.	The nature of the various obligations which BL is said to have owed to Habibsons in these respects is not spelled out in the draft pleading and it is difficult to understand the case that Habibsons is seeking to make. The judge refused permission to make the amendment on the grounds that even if BL were in breach of an obligation owed to Habibsons, no loss flowed from it since the transaction itself was binding and had to be completed. 
42.	In my view the judge was right to refuse permission to add a claim against BL. The case against BL is not set out with sufficient clarity in the current draft and it is difficult to see how it can have any real prospect of success. It is quite unclear how a failure on the part of BL to make enquiries about Indover’s solvency or its failure to provide such information as it had to Habibsons could have given rise to an actionable wrong. Nor is it clear how the mere undertaking of BL not to execute a transfer certificate could without more have given rise to a legally binding obligation. It is not alleged, for example, that the undertaking was supported by consideration or that Habibsons acted in any way in reliance upon it. However, all that is beside the point, because if, as I think, there is no real prospect of showing that the transaction between Habibsons and SCB (HK) became void and therefore remained enforceable in accordance with its terms, no loss can have been caused by the agent’s execution of the transfer certificate. 
Claim against SCB (NY)
43.	As in the case of BL, the claim against SCB (NY) proceeds on the assumption that the transaction ceased to be effective so that no debt arose between Habibsons and SCB (HK) that would support the set-off. Since, as I have held, there is no real prospect of showing that the transaction did become void, there can be no real prospect that this claim might succeed.
Costs
44.	The judge ordered Habibsons to pay SCB (HK)’s costs of the application on the indemnity basis. That no doubt reflected his view of the merits of the application and the manner in which the proceedings had been conducted. The grounds of appeal simply allege that there were no grounds for making such an order, but do not give any further particulars of the manner in which the judge erred in the exercise of his discretion. Likewise, in her skeleton argument Mrs. Rosen Peacocke submitted that the judge’s order was insupportable, but she put forward no detailed reasons in support of her case.
45.	On an application of this kind the judge has a generous discretion with regard to costs and if either party intends to challenge the exercise of that discretion it must put forward cogent grounds for doing so. Occasionally the judge’s order is so unusual that it appears at first sight to be insupportable, but this is not such a case. This was, after all, Habibsons’ second attempt to formulate a case that had a real prospect of success and it had signally failed to do so, while putting SCB (HK) to considerable inconvenience and expense. In my view Habibsons has failed to identify any grounds for interfering with the judge’s exercise of his discretion. 
Conclusion
46.	For these reasons I think the judge was right to refuse permission to amend the particulars of claim. Since the issues have been fully argued before us I would give permission to appeal (save in relation to the Judge’s order as to costs), but I would dismiss the appeal itself.
Lord Justice Rix:
47.	I agree.