Australian and New Zealand Banking Group Ltd v Joseph Shihara Rukshan De Saram

• Judge: Belinda Ang Saw Ean J
• Judgment Date: 27 November 2014
• Neutral Citation: [2014] SGHC 250
• Year: 2014
• Published date: 02 December 2014
• Docket Number: Suit No 1029 of 2012 (Registrar’s Appeal No 106 of 2014)
• Hearing Date: 25 July 2014,22 May 2014
• Subject Matter: Stay of execution,Judgments and orders,Civil Procedure,Summary judgment
• Citation: [2014] SGHC 250
• Court: High Court (Singapore)
• Defendant Counsel: Gopal Perumal (Gopal Perumal & Co)
• Plaintiff Counsel: Toh Wei Yi and Lee Hui Min (Harry Elias Partnership LLP)

Belinda Ang Saw Ean J: Introduction

This action involved two residential property term loan agreements dated 9 June 2010 and 12 October 2010 respectively (“the Facility Agreements”). By the Facility Agreements, the plaintiff bank, Australian and New Zealand Banking Group Limited (“the Bank”), granted loans to the defendant borrower, Joseph Shihara Rukshan De Saram (“the Borrower”). The Borrower subsequently defaulted on interest payments due under the Facility Agreements and the Bank terminated the Facility Agreements on 10 September 2012. The Bank sued to recover monies due and owing from the Borrower.

On 14 March 2014, the Bank successfully obtained summary judgment against the Borrower. The Assistant Registrar (“AR”) who heard the Bank’s application for summary judgment (vide Summons No 2166 of 2013) ordered the Borrower to pay the following Judgment sums together with contractual interest, default fees and legal costs on a full indemnity basis: The sum of HK$4,043,424,75; The sum of AU$ 480,862.92; The sum of US$1,350.00; Interest that continues to accrue on the principal sum of HK$3,994,239.20 under Facility 1 at the rate of 1.9017% per annum from 5 December 2012 till the date of full payment; Interest that continues to accrue on the principal sum of AU$464,000 under Facility 2 at the rate of 4.8454% per annum from 5 December 2012 till the date of full payment; Default fees in respect of Facilities 1 and 2 that continues to accrue from 5 December 2012 until the date of full payment; and Costs in the sum of $32,000 (inclusive of reasonable disbursements).

The Borrower filed Registrar’s Appeal No 106 of 2014 (“RA 106”) to appeal against the AR’s decision. I dismissed the Borrower’s appeal at the conclusion of the hearing on 25 July 2014. I also ordered costs of the appeal to be fixed at $7,000. In addition, I declined to stay execution of the summary judgment in the Bank’s favour pending trial of the Borrower’s Counterclaim.

The Borrower has appealed against my decision. I now give my grounds of decision for dismissing RA 106.

Facts underling the dispute The First Loan Facility

By a facility letter dated 7 May 2010, the Bank offered to grant the Borrower a Residential Property Term Loan Facility. The Borrower accepted the facility on 9 June 2010 (“Facility 1”). The Bank’s standard terms and conditions (“T&C”) were also incorporated into Facility 1.1Maya Lim’s Second Affidavit, pp 2–3 at [8]–[10].

Clause 3 of Facility 1 allowed for funds to be drawn down by the Borrower through the form of a single currency (Australian Dollar) or cross currency (Australian Dollar and Hong Kong Dollar) loan. If the Borrower opted for a single currency loan, he could draw down a maximum sum of AU$668,000. If he opted for a cross currency loan instead, the total amount he could draw down was limited to a maximum sum of AU$584,500 or its equivalent in Hong Kong Dollars at the prevailing exchange rate two banking days before the date of the draw down.2Maya Lim’s Second Affidavit, Tab ML-1, pp 29–30. In either case, the maximum sum must be drawn down in one tranche within six months from the date of Facility 1.

Clause 8 of the Facility 1 provided that the interest periods applicable to the loan facility would be of a duration of either one month or three months subject to any variation by the Bank. Under cl 9 of Facility 1, the interest rate in respect of each interest period was fixed at 1.25% per annum over the Bank’s cost of funds which is the cost the Bank would incur in raising deposits for an amount comparable to the loan or any part thereof and in the currency of the loan and for a term equivalent to the relevant interest period in the Singapore interbank market (“the Cost of Funds”).3Maya Lim’s Second Affidavit, Tab ML-1, p 31. This Cost of Funds would be quoted by the Bank on the second business day before the commencement of each interest period. Clause 9 also provided that interest was payable by the Borrower to the Bank on the last day of each interest period.4Maya Lim’s Second Affidavit, Tab ML-1, p 31.

Under cl 12 of Facility 1, the loan facility was secured by, inter alia, a mortgage over 127-129B Brisbane Street, Berwick, Victoria, Australia (“the First Property”). The Bank, pursuant to cl 14 of Facility 1, was entitled to rely on its own assessment of the value of the security pledged by the Borrower under cl 12 in determining the loan/security ratio.5Maya Lim’s Second Affidavit, Tab ML-1, pp 32–33.

A default is defined under cl 5(a)(i) of the T&C to include any failure to make payment for any sum payable when due, such as interest. Clause 5(b) of the T&C entitled the Bank to, upon any such default, terminate Facility 1 and demand for immediate repayment of all amounts owed by the Borrower to it under Facility 1.6Maya Lim’s Second Affidavit, Tab ML-2, p 40.

On 9 July 2010, the Borrower drew down the maximum sum of HK$3,994,239.20 (the equivalent of AU$584,500 at the relevant exchange rate) as a cross currency loan pursuant to cl 3 of Facility 1.7Maya Lim’s Second Affidavit, p 11 at [14].

The Second Loan Facility

By a facility letter dated 11 October 2011, the Bank offered to grant the Borrower a second Residential Property Term Loan Facility. The Borrower accepted the facility on 12 October 2010 (“Facility 2”). The Bank’s T&C was also incorporated into Facility 2.8Maya Lim’s Second Affidavit, p 11 at [16]–[17]. According to the Borrower’s e-mail dated 14 September 2010 to the Bank, Facility 2 was intended to finance the purchase of a property known as 13 Fritzlaff Court, Berwick, Victoria, Australia (“the Second Property”).

The terms of Facility 2 were largely in pari materia with the terms of Facility 1. The only material differences were in relation to cll 3 and 12 of Facility 2. Clause 3 of Facility 2 allowed the Borrower to draw down a maximum sum of AU$464,000 as a single currency loan or a maximum sum of AU$406,500 (or its equivalent in Hong Kong Dollars) as a cross currency loan.9Maya Lim’s Second Affidavit, Tab ML-5, p 56. Under cl 12, Facility 2 was secured by, inter alia, a mortgage of the Second Property.10Maya Lim’s Second Affidavit, Tab ML-5, p 59.

On or about 15 October 2010, the Borrower drew down the maximum sum of AU$464,000 as a single currency loan pursuant to cl 3 of Facility 2.11Maya Lim’s Second Affidavit, p 12 at [20].

The Borrower’s breaches of the Facility Agreements

Pursuant to cl 8 of the Facility Agreements, the interest period applicable to each loan facility was set at three months. According to the Bank, and this was not disputed by the Borrower, there were various occasions where the Borrower was late in making interest payments that gave rise to instances of default, as defined under cl 5(a)(i) of the relevant T&C. The first instance of default occurred when the Borrower, as shown in his Third Affidavit, failed to make timely interest payment vis-à-vis the Facility Agreements in January 2011 for the first quarter of 2011.12Joseph Shihara Rukshan De Saram’s Third Affidavit, pp 43–44 at [128]. Payment was only made subsequently.

In this action, the interest repayments under the Facility Agreements were due on 12 July 2012, but the Borrower did not make payment. The interest owed for that relevant period under Facility 1 and Facility 2 were HK$19,010.28 and AU$6,969.19 respectively.13Maya Lim’s Second Affidavit, Tab ML-9, pp 97 and 99. The Bank received no payment from the Borrower despite numerous reminders sent by the Bank over the period of 13 July 2012 to 27 August 2012. Although the Bank issued two Notices of Default dated 27 August 2012, the Bank informed the Borrower, on a without prejudice basis, that it would wait until 6 September 2012 for payment failing which it would take action.

In light of the failure of the Borrower to make good the default by 6 September 2012, the Bank terminated the Facility Agreements on 10 September 2012 and demanded immediate payment of all sums owed by the Borrower to the Bank pursuant to cl 5(b) of the T&C.14Maya Lim’s Second Affidavit, Tab ML-15, p 129.

As stated, the Bank sued the Borrower on 4 December 2012.

The Borrower’s Defence and Counterclaim

The Borrower’s challenge to the Bank’s application for summary judgment was presented by reference to the matters set out in the Borrower’s Defence and Counterclaim (Amendment No 1): The Bank had delayed the processing of the mortgage documents for the First Property and was late in issuing the first facility letter offering Facility 1 to the Borrower (“Triable Issue 1”); The Bank had caused further delay after the Borrower had accepted and signed Facility 1 such that the draw down only took place on 9 July 2010 (“Triable Issue 2”); The Bank’s appointed valuers had derived “an artificially low valuation for the First Property” which resulted in a lower maximum cap as to the amount the Borrower could have drawn down from Facility 1 (“Triable Issue 3”); The Bank had unilaterally deducted the stamp duty payable on the Second Property from the amount drawn down by the Borrower under Facility 2 (“Triable Issue 4”); The Bank had “artificially inflated” its cost of funds vis-à-vis the interest payable under the Facility Agreements (“Triable Issue 5”); The Bank had “unilaterally changed” the interest rate payable over the cost of funds under the Facility Agreements from 1% to 1.25% (“Triable Issue 6”); The Bank had wrongfully terminated the Facility Agreements on 5 June 2012 (“Triable Issue 7”); The Bank had represented to the Borrower that “it would provide a high level of personal service, as well as internet banking facilities and credit cards” but had failed to do so (“Triable Issue 8”); and The Bank had failed to administer the cross currency loan under Facility 1 properly (“Triable Issue 9”).

The Borrower submitted that the allegations above (at [18]) were...