Bangkok Bank Ltd v Cheng Lip Kwong

• Jurisdiction: Singapore
• Judge: Yong Pung How J
• Judgment Date: 07 December 1989
• Neutral Citation: [1989] SGHC 104
• Date: 07 December 1989
• Subject Matter: Guarantor,Bank's issue of certificate with 'conclusive evidence' clause,Words and Phrases,Credit and Security,Whether debt has to be contemporaneous with issue of certificate,Guarantees and indemnities,'For the time being'
• Docket Number: Suit No 5186 of 1986
• Published date: 19 September 2003
• Defendant Counsel: Sarjit Singh Gill (Shook Lin & Bok)
• Court: High Court (Singapore)
• Plaintiff Counsel: RE Martin (Ramdas & Wong) and J Benny (Joseph Tan Jude Benny & Co)

Cur Adv Vult

The plaintiffs are a bank incorporated in Thailand and having a place of business in Singapore. By a guarantee in writing dated 21 December 1982 (the guarantee), the defendant and two others severally guaranteed the payment of any outstanding liability due to the plaintiffs by a corporate customer (the company) on account of moneys advanced to the company up to the tune of $5m; it also included the payment of any liabilities of the company on account of interest, commissions and banking charges relating thereto, together with interest thereon at the rate of 4% pa above the plaintiffs` prime lending rate from the date of default. The defendant`s liability was 25% of the total amount due.

On 15 August 1986, the outstanding amount due and owing by the company to the plaintiffs was $4,981,712.10. On that day, on the instructions of the plaintiffs, their solicitors demanded in writing from the defendant the payment of $1.25m being the defendant`s liability on his proportionate 25% share of the total amount due. As the defendant failed to respond to the demand, a writ was issued on 2 October 1986. The accompanying statement of claim stated that as at 15 August 1986, the outstanding amount due and owing by the company to the plaintiffs was $4,981,712.10 and claimed the payment of $1.25m as the defendant`s proportionate share under the guarantee. After effecting substituted service on the defendant, the plaintiffs made an application on 17 January 1987 under O 14 for summary judgment to be entered against the defendant for $1.25m with interest at 8% pa and costs.

The defendant opposed this application on the ground that, although in 1982 he had set up the company together with the other two guarantors, he had been removed as a director in early 1986. The other guarantors had taken over the control of the company and had mismanaged its affairs, resulting in the default.

On 3 July 1987, the deputy registrar ordered that judgment be entered against the defendant for $1.25m with interest at 8% pa from 2 October 1986 until the date of payment. On 7 July 1987, the defendant applied for a stay of execution. He merely claimed in his supporting affidavit that there was a triable issue but did not set out the grounds of his application in detail. The application was dismissed on 7 August 1987 and on 18 August 1987 judgment was duly entered against the defendant.

On 7 July 1987, however, the defendant had also appealed to the judge of the High Court in chambers against the deputy registrar`s decision. The appeal was heard on 7 October 1987. The defendant was granted unconditional leave to defend the action, and the deputy registrar`s decision in entering judgment was set aside.

On 26 October 1987, the defendant filed a defence. This claimed, inter alia, that the liability of the company was by way of a term loan under a loan agreement dated 21 December 1982 (the loan agreement), and that the repayment by the company of the term loan was subject to the completion of the project for which the loan had been made, and to the finalization of the loan account. As the project had not been completed by then, the liability of both the company and the defendant had not crystallized and there was therefore no liability on the part of the defendant.

On 11 March 1989, the plaintiffs applied under a notice for further directions for the defence to be struck out under O 18 r 19 on the ground that it disclosed no reasonable defence, was frivolous or vexatious, and an abuse of the process of the court. In a supporting affidavit dated 28 March 1989, the plaintiffs` solicitors averred that the defence filed on 26 October 1987 offered no defence at all to the plaintiffs` claim. The affidavit exhibited a certificate dated 27 March 1989 under cl 6(c) of the guarantee certifying that on 16 August 1986 a sum of $4,981,712.10 was due and owing by the company. It was contended by the plaintiffs that under cl 6(c) any certificate issued pursuant to it would be binding and conclusive on the defendant as a guarantor.

When the application was heard on 17 April 1989, the assistant registrar ordered that the defence be struck out under O 18 r 19 and under the inherent jurisdiction of the court, and that the plaintiffs be at liberty to enter judgment against the defendant for $1.25m together with interest thereon at 8% pa from 2 October 1986 until judgment, and with costs up to and including the application. On the same day, the defendant gave notice of appeal to the judge of the High Court in chambers against the assistant registrar`s decision, seeking that it be reversed, and that the plaintiffs` notice for further directions be dismissed.

On 17 October 1989, the defendant`s appeal was heard by me and dismissed; but I varied the assistant registrar`s order, so that the costs of the action prior to the production of the relevant certificate issued on 27 March 1989 should go to the defendant. At the defendant`s request, further arguments were heard by me on 14 November 1989 as a preliminary step to an appeal to the Court of Appeal under s 34(b) of the Supreme Court of Judicature Act (Cap 322). After hearing the further arguments, I remained of the view that the defence was obviously unsustainable because there was no real defence, and accordingly that recourse could properly be had to the summary process under O 18 r 19. I therefore confirmed the earlier...