CGU International Insurance plc v Quah Boon Hua and Others

JurisdictionSingapore
JudgeS Rajendran J
Judgment Date29 September 2000
Neutral Citation[2000] SGHC 198
Docket NumberSuit No 1766 of 1999
Date29 September 2000
Year2000
Published date19 September 2003
Plaintiff CounselFazal Mohamed Karim and M Anjalli (B Rao & KS Rajah)
Citation[2000] SGHC 198
Defendant CounselGoh Peck San and Chiong Meng Chuan (PS Goh & Co)
CourtHigh Court (Singapore)
Subject MatterEvidence,Credit and Security,Whether indemnity has legal effect against that signatory,Guarantees and indemnities,Letter of indemnity providing for three signatories but only two signatories signing,Hearsay,Intention of parties,Admissibility of evidence,Whether admissible in evidence,One signatory signing under impression that all three signatories will sign,Signatory's state of mind,Letter of indemnity,Signatory adducing evidence of what he was told at time of signing

: This is a case in which the plaintiffs sued the three defendants under a letter of indemnity that the three had signed indemnifying the plaintiffs against all losses the plaintiffs may suffer as a result of issuing, at the request of the defendants, a performance bond for the sum of $383,222 to a company known as Low Keng Huat (S) Ltd for the due performance by the third defendants (Hua Tong Marble Works Pte Ltd) of its obligation to Low Keng Huat (S) Ltd under a supply and installation contract that the third defendants had entered into with Low Keng Huat (S) Ltd.

The first and second defendants were directors of the third defendants.
There was a third director of the third defendants, one Lee Chee Sit; although provision was made in the letter of indemnity for a third director to sign, Lee Chee Sit had not signed the letter of indemnity.

Low Keng Huat had called on the performance bond and the plaintiffs had paid $383,222 under the bond to Low Keng Huat.
In this action, the plaintiffs sought reimbursement of the said sum from the three defendants. Judgment in default of appearance was entered against the third defendants and, as the second defendant (Poh Ah Beng) had been adjudicated a bankrupt, the plaintiffs had filed proof of debt against him. The action therefore proceeded only in respect of the first defendant (Quah Boon Hua).

The first defendant raised a number of defences to the claim.
Amongst them was a claim that he had been misled by the plaintiffs and by the second defendant into believing that the document he was signing was not a letter of indemnity but an application, to be signed by the third defendants and all the directors of the third defendants, for the issue of a performance bond. Lengthy submissions and copious authorities were cited in support of the defences raised. I saw no merit in these defences save for the plea in para 8 of the defence that it was a condition precedent to the signing of the letter of indemnity that all the directors of the third defendants would sign the said document and that as Lee Chee Sit was not a signatory, the document was ineffective as against the first defendant.

The evidence before me was that the first defendant was a minority shareholder of the third defendants (holding only 4.5% of the shares) and that, although he was a director, he was not involved in the day-to-day running of the third defendants.
The first defendant told the court that when the second defendant asked him to...

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2 books & journal articles
  • Contract Law
    • Singapore
    • Singapore Academy of Law Annual Review No. 2000, December 2000
    • 1 December 2000
    ...of a letter of indemnity, reference may be made to the Singapore High Court decision of CGU International Insurance plc v Quah Boon Hua[2000] 4 SLR 606. Implied terms One important issue in the sphere of implied terms has centred on what the precise relationship is between the “business eff......
  • Banking Law
    • Singapore
    • Singapore Academy of Law Annual Review No. 2000, December 2000
    • 1 December 2000
    ...would be one less person to whom they are entitled to look to for contribution. In CGU International Insurance plc v Quah Boon Hua & Ors[2000] 4 SLR 606, it was decided by Rajendran J that the signatories to a letter of indemnity who had signed the indemnity on the understanding that all th......

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