DB Trustees (Hong Kong) Ltd v Consult Asia Pte Ltd and Another Appeal

• Jurisdiction: Singapore
• Judge: Chan Sek Keong CJ
• Judgment Date: 06 August 2009
• Neutral Citation: [2009] SGCA 39
• Court: Court of Appeal (Singapore)
• Published date: 14 August 2009
• Citation: [2009] SGCA 39
• Plaintiff Counsel: Sarjit Singh Gill SC and Koh Junxiang (Shook Lin & Bok LLP),Christopher Anand Daniel and Kenneth Jerald Pereira (Clifford Law LLC)
• Defendant Counsel: Ernest Yogarajah Balasubramaniam (Arfat Selvam Alliance LLC)
• Subject Matter: Banking,Lending and security,Legal mortgages
• Year: 2009

6 August 2009 Judgment reserved.

V KRajah JA (delivering the judgment of the court):

1 These are our brief grounds of decision in relation to the appeals against the decisions of different High Court Judges in Originating Summons No 1044 of 2008 (“OS 1044/2008”) and Originating Summons No 800 of 2009 (“OS 800/2009”). Our grounds of decision are to be read with the decision of the High Court Judge who decided OS 1044/2008, DB Trustees (Hong Kong) Ltd v Consult Asia Pte Ltd [2009] SGHC 62 (“the Enforcement Judgment”) , where the facts have been fully stated.

2 OS 1044/2008 was an application by DB Trustees (Hong Kong) Limited (“DB Trustees”) against Consult Asia Pte Ltd (“Consult Asia”) for an order, inter alia, that DB Trustee’s appointment of receivers and managers over Consult Asia on 4 July 2008 was valid and enforceable. The appointment had been made in the context of existing security arrangements between the parties. Consult Asia had mortgaged two properties as security (“the Security”) for the redemption of Senior Secured Notes (“the Notes”) that it had issued pursuant to a Subscription Agreement, dated 28 December 2006. DB Trustees acted as trustee of the Security on behalf of the Note-holders. However, Consult Asia failed to redeem the Notes by 28 June 2008, the contractually stipulated redemption date. As a consequence, DB Trustees later appointed the receivers and managers to take control of Consult Asia and enforce the Security. Consult Asia argued that DB Trustees had no right to appoint the receivers and managers since DB Trustees had acted unreasonably in refusing to release the Security concurrently with the payment of the redemption monies.

3 The High Court Judge in OS 1044/2008 agreed with Consult Asia and dismissed the application. He found that Consult Asia had shown enough evidence to demonstrate that it had a real intention as well as the means to redeem the Notes. He accepted the bare evidence adduced by Consult Asia of an agreement entered into in early February 2008 (with a new placement agent to procure investors to participate in a fresh notes issuance facility in order to obtain sufficient funds to redeem the Security) as both “clear” and “concrete enough” evidence of the proposed refinancing, at [39] of the Enforcement Judgment. In his view, Consult Asia had been impeded in its attempt to secure redemption by DB Trustees’s refusal to release the Security concurrently with the proposed redemption payment by Consult Asia. This, he held, “effectively frustrated the defendant’s attempt to proceed with alternative financing in order to pay off the principal sum and interest due”, at [40] of the Enforcement Judgment. Accordingly, the Judge discharged the appointment of the receivers and managers by DB Trustees and allowed Consult Asia up to 29 April 2009 to redeem the Notes.

4 In OS 800/2009, Consult Asia applied for the receivers and managers, appointed by DB Trustees on 30 April 2009, to be discharged. DB Trustees had again appointed the receivers and managers over all the assets and business of Consult Asia, following the expiry of the grace period allowed by the Judge in OS 1044/2008, since Consult Asia had not redeemed the Notes up to the expiry of the stipulated time....