Edwards Jason Glenn v Australia and New Zealand Banking Group Ltd

• Jurisdiction: Singapore
• Judge: Tay Yong Kwang J
• Judgment Date: 21 March 2012
• Neutral Citation: [2012] SGHC 61
• Court: High Court (Singapore)
• Docket Number: Suit No 489 of 2011
• Year: 2012
• Published date: 02 April 2012
• Hearing Date: 31 October 2011,02 November 2011,01 November 2011
• Plaintiff Counsel: Suresh Nair and Daniel Zhu (Straits Law Practice LLC)
• Defendant Counsel: Andy Lem and Toh Wei Yi (Harry Elias Partnership)
• Subject Matter: Contract,Interpretation,Penalty
• Citation: [2012] SGHC 61

Tay Yong Kwang J: Introduction

This case, at its simplest, is one of a borrower who took out a loan to buy properties and to invest and now refuses or is unable to pay it back. It is complicated by the mechanisms within the loan, for example, the different currencies that denominate the different tranches of the loan, as well as the different triggers that set off related calls on the loan but, at its heart, it is a case of a borrower who is facing a claim from the bank and seeking a declaration to absolve himself of his debts. In attempting to do so, the plaintiff has mounted a multi-pronged attack on the contract he signed on, claiming, among other things, that the contract is void for uncertainty and that there are multiple difficulties in the construction of the contract.

Having considered the evidence and the parties’ three sets of written submissions tendered sequentially after the trial, I have decided to dismiss the Plaintiff’s claim and to allow the Defendant’s counterclaim. I now give the reasons for my decision.

Facts Parties to the dispute

The plaintiff, Jason Glenn Edwards (“Edwards”) is an Australian citizen who has lived in Singapore for 6 years.¹ He is General Counsel at Clearwater Capital Partners², a firm in the business of private equity and fund management.³ He was previously a partner at the law firm, Baker and McKenzie.⁴ It is not in dispute that Edwards is a financially astute and sophisticated customer who was proactive in buying and selling instrument funds as well as booking forward currency conversions.⁵ His income is paid to him in either USD or SGD.⁶

The defendant, Australia and New Zealand Banking Group Limited (“ANZ”), is an international banking group operating in Singapore. ANZ provides banking and financial services, including deposits services and loan facilities.⁷

Edwards testified at the trial. An Australian property valuer who did a valuation of 61 George Street in Queensland (see [10] below), one of the properties in issue here, and an Australian estate agent engaged by the previous owner of 61 George Street to sell the said property in January 2008 were supposed to testify at the trial via video-link. However, it was agreed at the start of the trial that their affidavits of evidence-in-chief (“AEIC”) be admitted without cross-examination but would be subject to submissions to be made. The witnesses who appeared for ANZ at the trial were: Ms Jodene Frances Edwards (“Jodene Frances”), a former employee of ANZ in Singapore from 2004 - June 2007.⁸ She is a former Private Banker in ANZ, specializing in the sale of dual and multi-currency facilities. She met Edwards sometime before January 2006 in her capacity as private banker after he was referred to her by one of her colleagues.⁹ Malcolm George Crispe (“Crispe”), an ANZ Associate Director of Private Banking at ANZ. He dealt with Edwards after Edwards’ account was transferred to him from Jodene Frances in April 2007.¹⁰ Crispe was Edwards’ Relationship Manager till April 2009, when Edwards’ account was transferred to the Asset Management Unit of ANZ.¹¹ Maya Lim, the Senior Manager, Lending Services Asia of ANZ. He dealt with Edwards from 20 April 2010 onwards.

Similarly, an Australian valuer engaged by ANZ to do a retrospective valuation of 61 and 75 George Street (the latter being the other property in issue here- see [9] below) was also supposed to have testified via video-link. His AEIC was also admitted by consent without cross-examination but subject to submissions to be made.

Background to the dispute The promising start

In 2006, Edwards wanted to purchase property in Australia and, to this end, wanted to borrow and make mortgage payments in the currency of his income or alternatively in a low interest currency like the Japanese Yen. He sought to avoid having to convert his income into Australian Dollars to make his mortgage payments because if the Australian Dollar appreciated against the currency he was paid in, the cost of his monthly payments would rise.¹² He also found borrowing in Japanese Yen not too “burdensome” as the interest rate was low.¹³

In January 2006, ANZ advertised a package that appeared to be perfectly suited to Edwards’ needs.¹⁴ It featured the ability to borrow in income currency and/or property currency and the flexibility to switch in between.¹⁵

On 24 January 2006, Edwards signed a facility letter for a Multi Currency Term Loan Facility (“the Facility Letter”). Funds were made available to Edwards in Japanese Yen (“JPY”), Singapore Dollars (“SGD”), Australian Dollars (“AUD”) and US Dollars (“USD”). ANZ’s Standard Terms and Conditions (“the T&Cs”) were issued as part of the Facility Letter.¹⁶ The stated purpose of the facility was to refinance an existing loan with Commonwealth Bank of Australia, Hong Kong, for a property located at 75 George Street, Burleigh Heads, Queensland, Australia (“75 George Street”), for investment purposes, and to finance the purchase of a residential property located in Singapore.¹⁷ The Facility Letter was subsequently varied by variation letters dated: 22 March 2006¹⁸, 13 April 2006¹⁹, 27 July 2006²⁰, 21 August 2007²¹, 10 December 2007²², 14 July 2008²³ and 23 October 2009²⁴ (collectively, “the Variation Letters”).²⁵ The Facility Letter, Variation Letters and the T&Cs together formed the entire facility agreement (“the Facility Agreement”) entered into between Edwards and ANZ.²⁶ I draw particular attention here to the 14 July 2008 variation letter (“the 14 July letter”). It is of central importance in this trial and almost the entirety of the trial was spent on interpreting the clauses in the 14 July letter (see [42] – [102] below).

The purchase of 61 George Street

In July 2008, Edwards wanted to purchase 61 George Street Central, Burleigh Heads, Queensland 4220 (“61 George Street”). He sought a variation of the existing loan facility to obtain additional loan funds in order to assist in financing the purchase.²⁷ On 14 July 2008, Edwards signed the 14 July letter which set out how much funds would be made available to Edwards and what securities ANZ wanted from Edwards. It also set out terms relating to the Loan to Security Ratio (“LVR”) and terms relating to the consequences of breaching certain LVRs (see [43] below for the exact terms). On or about 25 July 2008, Edwards drew down on the new facility. The amount required was AUD 1,714,879.11, of which Edwards requested that:²⁸ AUD 1,000,000 be converted to JPY, with the resulting loan being JPY 103,709,000;²⁹ AUD 714,879.11 be converted to USD, with the resulting loan being USD 688,078.29.³⁰

As of or about 25 July 2008, Edwards’ total loan principal under the Facility Agreement (“the Total Loan Principal”) was:³¹ AUD 269,073.04; JPY 180,297,938; and USD 997,148.29.

LVR exceeds 80%

On 7 October 2008, the LVR was in excess of 80%, a stipulated threshold in the Facility Agreement (see [43] below).³² On 10 October 2008, Crispe informed Edwards via email that a call had been triggered on the remaining loans.³³ Crispe asked that Edwards call him to discuss his options. Crispe also attached to the email:³⁴ A letter dated 9 October 2008 by Michael Byers, the Head of Risk and Compliance, Private Banking, Asia, by which ANZ informed Edwards that: LVR was in excess of 90% and that Edwards was required to either (1) provide additional security of a pledged cash deposit of an amount not less than AUD 1,139,000; (2) reduce the loan outstanding by AUD 1,025,000; or (3) provide other security that would be acceptable to ANZ by 20 October 2008. If he did not do either of the three, ANZ would exercise its right to convert Edwards’ loan outstandings.³⁵ A spreadsheet summarising Edwards’ position, containing the value of the securities, the amount of loan outstandings, the maximum approved LVR and the amount of payment that needed to be made by Edwards to cure the LVR breach.³⁶

Edwards proposes to repay loans

On 10 October 2008, Edwards responded that he wanted to:³⁷ liquidate the funds that were being used as security for the facility; repay the AUD loan in full; make partial repayment of the USD loan the following week; not have the loans converted.

On or about 24 October 2008, Edwards’ LVR was still in excess of 80%.³⁸ On 31 October 2008, Edwards informed Crispe via email that he had set up the standing instruction to transfer USD 10,000 a month, beginning 3 November 2008.³⁹ On or around 6 November 2008, USD 10,000 was received by ANZ.⁴⁰

The first conversion (JPY to AUD)

On 17 November 2008, Crispe informed Edwards over the phone that ANZ had decided to convert all loan outstandings to AUD, as LVR was in excess of 90%. Edwards expressed disappointment and stressed that he had the capacity to make payment to reduce the loan outstandings.⁴¹

In email replies on 18 November 2008, Edwards reiterated his proposals to avoid conversion. He proposed to pay the AUD loan with:⁴² at least USD 200,000 from his bonus; proceeds from the sale of his Thai property; and proceeds from the sale of the Series 11 Fund.

He also proposed to reduce the USD portion of the loan from approximately USD 997,000 to USD 350,000.⁴³ He would then continue to pay USD 10,000 each month and add to these monthly payments to make sure the rest of the USD loan was repaid in full in less than two years. These proposed payments would leave him with the JPY portion outstanding.⁴⁴

In an email dated 18 November 2008, Crispe informed Edwards that the JPY loan would be converted to AUD but Edwards could retain the USD portion of the loan on the basis that USD 500,000 would be repaid by March 2009, with USD 300,000 paid from the proceeds of sale of the Thai property and USD 200,000 from Edwards’ bonus. Upon conversion of the JPY loan to AUD, the proceeds from the sale of the Series 11 Fund and term deposit of AUD 44,047.27 would be used to repay part of the AUD...