Goh Chin Soon v Oversea-Chinese Banking Corporation Limited

• Jurisdiction: Singapore
• Judge: Lee Seiu Kin JC
• Judgment Date: 30 January 2001
• Neutral Citation: [2001] SGHC 17
• Published date: 14 March 2013
• Court: High Court (Singapore)
• Plaintiff Counsel: Anand Thiagarajan and Netto (Anand T & Co)
• Defendant Counsel: Lee Eng Beng and Melissa Lee (Rajah & Tann)

JUDGMENT:

Grounds of Decision

1 On 12 September 2000 the Defendants ("the Bank") issued a statutory demand ("SD") under section 62 of the Bankruptcy Act to the Plaintiff ("Goh") in respect of about S$3.5 million. The SD was served on 28 September and on 13 October Goh took out this summons to apply to set it aside. The Deputy Registrar dismissed the application and gave the Bank liberty to commence bankruptcy proceedings forthwith. Goh appealed against that decision and the matter came up before me on 7 November 2000. After hearing counsel for the parties, I dismissed the appeal with costs. Goh filed a Notice of Appeal on 17 November against my orders and I now give my written grounds of decision.

2 Goh controls a number of companies and among these are Galleries Development Pte Ltd ("Galleries") and Grandlink Group Pte Ltd ("Grandlink"). These 2 companies entered into various loan agreements with the Bank in which Goh acted as guarantor. He also executed third party mortgages of various properties, which he owned solely or jointly, as security for those facilities. The details of these facilities are as follows:

(i) Banking facilities totalling about $11 million were granted to Galleries. Goh had executed a personal guarantee to secure these facilities. Upon Galleries default the Bank recalled the facilities and instituted legal action against Galleries, and against Goh under the guarantee, to recover the amount outstanding in Suit No. 600161/2000. Goh did not appeal against the judgment that was eventually entered against him for about $3.4 million which became the subject of the SD in the present summons.

(ii) Loan facilities totalling about $50 million were extended to Grandlink. These were secured by third party mortgages over 13 properties which were solely or jointly owned by Goh as well as by a personal guarantee executed by Goh for the sum of $43 million. Grandlink defaulted on the loans and the Bank obtained judgment for the $50 million against Grandlink and against Goh as guarantor. The Bank also obtained an order for possession of the 13 properties under the mortgages. 12 of these were eventually sold, or contracts entered into for their sale, and the total proceeds would be about $35.5 million. The last unsold property is valued at about $3 million with a forced sale value of $2.7 million. After deducting the higher value, there remained a shortfall in excess of $11.5 million which Grandlink and Goh are liable to pay the Bank.

3 Goh relied on 2 grounds for setting aside the SD:

i. Goh had a valid counterclaim, set-off or cross demand which exceeds the amount of the debt; and

ii. The SD did not comply with rule 94(5) of the Bankruptcy Rules.

(i) Counterclaim, set-off or cross demand

4 Rule 98(2) of the Bankruptcy Rules sets out the grounds for setting aside a statutory demand and provides as follows:

(2) The court shall set aside the statutory demand if --

(a) the debtor appears to have a valid counterclaim, set-off or cross demand which is equivalent to or exceeds the amount of the debt or debts specified in the statutory demand;

(b) the debt is disputed on grounds which appear to the court to be substantial;

(c) it appears that the creditor holds assets of the debtor or security in respect of the debt claimed by the demand, and either rule 94 (5) has not been complied with, or the court is satisfied that the value of the assets or security is equivalent to or exceeds the full amount of the debt;

(d) rule 94 has not been complied with; or

(e) the court is satisfied, on other grounds, that the demand ought to be set aside.

5 Goh relied on ground (a) of rule 98(2) and claimed that he had a counterclaim, set-off or cross demand against the Bank which is equivalent to or exceeds the sum in the SD. In his affidavit, Goh deposed that on 15 September 2000, Grandlink, Goh and one Sim Chui Chu commenced Suit No 740/2000 against the Bank for damages arising from the Banks breach of their duties as mortgagees in possession of 2 properties. The plaintiffs in that action alleged that the Bank had failed to sell those properties at their true market value. Three months after the Bank had become mortgagees in possession of the properties, their solicitors wrote to Grandlinks solicitors to advise that the Bank was considering an offer of $12.05 million. They gave Grandlink 6 days to revert should they be able to procure any higher offer. The deadline was subsequently extended to 1 September 2000 but Grandlink was unable to notify the Bank of any better offer by that date. However the following day, 2 September, Grandlinks solicitors faxed a letter to the Banks solicitors stating that they had procured an offer for $12.2 million. The Bank replied that they had already sold the properties to the purchaser who had offered the $12.05 million. Grandlink subsequently obtained a valuation report which stated that the properties were worth $17.2 million. In that action the plaintiffs ask for an injunction to restrain the Bank from completing the sale and damages in the alternative. The plaintiffs in that action also...