MUI Bank Bhd v Alkner Investments Pte Ltd

• Jurisdiction: Singapore
• Judge: Chao Hick Tin JC
• Judgment Date: 05 September 1990
• Neutral Citation: [1990] SGHC 60
• Docket Number: Originating Summons No 685 of 1989
• Date: 05 September 1990
• Year: 1990
• Published date: 19 September 2003
• Plaintiff Counsel: Gourdeep Singh (Tan, Lee & Partners)
• Citation: [1990] SGHC 60
• Defendant Counsel: Tang Khin Wai (Lee & Lee)
• Court: High Court (Singapore)
• Subject Matter: Court's discretion to refuse relief of possession,Credit and Security,Mortgage of real property,Efforts to obtain alternative financing not to be frustrated,Allegations of fraud, illegality or unconscionable conduct on the part of mortgagee,Opportunity to be given to mortgagor to pay off mortgage

This is a mortgagee proceeding under O 83 of the Rules of the Supreme Court 1970 (RSC) wherein the plaintiffs claim against the defendants for a sum of $1,829,610.36 being the outstanding overdraft secured under a legal mortgage, plus additional accrued interest from 1 July 1989. The plaintiffs also ask for delivery by the defendants of the mortgaged properties with vacant possession.

The matter came up before me by way of an appeal by the plaintiffs against a decision of the senior assistant registrar who refused to grant the orders prayed for in this originating summons. Instead, the senior assistant registrar ordered that the originating summons be converted into a writ and the action to go for trial with the affidavits to stand as pleadings. I dismissed the appeal but ordered early trial and costs in the cause. I now give my reasons.

The plaintiffs are a bank. By an agreement of 1 December 1987, the defendants were granted overdraft facilities of up to $1.8m on a current account operated by the defendants with the plaintiffs. As security for the facilities, a legal mortgage of certain properties was executed by the defendants in favour of the plaintiffs. Under the terms of the mortgage, the defendants were required `to pay to the mortgagee on demand in writing made to the mortgagor the balance which at the date of such demand shall be owing or remaining unpaid ... on the said account ... together with interest ... .`

On 29 March 1989, Tan Lee & Partners, writing on behalf of the plaintiffs, demanded from the defendants the payment within seven days of $1,819,614.21 being the amount overdrawn on the account, plus interest. Notice was also given that if the sum, plus interest, was not paid, the plaintiffs would enforce their rights against the mortgaged properties.

On 21 April 1989, the plaintiffs, through their solicitors, gave notice and demanded that the defendants quit and deliver up the properties with vacant possession to the plaintiffs by 31 May 1989.

In an affidavit filed on 20 September 1989 on behalf of the defendants, a director of the defendants, one Lam Tsen Fui (Lam), deposed to two matters in answer to the plaintiffs` application to obtain possession of the mortgaged properties and for payment of the outstanding sum.

The first matter is that sometime in August/September 1988 the plaintiffs` manager, one Kwan Cheng Kee (Kwan), had persistently tried to persuade and induce Lam to purchase a piece of property from a friend of Kwan. Lam refused to do so. As a result the relationship between the plaintiffs and the defendants deteriorated. The second matter was that sometime after the receipt of the letter of demand of 29 March 1989, the defendants applied to another bank, the Asia Commercial Bank (ACB), for a loan of $2.8m, in order to enable the defendants to repay the outstanding loan to the plaintiffs. Lam was informed and believed that their application had been approved by ACB but that it was subsequently cancelled because the plaintiffs` manager, Kwan, in breach of the duty of banking secrecy and other duties owed by the plaintiffs to the defendants, disclosed to certain officers of ACB certain information concerning the defendants` overdraft account with the plaintiffs and also made certain unfounded allegations against the defendants.

In his affidavit in reply filed on 26 September 1989, Kwan deposed to the fact that the plaintiffs, on the instructions of its head office at Kuala Lumpur, decided to demand the repayment of the outstanding overdraft because the account had exceeded the limit of $1.8m. Many reminders were sent to the defendants to service the account by paying the accrued monthly interest and to bring down the account to the approved limit and the defendants were not able to comply with the same. Kwan denied the allegation relating to the matter involving Lam`s refusal to buy a property from Kwan`s friend. But I would observe that Kwan did not specifically respond to the allegation that he spoke to officers of ACB, resulting in ACB deciding not to approve the defendants` application for loan: there was only a general denial. Kwan did not say that he did not speak to the officers of ACB.

In a further affidavit filed on 12 October 1989, Lam averred that because the plaintiffs` and the defendants` relationship deteriorated in September 1988, the defendants decided to approach ACB to negotiate an alternative arrangement in order to repay the loan from the plaintiff. Lam further deposed to the following:

6 The defendants were informed by three senior officers of the ACB that the defendants` said application had been duly processed internally recommended and approved. However, sometime in April/May 1989, the defendants were informed by the ACB that the ACB had decided to reject the defendants` application in view of what Kwan Cheng Kee, the credit manager of the plaintiffs had wrongfully stated, divulged and disclosed to the ACB over the telephone.

(7) I wish to...