Oversea-Chinese Banking Corp Ltd v Lim Sor Choo

• Court: High Court (Singapore)
• Judge: Dedar Singh Gill JC
• Judgment Date: 04 June 2020
• Neutral Citation: [2020] SGHC 116
• Citation: [2020] SGHC 116
• Published date: 11 June 2020
• Plaintiff Counsel: Tan Kai Yun, Lorraine Koh Xin Yu and Rajan Smitha Menon (WongPartnership LLP)
• Defendant Counsel: Yogarajah Yoga Sharmini and Kannan s/o Balakrishnan (Haridass Ho & Partners)
• Docket Number: Suit No 586 of 2019 (Registrar’s Appeal No 8 of 2020)
• Hearing Date: 11 February 2020
• Date: 04 June 2020
• Subject Matter: Banking,Express terms,Contract,Lending and security,Contractual terms

Dedar Singh Gill JC:

This is an appeal from the decision of the Assistant Registrar dated 23 December 2019 (“the Decision”) pursuant to O 14 r 12 of the Rules of Court (Cap 322, R 5, 2014 Rev Ed) (“Rules of Court”). In the Decision, the Asst Registrar held that the defendant was liable for US$131,512,173.91 under a judgment entered in the plaintiff’s favour against the defendant’s husband (“the Judgment Debt”) pursuant to the terms of a joint mortgage (“the Mortgage”). The Judgment Debt arose out of a guarantee given by the defendant’s husband to support a loan granted to two companies. I dismissed the appeal. The defendant has appealed against my decision. I now set out my grounds.

Facts

On 21 July 2011, the plaintiff (“the Bank”) issued an offer letter to the defendant and her husband (“the Borrowers”) offering them a loan facility of S$2.7m (“the Loan Facility”) for the purpose of purchasing a property (“the Property”).¹ On 23 July 2011, the Borrowers accepted the offer letter (“the Offer Letter”).² The Offer Letter stated that the offer was “on the terms and conditions set out … in our ‘Terms and Conditions Governing Mortgage Loans’”.³

Under cl 2 of the Offer Letter, the Borrowers were required to secure the Loan Facility with a mortgage over the Property.⁴ To this end, the Borrowers executed the Mortgage on 26 September 2011 and registered it three days later.⁵ The Mortgage was expressly subject to the terms set out in the Bank’s “Memorandum of Mortgage” as then in force (“the Memorandum”) and Annex 1 of the Mortgage (“Annex 1”).⁶ The Offer Letter, the Memorandum and Annex 1 are hereinafter collectively referred to as “the Facility Documents”. In particular, cl 1.1 of Annex 1 states:⁷

In consideration of the Mortgagee having at the request of the Mortgagor agreed to make or continuing to make available to the Mortgagor general banking facilities including but not limited to advances, revolving credit facilities, loans, guarantee facilities and term facilities whether in Singapore Dollars and/or in foreign currencies and such other general banking and credit facilities or other accommodation, up to such amount or amounts as the Mortgagee may from time to time agree by permitting the Mortgagor to overdraw on the account or accounts current or to draw down or utilise any facilities on any other account or accounts whatsoever whether current or revolving or continuing or whether in instalments or otherwise which the Mortgagor now has or may at any time hereafter have with the Mortgagee either solely or jointly or jointly with any other person or persons in partnership or otherwise (hereinafter called ‘the said Accounts’ which expression shall wherever the context admits include any one or more of the accounts hereinbefore mentioned) on such terms as may from time to time be fixed by the Mortgagee in its absolute discretion, the Mortgagor hereby covenants with the Mortgagee as follows:- 1. To pay:- 1.1 To the Mortgagee on demand made to the Mortgagor all such sums of money which are now or shall from time to time or at any time hereafter be owing or remain unpaid to the Mortgagee by the Mortgagor either as principal or as surety and either solely or jointly or jointly with any other person or persons in partnership or otherwise whether on the said Accounts or otherwise in any manner whatsoever or for all other liabilities whether certain or contingent primary or collateral including (but without prejudice to the generality of the foregoing) the balance which at the date of such demand shall be owing or remain unpaid to the Mortgagee by the Mortgagor on the said Accounts or otherwise in any manner whatsoever whether in respect of moneys advanced or paid to or for the use or accommodation of the Mortgagor either solely or jointly or jointly with any other person or persons in partnership or otherwise or in respect of cheques bills of exchange promissory notes or other negotiable instruments signed drawn accepted or indorsed by or on behalf of the Mortgagor either solely or jointly or jointly with any other person or persons in partnership or otherwise or discounted paid or held by the Mortgagee either at the request of the Mortgagor or in the course of business or otherwise or in respect of letters of credit bills notes drafts trust receipts guarantees indemnities or other documents or instruments signed by the Mortgagor either solely or jointly or jointly with any other person or persons in partnership or otherwise and held by the Mortgagee or in respect of any other banking facilities whatsoever pursuant to the terms and conditions of any offer facility or commitment letter(s) or agreement(s) in relation thereto as revised varied amended supplemented or superceded [sic] from time to time (hereinafter collectively referred to as ‘the Letter of Offer’);

Clauses 1.2, 1.3 and 2 provide as follows: 1. To pay:-

…

1.2 To the Mortgagee interest on daily balances on or in respect of the principal moneys hereinbefore covenanted to be paid or any part thereof as shall from time to time be owing or remain unpaid until full payment at the rate or rates and in the manner provided under the terms of any banking facilities extended by the Mortgagee to the Mortgagor from time to time or at such other rate or rates and with such periodic rests as may from time to time be fixed by the Mortgagee; and 1.3 To the Mortgagee interest on any balance owing or remaining unpaid if and when the said Accounts shall be closed or shall cease to be current at the rate or rates and in the manner aforesaid or at such other rate or rates and with such periodic rests as may from time to time be fixed by the Mortgagee from the date of such demand being made or from the date such account intended to be hereby secured shall be closed or shall cease to be current (as the case may be) whichever is the earlier until full payment is received by the Mortgagee both after as well as before judgment (if any) shall have been obtained in respect thereof. 2. That this Mortgage expressly authorises the Mortgagee to make further advances or give credit in instalments or on a current, revolving or continuing account or otherwise or any other credit or banking facilities or accommodation whatsoever from time to time to the Mortgagor either solely or jointly or jointly with any other person or persons in partnership or otherwise and all moneys and liabilities owing to the Mortgagee from time to time in connection therewith shall be secured by this Mortgage in addition to the moneys and liabilities already outstanding or incurred as at the date hereof.

Subsequently, by way of a letter of offer in writing dated 14 July 2017, the plaintiff’s branch in Hong Kong offered banking facilities to Coastal Oil (HK) Limited and Coastal Oil Singapore Pte Ltd (“the Companies”).⁸ The Companies duly accepted the letter of offer and utilised the banking facilities (“the Coastal Facilities”).⁹ By a guarantee in writing dated 19 February 2016, the defendant’s husband had earlier furnished a guarantee in favour of the Hong Kong branch to pay the sums owed by the Companies (“the Guarantee”).¹⁰ On 13 December 2018, Coastal Oil Singapore Pte Ltd was placed under provisional liquidation.¹¹ In a letter dated 19 December 2018, the Bank demanded that the defendant’s husband make full payment of the sums due and owing by virtue of the Guarantee.¹² At a creditors’ meeting held on 28 December 2018, Coastal Oil Singapore Pte Ltd appointed liquidators.¹³

On 14 January 2019, the Bank commenced Suit No 51 of 2019 in respect of sums due and owing by the defendant’s husband.¹⁴ Since the defendant’s husband did not enter an appearance, the Bank obtained default judgment against him on 8 February 2019 for the sum of US$131,512,173.91 plus interests and costs.¹⁵ On 24 April 2019, the Bank issued to the Borrowers a notice of default.¹⁶ On 17 June 2019, the Bank commenced this action against the defendant.

The defendant argued that she was not jointly and severally liable for the Judgment Debt based on a proper construction of the Facility Documents. Given that the issue of liability rested on the construction of the contractual terms, both parties agreed (upon the plaintiff’s application) that the court should determine the issue pursuant to O 14 r 12 of the Rules of Court without a full trial. On 23 December 2019, the Asst Registrar delivered the Decision.

Decision below

In the Decision, the Asst Registrar made the following findings: first, on the proper construction of the Facility Documents, the defendant is jointly and severally liable for all sums owing and which remain unpaid to the Bank by a co-borrower; second, on the proper construction of the Facility Documents, the covenant to pay under cl 1.1 of Annex 1 includes liabilities arising out of a judgment debt that a co-borrower owes to the Bank; and third, on the proper construction of the Facility Documents, the defendant is liable to pay the Bank’s costs on an indemnity basis.

The Asst Registrar noted that the defendant’s submissions were often contradictory. It was not clear whether the defendant took the view that the covenant covered moneys that the Bank loaned to: both the Borrowers under the housing loan; both the Borrowers jointly; either of the Borrowers; or either of the Borrowers, inclusive of sums owed to the Bank by way of guarantee.

The Asst Registrar held that the case turned solely on the construction of the Facility Documents and cl 1.1 of Annex 1 in particular. In this regard, she made two observations: first, under cl 1.1, the defendant and her husband are liable for debts owed by each or both of them to the plaintiff, independent of the housing loan and to no limit; and second, under cl 1.1, such debts include the Judgment Debt in question.

She concluded that the language of cl 1.1 was clear. The Borrowers had to...