Pereira, Dennis John Sunny v United Overseas Bank Ltd

• Jurisdiction: Singapore
• Judge: Sundaresh Menon CJ
• Judgment Date: 09 November 2017
• Neutral Citation: [2017] SGCA 62
• Plaintiff Counsel: Chong Xin Yi and Wong Jun Weng (Ignatius J & Associates)
• Docket Number: Civil Appeal No 29 of 2017
• Date: 09 November 2017
• Hearing Date: 23 October 2017
• Subject Matter: Mortgagee's rights,Credit and Security,Mortgage of real property
• Published date: 22 November 2017
• Defendant Counsel: Seah Zhen Wei Paul, Kang Weisheng Geraint Edward and Aditi Ravi (Tan Kok Quan Partnership)
• Court: Court of Appeal (Singapore)
• Citation: [2017] SGCA 62
• Year: 2017

Sundaresh Menon CJ (delivering the grounds of decision of the court): Introduction

This was an appeal against the decision of the High Court in respect of a mortgagee action brought by the respondent, United Overseas Bank Limited (“UOB”), seeking (among other reliefs) orders for the delivery of possession of two properties co-owned by the appellant, Mr Pereira, Dennis John Sunny (“the Appellant”), and his former wife (“W”). UOB had granted two housing loans to them, and had also granted two loan facilities to Offshore Logistics (Asia Pacific) Pte Ltd (“the Company”), a company which was majority-owned by the Appellant. The loan facilities to the Company were secured by personal guarantees provided by the Appellant. The Appellant’s liability under those guarantees as well as under the housing loans were all secured by a mortgage over the two properties, as explained below. UOB’s mortgagee action was first heard more than a year ago by an assistant registrar (“the AR”), who granted an order for the delivery of possession of the properties (“the Order”), save that the execution of the Order with respect to one of the two properties was stayed on account of the fact that the Appellant’s daughter (“the Daughter”) was then residing there and was preparing for her school examinations. The Appellant subsequently sought a further stay, but this was dismissed by the AR, whose decision was upheld on appeal to the High Court: see United Overseas Bank Ltd v Pereira, Dennis John Sunny and another [2017] SGHC 66 (“the GD”). On further appeal to us, the Appellant sought an open-ended stay of execution of the Order until after the completion of an intended sale of the Company’s assets. We dismissed the appeal at the conclusion of the parties’ oral arguments and furnished our brief reasons. As this appeal raised a point of practical importance, we now set out our reasons in greater detail.

The material facts

The background facts relating to the present appeal have been detailed by the High Court judge (“the Judge”) in the GD. It is sufficient for us to briefly outline just the key points.

The Appellant was the majority shareholder of the Company, and was also one of its directors at the material time. On 1 July 2016, the Company was placed under judicial management upon UOB’s application. The Appellant also co-owned at least two properties with W. The first of these properties, 44 Toh Crescent (“the Property”), was the family home, and it was occupied by the Appellant, W, the Daughter and W’s son from a previous marriage. The other property was an apartment at Upper Changi Road (“the Changi Apartment”). Only the Property was in issue in this appeal.

As mentioned earlier, the Appellant and W mortgaged the two properties to UOB as security for monies due and owing to UOB pursuant to two housing loans granted to them by UOB, as well as to secure the Appellant’s liability under the personal guarantees which he had furnished in respect of two loan facilities extended by UOB to the Company. Sometime around March 2015, the Company defaulted on the payment of the monthly instalments due to UOB under the two loan facilities. About a year later, in around March 2016, the Appellant and W also defaulted on the payment of the monthly instalments in respect of the two housing loans. Letters of demand were issued to them by UOB’s solicitors, but these did not elicit the desired response. A notice pursuant to s 75(2) of the Land Titles Act (Cap 157, 2004 Rev Ed) was then served by UOB’s solicitors on the Appellant and W requesting them to deliver possession of the two properties to UOB. When that went unanswered, UOB, by way of Originating Summons No 619 of 2016, applied to the court for (among other things) orders that the Appellant and W deliver possession of the two properties.

On 24 August 2016, UOB’s application was heard by the AR, who granted the Order on the same day. However, the AR stayed the execution of the Order in respect of the Property for a period of about three months until 30 November 2016 so as not to disrupt the Daughter’s preparations for her school examinations. It may be noted that UOB did not object to this arrangement. UOB subsequently took possession of and sold the Changi Apartment. As at 4 April 2017, the total amount owed to UOB was in excess of $9m, of which approximately $0.57m was owed by the Appellant and W under the housing loans, with the remainder owed by the Company under the loan facilities, in respect of which the Appellant was the guarantor.

On or around 30 November 2016, the Appellant’s solicitors wrote to UOB’s solicitors to request a one-month extension for the delivery of possession of the Property to UOB. UOB did not accede to this request; however, it also did not take immediate measures to enforce the Order in respect of the Property. On 23 December 2016, the Appellant, through his solicitors, applied to the court by way of Summons No 6142 of 2016 for a stay of execution of the Order “until 31st March 2017 or such earlier time that the [Company’s shares] [are] sold or otherwise dealt with, with liberty to apply for an extension if an impending sale is in the midst of completion”. W was not a party to the summons. The Appellant’s case, essentially, was that subsequent to the hearing before the AR on 24 August 2016, the Company had received an offer from a prospective investor to acquire some of its shares. The details of the transaction were not available, such as from whom the shares would be acquired and whether the Company would be issuing fresh shares, but in essence, the Appellant’s point was that funds would be injected into the Company pursuant to the contemplated transaction, as a result of which there was a reasonable prospect that the Company would be rehabilitated and would also be able to repay the debt which it owed UOB. The Appellant’s contention was that since he expected that the Company’s indebtedness would imminently be repaid, UOB should not be allowed to take possession of the Property in the meantime.

As noted above, the Appellant’s application was heard and dismissed by the AR on 4 January 2017. The Appellant then filed an appeal to the High Court against that decision.

The decision below

At the oral hearing before the Judge, counsel for the Appellant sought a stay of execution of the Order until May 2017, which, according to the Appellant, was when the transaction with the prospective investor was expected to be finalised. It may be recalled that before the AR, the Appellant had sought a stay only until 31 March 2017 “or such earlier time that the [Company’s shares] [are] sold or otherwise dealt with, with liberty to apply for an extension if an impending sale is in the midst of completion” [emphasis added]. Hence, the Appellant was in effect seeking a further extension of the stay on appeal to the High Court.

The Judge heard and dismissed the appeal on three main grounds.

First, the Judge noted that our decision in Chan Siew Lee Jannie v Australia and New Zealand Banking Group Ltd [2016] 3 SLR 239 (“Jannie Chan”) had clearly established that a creditor was fully entitled to proceed against a guarantor regardless of whether or not the creditor had other remedies which it could also separately enforce against the principal debtor. Thus, as a matter of law, it was irrelevant whether or not there was a reasonable prospect that the Company, the principal debtor in this case, would be able to repay its debt to UOB because UOB was not required to enforce the debt against the Company before seeking remedies against the...