Prosperous Credit Pte Ltd v Gen Hwa Franchise International Pte Ltd and Others

• Jurisdiction: Singapore
• Judgment Date: 07 January 1998
• Date: 07 January 1998
• Docket Number: Suit No 643 of 1997 (Registrar's
• Court: High Court (Singapore)

Prosperous Credit Pte Ltd

Plaintiff

and

Gen Hwa Franchise International Pte Ltd and others

Defendant

[1998] SGHC 7

Judith Prakash J

Suit No 643 of 1997 (Registrar's Appeal No 230 of 1997)

High Court

Civil Procedure–Summary judgment–Allegation of forgery to raise issue of fact–Whether reasonable probability of bona fide defence–Whether triable issue–Credit and Security–Guarantees and indemnities–Summary judgment–Hire purchase of machines on security of joint and several guarantees of three guarantors–Document provides for signature of two out of three guarantors–Remaining guarantor signed separate document–Whether intention of parties for all co-guarantors to sign same guarantee document–Whether triable issue

The plaintiff finance company let on hire purchase certain machines to a company on the security of the guarantees of the second, third and fourth defendants. The execution portion of the hire-purchase agreement provided for the signature of two guarantors only. The second and third defendants signed this portion. The fourth defendant signed a separate guarantee on the same day. Upon the company's default, the finance company sued the guarantors. The assistant registrar granted the finance company's application for summary judgment against the third defendant. On appeal, the third defendant claimed that there were two triable issues, viz (a) that he had never signed the guarantee; and (b) if he was found to have signed the guarantee, it was on the understanding and condition that all the co-sureties of the joint and several guarantee had to sign the same document.

Held, dismissing the third defendant's appeal:

(1) A bare assertion was not enough to raise an issue of fact. The court had to look at the whole situation and ask whether there was a fair and reasonable probability of the defendant having a real or bona fide defence. It was material that until the proceedings commenced, the third defendant had not denied that he stood as guarantor. On the whole, there was no reasonable probability of the third defendant having a bona fide defence on the ground that he had not signed the guarantee: at [14] to [16].

(2) The form of the documentation showed that it was not contemplated that the fourth defendant was to sign the same guarantee document as the second and third defendants. Even if the third defendant's original intention had been that all co-guarantors had to sign the same document, he had waived that requirement by signing a document which, on the face of it provided for signature by only two out of the three guarantors. The third defendant's expectation that the fourth defendant had to become a guarantor was also fulfilled, as the latter had signed a guarantee in respect of the same obligations to the hire-purchase company and was liable to contribute to any payment made by the third defendant as guarantor. The third defendant did not show any triable issues and the appeal was accordingly dismissed: at [19], [21] and [22].

Banque de Paris et Des Pays-Bas (Suisse) SA v Costa de Naray [1984] 1 Lloyd's Rep 21 (folld)

Hong Leong Finance Ltd v Goh Khim Teik [1993] 3 SLR (R) 793; [1994] 1 SLR 366 (distd)

Indian Bank v Raja Suria [1993] 1 SLR (R) 855; [1993] 2 SLR 497 (distd)

Lee Mun Hooi and Koh Kiew Soon (Lee Bon Leong & Co) for the plaintiff

Attlee Hue Kuan Yew (Ng Hong & Hue) for the third defendant.

Judith Prakash J

1 By a hire-purchase agreement dated 18 July 1996, the plaintiffs, as owners, let on hire purchase to the first defendants, Gen Hwa Franchise International Pte Ltd, as hirers, three machines. On the same day, the second, third and fourth defendants signed guarantees of the first defendants' obligations under the hire-purchase agreement. At the time, the third and fourth defendants were directors and shareholders of the first defendants.

2 Two guarantees were signed. The hire-purchase agreement was a printed standard form document prepared by the plaintiffs which comprised four pages. The fourth page contained the execution portion of the hire-purchase agreement, a “Delivery Receipt” and a portion entitled “Guarantee”. The guarantee portion provided for the signature of two guarantors only and this portion was signed by the second and third defendants. The fourth defendant signed a separate guarantee. This was a printed two-page document entitled “Personal Guarantee”. The signature of all three guarantors was witnessed by the same person, one Ms Tan Leng Leng, a director of the plaintiff company.

3 The first defendants defaulted in payment of the instalments due under the hire-purchase agreement. On 4 February 1997, the plaintiffs served on the first defendants a notice demanding payment of the arrears of...