Sia Leng Yuen v HKR Properties Ltd

• Jurisdiction: Singapore
• Judge: Lee Seiu Kin JC
• Judgment Date: 01 November 2001
• Neutral Citation: [2001] SGHC 331
• Docket Number: Originating Summons (Bankruptcy) (Registrar's Appeal No 600158 of 2001)
• Date: 01 November 2001
• Published date: 19 September 2003
• Year: 2001
• Plaintiff Counsel: Intekhab Khan (J Koh & Co)
• Citation: [2001] SGHC 331
• Defendant Counsel: Liew Yik Wee (Wong Partnership)
• Court: High Court (Singapore)
• Subject Matter: Bankruptcy,Statutory demand,Insolvency Law,Words and Phrases,Setting aside,Whether borrower's security becomes guarantor's pursuant to consent order where creditor agrees to release security to guarantor upon receiving payment from guarantor,Guarantor defaulting on repayment obligations,rr 94(5) & 98(2)(c) Bankruptcy Rules (Cap 20, R 1, 1996 Ed),Whether statutory demand regular -Whether creditor has to state in statutory demand that he holds security for debt,'Security'

: This is an appeal against the decision of Assistant Registrar May Loh who dismissed the application of the appellant (`Sia`) to set aside a statutory demand dated 1 March 2001 served on him by the respondent (`HKR`). On 23 October 2001, after hearing counsel for the parties, I dismissed the appeal. Sia has since appealed and I now give my grounds of decision.

By an agreement (`the loan agreement`) dated 18 November 1997, HKR lent US$3m to Murex Co Ltd (`Murex`), a Thai company that is the developer and owner of the Blue Canyon Country Club (`BCCC`). Pursuant to cl 7 of the loan agreement, Murex issued to HKR 250 new club memberships in BCCC as security for the loan.

The US$3m loan was repayable on 31 March 1998. On 27 March 1998 Murex requested HKR for an extension of time. HKR agreed to extend it to 30 April 1998 in consideration of Sia unconditionally guaranteeing payment of all the indebtedness of Murex to HKR. Sia duly executed this guarantee (`the guarantee`). However on 30 April 1998 Murex was still unable to make payment. HKR agreed to a further extension on condition that Sia confirmed in writing that the guarantee remained good and valid. This he did on 28 May 1998.

In the event, Murex was unable to pay HKR and the latter commenced Suit 2239/98 against Sia to recover the debt pursuant to the guarantee. That action was settled and on 12 January 2000 the parties entered a consent order (`the consent order`) in the following terms:

THIS ACTION having on 12 January 2000 come on for trial before The Honorable Judicial Commissioner Amarjeet Singh,

AND the parties having agreed terms of settlement,

BY CONSENT IT IS ORDERED that:

1 Judgment be entered against the Defendant:

a. for the amount set out in the Statement annexed hereto;

b. interest at the rate of 15% per annum on the amount outstanding; and

c. costs to be taxed if not agreed.

2 The Defendant will make payment of all amounts due and owing to the Plaintiffs as follows:

a. USD500,000 on or before entering of the Consent Judgment;

b. USD750,000 on or before 31 January 2000;

c. USD1 million on or before 28 February 2000; and

d. the balance amounts due ... on or before 15 March 2000.

3 With the receipt of each payment, the Plaintiffs will release to the Defendant, the number of memberships based on the amount received, rounded down to the nearest number of memberships. The value of each membership to be fixed at USD23,500.

4 Upon payment of all sums due and owing to the Plaintiffs, all memberships are to be released to the Defendant.

5 Execution proceedings against the Defendant shall be taken out only in the event of default of any of the above terms.

Sia made some payment pursuant to this consent order but defaulted on the rest. On 1 March 2001 HKR, through its solicitors, issued a statutory demand (`the statutory demand`) pursuant to s 62 of the Bankruptcy Act (Cap 20, 2000 Ed) to Sia to demand the remaining sum, which was around US$2.2m. Before the assistant registrar below Sia sought to set aside the statutory demand on the following grounds:

(1) that service of the statutory demand was irregular; and

(2) that the statutory demand failed to state that HKR held new club memberships in BCCC as security for the loan.

However before me counsel for Sia, Mr Intekhab, said that he was only proceeding on the second ground, ie the failure to state in the statutory demand that HKR held the new club memberships as security for the loan.

First of all it should be noted that the club...