Standard Chartered Bank v Uniden Systems (S) Pte Ltd and Others

• Jurisdiction: Singapore
• Judge: Lai Siu Chiu J
• Judgment Date: 28 April 2003
• Neutral Citation: [2003] SGHC 98
• Docket Number: Suit No 283 of 2002
• Date: 28 April 2003
• Published date: 22 December 2003
• Year: 2003
• Plaintiff Counsel: Dylan Lee (Shook Lin & Bok)
• Citation: [2003] SGHC 98
• Defendant Counsel: Choo Wai Han (the third defendant) in person
• Court: High Court (Singapore)
• Subject Matter: Solicitor acting for both mortgagor and mortgagee in loan transaction,Whether there was anything to warrant bank to conduct further investigations,Mistake,Wife signing guarantee in favour of bank to secure banking facilities for husband's business,Whether wife would have signed guarantee if she had been advised of risks involved,Husband-wife relationship,Presumed,Contract,Whether guarantor knew she was signing guarantee,Wife lacked independent advice when she signed guarantee in favour of bank to secure banking facilities for husband's business,Whether bank had actual or constructive notice of undue influence,Wife alleging she signed guarantee under husband's undue influence,Non est factum,Legal Profession,Whether solicitor in conflict of interest,Professional conduct,Notice of undue influence,Conflict of interest,Undue influence

The facts

1 Standard Chartered Bank (the Bank) is a bank which carries on business in Singapore at No. 6 Battery Road #07-00, Singapore 049909 (the main branch) and elsewhere. Uniden Systems (S) Pte Ltd (the company) the first defendant, was at the material time, a customer of the Bank. Leslie Tan Le Se (Tan) the second defendant was at the material time, the managing-director of the company. Choo Wai Han (Choo) the third defendant, was also a director of the company at the material time and is the wife of Tan. The parties (who were married on 16 March 1973) are separated (since 1998) pending divorce proceedings, due to Tan's involvement with another woman. They have one child, a daughter born in September 1987.

2 Before Tan started the company, he had a sole-proprietorship called Uniden Systems (Uniden) which he registered on 14 May 1985, and which he subsequently converted into a partnership (in January 1994) with Choo as his partner. The partnership was in turn converted into the company on 6 September 1995 with Tan and Choo as directors and shareholders each holding 50% of the shares. The conversion exercise was carried out by Uniden's accountants NSC Management Services. The company used to deal in automotive air-conditioning compressors and other components and systems and, during its heyday, it had markets overseas in particular the Middle East, Pakistan, India, Europe and East/South East Asia.

3 After an introduction in 1995 by a third party to the Bank's then relationship manager Lim Eng Bock (Lim) at the main branch, Tan applied to the Bank for trade financing facilities first for the partnership of Uniden and then, for the company. The Bank by its letter of offer dated 18 August 1995 (the letter of offer) offered various facilities (including overdraft) to the company. The letter of offer was subject to the Bank's Standard Terms and Conditions and inter alia, required the company's directors to execute joint and several guarantees as well as an all monies legal mortgage over the property known as No. 5 Tosca Street (the property) which was then the matrimonial home of the couple. By a resolution dated 18 September 1995 passed and signed by Tan and Choo, the company accepted the letter of offer.

4 The Bank instructed their solicitors (the law firm) to act for them in the mortgage documentation and the guarantees, so did the company. The solicitor of the law firm who prepared the documents was Ms Woon. However, when Tan and Choo visited the law firm's office on or about 12 September 1995 to sign the mortgage and guarantee, they were attended to by one another solicitor (N) and not Ms Woon, as the latter was then not in the office. The mortgage and guarantee were both dated 3 January 1996. After the loan documentation had been completed and the mortgage registered, the Bank extended overdraft and other facilities (including trust receipts) to the company. Besides the Bank, the company had facilities granted by other banks, including DBS.

5 The company's business boomed in the 1980s. When the company's business prospered, so did the couple. Tan purchased a condominium (at Astrid Meadows), two office units for the company as well as the property in or about 1992, as well as a motor-vehicle (BMW make) for Choo's use.

6 During those prosperous times, Tan used to travel frequently. Whenever he was out of Singapore, Choo would sign documents (including bank documents) for and on behalf of the company and would visit the company’s office for that purpose. However, Tan kept in constant touch with the company's office by telephone during those trips and would give instructions to his staff, and even draft/dictate letters for signature by Choo. The company's business unfortunately faltered in or about 1998 after the Asian financial crisis, and subsequently failed; Tan claimed he was cheated by a joint venture partner.

7 There were two (2) subsequent letters of offer from the Bank to the company after the letter of offer, one was dated 7 October 1999 (the second letter of offer) while the third was dated 23 November 1999 (the third letter of offer). The third letter of offer revised the company's facilities; the company agreed thereunder to commence repaying the Bank's five (5) year term loan by 30 November 1999. The company defaulted on its obligations in July 2000 and after the Bank's solicitors had made the requisite demand of the two (2) guarantors (Tan and Choo) by a letter dated 27 April 2001 (the letter of demand) of the various sums then owed under the facilities, these proceedings were eventually commenced (on 15 March 2002) against all three (3) parties.

The pleadings

8 In the statement of claim, the Bank referred not to the letter of offer but to the second and third letters of offer but, did refer to the guarantee. The second and third letters of offer are not be found in the agreed bundle of documents tendered to the court (AB1-159) or in the affidavits of evidence of the Bank's witnesses; for that matter, neither can the letter of demand. The documents formed part of the exhibits to the affidavit of the Bank's Account Manager Yeong Chun Wei (filed on 25 April 2002) in the Bank's application for summary judgment against Tan and Choo.

9 The Bank claimed against the company as principal debtor and against the Tan and Choo as guarantors, the total sum of $3,691,164.23 comprising of (i) overdraft facility ($1,982,898.21), (ii) the trust receipts ($13,675.35), (iii) the import loan ($534,951.97) and (iv) the term loan facility ($1,159,638.70) together with contractual rates of interest and, costs on a full indemnity basis.

10 The company did not enter an appearance to the writ of summons and judgment in default of its appearance was obtained by the Bank on 12 April 2002 for the principal sum of $3,691,164.23 while summary judgment in the same principal amount was obtained against Tan on 3 June 2002, as well as against Choo. However the judgment against Choo was subsequently set aside on her successful appeal in Registrar's Appeal No. 148 of 2002 (heard on 25 July 2002); the defence she filed on 12 April 2002 was allowed to stand. I should also point out that Choo's previous solicitors discharged themselves from acting for her just before the trial. She explained to the court she did not have the means to pay them.

11 As the trial was confined to the Bank's claim against Choo, I turn my attention to the Defence filed by her former solicitors on 12 April 2002. Whilst she admitted signing the guarantee, Choo denied she was liable thereunder. She pleaded she could not recall signing the guarantee before N on 12 September 1995 or at any other time. She recalled signing certain documents in connection with conveyancing matters regarding the property and another property but she was attended to be another lawyer (Lee Yuen Mai), not N. On one occasion when Lee Yuen Mai was not available, she was attended to by a lady lawyer (whose name she could not recall). Choo alleged that before she signed the documents presented to her, the lady lawyer did not explain the nature of the documents to her; she was not advised on the consequences of signing the guarantee.

12 Choo also averred that she stopped working after the birth of her daughter, became a full-time home-maker and was preoccupied with taking care of and, bringing up the child. Consequently, Tan became the sole breadwinner of the family. She contended that the business of the company was under the sole management of Tan to her total exclusion.

13 Before this trial commenced, the company was wound-up on 17 January 2003 in CWU No. 202 of 2002 by another creditor (DBS Bank for a debt of about $650,000), while Tan was adjudged a bankrupt in Bankruptcy No. 1320 of 2002 on 20 December 2002, on a petition presented by the Bank.

The plaintiffs' case

14 The Bank called three (3) witnesses one of whom was N who is no longer with the law firm (she left in 1997) but has joined another, with which she continues to do conveyancing and banking work.

15 In her written testimony, N (PW1) recalled attending to Tan and Choo on the morning of 12 September 1996, when Ms Woon was not available. She had before her that day, the file containing the letter of offer, the mortgage (for the property) and the guarantee. N introduced herself to the couple, informed them Ms Woon was unable to attend to them, requested and was given their identity cards to verify their particulars stated in the documentation. She then told the couple that two (2) documents were to be executed by them, namely the mortgage and guarantee.

16 N deposed that as was her usual practice, she explained the terms and provisions set out in both documents to Tan and Choo and also referred to the letter of offer. After her explanation, N asked the couple whether they understood or required further clarification of, the terms and conditions of the mortgage and guarantee; they indicated they understood. She did not notice anything unusual in the behaviour of either Tan or Choo or, that the former appeared overbearing and insistent that Choo should sign the documents or, that the latter appeared intimidated by Tan to sign the guarantee. Had she detected any signs of reluctance or hesitation in either party in the signing of the documents, she would have requested the couple to think over the matter and if need be, even postponed signing to a later date, after the couple had given the matter sufficient consideration. She would also have made a note in the file of her observations and informed Ms Woon (her supervising partner) accordingly.

17 After the couple had signed the documents, they informed her the seal of the company was not yet available as it was in the course of being made, due to the fact the company was only very recently incorporated. They said they would affix the common seal of the company on the mortgage another day after it was ready.

18 In the course of her testimony, N relied on an...