Terrestrial Pte Ltd v Allgo Marine Pte Ltd

• Jurisdiction: Singapore
• Judgment Date: 20 November 2013
• Date: 20 November 2013
• Docket Number: Suit No 827 of 2011 (Registrar's Appeal No 101 of 2013)
• Court: High Court (Singapore)

Terrestrial Pte Ltd

Plaintiff

and

Allgo Marine Pte Ltd and another

Defendant

[2013] SGHC 252

Andrew Ang J

Suit No 827 of 2011 (Registrar's Appeal No 101 of 2013)

High Court

Civil Procedure—Summary judgment—Company failing to repay loan—Clause excluding right of set-off—Whether clause conflicted with rule of common law—Section 4 (13) Civil Law Act (Cap 43, 1999 Rev Ed)

Civil Procedure—Summary judgment—Company failing to repay loan—Clause excluding right of set-off—Whether clause excluded right of equitable set-off

Civil Procedure—Summary judgment—Company failing to repay loan—Clause excluding right of set-off—Whether clause was unfair contract term—Sections 3 (1), 3 (2) and 13 (1) Unfair Contract Terms Act (Cap 396, 1994 Rev Ed)

Civil Procedure—Summary judgment—Company failing to repay loan—Loan provider allegedly breaching separate contract—Whether loan provider took advantage of its own wrong in enforcing loan agreement

Allgo Marine Pte Ltd (‘the First Defendant’) and Koh Lin Yee (‘the Second Defendant’) appealed in Registrar's Appeal No 101 of 2013 (‘RA 101/2013’) against an order of the assistant registrar (‘the AR’) in Summons No 418 of 2013 (‘SUM 418/2013’) granting summary judgment under O 14 of the Rules of Court (Cap 322, R 5, 2006 Rev Ed) (‘the Rules of Court’) in favour of Terrestrial Pte Ltd (‘the Plaintiff’) with respect to a loan agreement between the parties.

The Plaintiff had commenced Suit No 827 of 2011 against the Defendants for moneys owing under a loan agreement (‘the Loan Agreement’). Under the Loan Agreement, the Plaintiff had advanced $350,000 to the First Defendant. The Second Defendant was a director of the First Defendant and the guarantor under the Loan Agreement. The recitals to the Loan Agreement stated that the First Defendant was in breach of its obligation to supply a flat top barge to the Plaintiff even though the Plaintiff had paid the purchase price of $1,200,000 in full. The purpose of the $350,000 loan was to enable the First Defendant to discharge the outstanding sum owed to its barge builder.

On 31 January 2011, the Plaintiff provided an additional loan of $56,000 to the First Defendant (‘the Additional Loan’). This loan was to enable the First Defendant to discharge the remaining sum owed by them to the shipbuilder in relation to another vessel purchased by the Plaintiff from the First Defendant. The Additional Loan became due and payable on 2 March 2011.

It was not disputed between the parties that the First Defendant did not repay any part of the moneys disbursed under the Loan Agreement or the Additional Loan. At the hearing of SUM 418/2013, the AR granted summary judgment in favour of the Plaintiff against the Defendants for the moneys owed under the Loan Agreement and the Additional Loan. Dissatisfied, the Defendants brought the present appeal in RA 101/2013.

Held, dismissing the appeal:

(1) The principles relating to a summary judgment application under O 14 of the Rules of Court were well settled. In order to obtain judgment, a plaintiff first had to show that he had a prima facie case for judgment. Once shown, the burden shifted to the defendant who, in order to obtain leave to defend, had to establish that there was a fair or reasonable probability that he had a real or bona fide defence: at [8] .

(2) Since it was not disputed that the Defendants did not repay any part of the moneys disbursed under the Loan Agreement or the Additional Loan, the Plaintiff had established a prima facie case for summary judgment: at [9] .

(3) Clause 12.2 of the Loan Agreement clearly stated that payments were to be made without set-off. This had to be construed to include equitable set-off because it was not limited to contractual set-off: at [10] to [12] .

(4) It was well settled that the defence of equitable set-off might be expressly excluded by contract. It sufficed if the contract contained clear words which excluded the right of set-off, either expressly or by necessary implication: at [13] .

(5) Here there was simply no conflict between a rule of equity and a rule of the common law, the Defendants not having identified any. Moreover, nothing in s 4 (13) of the Civil Law Act prohibited the contractual exclusion of the defence of equitable set-off: at [14] and [15] .

(6) The suggestion in Gao Bin v OCBC Securities Pte Ltd[2009] 1 SLR (R) 500 to construe ‘any liability’ under the Unfair Contract Terms Act (Cap 396, 1994 Rev Ed) (‘UCTA’) as a crystallised or admitted liability put an unwarranted qualification on the word ‘liability’. In deciding whether the UCTA applied, it was not entirely apropos to draw a distinction between admitted and disputed liabilities because this distinction was only considered in the context of determining the reasonableness of the clause in Stewart Gill Ltd v Horatio Myer & Co Ltd[1992] 1 QB 600. It was also unnecessary to restrict the phrase ‘any liability’ in s 3 of the UCTA to a crystallised or admitted liability: at [21] .

(7) The UCTA did not apply to cl 12.2 of the Loan Agreement. In order for s 3 of the UCTA to apply, the Defendants had to show that one of the parties was dealing as a ‘consumer or on the other's written standard terms’. However, the Defendants failed to lead any evidence on this issue and therefore did not satisfy this requirement which was an important prerequisite to the applicability of ss 3 and 13 (1) of the UCTA: at [22] .

(8) In any case, cl 12.2 satisfied the requirement of reasonableness under the UCTA. The Plaintiff did not induce the Defendants to enter into the Loan Agreement and the Defendants were free to borrow money from any other company or financial institution in order to pay its debt owed to the shipbuilder. In addition, the Defendants knew of, or ought reasonably to have known of, the existence of cl 12.2 because such clauses were a common feature in loan agreements. Even if the Defendants had borrowed money from a bank instead, a clause similar to cl 12.2 would almost invariably have been included in the loan documentation. In the circumstances, it was not unreasonable for the Plaintiff, as a condition of its voluntarily making a loan to the First Defendant, to wish for the Defendants' obligation for repayment of the same to be unequivocal and not subject to any set-off or counterclaim: at [23] .

(9) The principle that one might not take advantage of one's own wrong had no application on the present facts. The tug contract was a separate agreement from the Loan Agreement and the latter also made no mention of the former. In any case, the tug contract had not been signed by the Plaintiff and there was considerable doubt over whether the tug contract was valid and enforceable: at [25] .

(10) Assuming arguendo that the tug contract was valid and enforceable and that the Plaintiff had breached its obligations thereunder, it would have been absurd to allow the Defendants to escape their contractual obligations under the Loan Agreement on the basis of a prior breach of the tug contract which they would have been fully cognisant of at the time of signing the Loan Agreement: at [26] .

Associated Development Pte Ltd v Loong Sie Kiong Gerald [2009] 4 SLR (R) 389; [2009] 4 SLR 389 (folld)

Cheung Yong Sam Investments Pte Ltd v Land Equity Development Pte Ltd [1992] 3 SLR (R) 533; [1993] 1 SLR 1002 (folld)

Flamar Interocean Ltd v Denmac Ltd (The Flamar Pride and Flamar Progress) [1990] 1 Lloyd's Rep 434 (folld)

Gao Bin v OCBC Securities Pte Ltd [2009] 1 SLR (R) 500; [2009] 1 SLR 500 (not folld)

Hiap Tian Soon Construction Pte Ltd v Hola Development Pte Ltd [2003] 1 SLR (R) 667; [2003] 1 SLR 667 (folld)

Pacific Rim Investments Pte Ltd v Lam Seng Tiong [1995] 2 SLR (R) 643; [1995] 3 SLR 1 (folld)

Sim v Rotherham Metropolitan Borough Council [1987] Ch 216 (folld)

Singer Co (UK) Ltd v Tees and Hartlepool Port Authority [1988] 2 Lloyd's Rep 164 (folld)

Stewart Gill Ltd v Horatio Myer & Co Ltd [1992] QB 600 (folld)

Civil Law Act (Cap 43, 1999 Rev Ed) s 4 (13) (consd)

Rules of Court (Cap 322, R 5, 2006 Rev Ed) O 14

Unfair Contract Terms Act (Cap 396, 1994 Rev Ed) ss 3, 13 (1) (consd) ;ss 6 (3) , 7 (3) , 7 (4) , 13, Second Schedule

Unfair Contract Terms Act 1977 (c 50) (UK) ss 3, 3 (1) , 3 (2) , 13, 13 (1) , 13 (1) (b) , 13 (1) (c)

Chin Ren Howe Edgar and Tan Yi Yin Amy (Kelvin Chia Partnership) for the respondent/plaintiff

Govindarajalu Asokan (Gabriel Law Corporation) for the appellants/defendants.

Andrew Ang J

Introduction

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