The Bank of East Asia Limited v Sudha Natrajan

• Jurisdiction: Singapore
• Judge: Kannan Ramesh JC
• Judgment Date: 24 December 2015
• Neutral Citation: [2015] SGHC 328
• Citation: [2015] SGHC 328
• Court: High Court (Singapore)
• Published date: 09 December 2016
• Docket Number: Suit No 751 of 2014
• Plaintiff Counsel: Chua Beng Chye and Tan Shu Ying, Cherie (Rajah & Tann Singapore LLP)
• Defendant Counsel: Ng Lip Chih and Tan Jieying (NLC Law Asia LLC)
• Subject Matter: Deeds and Other Instruments,Deed,Avoidance
• Hearing Date: 11 November 2015,25 November 2015,12 November 2015

Kannan Ramesh JC: Introduction

Did the Defendant execute a Deed of Assignment of Proceeds (“the Deed”) in duplicate on 10 January 2014? This is the central issue in this case. Bank of East Asia Limited, the Plaintiff, asserted that the Defendant signed the Deed in duplicate on 10 January 2014. The Defendant, Sudha Natrajan, emphatically denied that she had penned her signature on the Deed on that day, or at all. Pertinently, the person who was the source of the Defendant’s travails, her husband, Rajan Natrajan (“Rajan”), was not called by the Defendant as a witness to cast light on the facts and circumstances surrounding the execution of the Deed. I find this omission jarring given that Rajan was a co-signatory of the Deed and a central figure in these events. Rajan was a major shareholder and principal director of Tecnomic Processors Pte Ltd (“Tecnomic”) in whose favour the Plaintiff had granted certain banking facilities (“the Banking Facilities”). It was in respect of Tecnomic's liabilities under the Banking Facilities that the Deed was executed. Tecnomic was placed in compulsory liquidation on 10 January 2014 and Rajan was adjudicated a bankrupt on 12 June 2014, prior to the commencement of this action. That explained why they were not parties before me

The Plaintiff’s claim

The Plaintiff’s claim against the Defendant is for the sum of US$1,789,398.56, and interest on this sum from 13 June 2014 until the date of full payment at the rate of 6% per annum above the Plaintiff’s Base Lending Rate, and costs on a full indemnity basis.

The cause of action is based on the Deed. The Defendant, as well as Rajan, were alleged to have covenanted to be jointly and severally liable for sums due and owing by Tecnomic to the Plaintiff under the Banking Facilities.

The Defence

The principal defence is that the Defendant was not a party to the Deed because she did not sign the same. The Defendant initially ran another substantive defence, viz, the Deed was not supported by consideration. The nub of that defence was that the Plaintiff was not in a position to make or continue to make loans and advances or otherwise give or continue to give credit or accommodation or time to Tecnomic because it was ordered to be wound up on the day when the Deed was allegedly signed. The Defendant argued that there was therefore no consideration to support the Deed. No dispute was raised as regards the quantification of the Plaintiff’s claim and the claim for interest and costs.

While the defence of absence of consideration was also pursued in the Defendant’s written submissions, counsel for the Defendant conceded the defence, and rightly so in my view, in the course of oral submissions, given that the Deed was executed as a deed (therefore obviating the need for consideration). Accordingly, if I find that the Defendant had signed the Deed, judgment against her in terms of the Plaintiff’s claim must be entered.

The background facts

The Plaintiff was a bank registered in the Hong Kong SAR and carried on business in Singapore at its local branch.

The Defendant and Rajan were joint owners of a property situated at 41 Eng Kong Place, Singapore 599113 (“the Property”). The Property was the matrimonial home of the Defendant and Rajan. The Defendant was also an employee of Tecnomic between April 2007 and September 2013, during which time she held the position of Human Resource Manager. She ceased employment shortly before Tecnomic defaulted on payment under the Banking Facilities.

The Plaintiff granted the Banking Facilities to Tecnomic pursuant to a letter of offer dated 6 September 2012. The letter of offer incorporated the Plaintiff’s Standard Terms and Conditions Governing Banking Facilities.

By a guarantee dated 7 September 2012 (“the Guarantee”) executed by Rajan and one Sarada Devi Krishna Pillai Suresh Kumar (“Suresh”), Rajan and Suresh jointly and severally agreed to pay on demand all sums owed by Tecnomic to the Plaintiff under the Banking Facilities. At all material times, Rajan was a significant shareholder of Tecnomic and one of its two directors.

Tecnomic defaulted on two payments that were due under the Banking Facilities on 18 October 2013 and 21 November 2013 respectively. A letter of demand dated 22 November 2013 (“the 22 November 2013 Letter”) was sent to Tecnomic demanding payment of the sums that had fallen due. This letter was copied to both Rajan and Suresh. Pertinently, the copy to Rajan was sent to the Property.

The demand in the 22 November 2013 Letter was unsatisfied resulting in the termination of the Banking Facilities by a letter dated 2 December 2013. That letter was sent to Tecnomic at its registered address.

It would appear that discussions took place in December 2013 between Rajan and the Plaintiff to examine how best to address the situation. The Plaintiff suggested that the Property be taken as collateral in return for forbearance on its part in instituting proceedings under the Banking Facilities. Upon Rajan agreeing to the suggestion, the Deed was drawn up in duplicate by the Plaintiff’s solicitors and handed to Rajan for execution. The Deed was to be signed by Rajan, the officers of Tecnomic (on its behalf), and the Defendant given that she was a joint owner of the Property. Under cl 2 of the Deed, Rajan, the Defendant, and Tecnomic jointly and severally covenanted to pay all sums owed by Tecnomic to the Plaintiff under the Banking Facilities.

Both copies of the Deed were returned by Rajan to the Plaintiff on 3 January 2014. It was noticed that although the Deed had been signed, it had not been witnessed. It is unclear whether the Defendant had also signed the Deed at that time though the Plaintiff’s Deputy General Manager, Mr Heng Juay Yong (“Mr Heng”), testified that he believed that she had. A fresh set of the Deed was prepared (in duplicate) and given to Rajan for re-execution, this time with instructions to have the signatures witnessed by a solicitor.

On 10 January 2014, Rajan handed two copies of the Deed to the Plaintiff. The two copies of the Deed that were returned were introduced in evidence as “D1” and “D2”. D1 and D2 carried the signatures of Rajan, the Defendant, and that of Rajan and one Ravi Krishnamurthy (both of whom signed on behalf of Tecnomic). It was affixed with the common seal of Tecnomic. D1 and D2 also bore the signature of Mr Johnny Cheo (“Mr Cheo”), a solicitor, as a witness to the signatures of Rajan (in his personal capacity only) and the Defendant. It was the Plaintiff’s position that these signatures and Tecnomic’s seal were on D1 and D2 when Rajan returned them on 10 January 2014. Mr Cheo was retained by Rajan, not the Plaintiff, for the purpose of witnessing Rajan and the Defendant’s signatures. Up to this time, the Plaintiff’s representatives had no interaction with the Defendant. In fact, the Plaintiff’s interaction with regard to the Deed was only with Rajan.

The Deed was then dated 10 January 2014 by the Plaintiff’s solicitors. A caveat was lodged by the Plaintiff against the Property on 20 January 2014 on the basis of the interest that was created under the Deed in favour of the Plaintiff (“the Caveat”).

Separately, on 20 December 2013, a creditor of Tecnomic, Taiyo Enterprise Inc, commenced winding-up proceedings against the company. On 10 January 2014, Tecnomic was ordered to be wound up. The Plaintiff asserted that it only became aware of the winding up proceedings against Tecnomic on 28 January 2014 when it was notified of the same by the liquidator of Tecnomic pursuant to a notice dated 23 January 2014. The Defendant did not accept that the Plaintiff was, as at 10 January 2014, unaware of the winding-up proceedings against Tecnomic. However, there was no evidence to suggest that the Plaintiff knew of the proceedings. In particular, there was no evidence that the officers of Tecnomic specifically Rajan or Suresh, or the Defendant notified the Plaintiff of the winding up proceedings. That the Plaintiff required Tecnomic to be a party to the Deed would suggest that it was not in fact aware of the winding-up proceedings at the material time.

On 10 February 2014, the Australia and New Zealand Banking Group Limited filed a bankruptcy application against Rajan. Rajan was made a bankrupt pursuant to that application on 12 June 2014.

By a letter dated 17 March 2014 from the Plaintiff’s solicitors to the Defendant (“the 17 March 2014 Letter”), the Plaintiff demanded payment under the Deed of the sums due and owing by Tecnomic. The letter was sent by registered post to the Property. The Defendant denied receiving the 17 March 2014 Letter.

This action was commenced on 16 July 2014, and service of process was effected on the Defendant at the Property on 19 July 2014. Following service, the Defendant, through her then solicitors, Messrs C.M. Sum & Company, sought a copy of the Deed from the Plaintiff’s solicitors. For the first time, the Defendant alleged that she had not signed the Deed. Following receipt of copies of the Deed, the Defendant filed a police report on 4 August 2014 (“the Police Report”) alleging that her signatures on D1 and D2 (collectively, “the Signatures”) had been forged. The Police Report is of significance in the evidential matrix.

The Issue – did the Defendant sign the Deed on 10 January 2014?

The pleadings frame two issues for my consideration. As a consequence of the concession by counsel for the Defendant that consideration was not required (see [5] above), there is really only one issue left for me to consider. This is what I described at the outset as the central issue: did the Defendant execute the Deed in duplicate on 10 January 2014 before Mr Cheo or at all?

The Plaintiff called Mr Heng and Mr Cheo as its witnesses. The Defendant also testified. In addition, she called a handwriting expert, Mr Yap Bei Sing (“Mr Yap”), to prove that the Signatures were not penned by...