United Overseas Bank Ltd v Tru-line Beauty Consultants Pte Ltd and others

• Jurisdiction: Singapore
• Judge: Woo Bih Li J
• Judgment Date: 17 December 2010
• Neutral Citation: [2010] SGHC 363
• Published date: 22 December 2010
• Date: 17 December 2010
• Year: 2010
• Hearing Date: 11 November 2010
• Subject Matter: Civil Procedure
• Plaintiff Counsel: Lionel Tay, Ng Pei Jing and Esme Wei (Rajah & Tann LLP)
• Citation: [2010] SGHC 363
• Defendant Counsel: Lee Chung Yen Steven and Alvin Chia (Hilborne & Company)
• Court: High Court (Singapore)
• Docket Number: Suit No 1057 of 2009/E (Registrar’s Appeal Nos 261 of 2010/G and 262 of 2010/L)

Woo Bih Li J: Introduction

United Overseas Bank Limited (“UOB”) instituted the main action, Suit No 1057 of 2009/E (“Suit 1057”), against its customer – Tru-line Beauty Consultants Pte Ltd (the “Borrower”), as well as the Borrower’s guarantors – Lee Hwee Loo (“Lee”) and Tan Wei Hong (“Tan”) (collectively referred to as the “Guarantors”), for sums allegedly outstanding under two banking facilities granted by UOB to the Borrower.

Registrar’s Appeal No 261 of 2010/G (“RA 261”) is the appeal of the Borrower and the Guarantors against the decision of the Assistant Registrar (“the AR”), in Summons No 1185 of 2010/Y (“Sum 1185”), to grant summary judgment to UOB for its claim in Suit 1057. Registrar’s Appeal No 262 of 2010/L (“RA 262”) is UOB’s appeal against the AR’s dismissal of UOB’s application, in Summons No 1184 of 2010/T (“Sum 1184”), to strike out paras 24–31 of the Defence and Counterclaim. I dismissed both appeals on 11 November 2010.

Background

UOB had granted the Borrower two banking facilities (collectively referred to as the “Banking Facilities”): a S$450,000 trust receipt facility (“the Trust Receipt Facility”) under a Loan Insurance Scheme III pursuant to UOB’s Letter of Offer dated 25 October 2007 (“the 1st Facility Letter”); and an overdraft account of up to S$90,000 in respect of the Borrower’s current account (“the OD Facility”) pursuant to UOB’s Letter of Offer dated 29 October 2007 (“the 2nd Facility Letter”). On 22 October 2008, UOB sent a letter to the Borrower notifying it that the Trust Receipt Facility had been extended for a year with effect 26 October 2008 and that all the other terms and conditions contained in the previous facility letter(s) would remain unchanged and continue to be binding on the Borrower (the “Review Facility Letter”).

Lee and Tan were joint and several guarantors for the Borrower under two on-demand guarantees in favour of UOB (“the Guarantees”). The guarantee for the Trust Receipt Facility was dated 26 October 2007 and had a limit of S$450,000. The guarantee for the OD Facility was dated 29 October 2007 and had a limit of S$180,000. The Borrower’s liabilities under the Banking Facilities were secured by the Guarantees as well as a Letter of Charge and Set-off (the “FD Charge”) executed by Lee in respect of fixed deposits of not less than S$60,000 placed by Lee with UOB. Clause 9 of the Guarantees provided that the Guarantors would be sole and principal debtors vis-à-vis UOB for all the moneys guaranteed. By cl 13 of the Guarantees, the Guarantors agreed to indemnify UOB against all losses, damages, liabilities, claims, costs, charges and legal and other expenses sustained as a result of or arising from the Banking Facilities.

UOB’s Standard Terms and Conditions Governing Banking Facilities (the “Standard Terms”) were annexed to the 1st Facility Letter and the 2nd Facility Letter and were binding upon the Borrower. Clause 8 of the Standard Terms stated:

WAIVER WITHOUT PREJUDICE The Bank may neglect or forbear to enforce any of the terms in this Agreement or waive on such conditions as it deems fit any breach by you of the same without prejudice to its right at any time afterwards to act strictly in accordance with the originally agreed terms in respect of the existing or subsequent breach. [emphasis added]

Clause 10 of the Standard Terms provided as follows:

EVENTS OF DEFAULT On the occurrence of any of the following events of default (i) the Bank shall cease to be under any further commitment to you and all outstandings under the entire credit line (“the Outstandings”) shall become due and payable immediately... :

(a) If you breach any term of this Agreement including failure to pay any amount due under this Agreement on the due date or on demand, if so payable; (b) If you are unable to pay your debts when they become due or commit an act of bankruptcy or insolvency;

...

(e) If you default under any other agreement involving the borrowing of money or the granting of advances or credit which gives the holder of the obligation concerned the right to accelerate repayment or withdraw the advance or credit;

...

[emphasis added]

On or about 3 April 2009, UOB issued an irrevocable Letter of Credit No. 1TMLC033498 for the sum of EUR26,565.42 (“the L/C”) to the Borrower in favour of Davines S P A (“Davines”). At the material time, the Borrower was Davines’ local exclusive distributor of hair products.

On 21 May 2009, UOB faxed a document titled Collection Notice Term Bills to the Borrower (“the Collection Notice”) informing the Borrower that UOB had received documents from Davines for the sum of EUR26,565.42 in respect of the L/C and seeking the Borrower’s instructions with regards to discrepancies in the documents. The reference number for the Collection Notice was 1TMTB011222. The Borrower ticked and signed an option on the Collection Notice which stated that it required a Trust Receipt. It returned the Collection Notice to UOB on the same date.

On 26 May 2009, 9 June 2009 and 10 June 2009, UOB had sent SWIFT messages to Davines’ negotiating bank to inform it that the documents remained refused and that UOB was holding the documents until it received “a waiver from [the Borrower] and agree[d] to accept it, or receive[d] further instructions from [Davines’ negotiating bank], prior to agreeing to accept a waiver”.

As the Borrower failed to repay UOB the moneys owed under three bills outstanding on the Borrower’s current account (Bill No. 1TMIL102592 for EUR43,990.29; Bill No. 1TMIL110572 for EUR9,398.26; and Bill No. 1TMIL102928 for US$20,926.80), UOB sent a letter of demand (the “Recall Letter”) on or about 8 July 2009 to the Borrower and the Guarantors demanding that they make full payment of the outstanding due within five days from the date of the Recall Letter, failing which all of the Borrower’s Banking Facilities would be deemed to have been recalled by UOB and UOB would proceed to uplift the fixed deposit pledged under the FD Charge. Although there was a typographical error in Tan’s address (the street number was stated as “83” instead of “82”), Tan did not dispute receipt of this letter.

It was undisputed that the Borrower and the Guarantors failed to comply with the demands stated in the Recall Letter.

UOB recalled the Banking Facilities on or about 13 July 2009. UOB also sent Lee a Withdrawal Advice slip dated 31 July 2009 to inform Lee that UOB had uplifted a fixed deposit under the FD Charge.

On 3 August 2009, UOB sent a letter to the Borrower to inform it that Bill No. 1TMTB011222 for the amount of EUR26,565.42 under the L/C would be due on 18 August 2009 (“the Term Bill Notice”). The Term Bill Notice stated:

PLEASE ADVISE US ON YOUR PREFERRED SETTLEMENT MODE BY SELECTING THE OPTIONS BELOW:

( ) WE HAVE BOOKED EXCHANGE RATE AT ____ UNDER CONTRACT NO: ____. ( ) PLEASE DEBIT MY SINGAPORE/FOREIGN CURRENCY ACCOUNT NO. ____ WITH YOU ON DUE DATE. ( ) WE REQUIRE TRUST RECEIPT FOR THE BALANCE OF 30 DAYS OF TRUST RECEIPT PERIOD AVAILABLE TO US. PLEASE INDICATE CURRENCY OF TR (FOREIGN OR SINGAPORE). The Borrower replied on 7 August 2009, selecting the third option.

On 14 August 2009, UOB sent a SWIFT message to Davines’ negotiating bank to inform it that UOB was returning the full set of discrepant documents (see [7] above) on that day. On 17 August 2009, UOB sent a Debit Advice to the Borrower informing the Borrower that UOB had deducted the sum of S$170.00 from the Borrower’s account as cancellation charges under the L/C.

On or about 24 August 2009, UOB’s solicitors, Rajah & Tann LLP (“R&T”) sent a further letter of demand to the Borrower demanding payment of the total outstanding sums under the Banking Facilities. The letter was titled:

BANKING FACILITIES GRANTED BY UNITED OVERSEAS BANK LIMITED AND SECURED BY A CONTINUING PERSONAL GUARANTEE FOR THE PRINCIPAL SUM OF S$180,000.00 AND A CONTINUING PERSONAL GUARANTEE FOR THE PRINCIPAL SUM OF S$450,000.00 EXECUTED BY TAN WEI HONG AND LEE HWEE LOO IN FAVOUR OF UNITED OVERSEAS BANK LIMITED (COLLECTIVELY, THE “GUARANTEES”)

It detailed the outstanding sums as follows:

We are further instructed that you have defaulted and/or failed to make payment on the outstandings in respect of the following:-

(1) Overdraft facility, such that the amount found due and owing by you to our clients as at 17 August 2009 amount to S$25,014.93 with further interest continuing to accrue from 18 August 2009 until the date of full settlement; (2) Letter of Credit facility, such that the amount found due and owing by you to our clients as at 17 August 2009 amount to EUR26,565.42 with further interest continuing to accrue from 18 August 2009 until the date of full settlement; and (3) Loan Insurance Scheme III Trust Receipt facility such that the amount found due and owing by you to our clients as at 17 August 2009 amount to EUR101,616.82 and US$21,285.05 with further interest continuing to accrue from 18 August 2009 until the date of full settlement.

[emphasis in bold in original]

On the same day, R&T sent a further letter (erroneously dated 21 August 2009) to the Guarantors demanding from the Guarantors full payment of the total outstanding sum under the Banking Facilities of S$25,121.93, EUR128,182.24 and US$21,285.05 together with further legal interest and legal costs. The letter to the Guarantors stated that a copy of R&T’s letter of demand to the Borrower dated 24 August 2009 was enclosed but the Guarantors claimed that the said letter was not in fact enclosed. R&T’s letters were served on the Borrower and the Guarantors by way of AR Registered Mail and Certificate of Posting. The letters to the Guarantors were not sent to their address as stated in the Guarantees but were instead sent to their addresses as stated in an Enhanced Instant Search on the...