Re Boonann Construction: Judicial Management, Mortgage Redemption & Interest Owed
In Re Boonann Construction Pte Ltd, the Singapore High Court addressed an application by the judicial managers of Boonann Construction to determine the total sum owing to the Bank of Singapore for redemption of a mortgaged property. The judicial managers sought a declaration that interest on the mortgage ceased to accrue on the date of the judicial management order. The court, Judith Prakash J, dismissed the application, holding that interest continues to accrue until the date of payment. The court sanctioned the redemption but authorized payment of all sums due under the mortgage, including interest, up to the payment date.
1. Case Overview
1.1 Court
High Court1.2 Outcome
Order accordingly.
1.3 Case Type
Insolvency
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
High Court held that interest on a mortgage continues to accrue during judicial management until redemption, dismissing judicial managers' application.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Boonann Construction Pte Ltd | Applicant | Corporation | Application Dismissed | Lost | Nazim Khan, Chng Bee Peng |
| Bank of Singapore | Respondent | Corporation | Judgment for Respondent | Won | Tan Tian Luh |
| Chan Ket Teck | Applicant | Individual | Application Dismissed | Lost | Nazim Khan, Chng Bee Peng |
| Chew Kia Ngee | Applicant | Individual | Application Dismissed | Lost | Nazim Khan, Chng Bee Peng |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Judith Prakash | Judge | Yes |
4. Counsels
| Counsel Name | Organization |
|---|---|
| Tan Tian Luh | Helen Yeo & Partners |
| Nazim Khan | Colin Ng & Partners |
| Chng Bee Peng | Colin Ng & Partners |
4. Facts
- The Bank of Singapore extended credit facilities of up to $2.7m to Boonann Construction in May 1996.
- The credit facilities were secured by an 'All Monies Open Mortgage' over Boonann Construction's property.
- Boonann Construction was placed under judicial management on 25 June 1999.
- As of 25 June 1999, Boonann Construction owed the bank $2,265,452.23, including interest.
- The judicial managers applied to the court for a declaration that interest ceased to accrue on the date of the judicial management order.
- The judicial managers sought to redeem the property by paying only the amount owed as of the date of the judicial management order.
5. Formal Citations
- Re Boonann Construction Pte Ltd, OP 17/1999, OP 17/1999
- Re Boonann Construction Pte Ltd, SIC 601780/2000, SIC 601780/2000
6. Timeline
| Date | Event |
|---|---|
| Bank of Singapore offered credit facilities to Boonann Construction secured by a mortgage. | |
| Boonann Construction was put under judicial management. | |
| Judicial managers filed an application regarding the redemption of the property. | |
| Hearing took place regarding the judicial managers' application. | |
| Decision date. |
7. Legal Issues
- Accrual of Interest During Judicial Management
- Outcome: The court held that interest on the mortgage continues to accrue during judicial management until the property is redeemed.
- Category: Substantive
- Sub-Issues:
- Cessation of interest on secured debt upon judicial management order
- Interpretation of 'sums secured by the security' under s 227H(5) of the Companies Act
- Redemption of Mortgaged Property During Judicial Management
- Outcome: The court sanctioned the redemption of the mortgaged property but ensured the bank received all sums due, including interest, up to the date of payment.
- Category: Substantive
- Sub-Issues:
- Court's discretion in sanctioning redemption
- Protection of secured creditor's interests
8. Remedies Sought
- Declaration
- Sanction of Redemption
9. Cause of Actions
- Mortgage
- Debt Recovery
10. Practice Areas
- Restructuring and Insolvency
- Banking and Finance
11. Industries
- Construction
- Banking
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Re ARV Aviation | N/A | Yes | [1988] BCC 708 | England and Wales | Cited for the interpretation of 'sums secured by the security' to include interest and costs. |
| Re Securitibank | N/A | Yes | [1980] 2 NZLR 714 | New Zealand | Cited for the principle that a secured creditor is entitled to contractual interest up to the date of liquidation. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Companies Act (Cap 50, 1994 Ed) | Singapore |
| s 227D Companies Act (Cap 50, 1994 Ed) | Singapore |
| s 227G Companies Act (Cap 50, 1994 Ed) | Singapore |
| s 227H Companies Act (Cap 50, 1994 Ed) | Singapore |
| s 227H(5) Companies Act (Cap 50, 1994 Ed) | Singapore |
| s 227G(6) Companies Act (Cap 50, 1994 Ed) | Singapore |
| s 227I(1)(a) | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Judicial Management
- Mortgage Redemption
- Interest Accrual
- Secured Creditor
- All Monies Open Mortgage
- Sums Secured by the Security
15.2 Keywords
- Judicial Management
- Mortgage
- Interest
- Redemption
- Secured Creditor
- Insolvency
16. Subjects
- Insolvency
- Banking
- Finance
- Mortgages
17. Areas of Law
- Insolvency Law
- Judicial Management
- Mortgages
- Company Law