Re Boonann Construction: Judicial Management, Mortgage Redemption, and Interest Accrual

In Re Boonann Construction Pte Ltd, the Singapore High Court addressed an application by the judicial managers of Boonann Construction Pte Ltd to redeem a mortgage held by the Bank of Singapore. The judicial managers sought a declaration that interest on the mortgage debt ceased accruing when the company entered judicial management. Judith Prakash J dismissed the application, holding that interest continues to accrue on secured debts during judicial management until the date of redemption. The court sanctioned the redemption of the mortgage, ordering payment of all sums due, including interest, to the bank and dismissed the judicial managers' prayer for a declaration.

1. Case Overview

1.1 Court

High Court

1.2 Outcome

Order sanctioning the redemption of the mortgage by the judicial managers, with payment to the bank of all sums payable under the mortgage, inclusive of interest, up to the date of payment. The judicial managers’ prayer for a declaration was dismissed.

1.3 Case Type

Insolvency

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

The High Court held that interest on a mortgage continues to accrue even when a company is under judicial management, sanctioning the mortgage redemption.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
Chan Ket TeckApplicantIndividual
Chew Kia NgeeApplicantIndividual
Boonann Construction Pte LtdApplicantCorporationNazim Khan, Chng Bee Peng
Bank of SingaporeRespondentCorporationJudgment for RespondentWonTan Tian Luh

3. Judges

Judge NameTitleDelivered Judgment
Judith PrakashJudgeYes

4. Counsels

Counsel NameOrganization
Tan Tian LuhHelen Yeo & Partners
Nazim KhanColin Ng & Partners
Chng Bee PengColin Ng & Partners

4. Facts

  1. Boonann Construction Pte Ltd owned property at 19 Kaki Bukit Industrial Terrace.
  2. In May 1996, Bank of Singapore offered Boonann Construction credit facilities up to $2.7 million.
  3. The credit facilities were secured by an 'All Monies Open Mortgage' over the property.
  4. Boonann Construction was placed under judicial management on 25 June 1999.
  5. At the time of judicial management, the company owed the bank $2,265,452.23, including interest.
  6. Judicial managers applied to the court for a declaration that interest ceased to run on the date of judicial management.

5. Formal Citations

  1. Re Boonann Construction Pte Ltd, Originating Petition No 17 of 1999, [2000] SGHC 130

6. Timeline

DateEvent
Bank of Singapore offered credit facilities to Boonann Construction Pte Ltd.
Boonann Construction Pte Ltd put under judicial management.
Judicial managers filed application for declaration regarding redemption of property.
Hearing took place.
Judgment issued.

7. Legal Issues

  1. Accrual of Interest During Judicial Management
    • Outcome: The court held that interest on a mortgage continues to accrue even when a company is under judicial management.
    • Category: Substantive
    • Related Cases:
      • [1988] 4 BCC 710
      • [1980] 1 NZL 714

8. Remedies Sought

  1. Declaration that interest ceased to accrue on the date of judicial management
  2. Sanction for the redemption of the property from the mortgage

9. Cause of Actions

  • No cause of actions

10. Practice Areas

  • Commercial Litigation
  • Insolvency
  • Banking Law

11. Industries

  • Construction
  • Banking

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Re ARV Aviation LtdN/AYes[1988] 4 BCC 710EnglandCited for the interpretation of 'the sum secured by the security' in the context of an administrator's power to sell assets subject to a security, holding that it covers capital, interest, and costs.
Securitibank LtdN/AYes[1980] 1 NZL 714New ZealandCited for the principle that a secured creditor is entitled to contractual interest up to the date of the liquidation of his security, notwithstanding the prior winding up of the debtor company.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute NameJurisdiction
Companies Act (Cap 50) s 227DSingapore
Companies Act (Cap 50) s 227GSingapore
Companies Act (Cap 50) s 227HSingapore
Companies (Amendment) Act 1987Singapore

15. Key Terms and Keywords

15.1 Key Terms

  • Judicial Management
  • Mortgage
  • Redemption
  • Interest Accrual
  • Secured Creditor
  • All Monies Open Mortgage
  • Proof of Debt
  • Companies Act
  • Companies Regulations

15.2 Keywords

  • Judicial Management
  • Mortgage Redemption
  • Interest
  • Insolvency
  • Singapore
  • Company Law

16. Subjects

  • Insolvency
  • Banking
  • Mortgages
  • Company Law

17. Areas of Law

  • Insolvency Law
  • Judicial Management
  • Mortgage Law
  • Company Law