CGU International Insurance v Quah Boon Hua: Letter of Indemnity and Signatories' Intent

In CGU International Insurance plc v Quah Boon Hua, the High Court of Singapore dismissed the plaintiff's claim against the first defendant, Quah Boon Hua, under a letter of indemnity. The plaintiff sought reimbursement for losses incurred after issuing a performance bond to Low Keng Huat (S) Ltd on behalf of Hua Tong Marble Works Pte Ltd, the third defendant. The court, presided over by S Rajendran J, found that the letter of indemnity was ineffective against Quah Boon Hua because it was intended to be signed by all three directors of Hua Tong Marble Works Pte Ltd, but one director did not sign. The court accepted Quah Boon Hua's evidence that he signed under the impression that all directors would sign, and as a minority shareholder, he would not have signed otherwise.

1. Case Overview

1.1 Court

High Court

1.2 Outcome

Plaintiffs` claim dismissed.

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

CGU International Insurance sued Quah Boon Hua for losses from a performance bond. The court dismissed the claim, finding the letter of indemnity ineffective due to a missing signatory.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
CGU International Insurance plcPlaintiffCorporationClaim DismissedLostFazal Mohamed Karim, M Anjalli
Quah Boon HuaDefendantIndividualJudgment for DefendantWonGoh Peck San, Chiong Meng Chuan
Poh Ah BengDefendantIndividualProof of debt filed against defendantNeutral
Hua Tong Marble Works Pte LtdDefendantCorporationJudgment in default of appearanceLost

3. Judges

Judge NameTitleDelivered Judgment
S RajendranJudgeYes

4. Counsels

Counsel NameOrganization
Fazal Mohamed KarimB Rao & KS Rajah
M AnjalliB Rao & KS Rajah
Goh Peck SanPS Goh & Co
Chiong Meng ChuanPS Goh & Co

4. Facts

  1. CGU International Insurance issued a performance bond for $383,222 to Low Keng Huat (S) Ltd at the request of the defendants.
  2. The bond was for the due performance by Hua Tong Marble Works Pte Ltd of its obligations under a contract with Low Keng Huat (S) Ltd.
  3. Quah Boon Hua was a director and minority shareholder (4.5%) of Hua Tong Marble Works Pte Ltd.
  4. The letter of indemnity provided for three signatories, but only two directors signed it.
  5. Quah Boon Hua claimed he was told all three directors would sign the letter of indemnity.
  6. Low Keng Huat called on the performance bond, and the plaintiffs paid $383,222.
  7. The letter of indemnity sent to the defendants by the plaintiffs for signature had provision for it to be signed by the third defendants and three directors.

5. Formal Citations

  1. CGU International Insurance plc v Quah Boon Hua and Others, Suit 1766/1999, [2000] SGHC 198

6. Timeline

DateEvent
Decision Date

7. Legal Issues

  1. Effectiveness of Letter of Indemnity
    • Outcome: The court held that the letter of indemnity was ineffective against the first defendant because it was intended to be signed by all three directors, but one director did not sign.
    • Category: Substantive
    • Sub-Issues:
      • Condition precedent of all directors' signatures
      • Intention of parties
  2. Admissibility of Hearsay Evidence
    • Outcome: The court held that the first defendant's evidence of what the second defendant told him was admissible to explain his state of mind when signing the document, not to prove the truth of what was said.
    • Category: Procedural
    • Sub-Issues:
      • Signatory's state of mind

8. Remedies Sought

  1. Reimbursement of $383,222

9. Cause of Actions

  • Breach of Indemnity

10. Practice Areas

  • Commercial Litigation

11. Industries

  • Construction
  • Insurance

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Indian Bank v Raja Suria & OrsCourt of AppealYes[1993] 2 SLR 497SingaporeCited for the principle that the intention of the parties is the crucial test in determining the effectiveness of a letter of indemnity signed by multiple guarantors.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute NameJurisdiction
No applicable statutes

15. Key Terms and Keywords

15.1 Key Terms

  • Letter of Indemnity
  • Performance Bond
  • Signatories
  • Condition Precedent
  • Intention of Parties
  • Hearsay Evidence

15.2 Keywords

  • Letter of Indemnity
  • Performance Bond
  • Signatories
  • Singapore
  • Contract Law
  • Insurance

16. Subjects

  • Contract Law
  • Insurance Law
  • Evidence Law

17. Areas of Law

  • Credit and Security
  • Guarantees and Indemnities
  • Contract Law
  • Evidence