DBS Bank v Ong Yew Huat: Scope of Charge over Fixed Deposit for Overdraft Facility
In The Development Bank of Singapore Limited v Ong Yew Huat and Others, the Court of Appeal of Singapore heard an appeal regarding the scope of a charge over a fixed deposit account. The Development Bank of Singapore Limited (DBS) appealed a decision regarding a charge over a fixed deposit account maintained by Tararone Investments Pte Ltd (Tararone) to secure an overdraft facility granted to Sogo Department Stores (S) Pte Ltd (Sogo). The court allowed the appeal, declaring that the charge secured further facilities extended by DBS to Sogo after the initial overdraft facility was terminated, entitling DBS to recover the outstanding amount from Tararone's fixed deposit.
1. Case Overview
1.1 Court
Court of Appeal1.2 Outcome
Appeal Allowed
1.3 Case Type
Civil
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
The Court of Appeal addressed whether a charge over a fixed deposit secured liabilities beyond the initial overdraft facility. The court held that the charge covered all debts from any account owed by Sogo to DBS.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| The Development Bank of Singapore Limited | Appellant | Corporation | Appeal Allowed | Won | Leslie Chew, Chan Kia Pheng |
| Ong Yew Huat | Respondent | Individual | Appeal Dismissed | Lost | Ronald Choo, Chio Yuen-Lyn |
| Nagaraj Sivaram | Respondent | Individual | Appeal Dismissed | Lost | Ronald Choo, Chio Yuen-Lyn |
| Fang (nee Ho) Ai Lian | Respondent | Individual | Appeal Dismissed | Lost | Ronald Choo, Chio Yuen-Lyn |
| The Judicial Managers of Tararone Investments Pte Ltd jointly and severally | Respondent | Corporation | Appeal Dismissed | Lost | Ronald Choo, Chio Yuen-Lyn |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Chao Hick Tin | Judge of Appeal | Yes |
| L P Thean | Judge of Appeal | No |
| Yong Pung How | Chief Justice | No |
4. Counsels
| Counsel Name | Organization |
|---|---|
| Leslie Chew | Khattar Wong & Partners |
| Chan Kia Pheng | Khattar Wong & Partners |
| Ronald Choo | Rajah & Tann |
| Chio Yuen-Lyn | Rajah & Tann |
4. Facts
- Sogo was indebted to DBS for $18 million in an overdraft account.
- DBS agreed to continue the overdraft facility subject to a repayment schedule and security.
- Tararone executed a charge over a $18 million fixed deposit to secure Sogo's facilities.
- Sogo made payments, and Tararone made corresponding withdrawals from the fixed deposit.
- DBS terminated the overdraft facility due to Sogo's financial difficulties.
- DBS honored certain cheques after termination, provided the total outstanding did not exceed the security held.
- Sogo and Tararone were placed under interim judicial management.
5. Formal Citations
- The Development Bank of Singapore Limited v Ong Yew Huat and Others, CA 600022/2001, [2001] SGCA 58
6. Timeline
| Date | Event |
|---|---|
| DBS informed Sogo of overdraft facility terms. | |
| Tararone executed a charge in respect of a $18 million fixed deposit. | |
| DBS terminated Sogo's overdraft facility. | |
| DBS notified Tararone of Sogo's overdraft facility termination. | |
| Sogo protested DBS's decision to terminate the overdraft facility. | |
| DBS agreed to honor specific cheques drawn on the loan accounts. | |
| Sogo and Tararone placed under interim judicial management. | |
| Interim judicial managers instructed DBS to close all of Sogo's accounts. | |
| A sum of $46,889.54 was deducted from the overdraft facility. | |
| A judicial management order was made against Tararone. | |
| Sogo owed $2,878.586.28 in the overdraft account. | |
| DBS sought consent to enforce the charge on the fixed deposit. | |
| Interim judicial managers explained they had to consider questions before replying. | |
| Originating summons was filed. | |
| Judgment delivered by Court of Appeal. |
7. Legal Issues
- Scope of Charge
- Outcome: The court held that the charge was an 'all money' charge, securing all debts from any account owed by Sogo to DBS, including those incurred after the termination of the initial overdraft facility.
- Category: Substantive
- Sub-Issues:
- Interpretation of 'all moneys' clause
- Effect of termination of overdraft facility on charge
- Estoppel
- Outcome: The court held that the elements of estoppel were not satisfied, as the letter of termination did not constitute a clear and unambiguous representation, and there was no evidence of reliance or detriment.
- Category: Substantive
- Sub-Issues:
- Representation by conduct
- Reliance and detriment
8. Remedies Sought
- Declaration
- Recovery of Debt
9. Cause of Actions
- Enforcement of Charge
- Breach of Contract
10. Practice Areas
- Commercial Litigation
- Banking Litigation
11. Industries
- Banking
- Retail
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Bank of India v Trans Continental Commodity Merchants' Ltd & Patel | English Court of Appeal | Yes | [1983] 2 Lloyd's Rep 298 | England and Wales | Cited for the purposive and practical approach taken by the court in relation to a wide "all money" clause in a guarantee given to a bank. |
| Re Rudd & Son Ltd | English Court of Appeal | Yes | (1986) 2 BCC 98,955 | England and Wales | Cited to gauge judicial attitudes in relation to such "all money" clauses and the court's consideration of commercial sense in arriving at its decisions. |
| Estoril Investments Pty Ltd v Westpac Banking Corporation | Australian Court | Yes | (1993) 6 BPR 13,146 | Australia | Cited by counsel for Tararone to contend that the present charge should sensibly be read down to circumscribe its application. |
| Habibullah Mohamed Yousuff v Indian Bank | Court of Appeal | Yes | [1999] 3 SLR 650 | Singapore | Cited by Tararone to support the argument that a bank must disclose to a surety "unusual features" relating to a transaction. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Companies Act | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Charge
- Fixed Deposit
- Overdraft Facility
- All Moneys Charge
- Banking Facilities
- Repayment Schedule
- Termination
- Judicial Management
- Continuing Security
15.2 Keywords
- charge
- fixed deposit
- overdraft
- banking facilities
- security
- DBS
- Sogo
- Tararone
16. Subjects
- Banking
- Finance
- Security
17. Areas of Law
- Banking Law
- Contract Law
- Security Law
- Construction Law