OCBC v Infocommcentre: Overdraft Facility Recall & Misrepresentation in Compromise Agreements

Oversea-Chinese Banking Corp Ltd (OCBC) sued Infocommcentre Pte Ltd in the High Court of Singapore for defaulting on an overdraft facility. Infocommcentre claimed misrepresentation by OCBC regarding a 'Release Letter' and argued that the facility was not recallable on demand. Justice Rajah dismissed Infocommcentre's appeal, finding no evidence of misrepresentation or restrictions on OCBC's right to recall the facility, and deemed Infocommcentre's arguments unmeritorious.

1. Case Overview

1.1 Court

High Court

1.2 Outcome

Appeal dismissed.

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

OCBC sued Infocommcentre for defaulting on an overdraft facility. The court dismissed Infocommcentre's appeal, finding no misrepresentation or restrictions on OCBC's right to recall the facility.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
Oversea-Chinese Banking Corp LtdPlaintiff, RespondentCorporationAppeal dismissedWonHri Kumar, Wilson Wong
Infocommcentre Pte LtdDefendant, AppellantCorporationAppeal dismissedLostMichael Hwang, Ernest Wee, Oommen Mathew

3. Judges

Judge NameTitleDelivered Judgment
V K RajahJudgeYes

4. Counsels

Counsel NameOrganization
Hri KumarDrew and Napier LLC
Wilson WongDrew and Napier LLC
Michael HwangMichael Hwang
Ernest WeeMichael Hwang
Oommen MathewHaq and Selvam

4. Facts

  1. The defendant obtained a US$17 million short-term advance facility from Bank of Singapore (BOS) in 1995 to supplement working capital.
  2. The facility was secured by a mortgage on the defendant's property and a guarantee from Dr. Ang, a director of the defendant.
  3. In 1998, the facility was restructured into a Singapore dollar-denominated overdraft facility.
  4. The defendant defaulted on its obligations, leading to discussions and compromise agreements with the plaintiff (OCBC), which acquired BOS.
  5. The plaintiff terminated the facility after the defendant repeatedly failed to meet its obligations under the compromise agreements.
  6. The defendant claimed the plaintiff misrepresented the existence of a 'Release Letter' and that the facility was not recallable on demand.

5. Formal Citations

  1. Oversea-Chinese Banking Corp Ltd v Infocommcentre Pte Ltd, OS 456/2004, RA 179/2004, [2005] SGHC 134

6. Timeline

DateEvent
Bank of Singapore granted defendant a US$17,000,000 short term advance facility.
Short term advance facility agreement signed.
Mortgage signed.
Bank of Singapore offered defendant a Singapore dollar overdraft facility.
Oversea-Chinese Banking Corp Ltd acquired Bank of Singapore.
Plaintiff terminated facilities granted to the defendant.
First compromise agreement reached.
First compromise agreement reached.
Second compromise agreement reached.
Defendant and Dr Ang accepted terms of second compromise agreement.
Plaintiff terminated the facility.
Supplemental letters of offer issued to vary terms of letter of offer dated 29 November 2002.
Supplemental letters of offer issued to vary terms of letter of offer dated 29 November 2002.
Plaintiff terminated facility arrangement and demanded repayment of S$33,430,514.23.
Assistant Registrar Joyce Low ordered that the defendant pay the plaintiff the sum of $34,668,133.72 with interest.
Appeal dismissed.

7. Legal Issues

  1. Misrepresentation
    • Outcome: The court found no evidence of misrepresentation by the plaintiff that induced the defendant to enter into the compromise agreements.
    • Category: Substantive
    • Sub-Issues:
      • Inducement
  2. Breach of Contract
    • Outcome: The court found that the plaintiff was entitled to recall the facilities on demand and that the defendant had breached the terms of the loan agreements.
    • Category: Substantive
  3. Consideration
    • Outcome: The court held that the plaintiff's forbearance and reinstatement of the facility constituted sufficient consideration for the compromise agreements.
    • Category: Substantive

8. Remedies Sought

  1. Repayment of debt
  2. Possession and sale of mortgaged property

9. Cause of Actions

  • Breach of Contract
  • Recovery of Debt

10. Practice Areas

  • Commercial Litigation
  • Banking Litigation

11. Industries

  • Banking
  • Finance

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Overseas Union Bank v Lew Keh LamHigh CourtYes[1999] 3 SLR 393SingaporeCited for the principle that forbearance constitutes sufficient consideration for a contract.
Chwee Kin Cheong v Digilandmall.com Pte LtdHigh CourtYes[2004] 2 SLR 594SingaporeCited for the principle that forbearance constitutes sufficient consideration for a contract.
Titford Property Co Ltd v Canon Street Acceptances LtdChancery DivisionYesTitford Property Co Ltd v Canon Street Acceptances Ltd (Chancery Division, 22 May 1975)England and WalesDiscussed and distinguished; the court found that the present case did not involve a facility for a fixed term or a specific purpose like in Titford.
Williams and Glyn’s Bank Ltd v BarnesUnknownYes[1981] Com LR 205England and WalesCited for the principle that a provision for repayment on demand is not necessarily repugnant to the main purpose of a loan agreement.
Neuchatel Asphalt Co v BarnettUnknownYesNeuchatel Asphalt Co v Barnett [[1957] 1 All ER 362]England and WalesCited for the rule of construction that printed words inconsistent with the main object of a transaction may be limited or rejected.
Photo Production Ltd v Securicor Transport LtdHouse of LordsYesPhoto Production Ltd v Securicor Transport Ltd [[1980] AC 827]England and WalesCited for the principle that parties to a contract are free to determine their primary obligations.
Lloyds Bank plc v LampertEnglish Court of AppealYes[1999] 1 All ER (Comm) 161England and WalesCited for the principle that a bank can grant a facility with an envisaged duration while retaining the right to demand repayment at any time.
Chapman v Barclays Bank PlcUnknownYes[1997] 6 Bank LR 315England and WalesCited for the principle that a bank does not owe a duty of care to a borrower when exercising its discretionary right to withdraw overdraft facilities.
Industrial & Commercial Bank Ltd v Li Soon Development Pte LtdHigh CourtYes[1994] 1 SLR 471SingaporeCited for the common feature of banking overdraft that it may be withdrawn at any time by the bank.
Bank Bumiputra Malaysia Bhd Kuala Terengganu v Mae Perkayuan Sdn BhdUnknownYes[1993] 2 MLJ 76MalaysiaCited as a decision engendered on its own special facts.
Bumiputra-Commerce Bank Bhd, Kuala Terengganu v Chendering Development Sdn BhdUnknownYes[2004] 1 MLJ 657MalaysiaCited as a decision engendered on its own special facts.

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

  • Overdraft facility
  • Compromise agreement
  • Release letter
  • Recall on demand
  • Misrepresentation
  • Forbearance
  • Working capital
  • Mortgage
  • Guarantee

15.2 Keywords

  • Overdraft
  • Banking
  • Misrepresentation
  • Contract
  • Singapore

16. Subjects

  • Banking
  • Contract
  • Finance

17. Areas of Law

  • Banking Law
  • Contract Law
  • Civil Procedure