DB Trustees v Consult Asia: Validity of Receiver Appointment & Mortgage Enforcement
The Singapore Court of Appeal heard appeals from DB Trustees (Hong Kong) Ltd and Consult Asia Pte Ltd regarding the appointment of receivers and managers over Consult Asia's assets. DB Trustees appointed receivers after Consult Asia failed to redeem Senior Secured Notes. The High Court initially sided with Consult Asia, but the Court of Appeal, in this decision delivered by Justice V.K. Rajah, allowed DB Trustees' appeal and dismissed Consult Asia's appeal, finding that DB Trustees had the right to appoint receivers due to an Event of Default and that the receivers had not breached their duties. The court awarded costs to DB Trustees.
1. Case Overview
1.1 Court
Court of Appeal1.2 Outcome
Appeal in Civil Appeal No 19 of 2009 by DB Trustees is allowed and the appeal in Civil Appeal No 90 of 2009 by Consult Asia is dismissed.
1.3 Case Type
Civil
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
Court of Appeal affirms DB Trustees' right to appoint receivers over Consult Asia due to a loan default, dismissing claims of improper conduct.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| DB Trustees (Hong Kong) Ltd | Appellant, Respondent | Corporation | Appeal allowed | Won | Sarjit Singh Gill, Koh Junxiang |
| Consult Asia Pte Ltd | Respondent, Appellant | Corporation | Appeal dismissed | Lost | Ernest Yogarajah Balasubramaniam, Christopher Anand Daniel, Kenneth Jerald Pereira |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Chan Sek Keong | Chief Justice | No |
| Andrew Phang Boon Leong | Justice of the Court of Appeal | No |
| V K Rajah | Justice of the Court of Appeal | Yes |
4. Counsels
| Counsel Name | Organization |
|---|---|
| Sarjit Singh Gill | Shook Lin & Bok LLP |
| Koh Junxiang | Shook Lin & Bok LLP |
| Ernest Yogarajah Balasubramaniam | Arfat Selvam Alliance LLC |
| Christopher Anand Daniel | Clifford Law LLC |
| Kenneth Jerald Pereira | Clifford Law LLC |
4. Facts
- Consult Asia issued Senior Secured Notes pursuant to a Subscription Agreement dated 28 December 2006.
- DB Trustees acted as trustee of the Security on behalf of the Note-holders.
- Consult Asia mortgaged two properties as security for the redemption of the Notes.
- Consult Asia failed to redeem the Notes by the contractually stipulated redemption date of 28 June 2008.
- DB Trustees appointed receivers and managers over Consult Asia on 4 July 2008.
- Consult Asia argued DB Trustees acted unreasonably in refusing to release the Security concurrently with payment of redemption monies.
- Consult Asia was unable to settle refinancing terms with Merrill Lynch by June 2008.
5. Formal Citations
- DB Trustees (Hong Kong) Ltd v Consult Asia Pte Ltd and Another Appeal, CA 19/2009, 90/2009, OS 1044/2008, 800/2009, [2009] SGCA 39
6. Timeline
| Date | Event |
|---|---|
| Subscription Agreement dated | |
| Trust Deed dated | |
| Security Deed dated | |
| Agreement entered into in early February 2008 with a new placement agent | |
| Purported notice of redemption given by Consult Asia to DBS Trustees | |
| M/s Lee & Lee wrote to Consult Asia stating that ML had instructed their solicitors to put on hold further work | |
| Contractually stipulated redemption date | |
| DB Trustee’s appointment of receivers and managers over Consult Asia | |
| First Affidavit of Florence Koh Lee Kheng dated | |
| Originating Summons No 1044 of 2008 filed | |
| Expiry of grace period allowed by the Judge in OS 1044/2008 | |
| DB Trustees appointed the receivers and managers over all the assets and business of Consult Asia | |
| Originating Summons No 800 of 2009 filed | |
| Judgment reserved |
7. Legal Issues
- Validity of Appointment of Receivers and Managers
- Outcome: The Court of Appeal held that DB Trustees had the power to appoint receivers and managers over the undertaking and assets of Consult Asia.
- Category: Substantive
- Breach of Duty by Receivers and Managers
- Outcome: The Court of Appeal found that the receivers and managers had not breached any of the duties allegedly owed to Consult Asia.
- Category: Substantive
- Event of Default
- Outcome: The court determined that an Event of Default had occurred on 28 June 2008.
- Category: Substantive
8. Remedies Sought
- Order for valid and enforceable appointment of receivers and managers
- Discharge of receivers and managers
9. Cause of Actions
- Enforcement of Security
- Breach of Contract
10. Practice Areas
- Commercial Litigation
- Banking Litigation
- Mortgage Enforcement
11. Industries
- Finance
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| DB Trustees (Hong Kong) Ltd v Consult Asia Pte Ltd | High Court | No | [2009] SGHC 62 | Singapore | The Court of Appeal's grounds of decision are to be read with the High Court Judge's decision in OS 1044/2008, where the facts have been fully stated. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| No applicable statutes | |
15. Key Terms and Keywords
15.1 Key Terms
- Receivers and Managers
- Senior Secured Notes
- Security
- Redemption
- Event of Default
- Floating Charge
- Trust Deed
- Security Deed
- Refinancing
- Placement Agent
15.2 Keywords
- mortgage
- receiver
- trustee
- default
- security
- notes
- loan
16. Subjects
- Banking
- Finance
- Mortgages
- Insolvency
17. Areas of Law
- Banking Law
- Lending and Security Law
- Mortgage Law