DB Trustees v Consult Asia: Enforcement of Trust Deed, Security Deed & Moneylenders Act
DB Trustees (Hong Kong) Ltd sued Consult Asia Pte Ltd in the High Court of Singapore, seeking declarations and orders related to a Trust Deed and Security Deed following an alleged Event of Default on Senior Secured Notes. Consult Asia counterclaimed, arguing that DB Trustees was barred from enforcing its rights under the Moneylenders Act and the Trust Companies Act, and that no Event of Default had occurred. Tay Yong Kwang J dismissed DB Trustees' application, discharged the receivers, and ordered Consult Asia to pay US$42,080,000 to redeem the notes by 2009-04-29, with simultaneous release of secured assets, failing which an Event of Default shall be deemed to have occurred.
1. Case Overview
1.1 Court
High Court1.2 Outcome
Plaintiff's application dismissed with costs; receivers discharged; defendant to pay US$42,080,000 to redeem notes by 2009-04-29 with simultaneous release of secured assets, failing which an Event of Default shall be deemed to have occurred.
1.3 Case Type
Civil
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
DB Trustees (Hong Kong) Ltd sues Consult Asia Pte Ltd for defaulting on Senior Secured Notes. Court dismisses DB Trustees' application, finding they wrongfully prevented Consult Asia from redeeming the notes.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| DB Trustees (Hong Kong) Ltd | Plaintiff | Corporation | Application Dismissed | Lost | Sarjit Singh Gill, Koh Junxiang |
| Consult Asia Pte Ltd | Defendant | Corporation | Counterclaim Allowed in Part | Partial | Jimmy Yap, Ernest Subramaniam |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Tay Yong Kwang | Judge | Yes |
4. Counsels
| Counsel Name | Organization |
|---|---|
| Sarjit Singh Gill | Shook Lin & Bok LLP |
| Koh Junxiang | Shook Lin & Bok LLP |
| Jimmy Yap | Jimmy Yap & Co |
| Ernest Subramaniam | Jimmy Yap & Co |
4. Facts
- DB Trustees (Hong Kong) Limited (“the plaintiff”) made an application against Consult Asia Pte Ltd (“the defendant”).
- The plaintiff sought declarations that an Event of Default occurred under the Trust Deed and Security Deed.
- The plaintiff sought an injunction restraining the defendant from interfering with the Receivers.
- The defendant sought a declaration that the plaintiff was barred by Section 15 of the Moneylenders Act.
- The defendant owns two properties in Singapore: the Balestier property and the Changi property.
- The defendant financed its acquisition and development of the two properties through shareholder funds and borrowings.
- The defendant decided to seek alternative financing with the view of discharging the OCBC and the DBS loans.
- The defendant entered into an Engagement Letter with Merrill Lynch to act as exclusive placement agent.
- The plaintiff refused to release the security concurrently with the defendant’s intended redemption of the mortgaged property.
5. Formal Citations
- DB Trustees (Hong Kong) Ltd v Consult Asia Pte Ltd, OS 1044/2008, [2009] SGHC 62
6. Timeline
| Date | Event |
|---|---|
| Consult Asia Pte Ltd incorporated. | |
| Consult Asia decided to seek alternative financing. | |
| Florence Koh signed an Engagement Letter prepared by UBS. | |
| Subscription Agreement between Consult Asia and UBS signed. | |
| Trust Deed between DB Trustees and Consult Asia signed. | |
| Security Deed between DB Trustees and Consult Asia signed. | |
| Agency Agreement between DB Trustees, Consult Asia and Deutsche Bank AG signed. | |
| Deed of Share Charge between Maureen and the Plaintiff signed. | |
| Deed of Share Charge between Florence and the Plaintiff signed. | |
| Mortgage made by the defendant in favour of the plaintiff. | |
| First Interest Payment Date. | |
| Consult Asia secured agreement of Merrill Lynch to act as exclusive placement agent. | |
| Consult Asia gave DB Trustees notice of intention to redeem mortgages on 2008-06-28. | |
| Deutsche Bank sent fax to Consult Asia regarding principal and interest payment due on 2008-06-30. | |
| Deutsche Bank sent letter to Consult Asia revising the total funds due on 2008-06-27. | |
| Second Interest Payment Date. | |
| DB Trustees exercised right to give Consult Asia notice of an Event of Default. | |
| DB Trustees exercised right to appoint Receivers. | |
| DB Trustees made application against Consult Asia Pte Ltd. | |
| Judgment delivered. | |
| Deadline for Consult Asia to pay US$42,080,000 to redeem the US$32 million Notes. |
7. Legal Issues
- Event of Default
- Outcome: The court held that the plaintiff wrongfully prevented the defendant from redeeming the notes, and therefore an Event of Default had not occurred.
- Category: Substantive
- Sub-Issues:
- Default in payment of interest or principal
- Wrongful refusal to release security
- Bad Faith in Appointment of Receivers
- Outcome: The court held that the defendant failed to prove that the plaintiff acted in bad faith when it appointed the Receivers.
- Category: Substantive
- Related Cases:
- Roberto Building Material Pte Ltd v. Oversea-Chinese Banking Corp (No 2) [2003] 3 SLR 217
- Moneylending Transaction
- Outcome: The court held that the transaction was not a moneylending transaction caught by Section 15 of the Moneylenders Act.
- Category: Substantive
- Trust Business Licence
- Outcome: The court held that the plaintiff was an exempt person under Section 15(1)(d) of the Trust Companies Act (Cap 336, 2006 Rev Ed) read with Regulation 4(1)(f) of the Trust Companies (Exemption) Regulations (Cap 336, Rg 1) and therefore exempted from the requirement of holding a trust business licence.
- Category: Substantive
- Estoppel
- Outcome: The court rejected the defendant's contention on the estoppel issue, citing the parol evidence rule.
- Category: Substantive
8. Remedies Sought
- Declarations
- Injunction
- Delivery of Property
- Monetary Damages
- Costs
9. Cause of Actions
- Breach of Contract
- Enforcement of Security
10. Practice Areas
- Commercial Litigation
- Banking and Finance
- Debt Recovery
11. Industries
- Finance
- Real Estate
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Samuel v Jarrah Timber And Wood Paving Corporation Limited | House of Lords | Yes | [1904] AC 323 | England and Wales | Cited for the principle that a mortgagor cannot be prevented from getting back their property upon paying off what is due on the security. |
| Roberto Building Material Pte Ltd v. Oversea-Chinese Banking Corp (No 2) | Court of Appeal | Yes | Roberto Building Material Pte Ltd v. Oversea-Chinese Banking Corp (No 2) [2003] 3 SLR 217 | Singapore | Cited for the principle that a lender must act in good faith when appointing a receiver, and that bad faith requires dishonesty or improper motive. |
| Shamji v Johnson Matthey Bankers Ltd | N/A | Yes | Shamji v Johnson Matthey Bankers Ltd [1991] BCLC 36 | N/A | Cited to support the inherent conflict of interest in the appointment of a receiver and that the power cannot be challenged except on grounds of bad faith. |
| Hooper v Western Counties and South Wales Telephone Co Ltd | N/A | Yes | Hooper v Western Counties and South Wales Telephone Co Ltd (1892) 68 LT 7823 | N/A | Cited for the principle that debentures are not redeemable before the stated fixed date unless otherwise provided. |
| Hyde Management Services (Pty) Ltd v FAI Insurances | N/A | Yes | Hyde Management Services (Pty) Ltd v FAI Insurances (1983) 144 CLR 541 | Australia | Cited for the principle that a loan is not redeemable before the stated fixed date unless otherwise provided. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Section 15 of the Moneylenders Act (Cap 188, 1985 Rev Ed) | Singapore |
| Trust Companies Act (Cap 336, 2006 Rev Ed) | Singapore |
| Section 15(1)(d) of the Trust Companies Act (Cap 336, 2006 Rev Ed) | Singapore |
| s 2 of the Securities and Futures Act (Cap 289, 2006 Rev Ed) | Singapore |
| Section 94 of the Evidence Act | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Trust Deed
- Security Deed
- Event of Default
- Senior Secured Notes
- Receivers
- Redemption
- Mortgage
- Engagement Letter
- Moneylenders Act
- Trust Companies Act
15.2 Keywords
- Trust Deed
- Security Deed
- Event of Default
- Moneylenders Act
- Receivership
- Mortgage Redemption
16. Subjects
- Credit and Security
- Trusts
- Mortgages
- Finance
17. Areas of Law
- Credit and Security
- Trust Law
- Mortgage Law
- Contract Law
- Financial Law