United Overseas Bank v Tru-line Beauty Consultants: Summary Judgment & Banking Facilities Recall

United Overseas Bank Limited (UOB) sued Tru-line Beauty Consultants Pte Ltd (the Borrower) and its guarantors, Lee Hwee Loo and Tan Wei Hong, for sums outstanding under banking facilities. The High Court of Singapore heard appeals against the Assistant Registrar's decision on UOB's summary judgment application and the Borrower's counterclaim. The court dismissed both appeals, upholding the summary judgment in favor of UOB and allowing the counterclaim to proceed to trial. The Borrower's counterclaim alleged wrongful termination of a letter of credit, leading to the loss of a distribution agreement.

1. Case Overview

1.1 Court

High Court

1.2 Outcome

Appeals dismissed.

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

UOB sought summary judgment against Tru-line Beauty Consultants and guarantors for outstanding banking facilities. The court dismissed appeals against the summary judgment and striking out counterclaim.

1.7 Decision Date

16 December 2010

2. Parties and Outcomes

Party Name	Role	Type	Outcome	Outcome Type	Counsels
United Overseas Bank Ltd	Plaintiff, Respondent	Corporation	Appeal allowed	Won	Lionel Tay of Rajah & Tann LLP Ng Pei Jing of Rajah & Tann LLP Esme Wei of Rajah & Tann LLP
Tru-line Beauty Consultants Pte Ltd	Defendant, Appellant	Corporation	Appeal dismissed	Lost	Lee Chung Yen Steven of Hilborne & Company Alvin Chia of Hilborne & Company
Lee Hwee Loo	Defendant, Appellant	Individual	Appeal dismissed	Lost	Lee Chung Yen Steven of Hilborne & Company Alvin Chia of Hilborne & Company
Tan Wei Hong	Defendant, Appellant	Individual	Appeal dismissed	Lost	Lee Chung Yen Steven of Hilborne & Company Alvin Chia of Hilborne & Company

3. Judges

Judge Name	Title	Delivered Judgment
Woo Bih Li	Judge	Yes

4. Counsels

Counsel Name	Organization
Lionel Tay	Rajah & Tann LLP
Ng Pei Jing	Rajah & Tann LLP
Esme Wei	Rajah & Tann LLP
Lee Chung Yen Steven	Hilborne & Company
Alvin Chia	Hilborne & Company

4. Facts

UOB granted Tru-line Beauty Consultants two banking facilities: a trust receipt facility and an overdraft account.
Lee and Tan were joint and several guarantors for Tru-line under two on-demand guarantees.
UOB issued an irrevocable Letter of Credit to Tru-line in favor of Davines.
Tru-line failed to repay UOB the moneys owed under three bills outstanding on the current account.
UOB sent a Recall Letter to Tru-line and the Guarantors demanding full payment.
UOB recalled the Banking Facilities and uplifted a fixed deposit pledged under the FD Charge.
Davines did not renew its distribution agreement with Tru-line due to a significant default in payments.

5. Formal Citations

United Overseas Bank Ltd v Tru-line Beauty Consultants Pte Ltd and others, Suit No 1057 of 2009/E (Registrar's Appeal Nos 261 of 2010/G and 262 of 2010/L), [2010] SGHC 363

6. Timeline

Date	Event
2007-10-25	UOB issued Letter of Offer for Trust Receipt Facility.
2007-10-26	Guarantee for Trust Receipt Facility was dated.
2007-10-29	UOB issued Letter of Offer for Overdraft Facility.
2007-10-29	Guarantee for Overdraft Facility was dated.
2008-10-22	UOB sent letter to Borrower notifying extension of Trust Receipt Facility.
2009-04-03	UOB issued irrevocable Letter of Credit to Borrower.
2009-05-21	UOB faxed Collection Notice to Borrower.
2009-05-26	UOB sent SWIFT messages to Davines’ negotiating bank.
2009-06-09	UOB sent SWIFT messages to Davines’ negotiating bank.
2009-06-10	UOB sent SWIFT messages to Davines’ negotiating bank.
2009-07-08	UOB sent Recall Letter to Borrower and Guarantors.
2009-07-13	UOB recalled Banking Facilities.
2009-07-31	UOB sent Lee a Withdrawal Advice slip.
2009-08-03	UOB sent Term Bill Notice to Borrower.
2009-08-07	Borrower replied to Term Bill Notice.
2009-08-14	UOB sent SWIFT message to Davines’ negotiating bank.
2009-08-17	UOB sent Debit Advice to Borrower.
2009-08-24	Rajah & Tann LLP sent letter of demand to Borrower.
2009-08-24	Rajah & Tann LLP sent letter of demand to Guarantors.
2009-09-23	Rajah & Tann LLP notified Borrower and Guarantors of reduced sum.
2009-10-30	Davines sent letter stating they would not renew distribution agreement.
2009-12-15	UOB filed Writ of Summons and Statement of Claim.
2010-01-27	Borrower and Guarantors filed joint Defence and Counterclaim.
2010-02-09	UOB filed Reply and Defence to Counterclaim.
2010-04-05	Borrower and Guarantors exhibited joint affidavit.
2010-04-23	UOB filed affidavit.
2010-05-03	Lee filed affidavit.
2010-11-11	Appeals dismissed.
2010-12-17	Decision Date

7. Legal Issues

Breach of Contract
- Outcome: The court found that the bank was entitled to recall the banking facilities due to the borrower's default. The court also found that the counterclaim for wrongful termination of the letter of credit should proceed to trial.
- Category: Substantive
- Sub-Issues:
  - Wrongful termination of letter of credit
  - Failure to repay sums due under banking facilities
Guarantee
- Outcome: The court found that the guarantors' liability had arisen because a written demand was made and received, even if not served at the address stated in the guarantees.
- Category: Substantive
- Sub-Issues:
  - Enforceability of guarantee
  - Service of demand on guarantors
Summary Judgment
- Outcome: The court upheld the summary judgment in favor of the bank, finding that the borrower's counterclaim did not give rise to a sufficient degree of proximity to raise a set-off.
- Category: Procedural
- Sub-Issues:
  - Appropriateness of summary judgment
  - Set-off and counterclaim

8. Remedies Sought

Monetary Damages
Interest
Costs and disbursements on a full indemnity basis

9. Cause of Actions

Breach of Contract
Breach of Guarantee

10. Practice Areas

Commercial Litigation
Banking Litigation

11. Industries

Finance

12. Cited Cases

Case Name	Court	Affirmed	Citation	Jurisdiction	Significance
Brody, White and Co Inc v Chemet Handel Trading (S) Pte Ltd	High Court	Yes	[1992] 3 SLR(R) 146	Singapore	Cited for the principle of autonomy of credit in letter of credit transactions.
Agritrade International Pte Ltd v Industrial and Commercial Bank of China	High Court	Yes	[1998] 1 SLR(R) 322	Singapore	Cited for the principle that the contractual relationship between the issuing bank and the applicant for the credit cannot affect the relationship between the issuing bank and the beneficiary.
Allied Bank (Malaysia) Bhd v Yau Jiok Hua	High Court	No	[1998] 6 MLJ 1	Malaysia	Cited for the proposition that personal service of letters of demand is required, but this was overturned on appeal.
Allied Bank (Malaysia) Bhd v Yau Jiok Hua	Court of Appeal	Yes	[2006] 5 MLJ 145	Malaysia	Cited to show that the High Court's ruling on personal service was overturned and that personal service is not required.
Hawley & Hazel Chemical Co (S) Pte Ltd v Szu Ming Trading Pte Ltd	High Court	Yes	[2008] SGHC 13	Singapore	Cited for the four classes of cases in the court’s determination of whether summary judgment should or should not be granted.
Abdul Salam Asanaru Pillai (trading as South Kerala Cashew Exporters) v Nomanbhoy & Sons Pte Ltd	High Court	Yes	[2007] 2 SLR(R) 856	Singapore	Cited for the principles regarding equitable set-off and the connection between claims.
Bim Kemi AB v Blackburn Chemicals Ltd	Civil Division	Yes	[2001] 2 Lloyd’s Rep 93	England	Cited for the principles regarding equitable set-off and the connection between claims.
United Overseas v Peter Robinson (trading as Top Shop)	English Court of Appeal	Yes	N/A	England	Cited for the approach of the court to set-offs and counterclaims raised in opposition to summary judgment applications.
Hanak v Green	N/A	Yes	[1958] 2 QB 9	N/A	Cited for the general right to equitable set-off in cases where there is a close relationship or connection between the dealings and the transactions which give rise to the respective claims.
British Anzani (Felixstowe) Ltd v International Marine Management (UK) Ltd	N/A	Yes	[1980] 1 QB 137	N/A	Cited for the principle that it is not necessarily the case that the claim and cross-claim must arise out of the same contract.
The Government of Newfoundland v The Newfoundland Railway Company	N/A	Yes	(1888) 13 App Cas 199	N/A	Cited for the principle that there is no universal rule that claims arising out of the same contract may be set against one another in all circumstances.

13. Applicable Rules

Rule Name
Order 18 Rule 19(1) of the Rules of Court
Order 62 Rule 2 of the Rules of Court
Order 62 Rule 1 of the Rules of Court

14. Applicable Statutes

Statute Name	Jurisdiction
No applicable statutes

15. Key Terms and Keywords

15.1 Key Terms

Banking Facilities
Trust Receipt Facility
Overdraft Facility
Guarantees
Letter of Credit
Recall Letter
Standard Terms
Summary Judgment
Set-off
Counterclaim

15.2 Keywords

banking facilities
guarantee
letter of credit
summary judgment
set-off
counterclaim

17. Areas of Law

Area Name	Relevance Score
Banking and Finance	90
Guarantee	80
Contract Law	70
Summary Judgement	60
Breach of Contract	50
Documentary Credits	40
Estoppel	30

16. Subjects

Banking
Finance
Contract Law
Civil Procedure