Lim Zhipeng v Seow Suat Thin: Guarantee Enforceability & Consideration in Debt Recovery

In Lim Zhipeng v Seow Suat Thin, the Court of Appeal of Singapore heard an appeal regarding the enforceability of a guarantee. Lim Zhipeng (Appellant) sought to enforce a Deed of Guarantee against Seow Suat Thin (Respondent), who acted as guarantor for her son's debt. The High Court dismissed the claim, citing lack of consideration. The Court of Appeal allowed the appeal, holding that consideration was adequately pleaded and furnished by the Appellant's forbearance to take action against the Debtor. The court also dismissed the Respondent's counterclaim.

1. Case Overview

1.1 Court

Court of Appeal of the Republic of Singapore

1.2 Outcome

Appeal Allowed

1.3 Case Type

Civil

1.4 Judgment Type

Judgment

1.5 Jurisdiction

Singapore

1.6 Description

Appeal regarding a guarantee's enforceability. The court examined the requirements of a deed and whether forbearance to file a proof of debt constitutes sufficient consideration.

1.7 Decision Date

7 September 2020

2. Parties and Outcomes

Party Name	Role	Type	Outcome	Outcome Type	Counsels
Lim Zhipeng	Appellant	Individual	Appeal Allowed	Won	Tan Wen Cheng Adrian of August Law Corporation Tan Choon Yuan Delson of August Law Corporation
Seow Suat Thin	Respondent	Individual	Appeal Dismissed	Lost	Kanthosamy Rajendran of RLC Law Corporation Prasanna Prabhakaran of RLC Law Corporation

3. Judges

Judge Name	Title	Delivered Judgment
Judith Prakash	Judge of Appeal	Yes
Belinda Ang Saw Ean	Judge	No
Woo Bih Li	Judge	No

4. Counsels

Counsel Name	Organization
Tan Wen Cheng Adrian	August Law Corporation
Tan Choon Yuan Delson	August Law Corporation
Kanthosamy Rajendran	RLC Law Corporation
Prasanna Prabhakaran	RLC Law Corporation

4. Facts

Appellant lent $565,000 to the Debtor, who failed to repay the debt.
Debtor was made a bankrupt by another creditor.
Respondent agreed to act as guarantor for the Debtor's debt.
A document entitled “Deed of Guarantee” was signed by the Appellant and the Respondent.
Respondent made a part-payment of $40,000 but then defaulted.
Appellant sued the Respondent to enforce the Guarantee.
Appellant filed a proof of debt against the Debtor.

5. Formal Citations

Lim Zhipeng v Seow Suat Thin, Civil Appeal No 11 of 2020, [2020] SGCA 89

6. Timeline

Date	Event
2016-12-01	Appellant lent $565,000 to the Debtor.
2017-01-05	Debtor agreed to return $265,000 to the Appellant.
2017-03-28	Debtor agreed to return $330,000 to the Appellant.
2017-04-01	Appellant became worried about the Debtor's ability to repay the debt.
2017-05-01	Institutional creditor took out bankruptcy proceedings against the Debtor.
2017-07-01	Debtor was made a bankrupt.
2017-07-01	Debtor tried to annul the bankruptcy order.
2017-07-01	Debtor proposed that his mother, the Respondent, act as guarantor.
2017-09-01	Debtor proposed that his mother, the Respondent, act as guarantor.
2017-09-01	Appellant gave the Debtor a document entitled “Deed of Guarantee” to be signed by the Respondent.
2017-09-28	Respondent signed the Guarantee before a lawyer.
2017-11-21	Respondent paid the Appellant $40,000.
2018-02-27	Appellant informed the Respondent that she had defaulted on the payment terms in the Guarantee.
2018-03-28	Appellant lodged a proof of debt for $447,000 against the Debtor.
2018-04-03	Appellant sued the Respondent in the High Court.
2019-01-29	Assistant registrar entered judgment for the Appellant in the sum of $438,500.
2020-07-16	Judgment reserved.
2020-09-08	Judgment delivered.

7. Legal Issues

Enforceability of a Deed
- Outcome: The court held that the Guarantee was not enforceable as a deed because it had not been sealed.
- Category: Substantive
- Sub-Issues:
  - Sealing requirement
  - Intention to execute a deed
Sufficiency of Consideration
- Outcome: The court held that consideration was adequately pleaded and furnished by the Appellant's forbearance to take action against the Debtor.
- Category: Substantive
- Sub-Issues:
  - Forbearance to sue
  - Forbearance to file a proof of debt
Pleading of Consideration
- Outcome: The court held that consideration was adequately pleaded in the Appellant's Reply and Defence to Counterclaim.
- Category: Procedural
Circumventing Bankruptcy Act
- Outcome: The court held that enforcing the Guarantee against the Respondent did not contravene the policy underpinning the pari passu principle.
- Category: Substantive
Unilateral Mistake
- Outcome: The court held that there was no mistake on the Respondent's part of sufficient importance vis-à-vis any term of the Guarantee which would suffice to vitiate the Guarantee.
- Category: Substantive

8. Remedies Sought

Monetary Damages

9. Cause of Actions

Breach of Guarantee

10. Practice Areas

Commercial Litigation

11. Industries

No industries specified

12. Cited Cases

Case Name	Court	Affirmed	Citation	Jurisdiction	Significance
Re Sarah Jane Sandilands and others	English Court of Appeal	Yes	(1871) LR 6 CP 411	England	Cited to determine whether a purported deed had been sealed, and held that the lack of a physical impression of a seal does not necessarily mean the document was not sealed.
First National Securities Ltd v Jones and another	Court of Appeal	Yes	[1978] Ch 109	England	Cited to support the argument that the sealing requirement can be fulfilled even if there is no physical impression or manifestation of a seal.
Cytec Industries Pte Ltd v Asia Pulp & Paper Co Ltd	High Court	Yes	[2009] 2 SLR(R) 806	Singapore	Cited to explain the First National decision and to support the argument that the non-affixation of a seal on a deed was of no material consequence when the requisite intention is clear.
United Overseas Bank Ltd v Lea Tool and others	High Court	No	[1998] 1 SLR(R) 373	Singapore	Cited to contrast with the present case, as in that case the guarantee in dispute was not executed as a deed because the document itself did not purport to be a deed, a physical seal was not affixed to it, and the defendant was unfamiliar with the distinction between a deed and an ordinary contract.
TCB Ltd v Gray	English High Court	No	[1986] Ch 621	England	Cited as a relevant authority where the court held that it would be extending the legal fiction too far if it were to hold that the Guarantee had been sealed, as there was nothing to indicate that something amounting to sealing took place beyond the fact that the words of the document refer to its having been sealed.
Bachoo Mohan Singh v Public Prosecutor and another matter	Singapore Court of Appeal	Yes	[2010] 4 SLR 137	Singapore	Cited to support the argument that it is not the function of the statement of claim to anticipate a defence.
Gay Choon Ing v Loh Sze Ti Terence Peter and another appeal	Singapore Court of Appeal	Yes	[2009] 2 SLR(R) 332	Singapore	Cited for the definition of consideration.
Currie v Misa	Exchequer Court	Yes	(1875) LR 10 Exch 153	England	Cited for the definition of consideration.
Crears v Hunter	English Court of Appeal	Yes	(1887) 19 QBD 341	England	Cited to support the argument that a binding promise to forbear would be a good consideration for a guarantee.
Malayan Banking Bhd v Lauw Wisanggeni	High Court	Yes	[2003] 4 SLR(R) 287	Singapore	Cited to support the argument that a forbearance to sue, even for a short time, may, in appropriate circumstances, be consideration for a promise.
Re Cuthbert, ex parte Monnoyer British Construction Co Ltd (now Monnobar British Construction Co Ltd), by Joseph Stephenson its Liquidator v The Trustee	Not specified	Yes	[1936] 1 All ER 342	England	Cited to support the argument that a forbearance to file a proof of debt also suffices as valuable consideration.
Chan Siew Lee Jannie v Australia and New Zealand Banking Group Ltd	Singapore Court of Appeal	Yes	[2016] 3 SLR 239	Singapore	Cited to support the argument that a creditor may enforce the full amount of his debt as against a bankrupt and/or against any third party who has furnished security.
Broadley Construction Pte Ltd v Alacran Design Pte Ltd	High Court	Yes	[2018] 2 SLR 110	Singapore	Cited for the requirements for a unilateral mistake to vitiate a contract.
Hall v Eve	English Court of Appeal	Yes	(1876) 4 Ch D 341	England	Cited to support the argument that it is not the function of the statement of claim to anticipate a defence.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute Name	Jurisdiction
Bankruptcy Act (Cap 20, 2009 Rev Ed)	Singapore
Companies Act (Cap 50, 2006 Rev Ed)	Singapore
Law of Property (Miscellaneous Provisions) Act 1989 (Cap 34)	United Kingdom
Rules of Court (Cap 322, R5, 2014 Rev Ed)	Singapore

15. Key Terms and Keywords

15.1 Key Terms

Deed of Guarantee
Sealing requirement
Consideration
Forbearance
Proof of debt
Guarantor
Debtor
Creditor
Bankruptcy
Pari passu principle

15.2 Keywords

guarantee
deed
consideration
forbearance
bankruptcy
debt recovery

17. Areas of Law

Area Name	Relevance Score
Guarantee	90
Contract Law	85
Civil Procedure	75
Deeds	60
Estoppel	50
Bankruptcy	40
Procedural Law	30

16. Subjects

Contract Law
Civil Procedure
Bankruptcy Law