NCL Housing v Sea-Shore Transportation: Enforceability of Personal Guarantees & Oral Agreements

In NCL Housing Pte Ltd v Sea-Shore Transportation Pte Ltd and others, the General Division of the High Court of Singapore addressed a claim by NCL Housing against Sea-Shore Transportation, Kashmire Merkaney, and Sushela w/o Vijayarahavan for the sum of $4,774,303.54 relating to 20 personal guarantees signed by Mdm Kashmire for loans from NCL to SST. NCL discontinued its claim against SST and Mdm Sushela. Mdm Kashmire argued the guarantees were unenforceable due to an oral agreement. The court, presided over by Andre Maniam JC, found no such oral agreement existed and ruled in favor of NCL Housing, granting the claimed sum and further contractual interest.

1. Case Overview

1.1 Court

General Division of the High Court

1.2 Outcome

Judgment for Plaintiff

1.3 Case Type

Civil

1.4 Judgment Type

Judgment

1.5 Jurisdiction

Singapore

1.6 Description

NCL Housing sued Sea-Shore Transportation and Kashmire Merkaney for loan defaults. The court found the personal guarantees enforceable, rejecting claims of an oral agreement.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
Kashmire MerkaneyDefendantIndividualClaim DismissedLost
NCL Housing Pte LtdPlaintiffCorporationJudgment for PlaintiffWon
Sea-Shore Transportation Pte LtdDefendantCorporationClaim DiscontinuedDismissed
Sushela w/o VijayarahavanDefendantIndividualClaim DiscontinuedDismissed

3. Judges

Judge NameTitleDelivered Judgment
Andre ManiamJudicial CommissionerYes

4. Counsels

Counsel NameOrganization
John Jeevan NoelPereira & Tan LLC
Victor Khong Wei DePereira & Tan LLC
Prakash MulaniM&A Law Corporation
Ruelia RufusM&A Law Corporation

4. Facts

  1. NCL Housing provided loans totaling $4,090,830.26 to Sea-Shore Transportation.
  2. Kashmire Merkaney signed 20 personal guarantees in favor of NCL Housing for the loans to Sea-Shore Transportation.
  3. The Loan Agreements stipulated that the loans were to be repaid within one year.
  4. Sea-Shore Transportation failed to repay any of the loans to NCL Housing.
  5. NCL Housing demanded payment from Kashmire Merkaney on the personal guarantees.
  6. Kashmire Merkaney claimed the personal guarantees were only 'for show' due to an oral agreement.
  7. Kashmire Merkaney claimed NCL Housing caused severe detriment to SST’s business which resulted in SST being unable to repay the loans.

5. Formal Citations

    6. Timeline

    DateEvent
    First Loan Agreement and Personal Guarantee signed
    Share Subscription Agreement and Consultancy Agreement entered into
    Last Loan Agreement and Personal Guarantee signed
    SST defaulted on loan repayments
    NCL demanded payment from Mdm Kashmire and Mdm Sushela on the Personal Guarantees
    NCL Housing sued Sea-Shore Transportation, Kashmire Merkaney, and Sushela w/o Vijayarahavan
    Trial began
    Trial concluded
    Judgment reserved

    7. Legal Issues

    1. Enforceability of Personal Guarantees
      • Outcome: The court held the personal guarantees signed by Mdm Kashmire were enforceable.
      • Category: Substantive
    2. Existence and Validity of Oral Agreement
      • Outcome: The court found that no oral agreement existed between the parties that would render the personal guarantees unenforceable.
      • Category: Substantive
    3. Unconscionability
      • Outcome: The court rejected the defendant's argument that it was unconscionable for the plaintiff to enforce the personal guarantees.
      • Category: Substantive
      • Related Cases:
        • [2019] 1 SLR 349

    8. Remedies Sought

    1. Monetary Damages
    2. Interest
    3. Costs on a full indemnity basis

    9. Cause of Actions

    • Breach of Contract
    • Enforcement of Guarantee

    10. Practice Areas

    • Commercial Litigation

    11. Industries

    • Construction

    12. Cited Cases

    Case NameCourtAffirmedCitationJurisdictionSignificance
    BOM v BOK and another appealCourt of AppealYes[2019] 1 SLR 349SingaporeCited for the doctrine of unconscionability as it applies in Singapore.
    Bank of India v Trans Continental Commodity Merchants Limited and Jashbai Nagjibhai PatelN/AYes[1983] 2 Lloyd’s Rep 298N/ACited for the proposition that a surety may be discharged if the creditor has acted in bad faith towards her.
    Cheung Yong Sam Investments Pte Ltd v Land Equity Development Pte LtdN/AYes[1992] 3 SLR(R) 533N/ACited for the proposition that a party cannot take advantage of his own wrong to escape from his contractual obligations.

    13. Applicable Rules

    Rule Name
    No applicable rules

    14. Applicable Statutes

    Statute NameJurisdiction
    Contract (Rights of Third Parties) Act (Cap 53B, 2002 Rev Ed)Singapore
    Legal Aid and Advice Act (Chapter 160, 2014 Rev Ed)Singapore
    Rules of Court (Cap 322, R 5, 2014 Rev Ed)Singapore
    Evidence Act (Cap 97, 1997 Rev Ed)Singapore

    15. Key Terms and Keywords

    15.1 Key Terms

    • Personal Guarantee
    • Loan Agreement
    • Oral Agreement
    • Unconscionability
    • Share Subscription Agreement
    • Consultancy Agreement
    • Judicial Management

    15.2 Keywords

    • Personal Guarantee
    • Loan
    • Contract
    • Singapore
    • High Court
    • Breach of Contract
    • Enforcement
    • Oral Agreement
    • Unconscionability

    17. Areas of Law

    Area NameRelevance Score
    Contract Law90
    Guarantees and indemnities85
    Credit and Security80
    Guarantee75
    Breach of Contract70
    Unconscionability60
    Banking and Finance30
    Procedural Law20

    16. Subjects

    • Contract Law
    • Banking
    • Finance
    • Personal Guarantees