TA PRIVATE CAPITAL SECURITY AGENT LIMITED & Anor v UD TRADING GROUP HOLDING PTE. LTD. & Anor

Facts

Rutmet Inc (D2), a Canadian company, bought metal with financing from TransAsia Private Capital Limited (P2), a Hong Kong fund manager, under a facility of up to USD 60 million, and sold it to subsidiaries of UD Trading Group Holding Pte Ltd (D1), a Singapore metals trader. On 15 April 2019 D1 gave D2 a contract titled Guarantee covering its subsidiaries' payments. After D2 defaulted on the facility, it entered into security documents in November 2019 under which, the plaintiffs said, its rights under the Guarantee were assigned to them; P1, TA Private Capital Security Agent Limited, is P2's security agent. The subsidiaries did not pay, and on 24 January 2020 the plaintiffs demanded USD 63,303,806.66 from D1 under the Guarantee. D1 did not pay.

The plaintiffs sued in Suit No 624 of 2020; D2 ended up as second defendant though no claim was made against it. D1 did not dispute the Guarantee or that its subsidiaries owed the sum. It said instead that two securities its subsidiaries had pledged to the plaintiffs under a separate loan, which it alleged were improperly enforced, satisfied or could be set off against the claim, and it challenged the assignment. D2 alleged that the plaintiffs had orally agreed to pay its metal suppliers directly and had not done so. The plaintiffs applied to strike out both defences and for judgment.

Issues

1. Whether the Guarantee was an on demand performance guarantee or a simple guarantee
2. Whether D1's defences based on the two securities, set-off and clause 6 of the facility agreement were unsustainable
3. Whether the defendants' challenges to the assignment of D2's rights under the Guarantee were unsustainable

Holding

The Assistant Registrar allowed the application, struck out both defendants' defences and entered judgment against D1 for USD 63,303,806.66 with interest and costs. The defendants appealed.

Reasoning

Size and the number of defences do not prevent striking out; the court must examine whether the pleadings raise any triable issue. Singapore law applied because Ontario law was not proved on this point, though the result would be the same under Ontario law. The Guarantee held two obligations. Clauses 3.1.1 and 3.1.2 were a simple guarantee, triggered when the subsidiaries failed to pay. Clause 3.2, read with clause 9.1, which made the creditor's certificate of moneys and liabilities conclusive, and clause 7.3, barring set-off or counterclaim, was a separate and independent on demand obligation as principal debtor. Following IIG Capital and Bitumen, and distinguishing Vossloh and Carey Value whose certificate clauses covered only amounts, it was at least an on demand indemnity. Either way D1 was liable.

Even on a simple guarantee, the securities defence failed. The alleged agreement to treat the securities as cover for the facility was pleaded with shifting dates and forms and showed no meeting of minds, following Likpin. It also ran against clauses 7.3 and 9.1, the securities were not D1's own assets, they were said to secure a different contract, and the facility required written amendments. Clause 7.3 covered equitable as well as legal set-off. Clause 6 concerned a condition of the facility, not the Guarantee.

The assignment challenges also failed. D2's alleged oral payment agreement was uncertain, contradicted by the written amendment requirement and by its own evidence that the funds went to its account, and unsupported by documents. Clause 12.3 did not make the assignment conditional on notice, and the security documents were conditions precedent to the forbearance agreement, so rescinding that agreement would not undo them.

From the judgment