Abcom Pte Ltd v Transasia Private Capital Limited and another

Abcom Pte Ltd, a Singapore company in commodity trading, borrowed under a trade finance facility agreement dated 13 August 2019 from TransAsia Private Capital Limited, a Hong Kong company managing the Asian Trade Finance Fund. TA Private Capital Security Agent Ltd acted as security agent for the lender. An amended facility agreement dated 14 March 2022 recorded Abcom's acknowledgment that, as of 25 February 2022, principal of US$12,374,888.65 and interest, fees and charges of US$1,050,420.42 were outstanding, and chose Singapore law and the exclusive jurisdiction of the Singapore courts.

In Abcom's telling, it ran into repayment difficulties from events such as COVID-19 and the London Metal Exchange crisis. On 19 July 2022 it emailed the defendants asking for a six-month moratorium. The defendants neither accepted nor rejected the request, and Abcom paid less than the agreement required over the next six months. A meeting in January 2023 produced no agreement on the shortfall, though Abcom resumed full monthly instalments from February 2023. After letters threatening proceedings, the defendants issued a statutory demand dated 6 March 2023. On 20 March 2023 Abcom brought Originating Application No 261 of 2023 for an injunction restraining a winding up application. The judge dismissed it on 27 July 2023, Abcom appealed, and these are the grounds of decision.

1. Whether the debt was disputed in good faith and on substantial grounds because the parties had agreed a moratorium on repayments.
2. Whether the loan was unenforceable because the lender was not an excluded moneylender under the Moneylenders Act 2008.
3. Whether COVID-19 and the London Metal Exchange crisis were frustrating events excusing the shortfall in payments.

The parties accepted the rule in Metalform Asia Pte Ltd v Holland Leedon Pte Ltd [2007] 2 SLR(R) 268 that a company can restrain a winding up application on a debt disputed in good faith and on substantial grounds, so Abcom had to show triable issues. On the moratorium, the judge assumed in Abcom's favour that the defendants had agreed to it, although the correspondence did not fully support that. Even so, it meant only forbearance for six months. Abcom itself said there was no agreement on how the shortfall would be treated afterwards, so the deferred sums became payable when the period ended, a moratorium being by its natural meaning a temporary postponement. Nothing in the evidence showed an election, a representation or any approbation that payment would be put off to the end of the loan, so waiver by election, waiver by estoppel and approbation and reprobation all failed. There had also been a shortfall before the moratorium.

The moneylending point was misconceived. Abcom was a corporation borrowing for its business, there was no suggestion it was a sham set up to evade the Act, and a director's personal guarantee, even with a principal debtor clause, did not turn the loan into one made to an individual. There was no evidence that the lender did not lend solely to corporations.

Frustration was also misconceived. Where it applies it discharges the contract entirely for the future; it cannot excuse a period of reduced payments while keeping the loan alive. A change in the borrower's economic circumstances does not frustrate a loan the lender has already performed; absent a term, adverse events are the borrower's risk.

The High Court dismissed the application and declined to grant the injunction, finding that Abcom raised no triable issue on the timing of repayment once the six-month moratorium had ended and could not be said to dispute the debt in good faith.