Prominent businesswoman Jannie Chan has failed in her bid to set aside a statutory order to pay up US$5.7 million (S$7.7 million) on a guarantee for a bank loan.
Ms Chan argued that the creditor, Australia and New Zealand Banking Group (ANZ), had made a flawed application. She also wanted more time to set aside the statutory demand order.
But Senior Judge Kan Ting Chiu was not convinced by her defence, saying it was "unsound" and that court application for a time extension was not justified.
ANZ had made a loan to Timor Global (TGL), which was registered in Timor Leste. Ms Chan is a director and shareholder in TGL.
TGL pledged its assets to the bank for the loan and Ms Chan executed a personal guarantee with the other directors to underwrite the loan.
The bank then sought to claim the debt from her in a demand letter last October.
Her lawyer, Mr Eugene Thuraisingam, argued that the bank's demand order was defective as the security offered by TGL - which are the assets that the loan is tied to - was not disclosed. He urged that this be taken into account. It is understood this would have raised the prospect of the bank recovering part of the loan from the company's assets instead of going straight for Ms Chan.
But ANZ's lawyer, Mr Chou Sean Yu, countered that based on the bankruptcy rules, "security" referred only to security provided by the debtor (Ms Chan) to whom the statutory demand was issued.
In his judgment released yesterday, Justice Kan noted Mr Chou's view, pointing out that two High Court judges had dealt with and settled the issue of "security" to be referring solely to the debtor who was the subject of the proceedings.
An interpretation of the referred laws that "enables a debtor to rely on security which he has not provided, but has been provided by another party to lower his indebtedness does not promote a proper balance of interests..." said Justice Kan. "It is really not unfair that a debtor is not permitted to rely on security put up by another party."
The judge also rejected her explanation that her lawyer was negotiating with the bank to stop the bankruptcy petition against her, which accounted for her late application. He rejected her application for an extension of time.
"A delay of 70 days was substantial as the application should have been made within 14 days. The reason for the delay was unsatisfactory..." said Justice Kan in judgment grounds released yesterday
Mr Thuraisingam said yesterday that Ms Chan will be appealing the High Court decision.