High Court rejects UOB late-fee claim after loan recall

The case involved a $556.2k credit line secured by an Oxley Bizhub unit. 

The Singapore High Court ruled that United Overseas Bank Limited (UOB) cannot impose monthly late payment charges after recalling a loan facility and demanding full repayment.

The judgment came in a mortgage action that UOB filed against SGmade Co-Operates Pte Ltd in March over a $556.2k line of credit secured by a property at Oxley Bizhub.

The company defaulted on its instalment payments, after which UOB recalled the facility and demanded approximately $542.5k, representing the full outstanding amount under the loan.

UOB also sought a late payment charge of $80 for each instalment not paid on its due date. The bank later withdrew the claim after the court questioned whether the charge could still apply once the facility had been terminated.

In a judgment on 18 May, Assistant Registrar Randeep Singh Koonar said the clause cited by UOB applied only to unpaid instalments, not to a recalled facility where the full loan amount had become due. 

The court noted that the bank had made similar claims in previous cases but withdrew them when questioned. Koonar said it was unsatisfactory to continue making such claims but drop them once asked to justify its position.

“I was of the view that UOB should take a principled and consistent position on its legal entitlement to impose the Late Payment Charge,” he said.

The amended orders sought by UOB were granted, including vacant possession of the mortgaged property and payment of the outstanding amount. Costs were fixed at $7,500 all-in.