China and South Sea Bank Ltd v Tan Soon Gin (alias George Tan)
| Jurisdiction | UK Non-devolved |
| Court | Privy Council |
| Judgment Date | 1989 |
| Year | 1989 |
| Date | 1989 |
Guarantee - Debt - Mortgage securing loan - Default by debtor - Creditor not exercising power of sale over mortgaged securities - Securities becoming worthless - Whether creditor owing surety duty to exercise power of sale - Whether arguable defence that surety discharged from liability by creditor's breach of duty
The creditor made an advance to the debtor and the surety guaranteed repayment of the principal sum and interest. As security for the loan a company mortgaged to the creditor shares allegedly worth twice the sum advanced. The debtor defaulted on the date for repayment, and although the shares were then still worth more than the loan the creditor did not exercise its power of sale under the mortgage. After they had become worthless the creditor demanded payment of the principal sum and interest from the surety and brought an action against him. On the creditor's application for summary judgment under
On the creditor's appeal to the Judicial Committee: —
Held, allowing the appeal, that the creditor owed no duty to the surety to exercise its power of sale over the mortgaged securities and could decide in its own interest whether to sell and when to do so; that since the creditor had done no act injurious to the surety or inconsistent with his rights, nor failed to perform any act which it was under a duty to do, equity would not intervene to protect the surety; and that, therefore, the surety had no arguable defence to the creditor's claim under the guarantee (post, pp. 58G–H, 60A, D–E).
Per curiam. The tort of negligence has not yet subsumed all torts and does not supplant the principles of equity or contradict contractual promises or complement the remedy of judicial review or supplement statutory rights (post. p. 58F–G).
The following cases are referred to in the judgment of their Lordships:
Watts v. Shuttleworth (
Wulff v. Jay (
The following additional cases were cited in argument:
American Express International Banking Corporation v. Hurley [
Cuckmere Brick Co. Ltd. v. Mutual Finance Ltd. [
Mutual Loan Fund Association v. Sudlow (
National Bank of Greece S.A. v. Pinios Shipping Co. No. 1 [
Standard Chartered Bank Ltd. v. Walker [
Tai Hing Cotton Mill Ltd. v. Liu Chong Hing Bank Ltd. [
Tse Kwong Lam v. Wong Chit Sen [
Watts v. Shuttleworth (
APPEAL (No. 55 of 1988) with leave of the Court of Appeal of Hong Kong by the creditor, China and South Sea Bank Ltd., from the judgment of the Court of Appeal of Hong Kong (Cons V.-P., Barker and Power JJ.A.) given on 17 March 1988 allowing an appeal by the surety, Tan Soon Gin, alias George Tan, from the order of Rhind J. made on 31 May 1984 in the High Court dismissing the surety's appeal from the orders made by Master Hansen on 30 April 1984, whereby it was ordered, inter alia, that...
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