Singapore High Court rebukes UOB over inconsistent mortgage late fee claims

Singapore’s High Court has criticised United Overseas Bank (UOB) over what it described as the lender’s inconsistent handling of late payment charges in mortgage recovery proceedings, after the bank repeatedly abandoned such claims when pressed to justify them in court.

In written grounds issued on 18 May 2026, Assistant Registrar (AR) Randeep Singh Koonar said it was “unsatisfactory” that UOB continued advancing claims for late payment charges in mortgage actions before withdrawing them once the court questioned the legal basis.

The judgment arose from a mortgage action brought by UOB against SGmade Co-Operates, a footwear retailer, over a S$556,200 loan secured against a commercial unit at Oxley Bizhub in Ubi Road 1.

Court documents showed the banking facility was granted in June 2023 and structured for repayment over 312 monthly instalments.

The borrower later defaulted on instalment payments, prompting UOB’s former solicitors, Harry Elias Partnership LLP, to issue a demand letter on 9 September 2025 seeking payment of arrears.

After the arrears remained unpaid, UOB’s solicitors, Rajah & Tann Singapore LLP, issued a second demand letter on 22 October 2025 recalling the facility and demanding full repayment of S$542,508.28 within 14 days.

The bank subsequently served a notice to quit on 26 December 2025, requiring the borrower and occupiers to vacate the property within one month.

UOB commenced court proceedings on 4 March 2026 seeking vacant possession of the property, repayment of the outstanding loan amount, accrued interest and an S$80 late payment charge for each missed instalment.

The case was heard on 10 April 2026.

The defendant did not attend proceedings and remained unrepresented throughout the case.

Court says uncontested claims still require scrutiny

Despite the absence of opposition from the borrower, the High Court said UOB was still required to establish its entitlement to the orders sought.

“Even in an unopposed application, it remained for UOB to satisfy the Court that all the procedural and substantive requirements for granting the orders sought were met,” AR Randeep wrote.

The assistant registrar identified several concerns with the bank’s application.

One issue related to deficiencies in UOB’s supporting affidavit.

The court found the affidavit failed to properly identify which contractual terms had been breached or explain how those breaches entitled the bank to recall the loan and demand immediate repayment of the entire outstanding amount.

“It is insufficient for a claimant to make sweeping and unparticularised assertions in the supporting affidavit and leave the Court and the defendant to pore over pages of contractual documents to decipher what its case is,” AR Randeep said.

The judgment stated that such shortcomings could potentially attract adverse costs consequences, particularly where hearings were adjourned because of deficiencies in court papers.

Judge questions legal basis for late payment charges

A central issue in the dispute concerned whether UOB could continue imposing monthly late payment charges after terminating the facility and demanding full repayment of the loan.

The bank relied on Clause 4.7 of its facility letter, which imposed an S$80 fee “on each instalment payment not paid on due date”.

However, the court questioned whether the clause remained applicable once the facility had been recalled and repayment of the full outstanding sum was sought as a lump sum rather than through monthly instalments.

The assistant registrar noted that similar issues had surfaced in earlier mortgage proceedings involving UOB.

In one 2023 case, UOB maintained it was entitled to continue imposing such charges.

But in two separate 2025 mortgage actions, the bank withdrew similar claims after the court raised concerns about their legal basis.

“UOB should take a principled and consistent position on its legal entitlement to impose the late payment charge,” AR Randeep said.

“(It is) unsatisfactory for UOB to persist in making such claims but drop them once made to justify and defend their position.”

Following the court’s intervention, UOB amended its application and abandoned claims for late payment charges.

The bank later confirmed in correspondence to the court that it was “not legally entitled to impose late payment charges on monthly instalments that fell due after the Banking Facilities had been terminated”.

Court says contract wording was unambiguous

In analysing the facility agreement, AR Randeep found the wording of the contract to be “plain and unambiguous”.

The judgment said the late payment charge applied only to “instalment payments” that were unpaid by their due dates.

Once the bank recalled the facility and demanded immediate repayment of the full outstanding amount, there were no longer any monthly instalments payable, the court said.

“As a matter of plain language, clause 4.7 cannot apply where the bank has recalled the facility,” the judgment stated.

The court added that the agreement separately allowed UOB to impose late interest charges on outstanding sums, including capital repayments and accrued interest.

This distinction reinforced the interpretation that the S$80 late payment fee only applied while the facility remained active and repayments continued on an instalment basis.

AR Randeep described the outcome as “commercially sensible”.

“If UOB decides not to terminate the facility, UOB may claim payment of the monthly instalments in arrears, the late interest charge on those arrears, and the Late Payment Charge for each late repayment of a monthly instalment,” he said.

“However, if UOB decides to terminate the facility and claim the full outstanding amount due under the facility, UOB cannot claim payment of the Late Payment Charge.”

The judgment also noted that similar clauses were commonly found in loan agreements issued by UOB and other banks, making judicial clarification useful beyond the immediate dispute.

Costs reduced after court criticism

Although UOB ultimately succeeded in obtaining orders for vacant possession and repayment of the outstanding loan sum, the High Court reduced the legal costs sought by the bank.

UOB requested S$8,000 in costs on an indemnity basis, including around S$1,500 in disbursements.

The court instead awarded S$7,500.

AR Randeep said no additional costs were granted for the adjournment of the first hearing because the delay arose from shortcomings in UOB’s own filings.

The judgment also declined to grant a stay of execution on the possession order, noting that the defendant had not appeared or presented grounds supporting such relief.

According to The Straits Times, a UOB spokesperson on 25 May said the bank accepted the court’s ruling that late payment charges should not continue after a facility had been terminated and would follow the guidance moving forward.