TAN HAI PENG MICHEAL & Anor v Tan Cheong Joo & 4 Ors

Facts

Between 2009 and 2018, the late Tan Thuan Teck, founder of the Ho Lee Group of construction companies, and one of his companies made loans to four brothers and to companies linked to them. Fong Tat Holding Co Pte Ltd, a company of the brothers, guaranteed one loan. After his death his sons, as executors, brought three informally consolidated claims, Originating Claim Nos 381 of 2023, 382 of 2023 and 201 of 2024, to recover sums outstanding under three loans: a 2016 loan of $2,700,000 to all four brothers, a 2018 loan of $1,000,000 to one brother, Tan Cheong Joo, and a 2018 loan of $300,000 to another, Tan Seong Kok.

The defendants did not dispute the loans or the amounts. Their main defence was that the loans were unenforceable under the Moneylenders Act because the deceased was an unlicensed moneylender. Tan Cheong Joo also said that in a phone call on 15 April 2020 the deceased had agreed to waive interest on his loan. The executors replied that the deceased was an excluded moneylender because he lent only to accredited investors under s 4A of the Securities and Futures Act, and that no waiver was given.

Issues

1. Whether the borrowers or the lender bore the burden of proving that the lender was not an excluded moneylender
2. Whether the defendants proved that the borrowers were not accredited investors when the loans were made
3. Whether the deceased had agreed to waive interest on the 2018 loan to Tan Cheong Joo

Holding

The High Court (S Mohan J) allowed the claims in all three actions. It ordered the defendants in OC 201 to pay $100,000, the defendants in OC 381 to pay $500,000 and the defendant in OC 382 to pay $300,000, each with contractual interest at 2% per month to judgment and post-judgment interest at 5.33% per annum. Questions of costs and of the consequences of fictitious authorities cited for the defendants were left for a later judgment.

Reasoning

Following Sheagar s/o T M Veloo v Belfield International (Hong Kong) Ltd [2014] 3 SLR 524, the court held that an excluded moneylender falls outside the Act altogether, so a borrower relying on the statutory presumption of moneylending must first prove that the lender was not excluded. The defendants therefore had to prove that every borrower, including two companies that were not parties, was not an accredited investor. Their submissions had misquoted the Evidence Act by omitting the words making the general rule subject to other law, and the executors had no duty to seek discovery to help them.

Under the law in force before 8 October 2018, an individual qualified with net personal assets above $2 million, with no cap on the value of a home. Tan Cheong Joo's own evidence gave equity of $2,484,684 in his house, and his brother's adjoining house more likely than not gave that brother enough equity too. The brothers' evidence was near identical, opaque and largely unsupported: they called their many private company shareholdings unvalued, produced no accounts despite having access, and gave no bank records, while public material suggested sizeable businesses. No evidence was led on the two companies' net assets. The defendants failed to discharge their burden, so the deceased was an excluded moneylender and the defence failed.

On waiver, a call of 2.9 minutes did take place, but the court did not accept that a waiver was agreed. Tan Cheong Joo simply hung up when the deceased's long-serving secretary chased interest, his pleaded date and scope of the waiver changed, and nothing corroborated it. He had also not paid off the principal quickly, the consideration he relied on.

The court noted that two authorities in the defendants' closing submissions did not exist and were likely produced by an artificial intelligence tool, and declined to repeat them.

From the judgment