LIAU BENG CHYE v CHUA WEI JIEA (CAI WEIJIE)

Facts

Liau Beng Chye and his wife had owned their home since 1997. Around 2010 and 2011 he borrowed $250,000 at very high interest rates from SME Care Pte Ltd, a moneylending company of which Chua Wei Jiea and his father are directors. He could not repay, and according to SME's statement the amount outstanding was $3,056,606.58 by 28 September 2015. In July 2016 the home was sold to Mr Chua for $2.1m under an agreement meant to reduce what Mr Liau was claimed to owe SME. Mr Liau appears to have believed he could buy it back once the debt was settled; SME later issued a statement purporting to show the debt had grown to $21,273,813.54.

The family stayed on as tenants under successive tenancy agreements. The third, signed by Mr Chua, Mr Liau and his sons Liau Wizardson and Liau Weisheng Rizza, ran to 31 December 2022, required the tenants to deliver up the home on expiry, and made their obligations joint and several. The sons had moved out by then, but Mr Liau stayed. In DC/OC 615/2023 the District Judge awarded Mr Chua possession, damages of $8,500 per month against Mr Liau and the sons jointly and severally, and a further $8,500 per month against Mr Liau as double rent under s 28(4) of the Civil Law Act 1909. Mr Liau, unrepresented at trial, had pleaded that the transfer was a tainted transaction, but the DJ rejected this because SME was not a party. Mr Liau appealed in DCA 25/2024 and the sons in DCA 26/2024.

Issues

1. Whether a re-trial should be ordered so that Mr Liau's illegality defence and proposed counterclaims could be properly investigated.
2. Whether the sons could be held liable in damages for failure to deliver up the home when double rent had been awarded.

Holding

Philip Jeyaretnam J allowed both appeals, set aside the judgment below, and ordered a re-trial on Mr Liau's draft amended defence and counterclaim, with permission to join his wife and the CPF Board. Mr Liau and his sons were awarded the costs of their appeals.

Reasoning

Under O 19 r 7(6) of the Rules of Court 2021 a new trial may be ordered only to avoid substantial injustice. Mr Liau pointed to interest of 4% per month and late interest of 8% per month in the 2010 facility. Mr Chua relied on the propositions in Edler v Auerbach, arguing there was no illegality on the face of the documents and that SME's explanation was not before the court. The judge found that the draft pleading, which alleged the tenancy agreements were a sham, raised estoppel and sought to reopen the loans under s 37 of the Moneylenders Act 2008, had a substantial and reasonable prospect of success. It shocked the conscience that a $250,000 loan had led, according to SME, to debts in the tens of millions, and how Mr Liau came to sell his home to SME's director and become his tenant warranted investigation. While the DJ may not strictly have erred, possible illegality was apparent from the documents and the court can examine illegality even when unpleaded. Whether there was illegality was for the trial judge; the Edler propositions govern findings at trial, not whether a re-trial is just.

For the sons, the court assumed the agreement was valid. Mr Chua had elected double rent, which removes the need to prove loss and is an alternative to damages. The two could not be mixed by awarding damages at the monthly rent and making the sons jointly liable for them.

From the judgment