Thong Soon Seng v Magnus Energy Group Ltd

It was common ground that Mr Thong Soon Seng paid a total of $4m to Magnus Energy Group Ltd in September and October 2016, by three cheques handed to Mr Luke Ho Khee Yong, then the company's chief executive officer. In Suit No 1075 of 2020, Mr Thong claimed that the payments were loans under three oral loan agreements concluded with Mr Ho on the company's behalf: a $1m loan in September 2016, a further $3m in October 2016, and a variation in January 2017 extending repayment to January 2018 with interest of $600,000. He sued for $4.6m in debt and, alternatively, for $4m in unjust enrichment.

The company accepted receiving the money but denied any loan. It said Mr Ho had no authority to borrow on its behalf, and that the payments were made at the request and on behalf of PT Hanjungin, an Indonesian company that owed $4m to one of the company's subsidiaries after an investment project fell through, as an alternative arrangement for repaying that debt. The case was tried in the General Division of the High Court, which dismissed the claim and later gave these grounds after Mr Thong appealed.

1. Whether Mr Thong bore the burden of proving that the $4m was paid as loans, or whether an obligation to repay could be presumed from the company's receipt of the money.
2. Whether Mr Thong proved on the balance of probabilities that the payments were loans.
3. Whether he could recover the $4m in unjust enrichment for mistake of fact or total failure of consideration.

Under s 105 of the Evidence Act, Mr Thong bore the burden of proving the loans. Following PT Bayan Resources and Tan Chin Hock, a defendant who admits receipt but denies any debt does not trigger a presumption of an obligation to repay, so both the legal and the evidential burden stayed with him. The court's task was only to ask whether he had proved his case, not to choose between the two parties' stories.

He failed to do so. He was an experienced businessman and moneylender who had used written agreements, post-dated cheques, a guarantee and share rights in earlier loans, yet he documented nothing here, even at an alleged 10% for one month. On his own account, after the company failed to repay the first loan he lent it three times as much, at progressively lower effective rates, and he made no written demand until February 2020. His explanations of urgency and lack of legal advice were rejected. Having found no loans, the court did not need to decide Mr Ho's authority or whether the company's account was true.

The unjust enrichment claim also failed. The only mistake pleaded concerned Mr Ho's authority to make loan agreements that were not proved to exist. Total failure of consideration failed because the pleaded basis, the loan agreements, was never shown to exist. The argument raised in oral submissions, a common understanding that the money would be repaid, was not pleaded or put to Mr Ho. It was unproved for the same reasons, rested on the discredited implied obligation theory, and would let unjust enrichment undermine contract law.

The court acknowledged the result looked odd, since the company could keep the money even though it accepted it was not a gift. But Singapore's common law requires a recognised unjust factor and does not adopt the civil law's absence of basis approach, as the Hong Kong Court of Final Appeal also held in Big Island Construction.

The High Court dismissed Mr Thong's action, both in debt and in unjust enrichment, and ordered him to pay the company's costs fixed at $132,300.