Banking Law

Citation(2008) 9 SAL Ann Rev 97
Published date01 December 2008
Date01 December 2008
Negotiable instruments
Instrument issued to pay gambling debt in Singapore

4.1 The enforcement of gambling debts is undergoing changes in Singapore especially in respect of debts incurred in a casino. There is now a divergence between the enforcement of an ordinary gambling debt and a debt incurred in a Singapore casino when a cheque is issued in connection with the gambling transaction. The enforcement of an ordinary gambling debt continues to be governed by s 5 of the Civil Law Act (Cap 43, 1999 Rev Ed). When a negotiable instrument is issued in Singapore in payment of a wagering contract or for a debt arising from a gambling transaction, the instrument is unenforceable as it is given without consideration since a gambling debt is declared to be null and void under s 5 of the Civil Law Act. In Star Cruise Services Ltd v Overseas Union Bank Ltd[1999] 2 SLR 412, G P Selvam J decided that a gambling or wagering contract was null and void under s 6 of the Civil Law Act and no enforceable right or obligation arose from the contract. A cheque given to cover a debt arising from a gambling or wagering transaction was also unenforceable. Equally, in Sun Cruises Ltd v Overseas Union Bank Ltd[1999] 3 SLR 404, G P Selvam J arrived at a similar decision that a cashier”s order issued to further a gambling transaction was unenforceable.

4.2 In Malaysia, a similar line of reasoning has also been adopted by the courts. In Pet Far Eastern (M) Sdn Bhd v Tay Young Huat[1999] 5 MLJ 558, Abdul Malik Ishak J decided that when fraudulently obtained bank drafts were tendered as payment in furtherance of gambling transactions, the recipient took the drafts without consideration since the gambling transactions were null and void.

Instrument issued to pay foreign gambling debt

4.3 When a negotiable instrument is issued to settle a wagering or gambling debt incurred in a foreign casino, the instrument is also unenforceable in Singapore. In Star City Pty Ltd v Tan Hong Woon[2002] 2 SLR 22, the Singapore Court of Appeal decided that an action

brought in Singapore by a foreign casino to recover a loan granted to a customer to gamble at the casino was unenforceable on grounds of public policy.

Foreign judgment on gambling debt

4.4 The Singapore Court of Appeal”s strong stand in Star City Pty Ltd v Tan Hong Woon[2002] 2 SLR 22, against allowing the Singapore courts to be used as gambling debt collectors for foreign casinos appears not to apply when a foreign casino seeks to enforce a foreign judgment obtained against a gambler in respect of gambling debts. In Liao Eng Kiat v Burswood Nominees Ltd[2004] 4 SLR 690, the Singapore Court of Appeal decided that public policy considerations would not apply with the same rigour when it came to enforcing a foreign judgment obtained in respect of a gambling debt. In Desert Palace Inc v Poh Soon Kiat[2009] 1 SLR 71, the Singapore High Court followed the Court of Appeal”s decision in Liao Eng Kiat v Burswood Nominees Ltd. The defendant gambled at Caesars Palace, a casino in Las Vegas Palace, on various occasions between 1992 and 1998. The casino obtained a default judgment against the defendant in Nevada on 29 March 1999 for US$2,000,000. On 2 June 1999, a further default judgment for US$2,453,126.33 was obtained in the Superior Court of the State of California for the County of Santa Clara. The casino filed a claim in Singapore on 19 October 2007 for a sum of US$4,378,927.63 in respect of the judgments obtained in the United States. The defendant relied on two main defences. First, the claim was for the recovery of a gambling debt and this was rendered unenforceable under s 5(2) of the Civil Law Act (Cap 43, 1999 Rev Ed). The second defence was that the claim was time-barred under the Limitation Act (Cap 163, 1996 Rev Ed). Both these defences were rejected by the court. Chan Seng Onn J acknowledged that the enforcement of a gambling debt would not be sanctioned by the courts as it would be governed by s 5 of the Civil Law Act. Chan J said (at [38]):

In my view, if the plaintiff had sued in Singapore in reliance on the facts as set out above in [3], the plaintiff would clearly have an uphill task in persuading the court to find in its favour that it was in reality not an action brought for recovering monies won upon a wager. It did not matter that the transaction took place in a foreign jurisdiction in which action for the recovery of such monies (though prohibited in Singapore) would have been nevertheless legally enforceable in that foreign jurisdiction. If the action before me was simply to enforce the debt premised on the facts in [3], I would have immediately dismissed it as the Court of Appeal decisions cited by the defendant were binding on me and the material facts in the present case were indistinguishable from the facts in those cases.

4.5 The court, however, went on to decide that different public policy considerations applied to the enforcement of a foreign judgment obtained on a gambling debt. Chan Seng Onn J said (Desert Palace Inc v Poh Soon Kiat[2009] 1 SLR 71 at [40] and [54]):

An action in Singapore to recover an overseas gambling debt was in my view materially very different from an action in Singapore upon a foreign judgment, although the cause of action underpinning that foreign judgment might be the same overseas gambling debt incurred by the defendant. The valid, final and conclusive foreign judgment itself was the basis of the present cause of action before me. In my view, an application could be made for summary judgment on the ground that there was no defence to this form of common law action in Singapore upon the foreign judgment. I further held that the issue whether or not a foreign judgment was “valid, final and conclusive” as between the parties must be answered not from the perspective of Singapore law but must be answered based on the laws of the foreign jurisdiction in which the court issuing that foreign judgment was sited. Expert evidence on foreign law must be led on this issue, which had to be determined as a question of fact in the Singapore court in accordance with the law of evidence in Singapore.

… Further and for reasons based on the doctrine of comity of nations in relation to the recognition of the judgments of the courts of a foreign jurisdiction as being ‘enforceable’ by way of a separation [sic] action in Singapore (irrespective whether the process of its registration as a Singapore judgment was available), I did not believe that the public policy in Singapore ought to favour the evasion of foreign judgments by persons who borrowed money abroad for the purpose of gambling abroad and after having lost those borrowed money on gambling thereafter sought to evade responsibility for those foreign judgment debts after judgment in a foreign court had been successfully obtained against them. International comity also meant that foreign court judgments should be accorded appropriate levels of deference and respect.

4.6 An appeal from Desert Palace Inc v Poh Soon Kiat[2009] 1 SLR 71 is currently before the Court of Appeal. With the establishment of the integrated resorts in Singapore, the position pertaining to the recovery of gambling debts incurred in a casino is set to change. Under s 108(2) of the Casino Control Act (Cap 33A, 2007 Rev Ed), a casino is permitted to accept a cheque from a casino patron to establish a deposit account for...

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