District Judge Elaine Lim Mei Yee:
This Suit arose from two hire purchase agreements concluded in 2018 (each a “HPA” and collectively, the “HPAs”), under which the 1st defendant agreed to purchase from the plaintiff two Toyota Alphards 2.5 SC CVT bearing vehicle registration numbers SME0357R (the “1st Vehicle”) and SMD7473Y (which was subsequently changed to SMQ8444G) (the “2nd Vehicle”). The 2nd and 3rd defendants were guarantors of the 1st defendant’s liabilities and obligations under the HPAs pursuant to two Guarantees of Hire Purchase Agreements (each a “Guarantee” and collectively, the “Guarantees”).
The plaintiff pursued this Suit against only the 1st and 2nd defendants (the “defendants”) for repayment of the sums outstanding under the HPAs. The defendants denied liability for the plaintiff’s claims. They brought counterclaims against the plaintiff for losses arising from the plaintiff’s repossession of the 1st Vehicle and sale of the 2nd Vehicle, which they claimed were in contravention of the COVID-19 (Temporary Measures) Act 2020 (the “Act”).
After considering the pleadings, evidence and submissions of the parties, I granted the plaintiff’s claim for the sums outstanding under the HPA for the 1st Vehicle (the “1st HPA”), dismissed the plaintiff’s claim for the sums outstanding under the HPA for the 2nd Vehicle (the “2nd HPA”), and dismissed the defendants’ counterclaims. The defendants have appealed against my decision to grant the plaintiff’s claim for the sums outstanding under the 1st HPA. I therefore set out the grounds of my decision.
While there is no appeal against my decision to dismiss the plaintiff’s claim under the 2nd HPA and the defendants’ counterclaims, I have, for completeness, also set out my reasons for dismissing the same in these grounds of decision.
Background facts
Pursuant to the 1st HPA dated 14 September 2018 and the 2nd HPA dated 31 August 2018, the 1st defendant agreed to purchase the 1st Vehicle and the 2nd Vehicle respectively (collectively, the “Vehicles”) from the plaintiff. The purchase was for the 1st defendant’s business of leasing vehicles to limousine drivers who would then service private-hire passengers, corporate clients and tourists. The HPAs included a Schedule as well as the plaintiff’s Standard Terms and Conditions (the “Standard T&Cs”).
The material terms of the HPAs were as follows: Under Clauses III and IV of the 1st HPA, the price for the hire of the 1st Vehicle was $232,898, to be paid by way of an initial deposit of $19,888, followed by 59 subsequent monthly instalments of $3,551 and one final instalment of $3,501 commencing on 14 September 2018 and thereafter on the 14th day of each succeeding month. Under Clauses III and IV of the 2nd HPA, the price for the hire of the 2nd Vehicle was $234,088, to be paid by way of an initial deposit of $19,888, followed by 60 subsequent monthly instalments of $3,570 commencing on 31 August 2018 and thereafter on the 31st day of each succeeding month. Clause 2(b) of the Standard T&Cs provided that all sums due to the plaintiff under the HPA shall be punctually made by the 1st defendant without any prior demand. Clause 2(c) of the Standard T&Cs provided that in default of payment of any instalment on the due date or any other sum after payment in respect of which has become due, the 1st defendant shall pay interest on such overdue sum in accordance with Clause 5 of the Standard T&Cs. Clause 5(b) of the Standard T&Cs in turn stipulated that the interest payable on overdue sums was 5% per annum over the average prime lending rate of DBS Bank Ltd, Overseas-Chinese Banking Corporation Ltd and United Overseas Bank Ltd, from the date of default until the date full payment is made. Clause 5(c) of the Standard T&Cs imposed a late payment charge on the 1st defendant on any monies due under the HPA, in accordance with the provisions of the Schedule, from the due date of the payment until the date full payment is made. Clause 8 of the Standard T&Cs conferred on the plaintiff the right to retake and resume possession of the hired vehicle in the event the 1st defendant defaulted in payment of any instalment or other monies payable under the HPA, and provided that upon the exercise of such a right, the hiring and the HPA would be forthwith determined without notice. Clause 13 of the Standard T&Cs required the defendant to indemnify the plaintiff in full against all costs, charges, fees, expenses and liabilities imposed or reasonably incurred by the plaintiff for or arising out of or in connection with the loss, damage, repair, preservation, recovery or repossession of the hired vehicle or enforcement of the HPA, including legal costs on a full indemnity basis.
It was undisputed that the 1st defendant failed to make payments in accordance with the terms and conditions of the HPAs, and that the 2nd and 3rd defendant also failed to meet their payment obligations as guarantors of the 1st defendant.
Consequently, on 13 and 26 March 2020, the plaintiff issued to the 1st defendant notices of its intention to repossess the 1st Vehicle and the 2nd Vehicle respectively (the “Notice of Intention to Repossess the 1st Vehicle” and the “Notice of Intention to Repossess the 2nd Vehicle”). The notices stated that the plaintiff would terminate the HPAs and retake possession of the Vehicles after the expiration of seven business days from the date of service of the notice.
On or about 1 April 2020, the 1st defendant left the 2nd Vehicle just outside the plaintiff’s premises at 6 Benoi Road, with the key on the top of the car’s right front tyre. On 3 June 2020, the plaintiff repossessed the 1st Vehicle as the arrears under the 1st HPA remained unpaid. The plaintiff subsequently sold both Vehicles on an “as is where is” basis via open auction on sgcarmart.com to the highest bidder. The 1st Vehicle was sold to Supreme Leasing & Limousine Services (“Supreme Leasing”) on or about 27 June 2020 for $123,600. The 2nd Vehicle was sold on or about 22 October 2020 to Star A Motor for $140,209.
In the meantime, on 28 April 2020, the 1st defendant served a Notification for Relief (“NFR”) on the plaintiff in respect of the HPAs. On 6 May 2020, the plaintiff applied for a determination by an assessor of whether the defendant was entitled to relief under Part 2 of the COVID-19 (Temporary Measures) Act 2020 (the “Act”). On 23 June 2020, the assessor issued a determination that: Although the 1st HPA was a scheduled contract, Part 2 of the Act did not apply to it as the 1st defendant’s inability to make payments under the 1st HPA was not to a material extent caused by a COVID-19 event. The relief provided for under Part 2 of the Act applied to the 2nd HPA.
The prescribed period, during which the relief provided for under Part 2 of the Act applied to the 2nd HPA, spanned from 20 April 2020 to 31 January 2021.
On 7 December 2020, the plaintiff commenced this Suit against the defendants, seeking repayment of the sum outstanding under the 1st HPA. On 30 December 2020, the plaintiff amended its Statement of Claim to include its claim for the sum outstanding under the 2nd HPA.
The proceedings were not bifurcated. The trial was held on 6 January 2023. Each of the parties called one factual witness in support of their case: the plaintiff called its manager, Mr Mah Terk Hoong (“Mr Mah”), while the defendants called the 2nd defendant.
Summary of the parties’ cases
The plaintiff’s claims
The plaintiff quantified its claim for the outstanding sums under the HPAs at $42,994.81 for the 1st HPA and $7,979.85 for the 2nd HPA. These figures were inclusive of late interest as of 13 March 2020 for the 1st HPA, and as of 19 October 2020 for the 2nd HPA.
The plaintiff also claimed contractual interest at 10.25% p.a. on the sum of $47,682.45 (ie, the outstanding sums under the HPAs minus the abovementioned late interest) from the date of the Writ until final payment, pursuant to Clause 5(b) of the Standard T&Cs.
By the time oral closing submissions were made at the trial, the only live defences against the plaintiff’s claims were as follows: The plaintiff’s repossession of the 1st Vehicle on 3 June 2020 was in breach of sections 5(2) and (3)(k) of the Act as it was done within the interim moratorium period of 28 April 2020 to 23 June 2020. The repossession was therefore invalid pursuant to section 8(5)(a) of the Act. The plaintiff had failed to mitigate its losses by selling the 1st Vehicle at an undervalue. The plaintiff’s commencement of its claim under the 2nd HPA during the moratorium period of 6 May 2020 to 31 January 2021 was in breach of sections 5(2) and (3)(a) of the Act. Its claim under the 2nd HPA should therefore be dismissed pursuant to section 8(2) of the Act. The plaintiff’s sale of the 2nd Vehicle on 22 October 2020 (ie, prior to the expiry of the prescribed period) was in breach of sections 5(2) and (3)(d) of the Act. The sale was therefore invalid pursuant to section 8(3) of the Act. In relation to the 2nd Vehicle, the interest charged by the plaintiff on the arrears which fell due during the prescribed period should have been 5% pursuant to the Act, and not 10.25% as per the plaintiff’s claim.
The defendants’ counterclaims
The defendants quantified their counterclaims for losses arising from the plaintiff’s repossession of the 1st Vehicle and sale of the 2nd Vehicle in contravention of the Act as follows: For the 1st Vehicle, loss of car value in the sum of $91,473, or alternatively, loss of future rental income over the next five years in the sum of $90,000. For the 2nd Vehicle, loss of car value in the sum of $78,008.15, or alternatively, loss of future rental income over the next five years in the sum of $90,000.
The plaintiff denied liability for the counterclaims on the following grounds: The plaintiff’s repossession of the 1st...
