Bhagwandas v Brooks Exim Pte Ltd

• Jurisdiction: Singapore
• Judge: Lai Siu Chiu JC
• Judgment Date: 30 March 1994
• Neutral Citation: [1994] SGHC 81
• Docket Number: Suit No 866 of 1992
• Date: 30 March 1994
• Published date: 19 September 2003
• Year: 1994
• Plaintiff Counsel: P Nair and V Menon (Ong Tan Nair & Kwek)
• Citation: [1994] SGHC 81
• Defendant Counsel: Sarjit Kaur and Aqbal Singh (Sarjit Kaur & Co),Vinodh Commaraswamy (Shook Lin & Bok)
• Court: High Court (Singapore)
• Subject Matter: Whether agreement in contravention of Indonesian revenue law,Credit and Security,Whether plaintiff residing in Singapore within s 5(1) of Moneylenders Act,Whether claim void for being tainted with illegality,ss 2, 3, 5(1), (2), 8(1)(b), 15 & 23(5) Moneylenders Act (Cap 188),Money and moneylenders,Restitution,Illegal money-lending,Moneylenders Act (Cap 188),Definition of moneylender,Knowledge of illegality,Whether loan given in contravention of Moneylenders Act,Rebutting statutory presumption,ss 2 & 3 Test of system and continuity,Interest paid on deposit sum,Money had and received

Cur Adv Vult

This was a suit brought by an Indonesian national against a Singapore company for moneys had and received. At the close of the proceedings, I found that the defendants had not raised any defence to the action and accordingly, I gave judgment for the plaintiff. The defendants have appealed against my decision and I now give my reasons.

The facts

The two directors of the defendants and the plaintiff were brothers-in-law. It was unfortunate that they should end up at all in court over what was, to a large extent, initially meant to be a family favour extended and received in good faith.

The plaintiff was a businessman of considerable inherited wealth in Indonesia. He was in the main a textile merchant who also engaged in occasional property investments. Although he did not carry on any business in Singapore, he had several bank deposit accounts here, in the region of US$2m. In the course of his business in Indonesia, the plaintiff applied to PT Bank Mashill Utama (`BMU`) for the use of some banking facilities in Indonesia. A standby letter of credit was to be opened in favour of BMU to serve as security for the grant of the facilities. The plaintiff said he requested BMU to accept the letter of credit from the Bank of India (`BOI`) Singapore branch but BMU refused as BOI only had a representative office, not a branch, in Jakarta. The plaintiff therefore approached the defendants for help and an arrangement was made over the telephone. Pursuant to the arrangement, the plaintiff transferred a sum of US$960,185.11 from his fixed deposit account with BOI into the defendants` `one-day call` deposit account with Deutsche Bank (`DB`), Singapore. The standby letter of credit was opened on 10 July 1990 by the defendants with DB, through the latter`s Jakarta branch in favour of BMU, for a period of one year expiring on 10 July 1991. On 5 June 1991, before its expiry, the standby letter of credit was, however, released by BMU. Thereafter the plaintiff made several demands for the return of the entire sum of US$960,185.11.

On 16 September 1991 the defendants paid the plaintiff S$29,008 through a Banque Nationale de Paris account standing in the name of one Ishwardas Daryani. By a letter dated 23 September 1991 the plaintiff demanded that a sum of US$500,000 should be remitted to a Jakarta account by 30 September 1991. Upon the defendants` failure to make the necessary remittance the plaintiff flew from Jakarta to see the defendants` directors in their office in Singapore. An agreement was reached and evidenced in a letter from the defendants to the plaintiff dated 5 October 1991 which reads as follows:

Re: Fixed deposit - US$1,043,436.93

With reference to the above fixed deposit, please be informed that we shall be able to send you the remittance in four (4) instalments as follows:

On/abt 30 November 1991 - US$250,000

On/abt 30 December 1991 - US$250,000

On/abt 31 January 1992 - US$250,000

On/abt 28 February 1992 - US$293,436.93

Thanking you.

In the meantime, before the first instalment fell due, the plaintiff demanded payment of interest for the period 12 September 1991 to 12 November 1991 amounting to US$20,897; the defendants complied with the request. The defendants did not however keep their word regarding the instalment payment arrangement - not even the first instalment was paid.

On 23 December 1991 the plaintiff, having lost faith in the defendants` promises wrote to the defendants demanding the payment of the entire amount by 30 December 1991. Again, on 6 January 1992, the plaintiff wrote to demand the return of the deposit money. In his letter the plaintiff made clear his intention to file a police report for the defendants` alleged criminal breach of trust if the latter persisted in their refusal to return his money. The plaintiff gave the defendants an ultimatum to pay on the following scheme:

15 January 1992 US$300,000 (US Dollars Three Hundred Thousand)

(30) January 1992 US$300,000 (US Dollars Three Hundred Thousand)

(12) February 1992 US$443,438.93 (US Dollars Four Hundred and Forty-Three Thousand Four Hundred and Thirty- Eight and Cents Ninety-Three 93/100)

Came 15 January 1992, there was, yet again, no payment. On 17 January 1992, the plaintiff again flew to Singapore from Jakarta and went straight to the Criminal Investigation Department at Robinson Road. He telephoned the defendants before proceeding to lodge a report. His two brothers-in-law hurried to Robinson Road in an attempt to dissuade him from filing any complaint. They managed to pacify the plaintiff by promising to come up, within a few days, with a new scheme of payment. On 27 January 1992, the defendants made a fresh proposal of payment by eight unequal monthly instalments commencing on 20 March 1992. The proposal was however unequivocally rejected by the plaintiff, who informed the defendants that he would instruct solicitors to recover the deposit money. In the interval, however, the defendants paid to the plaintiff, pursuant to his request, a sum of US$20,868.74 representing interest on the deposit for three months commencing 13 November 1991.

A letter of demand was subsequently issued by the plaintiff`s solicitors on 13 March 1992, requiring the defendants to pay a total sum of US$1,043,436.93 by two equal monthly instalments. The first payment had to be received by 31 March 1992. On 30 March 1992, however, the defendants came up with another payment scheme whereby the plaintiff would be repaid in five monthly instalments commencing 20 April 1992. Unfortunately the defendants, yet again, went back on their word. On 8 May 1992, with little prospect of any settlement in sight, the plaintiff filed his writ of summons in this action against the defendants.

The cause of action

The statement of claim, as it then stood on the first day of hearing, was inadequate. It claimed a refund of moneys amounting to US$1,043,436.93 deposited with the defendants for establishing a standby letter of credit. Counsel for the plaintiff applied for and was granted leave to re-amend the statement of claim so as to allege a cause of action for money had and received. I granted the defendants liberty to make any consequential amendments to their defence. The plaintiff in the amended statement of claim prayed for the return of the initial sum of US$960,185.11 with bank interest thereon amounting to US$83,251.93 for the period 3 July 1990 to 11 September 1992 inclusive. He also claimed interest on the US$960,185.11 from 13 March 1992 (date of his solicitors` letter of demand) until the date of judgment. There was also a claim for any loss which the plaintiff may suffer as a result of fluctuations in the exchange rate of the US dollar.

The defence

The defendants raised several lines of defence. First they alleged that the initial arrangement for the opening of the standby letter of credit was tainted with illegality and therefore unenforceable. It was, so the defendants argued, a conscious attempt to evade the revenue laws of Indonesia. I will return to this defence later.

Secondly the defendants argued that they were not liable for interest on the US$960,185.11 for the period between 3 July 1990 and 11 September 1991 as there was no prior agreement for them to pay over the accrued interest to the plaintiff. To this I think it is more than adequate to say that the converse was that neither was there any prior agreement for the defendants to retain the accrued interest. In my judgment, the law is unambiguous that if one succeeds in an action for moneys had and received, then one is also entitled to any accrued interest, unless there is a prior agreement to the contrary.

Thirdly the defendants argued that it was an implied term of the initial arrangement that the deposit with the defendants was to be at the plaintiff`s risk. The plaintiff by his act impliedly agreed to assume the risk of the defendants` bank, DB, exercising its right of lien over the deposit account into which he transferred his money. The argument has no merit at all. Even assuming the contractual principles governing the implication of terms apply, it could not be said, in the present case, that the `officious bystander` test was satisfied. Neither was it `necessary` to imply such a term to give such efficacy as the parties must have intended. I should also mention that even after DB exercised its lien over the defendants` deposit account (on or about 13 September 1991), there was a balance of US$175,000 left in the account which instead of paying to the plaintiff, the defendants paid over to DG Bank, another of their bankers. Prior thereto, they utilized US$52,025 from the plaintiff`s deposit to pay one of their creditors in Jakarta.

Fourthly the defendants contended that the deposit money had, sometime after the expiry of the standby letter of credit, been converted to a loan in contravention of the Moneylenders Act (Cap 188) (`the Act`) and was therefore rendered irrecoverable. I will also return to this defence later. As a matter of chronology, it is more logical to first deal with the question of illegality stemming from the alleged evasion of the revenue laws of Indonesia. To this I will now turn.

Illegality on ground of public policy

The defence of illegality is not a panacea. All too often defendants come before the court in a futile attempt to allege that a transaction is illegal because it contravenes a certain provision in a foreign law. Trite though it may be, a Singapore court applies, generally speaking, Singapore law. Judges do not sit to enforce the laws of another friendly country. Neither are they expected to, not even under the auspices of comity of nations. There are, of course, cases where a transaction is rendered unenforceable, notwithstanding the fact that it is perfectly legal in Singapore, because it is illegal under foreign law. But not every transaction which is illegal under foreign law...