Brooks Exim Pte Ltd v Bhagwandas

• Jurisdiction: Singapore
• Judgment Date: 20 March 1995
• Date: 20 March 1995
• Docket Number: Civil Appeal No 192 of 1993
• Court: Court of Appeal (Singapore)

Brooks Exim Pte Ltd

Plaintiff

and

Bhagwandas Naraindas

Defendant

[1995] SGCA 29

M Karthigesu JA

,

L P Thean JA

and

Goh Joon Seng J

Civil Appeal No 192 of 1993

Court of Appeal

Contract–Illegality and public policy–Illegality under international and foreign law–Whether transaction tainted with illegality–Whether transaction meant to evade the revenue laws of friendly foreign country–Judicial approach towards such transactions–Credit and Security–Money and moneylenders–Illegal moneylending–Definition of moneylender–Whether moneylender not resident in Singapore was subject to Moneylenders Act (Cap 188, 1985 Rev Ed)–Whether loan made to obtain standby letter of credit constituted moneylending–Sections 2, 5 and 15 Moneylenders Act (Cap 188, 1985 Rev Ed)

The plaintiff wanted to obtain banking facilities in Indonesia. Accordingly, he proposed to the defendant, a company, that he transfer some moneys to its deposit account to obtain a standby letter of credit. The plaintiff subsequently demanded the repayment of the said moneys and the accumulated interest on the deposit, but the defendant did not make repayment. The plaintiff sued. The defendant pleaded that the transaction was illegal as the transaction whereby the moneys was deposited was in breach of Indonesian revenue law and it was an act of illegal moneylending. The High Court held that the transaction was not tainted with illegality so as to be unenforceable and that the plaintiff was not carrying on the business of moneylending and thereby allowed the plaintiff's claim. The defendant appealed.

Held, dismissing the appeal:

(1) The courts will not enforce an agreement where its object was to evade the revenue laws of a friendly foreign country. On the facts of the instant appeal, the intention underlying the transaction was not one of evading the revenue laws of Indonesia. As such, the deposit arrangement could not have been tainted with illegality and was enforceable: at [14].

(2) Not every man who loaned money at interest carried on the business of moneylending as defined under s 2 of the Moneylenders Act (Cap 188, 1985 Rev Ed) (“the Act”). Instead, a man who carried on a moneylending business was one who was ready and willing to lend to all and sundry provided that they were from his point of view eligible. In the instant appeal, the money was not transferred as a loan in the course of moneylending business. Accordingly, the defence failed and the appeal must be dismissed: at [16] and [17].

(3) Section 5 of the Act laid down the circumstances in which a moneylender was required to obtain a licence and when a licence may be granted to a moneylender. It had no bearing on the issue or question of whether or not a person was a moneylender or was carrying on the business of moneylending. That issue or question turned on the construction of that part of s 2 of the Act pertaining to the definition of “moneylender”. Accordingly, if a person did not reside in Singapore and did not fall within any of the exceptions (a) to (e) in s 2 of the Act, any “moneylending” transaction that such person entered into would still be subject to the Act: at [20].

Emery's Investments Trusts, Re [1959] Ch 410; [1959] 1 All ER 577 (refd)

Litchfield v Dreyfus [1906] 1 KB 584 (folld)

Lorrain Esme Osman v Elders Finance Asia Ltd [1992] 1 SLR (R) 50; [1992] 1 SLR 369 (distd)

Overseas Union Bank Ltd v Chua Kok Kay [1992] 2 SLR (R) 811; [1993] 1 SLR 686 (refd)

Patriot Pte Ltd v Lam Hong Commercial Co [1977-1978] SLR (R) 547; [1978-1979] SLR 175 (refd)

Singapore Finance Ltd v Soetanto [1992] 1 SLR (R) 645; [1992] 2 SLR 407 (refd)

Subramaniam Dhanapakiam v Ghaanthimathi [1991] 1 SLR (R) 164; [1991] SLR 432 (refd)

Moneylenders Act (Cap 188, 1985 Rev Ed)ss 2, 5, 15 (consd);s 8 (1) (b)

Law of the Republic of Indonesia No 7 of 1983Art 4 (1) (f)

Moneylenders Act1900 (c 51) (UK)

Harry Elias and Yap Teong Liang (Harry Elias & Partners) and Sarjit Kaur (Sarjit Kaur & Co) for the appellants

G Radakrishnan and Jayanthi Menon (Ong Tan Nair & Kwek) for the respondent.

Goh Joon Seng J

(delivering the grounds of judgment of the court):

1 This was an appeal from the decision of the High Court giving judgment for the respondent in his claim against the appellants for money had and received. We dismissed the appeal. We now give our reasons.

The facts

2 The respondent, an Indonesian resident, is a businessman of considerable inherited wealth. He did not carry on any business in Singapore. Part of his inheritance was in an account with the Singapore branch of the Bank of India (“BOI”). He wished to obtain some banking facilities in Indonesia from PT Bank Mashill Utama (“BMU”) for his business in Indonesia, to be guaranteed by a standby letter of credit to be issued by BOI. This was not acceptable to BMU because BOI did not have a branch in Jakarta. It had only a representative office. The respondent then turned to the appellants, two of whose directors are his brothers-in-law, for help in...