Ding Leng Kong v Mok Kwong Yue and Others

JurisdictionSingapore
JudgeWoo Bih Li J
Judgment Date19 May 2003
Neutral Citation[2003] SGHC 114
Citation[2003] SGHC 114
Defendant CounselAndrew Ee (Andrew Ee & Co)
Published date02 October 2003
Plaintiff CounselHee Theng Fong, Lee Cheow Ming Doris Damaris and Tan T'eng Ta' Benedict (Hee Theng Fong & Co)
Date23 May 2003
Docket NumberSuit No 1515 of 2001
CourtHigh Court (Singapore)
Subject MatterWhether presumption rebutted,Presumption of moneylending,Whether phrase in s 3 of the Moneylenders Act (Cap 188, 1985 Rev Ed) confined to repayment in money only,Money and moneylenders,Moneylenders Act (Cap 188, 1985 Rev Ed) s 3,Whether sums advanced are loans or investments,Failure to plead exception in s 2(c) of the Moneylenders Act (Cap 188, 1985 Rev Ed),Whether loans unenforceable,Loans of money,"A larger sum being repaid",Credit and Security,Whether in business of or carrying on business of moneylending,Whether plaintiff a moneylender,Words and Phrases

1 The plaintiff in this action is Dr Ding Leng Kong (“Ding”). He is a Singapore permanent resident.

2 There are four defendants named in the action:

(a) first defendant - Mok Kwong Yue (“Mok”), a Singapore citizen

(b) second defendant - Subbarao Pinamaneni (“Subba”) a citizen of the United States of America

(c) third defendant - Teamasia Pte Ltd (“Teamasia Singapore”), a company incorporated in Singapore

(d) fourth defendant - Teamasia Semiconductor (India) Pte Ltd (“TSI”), a company incorporated in India and situated in Hyderabad, Andhra Pradesh, India.

3 However, as Ding’s solicitors have not been able to effect service of the Writ of Summons on Subba, the trial was in respect of Ding’s claims against the other three Defendants only (collectively called “the Defendants”).

4 Ding’s claims are in respect of monies he had advanced which he alleges was by way of investment. However, the reliefs sought by Ding are not confined to the repayment of the monies, as I shall elaborate below. The receipt of the monies is not disputed. The main defence is that the monies were advanced by way of loans which loans are unenforceable for being in breach of the Moneylenders’ Act, Cap 200 (“the Act”), as Ding was and is not a registered moneylender.

5. In this judgment:

A reference to an affidavit of evidence-in-chief will start with “AEIC” and then the page or paragraph number

A reference to the notes of evidence will start with “NE” and then the page number

A reference to the Plaintiff’s Bundle of Documents will start with “PBD” and then the page number.

Background

6 I will go into some detail of the facts as they are slightly convoluted.

7 In 1974 or 1975, Mok met Ding when Mok was a sales manager with Dynacraft International Ltd, a manufacturer of lead frames for the semiconductor assembly industry. Ding was then the purchasing manager of RCA Sdn Bhd.

8 From 1984, Ding was trading as a sole-proprietor under the name of CCD Enterprise (“CCD”). CCD was and is in the business of manufacturing and supplying packaging materials for the semiconductor industry. Subsequently, Ding also became a shareholder of Peridin Pte Ltd (“Peridin”), a company incorporated in Singapore on 9 November 1994. Its principal business is the manufacture and supply of packaging materials for the semiconductor industry.

9 In the meantime, Mok had formed a joint venture company called VGE Pte Ltd (“VGE”) in 1993. He was its managing director and biggest shareholder. In 1995, he renewed contact with Subba when Subba was working with National Semiconductor. They became close friends and in 1995 or 1996, they formed a company i.e Teamasia Singapore, to represent their interests with Femnor Minerals, a public-listed company in India with a view to starting a venture in Chennai in Madras. That venture failed.

10 At about that time, Subba and Mok learned that another public-listed company in India, Greaves limited (“GL”), wanted to sell off its analog semiconductor unit. Subba and Mok became interested in the purchase but had to pay about USD1.25m for a 74% stake with an initial payment of USD250,000. The intention was for Teamasia Singapore to take a 95% stake in TSI and TSI would be the vehicle which would acquire a 74% stake in another Indian company Teamasia Greaves Semiconductor Pte Ltd (“Teamasia Greaves”) which would acquire the analog semiconductor unit from GL. They calculated that the business of this GL unit would generate sufficient cash which would enable them to pay the balance of the purchase price. So, they looked for parties to join this venture. As it turned out, a mutual friend Kou Aik Boon, who was a remisier servicing both Mok and Ding, “introduced” Mok to Ding. This was around end August 1997 (NE 7).

11 In September 1997, Ding agreed to advance Mok $30,000. The terms of this advance were contained in an agreement dated 18 September 1997. The advance was to be repaid on or before 31 December 1997 with interest at 2% per month. In addition, Ding was given an option to purchase shares in Teamasia Greaves up to a maximum of USD30,000. The option was valid for three years. I was informed during the trial that the intention was that Teamasia Greaves would issue shares to Ding if he exercised the option but this was not clear from the poorly drafted loan agreement. In any event, Ding did not exercise the option.

12 In or about the same month of September 1997, Ding also agreed to advance a second sum of USD150,000 this time to Teamasia Singapore to be guaranteed by Mok and Subba. The terms of this advance were also contained in a document. The copy adduced in evidence was undated but its validity was not disputed. Under the terms of that document, the monies were to be repaid within 60 days and, failing that, within 90 days. The purpose of the advance was for Teamasia Singapore to place it as a deposit into an escrow account in London to obtain a term loan from Wellbred Asset Management of Bahamas. If the loan from Wellbred was not forthcoming, the principal sum lent by Ding was to be repaid with interest at 2% per month. If the loan from Wellbred was granted, Ding would be allotted 4% of the equity in Teamasia Greaves in lieu of interest on his loan.

13 This loan of USD150,000, like some other sums, is not one of the sums claimed by Ding. However I mention it, as well as other sums not claimed by Ding, as they should be taken into account in my determination as to whether the sums claimed by Ding were advanced as loans and, if so, whether Ding was a moneylender within the Act.

14 In October 1997, a third sum of USD50,000 was advanced. This was to Teamasia Singapore (PBD 11 and 12) although it is not clear whether this sum was advanced by Ding personally or through his business CCD.

15 In December 1997, a forth sum of USD50,000 or USD55,000 was advanced to Teamasia Singapore (PBD 13, 14 and 15). The party advancing this sum was apparently CCD.

16 Neither of these two sums advanced in October and December 1997 are the subject of Ding’s claims. The cheque butt for the sum advanced in December 1997 states “Loan to Teamasia”.

17 In June 1998, Ding agreed to advance a fifth sum of USD165,000. This was for Teamasia Singapore to acquire shares in Teamasia Greaves. It is not disputed that this advance was governed by the terms of a deed between Teamasia Singapore, Ding, Mok and Subba (“the Deed”) although the copy thereof before me was signed only by Subba and Mok and was undated. The Deed was prepared by Ding’s solicitor Lim Tanguy of Chor Pee & Partners. As this sum of USD165,000 is one of the sums claimed by Ding and as Ding is taking the position that the sum was advanced as an investment in and not as a loan to Teamasia Singapore, I set out below its salient provisions:

(a) In the recital, Ding is defined as “the lender”.

(b) Clause 1 provides for Ding to “lend” USD165,000, which is defined as “the loan”, for the purpose of acquiring shares in Teamasia Greaves.

(c) Clause 2 provides that the total of loans made by Ding is USD365,000 and is to be repaid within four months from the date of the deed. The various loans are defined as “the loans”.

(d) Clause 4 provides that “In consideration of the loans”, Teamasia Singapore is to acquire and transfer to Ding an 8% stake in Teamasia Greaves free from all encumbrances.

18 In October 1999, Ding advanced a sixth sum of USD250,000. According to him, the USD250,000 is evidenced by a subsequent agreement dated 1 November 1999 (“the November 1999 agreement”) and was to assist TSI to acquire a stake in IMP Inc (“IMP”), a company listed on NASDAQ and operating in California.

19 The November 1999 agreement was also prepared by Ding’s solicitor but this time he used Helen Tay Hwee Hua from another firm i.e Catherine Lim & Co. This agreement was stated to be between Mok, Subba, Teamasia Singapore, TSI and Teamasia Semiconductor (USA) (“Teamasia USA”) on the one hand and Ding on the other hand. I set out below its salient provisions:

(a) Recital C states that the agreement is to consolidate all previous agreements in respect of funds provided by Ding.

(b) Clause 1.1 defines “Borrowers” to mean Mok, Subba and the TA Companies, and “TA Companies” means Teamasia Singapore, TSI and Teamasia USA.

(c) Under clause 2.1.1, each of the Borrowers acknowledges that Ding has provided funds on various occasions and in consideration of that he is entitled to a 4% stake in the enlarged capital of a holding company of the TA Companies, called “TA Holdings”.

(d) Under clause 2.1.2, Ding is to be appointed a director of TA Holdings.

(e) Under clause 2.2, the Borrowers acknowledge the outstanding amount of “the Previous Loans” to be at least USD696,000, subject to further confirmation by Ding. According to Ding, this USD696,000 includes the fifth sum of USD165,000 and the sixth sum of USD250,000 (see Ding’s Amended AEIC para 63).

(f) Under clause 3.1, Ding is to provide a further loan of USD500,000, defined as “Further Loan”, to the Borrowers upon execution of the agreement.

(g) Under clause 3.2, Ding is entitled to:

3.2.1 another 3% fully paid up shares in the enlarged capital of TA Holdings,

3.2.2 327,868 fully paid up shares in IMP forthwith,

3.2.3 581,222 fully paid up shares in IMP by 5 January 2000

3.2.4 fully paid up shares representing 7% of the capital in Teamasia Singapore

3.2.5 be appointed a director of Teamasia Singapore forthwith

(h) Clause 3.3 provides that the effect of clauses 2.1 and 3.2 is that Ding is entitled to an aggregate number of shares in TA Holdings representing 6% of its enlarged capital. This may have been a typographical error because clause 2.1.1 provides for 4% and 3.2.1 provides for 3%, making an aggregate of 7% of the enlarged capital. However, as one of the reliefs sought by Ding is 6%, and not 7%, of the issued and paid-up capital of TA Holdings, I will assume that 6% is the correct figure.

(i) Under clause 4.1, each of the Borrowers undertake to repay the Previous Loans and...

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  • Contract Law
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    • Singapore Academy of Law Annual Review No. 2003, December 2003
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