Ethoz Capital Ltd v Im8ex Pte Ltd and others
Jurisdiction | Singapore |
Judge | Sundaresh Menon CJ |
Judgment Date | 20 January 2023 |
Neutral Citation | [2023] SGCA 3 |
Court | Court of Appeal (Singapore) |
Docket Number | Civil Appeal No 28 of 2022 |
Published date | 27 January 2023 |
Year | 2023 |
Hearing Date | 08 November 2022 |
Plaintiff Counsel | Wong Soon Peng Adrian, Ang Leong Hao and Bryce Yeo (Rajah & Tann Singapore LLP) |
Defendant Counsel | Ranvir Kumar Singh (UniLegal LLC),The third respondent absent and unrepresented. |
Citation | [2023] SGCA 3 |
In our jurisprudence, the penalty doctrine makes a distinction between primary and secondary obligations, with only the latter attracting its application. In
In attempts to get around this threshold, parties have resorted to what we have previously referred to as “clever drafting”:
On the other hand, there is nothing intrinsically objectionable for parties to draft appropriate clauses to reflect their agreement that an obligation is a
In the case before us, the appellant argues that the payment of a sum constituting substantial interest on several loans is a primary obligation, and thus not subject to the penalty doctrine. However, the provision that it relies on was grafted into the contract without paying sufficient attention as to how it would interact with the other terms, leading to a document with seemingly contradictory clauses such that the nature of the obligation in question was unclear. This judgment will examine how such a conflict is to be resolved in the face of contradictory clauses in the contract.
Facts The background to the present appeal is set out in
The appellant, Ethoz Capital Ltd (“Ethoz”), is an excluded moneylender under the Moneylenders Act (Cap 188, 2010 Rev Ed) (“Moneylenders Act”).
The first respondent, Im8ex Pte Ltd (“Im8ex”), is a privately held company. The second respondent, Mr Chua Soo Liang (“Mr Chua”), is the sole director and shareholder of Im8ex. He is also the nephew of the third respondent, Mr Tan Meng Kim (“Mr Tan”). It should be noted that Mr Tan was absent throughout the proceedings and remains unrepresented. For the purposes of this judgment, as all three respondents’ interests are aligned, we will refer to them collectively as Im8ex.
Ethoz lent sums of $1m, $3.15m and $2.15m to Im8ex under three loan facilities for a total principal sum of $6.3m (“the Prior Facilities”). The Prior Facilities were for a term of 12 months, and their interest rate was between 6.25% to 6.5%
The Prior Facilities were secured by mortgages over four different properties which we will refer to as “the Alexandra Property”, “the Hoe Chiang Property”, “the Bayshore Property” which was Mr Chua’s home, and “the Taman Permata Property” which was Mr Tan’s home (collectively, “the Properties”). The Prior Facilities were also guaranteed by Mr Chua and Mr Tan.
The Facilities In July 2019, Ethoz and Im8ex began discussing the renewal of the Prior Facilities. This led to the signing of loan facilities that are the subject of the present appeal (“the Facilities”). They were signed in November 2019 and January 2020. Like the Prior Facilities, these were secured by guarantees from Mr Chua and Mr Tan, and mortgages over the Properties. The total principal amount borrowed by Im8ex under all the Facilities was similarly $6.3m, but this amount had been split into
As
Importantly, Schedule 3 also included an amount termed “Total Interest” which was the aggregate of
Significantly, Clause 7(B) provided that the Total Interest “shall be deemed earned and accrued in full upon the drawdown of the Advance”. Such a clause was, however, not present in the Prior Facilities.
There are also several provisions relevant in the event that Im8ex defaults on payment:
Finally, under the Facilities, Im8ex can make prepayment of the Advance after six months from the date of drawdown. Clause 6(B) provides that such prepayment would include “the Advance and interest computed thereon in full”, subject to conditions laid out in Clauses 6(B)(1)–(5).
Ethoz seeks to enforce the Facilities Im8ex defaulted on payment within the first year of all the Facilities. Consequently, on 3 September 2020, Ethoz gave notice demanding immediate and full payment of the Advance
On 15 January 2021, Ethoz filed HC/OS 30/2021 (“OS 30”) which sought the following orders: first, that Mr Chua and Mr Tan deliver vacant possession of the Properties; and second, that Im8ex, Mr Chua and Mr Tan jointly and severally pay Ethoz the Advance, Total Interest, and Default Interest due under the Facilities.
Im8ex resisted OS 30, making broad assertions of “unconscionable interest” and “unfair terms”. It also asserted that Ethoz had misrepresented the terms of the Facilities, and further, that Ethoz did not fully advise it on how the Total Interest worked.
OS 30 was heard by an assistant registrar (“the AR”) on 5 April 2021. Three days later, the AR gave his decision, finding for Ethoz.
Proceedings below Im8ex appealed against all the orders made in HC/RA 112/2021 (“RA 112”). The Judge heard the parties on 29 June 2021 and rendered his oral decision on 22 October 2021. On 2 January 2022, the Judge released his full grounds of decision which canvassed four issues: “Total Interest”, “Default Interest”, “Misrepresentation” and whether Im8ex could redeem the Facilities and the Properties (“Redemption”).
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