Gremio Capital Pte Ltd v Kamala Jewellers Pte Ltd and 5 Others

JudgeWong Peck
Judgment Date02 January 2018
Neutral Citation[2018] SGDC 1
CourtDistrict Court (Singapore)
Docket NumberDistrict Court Suit No. 1885 of 2017, DC/RA No. 88 of 2017, HC/RAS 33/2017
Published date21 March 2018
Hearing Date19 December 2017,29 November 2017
Plaintiff CounselMs Yap Vee Ler (M/s Lexcompass LLC)
Defendant CounselMr Sudeep Kumar (M/s SK Kumar Practice LLP)
Subject Mattercivil procedure- summary judgment
Citation[2018] SGDC 1
District Judge Wong Peck: Introduction

The Plaintiffs, since their incorporation in 2014, have been extending loans solely to corporate entities. As such, they are “excluded moneylenders” within the definition of the same under 2 (e)(iii)(A) of the Moneylenders Act (Cap. 188, Rev Ed 2010).

The first Defendants conduct a retail business of selling jewellery. The 2nd, 3rd and 4th Defendants are directors of the 1st Defendants. The 5th Defendants carry on the business of restaurants. The 2nd Defendant is the only director and sole shareholder of the 5th Defendants. The 6th Defendants carry on the business of cinema services. The 2nd and 3rd Defendants are the directors and shareholders of the 6th Defendants.

This matter came up for hearing before me as an appeal by the Defendants against the decision of the Deputy Registrar (“DR”) who granted summary judgment against the Defendants. The Defendants were ordered to pay the Plaintiffs the sum of $104,566 with interest on the sum of $104,566 at the rate of 5.33% per annum from date of Writ to date of Judgment and costs fixed at $7,000 (all-in). After hearing the parties, I dismissed the appeal. The Defendants have since appealed against my decision. These are the written grounds of my decision.


At the hearing before me, the issues were: whether the amount repayable was a penalty and the Court should not enforce such a repayment clause; and whether the interest amount was exorbitant and therefore unconscionable. These issues related to the repayment of $394,697.25 based on a loan of $300,150 over a period of 9 months which the Defendants had submitted should be declared null and void on account of it being a penalty or at the lowest be severed such that the amount payable was much lesser. At the hearing before this Court, the Defendants’ counsel confirmed that they were no longer pursuing the defence of illegal moneylending.


On or about 4 December 2015, the Plaintiffs and the first Defendants entered into a business loan agreement (“the agreement”) whereby the Plaintiffs extended a loan of $300,150 to the 1st Defendants. Clause 2 of the agreement provides that the repayable amount is $394,697.25 and it is to be repaid in 9 monthly instalments of $43,855.25. Clause 4 provides that in the event that a termination events occurs, the Plaintiffs shall have the right to terminate the agreement by giving written notice to the 1st Defendants whereupon the entire meaning balance of the remaining amount shall become payable immediately. Clause 4 also defines failure on the part of the 1st Defendants to pay the Plaintiffs as a termination event. Clause 5.6 provides that the 1st Defendants shall indemnify the Plaintiffs for all costs and expenses incurred by the Plaintiffs in using legal means to enforce the agreement.

The 2nd to 6th Defendants provided written guarantees to jointly and severely guarantee the 1st Defendants’ performance of the latter’s obligations under the agreement and indemnify the Plaintiffs against any loss, damages, costs and expenses. Thereafter, the amount of $300,150 was disbursed on or about 4 December 2015.

As the 1st Defendants failed to effect the seventh, eighth and ninth instalments on 3 July 2016, 3 August 2016 and 3 September 2016 respectively, the Plaintiffs issued a Default notice on 16 September 2016. Partial payments were made, leaving a balance of $104,566 outstanding. This means that the 1st Defendants had paid $290,131.25. Consequently, summary judgment application was taken out by the Plaintiffs for the outstanding sum of $104,566.

At the hearing before this court, the Defendants’ counsel submitted that the agreement did not mention the interest charged and that the burden of proof of the additional sum of $94,000 was neither a penalty nor an exorbitant sum was on the Plaintiffs. Counsel then referred this Court to Section 108 of the Evidence Act (Cap. 97, Rev Ed 1997) which provides:

Burden of proving fact especially within knowledge

108. When any fact is especially within the knowledge of any person, the burden of proving that fact is upon him.


When a person does an act with some intention other than that which the character and circumstances of the act suggest, the burden of proving that intention is upon him. A is charged with travelling on a railway without a ticket. The burden of proving that he had a ticket is on him.”

The Defendants’ counsel disagreed with Audrey Lim JC’s decision at [124] in CIFG Special Assets Capital I Ltd v Polimet Pte Ltd & Ors [2017] SGHC 22 where the learned JC had opined that the burden of proving that the default interest of 2% per month under Convertible Bond Subscription Agreements (“CBSAs”) was on the Defendants. Lim JC had relied on the Court of Appeal decision in CLAAS Medical Centre Pte Ltd v Ng Boon Ching [2010] 2 SLR 386 at [63]. In CIFG, the Plaintiffs had sued the Defendants for recovery of monies as a result of the first Defendants’ default on a series of loans that were structured as CBSAs. The basis of counsel’s disagreement with Lim JC was that the Court of Appeal decision must be viewed contextually in that CLAAS was mainly concerned with interpreting section 2(2) of the Contracts ( Rights of Third Parties) Act (Cap. 53B, Rev Ed 2002). In his oral submissions, the Defendants’ counsel submitted that the interest rate at 40-42% in the instant case was exorbitant and gave rise to a triable issue.

Although the Defendants’ counsel acknowledged that Itronic Holdings Pte Ltd v Tan Swee Leon & Anor [2016] 3 SLR 663; [2016] SGHC 771stood for the proposition that compensation amount amounting to penalties did not apply to primary obligations, counsel again disagreed with the decision as firstly, the court did not have the benefit of detailed arguments as to the applicability of primary and secondary obligations. Secondly, the High Court did not cite any local decision expressly accepting the position. Thirdly, the court did not make its decision based on either primary or secondary obligations. Finally, it was unclear whether the instant agreement bears in mind primary or secondary obligations and benefit of the doubt should be given to the Defendants. In the oral submissions of the Defendants’ counsel, he asserted that the amount of repayment was a...

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