Koh Lee Hoo v Low Poh Huat, Leo

• Jurisdiction: Singapore
• Judge: Vince Gui
• Judgment Date: 31 July 2023
• Neutral Citation: [2023] SGDC 161
• Court: District Court (Singapore)
• Docket Number: District Court Suit No. 549 of 2021, District Court Appeal No. 21 of 2023
• Hearing Date: 07 July 2023,10 July 2023,21 June 2023,23 June 2023
• Citation: [2023] SGDC 161
• Year: 2023
• Plaintiff Counsel: Lim Teck Hock Richard (Richard Lim & Company Advocates & Solicitors)
• Defendant Counsel: Tan Chai Ming Mark and Teo Jia Hui, Veronica (Focus Law Asia LLC)
• Subject Matter: Insolvency Law,Bankruptcy,Discharge,Discharge released defendant from debts,Whether plaintiff can sue under fraud exception,Tort,Misrepresentation,Statements of intention,Borrower represented intention to repay loan,Whether representation actionable,Limitation of Actions,Acknowledgement of debt,Renewal of limitation period
• Published date: 23 August 2023

District Judge Vince Gui: Introduction

The Plaintiff and the Defendant used to be long-time friends. At the height of their friendship, the Plaintiff advanced friendly loans amounting to $250,000 to the Defendant. The advances were made in June to July 2001. Soon thereafter, they lost touch. For over 19 years, they had no contact with each other.

Through chance, parties reconnected in September 2020. The Plaintiff reminded the Defendant of the loans and sought repayment. The Defendant acknowledged the loan. But repayment was not forthcoming. According to the Plaintiff, the Defendant spun lies about his financial circumstances to avoid repayment. Upset by the Defendant’s lies, the Plaintiff decided to commence legal action.

The peculiar feature of this action was the fact that the loans were advanced over 19 years ago. In the intervening period, the Defendant’s financial circumstances underwent a sea change. Back in 2001, the Defendant used to be a director and shareholder of a construction company which had some measure of success. Disaster unfortunately struck in the aftermath of the terrorist attacks at the World Trade Center on 11 September 2001, which sent financial and economic shockwaves throughout the United States and beyond. Singapore was not spared. According to the Defendant, the construction industry in Singapore crumbled, and the company soon ran into cashflow problems.¹ The company defaulted on some of the loans for which the Defendant had personally guaranteed.² The Defendant was adjudged a bankrupt in October 2002. He was finally discharged from bankruptcy on 17 September 2019.

The discharge of the Defendant’s bankruptcy presented a formidable hurdle to the Plaintiff’s claim. Section 127(1) of the Bankruptcy Act (Cap 20, 2009 Rev Ed) (“Bankruptcy Act”) provides that a discharge of bankruptcy releases the bankrupt from “all debts provable in bankruptcy”. In effect, the discharge gives the bankrupt a second chance to start his financial life afresh on a clean slate.

Relying on s 127(1) of the Bankruptcy Act, the Defendant sought to strike out the Plaintiff’s claim before trial. He argued that the Plaintiff should have filed a proof of debt with the Official Assignee. The court struck out the Plaintiff’s claim at first instance. On appeal, the Plaintiff sought to rescue his claim by making a plea of fraud. Fraud is an exception to the “clean slate” rule in s 127(1) of the Bankruptcy Act. Section 127(5)(a) of the Bankruptcy Act provides that a discharge does not release the bankrupt from provable debts secured by fraud. In the present case, the Plaintiff alleged that the loans were advanced in reliance of fraudulent misrepresentations made by the Defendant. The appellate judge decided to give the Plaintiff a chance to adduce evidence of fraud. The claim was restored for trial.

The trial came before me. On the evidence, I found that the allegation of fraud was not made out. Section 127(1) of the Bankruptcy Act barred the Plaintiff from bringing this claim. I dismissed the claim with oral grounds on this issue alongside other issues raised by the parties.³

The Plaintiff filed a notice of appeal against my decision.⁴ I now issue my written grounds of decision. I should caveat at the outset that these grounds were written without the benefit of transcripts of the audio recordings made during trial. Parties have not extracted the said transcripts at the time these grounds are issued. I have relied on my own notes of the trial to prepare these grounds.

Background facts

As the factual narratives provided by parties diverge greatly, I will first narrate the undisputed or indisputable background facts before turning to their allegations. I will spend some time discussing the facts surrounding the disbursement of the monies and the subsequent discussions relating thereto. It is important to understand these matters because one of the defences raised by the Defendant was that the alleged loans did not exist. He took the position that the advances were made in favour of his company for a business transaction and not to him personally.

It was common ground that the Plaintiff advanced monies to the Defendant amounting to $250,000. The monies were advanced in cash over four tranches. The advancements were recorded in payment vouchers as follows:⁵

Tranche	Date of payment voucher	Amount
1	9 June 2001	$71,130
2	30 June 2001	$24,000
3	17 July 2001	$47,000
4	25 July 2001	$107,870
Total:	$250,000

The payment vouchers were signed off by both the Plaintiff and the Defendant. The Plaintiff and the Defendant penned their signatures next to the words “payment approved by” and “received by” respectively. I will refer to the payment vouchers collectively as the “Payment Vouchers”.⁶

As mentioned above, parties lost contact shortly after the monies were disbursed.

On or around 10 September 2020, a mutual friend informed the Plaintiff that he had met the Defendant by chance.⁷ The Plaintiff contacted the Defendant via his mobile number. They spoke briefly over the phone. In December 2020, the Plaintiff called the Defendant again and asked to meet up. They met on 24 December 2020. During the meeting, the Plaintiff showed the Defendant the Payment Vouchers. The Plaintiff also sent copies of the Payment Vouchers to the Defendant via WhatsApp messenger later that day.⁸

On 4 January 2021, the Plaintiff followed up with the Defendant on the repayment of the loan.⁹ The Defendant said he was a bankrupt. The Defendant sent copies of his identity card to the Plaintiff for him to verify his bankruptcy. Searches however revealed that the Defendant had already been discharged of his bankruptcy on 17 September 2019. The Plaintiff was upset that the Defendant lied about his bankruptcy status.¹⁰

Parties met again, at the Plaintiff’s request, on 20 January 2021.¹¹ This time, the Plaintiff brought along one Goh Tiong Ming (“Mr Goh”). Mr Goh was a friend of the Plaintiff. He did not know the Defendant and had no dealings with the Defendant until that meeting. In fact, he did not even know that he was about to meet the Defendant until that very day.

At the meeting, the Plaintiff requested Mr Goh to draft a note acknowledging that the Defendant had borrowed monies from him. He requested Mr Goh to do so because he could not read or write English. Mr Goh promptly drafted the note as instructed. The Defendant also duly signed off the note at the meeting.¹² The note reads:¹³

I, Low Poh Huat (NRIC No. [redacted]) confirm I had borrow [sic] from Mr Koh Lee Hoo of S$250,000.00 (S$ Two Hundred & Fifty Thousand) in Year 2001, and signed the vourchers [sic].

I will refer to this as the “Acknowledgement Note”. The Acknowledgement Note was signed off by Mr Goh as a witness.

At the meeting, the Plaintiff also asked the Defendant to acknowledge the loans by signing off the Payment Vouchers. The Defendant duly penned his signature and the date “20/1/2021”. Mr Goh similarly signed off the Payment Vouchers as a witness.¹⁴

After that meeting, the Plaintiff requested the Defendant to repay the loans but to no avail. The Plaintiff engaged solicitors to seek legal recourse.

Parties’ factual allegations

I turn now to discuss the parties’ allegations. The allegations fell into two broad categories. One was the allegation of loan. The other was the allegation of fraud.

Allegation of loan

The Plaintiff alleged that the monies advanced were friendly loans. The loans were interest free. The Plaintiff considered the Defendant a good friend and trusted that he would repay the loan. Despite the Defendant’s disappearance, he held out hope that he would one day show up to apologise for his absence and provide a good explanation for the non-repayment or repay the loan.¹⁵

The Defendant alleged that the monies were not loans to him. He alleged that the monies were advanced to secure a business dealing with a company of which he was a director and shareholder. The company was called Eng Lock Hin Construction Pte Ltd (“ELHC”). The Defendant gave an elaborate explanation on what the monies were for:¹⁶ In or around May or June 2001, ELHC was awarded various construction projects. It sought to recruit 50 foreign workers to perform those projects. As part of the recruitment exercise, ELHC received the monies advanced by the Plaintiff to the Defendant. The $250,000 represented $5,000 for each of the 50 foreign workers that ELHC sought to recruit. The Defendant explained that the Plaintiff was a recruitment agent. According to him, it was supposedly “the practice” for recruitment agents to make advance payment to construction companies hiring the foreign workers. The advance payments would cover the “upfront administrative costs” of recruitment, such as the work permit fees, air fare, accommodation, certification fees and medical check-up. The Plaintiff would recoup the advance payments from the commission fees he would subsequently receive from the foreign workers. ELHC’s representative would sign off on the Plaintiff’s payment vouchers acknowledging receipt of the monies advanced. The said representative would usually sign off with his own name for greater accountability. ELHC would also have its own payment vouchers. The payments would also be deposited into ELHC’s bank accounts. As such, when the Defendant received the monies from the Plaintiff, he signed off the Payment Vouchers in his capacity as director of ELHC. After receiving the monies, the Defendant handed them over to ELHC’s accounting clerk. Due to the passage of time, he could not remember her name and have lost contact with her. The Defendant no longer had access to ELHC’s records as the company went into liquidation over 20 years ago. ELHC eventually did not manage to complete the recruitment exercise as it was wound up....