Lek Peng Lung v Lee Investments (Pte) Ltd and Others

• Jurisdiction: Singapore
• Judge: Warren Khoo L H J
• Judgment Date: 07 October 1991
• Neutral Citation: [1991] SGHC 145
• Docket Number: District Court Suit No 193 of 1991
• Date: 07 October 1991
• Year: 1991
• Published date: 19 September 2003
• Plaintiff Counsel: Vincent Yeoh (Phang & Co)
• Citation: [1991] SGHC 145
• Defendant Counsel: Leslie Chew (Khattar Wong & Partners)
• Court: High Court (Singapore)
• Subject Matter: Authority of one partner to bind partnership and other partners,Whether sums taken were 'fixed deposits' or 'loans',Competency of agents,Whether may be rebutted at O 14 stage,Acts done for carrying on, in the usual way, business of the kind carried on by the partnership,Summary judgment,Burden of proof,Partnership,Whether plaintiff was carrying on business of moneylending,Agency,Money and moneylenders,s 3 Moneylenders Act (Cap 188),Whether prohibited by licence conditions issued by Registrar of Pawnbrokers,Whether transaction prohibited under Moneylenders Act (Cap 188),Allegation of moneylending,Credit and Security,Civil Procedure,Notice of limitation of authority,Illegal money-lending,O 14 Rules of the Supreme Court 1970,Statutory pre-sumption

The plaintiff claimed the sum of $50,000 made up of two sums, $20,000 and $30,000, described in her amended statement of claim as `loans`, together with accrued interest.

The first, second and fourth defendants (`the defendants`) entered appearance. The third defendant does not appear to have entered appearance or taken any part in the proceedings.

The plaintiff applied for summary judgment. On 25 April 1991 the learned deputy registrar of the subordinate courts gave summary judgment in favour of the plaintiff. The defendants appealed. I heard the appeal on 11 July 1991. I upheld the learned deputy registrar`s decision. I now give my reasons.

The facts

The plaintiff is a housewife. The defendants, together with the third defendant, were partners of Ban Loke Pawnshop (`the pawnshop`). This partnership was dissolved in October 1990.

The plaintiff says that the two sums were lent to the pawnshop by her late husband. Two receipts were issued in the pawnshop`s printed form of receipt, one dated 22 January 1988 for the sum of $20,000, and the other dated 29 December 1987 for the sum of $30,000. The receipts were signed apparently by the third defendant purportedly on behalf of the pawnshop. They provided for interest at the rate of 1% per month.

Both receipts in translation state: `This is a receipt for a loan, not for a deposit.` The authors of the receipt form appear to have had in mind the distinction drawn by the Registrar of Pawnbrokers between loans and fixed deposits, of which more will be said later.

The plaintiff says that her late husband made the loans to the pawnshop through the introduction of a mutual friend of her husband and the third defen. The money was collected from her husband by the third defendant, and the receipts were issued. Both receipts bear the name of the plaintiff and not her late husband, but no objection has been raised to the plaintiff`s entitlement to sue.

The defendants put forward every possible ground for resisting summary judgment. In the court below, they said that there were the following triable issues:

(1) whether the loan transactions were illegal in the sense of being `ultra vires` the Pawnbrokers Act (Cap 222) (`the Act`);

(2) whether the third defendant had authority to bind the defendants;

(3) whether the loan transactions were illegal, being banking business conducted without a licence under the Banking Act (Cap 19);

(4) whether the loan transactions contravened the Moneylenders Act (Cap 188), the plaintiff, they said, being an unlicensed moneylender.

Before me, the defendants` counsel clarified that, in relation to issues (1) and (2), the defendants were now not relying on contraventions of the Act as founding an illegality rendering the contracts unenforceable. Rather, counsel told me, the defendants relied on such alleged contraventions only to support their contention that the third defendant did not have authority to take the loans and therefore to bind his partners.

Before me, the defendants also abandoned, no doubt advisedly, the issue of possible contraventions of the Banking Act (Cap 19). There were thus only two issues before me, ie that concerning the authority of the third defendant and that concerning possible contraventions of the Moneylenders Act. I will deal with them, referring to the evidence as I do so.

The authority issue

On the authority issue, the defendants said that there were triable issues whether:

(1) the pawnshop was allowed by the authorities to take the two sums, which they called `deposits`;

(2) the plaintiff or her late husband knew that it was not allowed to do so;

(3) the third defendant was authorized by the defendants to take the two sums; and

(4) the plaintiff or her late husband knew that the third defendant was not so authorized.

I will now deal with these points in turn.

(I) Whether pawnshop allowed to take loans or deposits

As what follows will show, it is necessary to make a distinction between fixed deposits and loans.

The Act does not deal with the question whether pawnbrokers can borrow from the public, whether in the form of fixed deposits or loans. Such activity has been regulated by means of licence conditions and administrative directions issued by the Registrar of Pawnbrokers, an official appointed by the Minister under the Act.

It appears that before 1979, taking deposits and loans from the public was a common activity of pawnbrokers. It was a means of financing their business, which required giving out loans on pledges. Pawnbrokers performed what in effect was a subsidiary banking function catering to certain sections of the public.

The parties produced sets of conditions attached to licences issued by the Registrar for the years 1979, 1989 and 1990. They also produced two letters written by the Registrar to the Singapore Pawnbrokers Association, dated 2 January 1979 and 2 June 1980. These documents give a view, but unfortunately not a complete one, of the evolution of the Registrar`s attitude towards the taking of loans and fixed deposits by pawnbrokers. The position gleaned from the documents is as follows. As far as fixed deposits are concerned, pawnshops have, since January 1979, been totally...