Shun Heng Credit Pte Ltd v Maverick Carz Pte Ltd and another

• Jurisdiction: Singapore
• Judge: Cheng Yuxi
• Judgment Date: 23 August 2023
• Neutral Citation: [2023] SGMC 69
• Court: Magistrates' Court (Singapore)
• Docket Number: Magistrate Court Suit No 9002 of 2021
• Hearing Date: 24 July 2023,19 June 2023
• Citation: [2023] SGMC 69
• Year: 2023
• Plaintiff Counsel: Vijai Parwani and Nah Wei Jin Danny Erwin
• Defendant Counsel: The second defendant in person.
• Subject Matter: Credit and Security,Hire-purchase,Remedies,Hirer failed to repay instalments,Whether contract terminated,Whether credit company could repossess vehicle,COVID-19 (Temporary Measures) Act,Guarantees and indemnities,Guarantees,Effect of conclusive evidence clause,Default judgment entered against hirer,Whether guarantor could challenge outstanding arrears,Tort,Harassment,Whether permission should be granted to commence counterclaim in District Court instead of Protection from Harassment Court,Section 16I Protection from Harassment Act
• Published date: 21 September 2023

District Judge Cheng Yuxi: Introduction

One of the foundational starting points in any free market is the sanctity of contract. Parties are free to arrange their affairs by entering into contracts governing their rights and obligations. But they expect, in turn, that contracts will be upheld and enforced according to the terms, and they will therefore bear the adverse consequences flowing from a breach of their obligations. In this regard, the Government does not lightly interfere into private contracts to alter the parties’ performance obligations.

But in April 2020, following the economic devastation brought about by the novel coronavirus disease (“Covid-19”), the Government intervened to do just that. It introduced a slew of measures to cushion the “serious shock” arising from the virus, including the COVID-19 (Temporary Measures) Act 2020 (“Covid-19 Act”). Part 2 of the Covid-19 Act altered parties’ performance obligations, even under contracts that had already been formed prior to the passing of the Act. It offered temporary relief for a party who was unable to perform an obligation in certain subsisting contracts by preventing the other party from taking enforcement action such as repossession of a good due to the default. The measures were, however, intended to be “targeted and temporary”, a “legal circuit breaker: a timeout until this virus dies out and contracts, like life, can return to normal”.¹ This is evident from the very title of the Covid-19 Act.

The first defendant in the present case entered into a hire-purchase agreement with the plaintiff, a credit company, to finance the purchase of a commercial vehicle. The second defendant was one of the guarantors under the hire-purchase agreement, against whom this trial proceeded. At the height of Covid-19, the first defendant could not keep up with instalment repayments and wanted to return the vehicle to the plaintiff. When it failed to do so, the plaintiff repossessed the vehicle instead. It also commenced an action to recover the outstanding arrears under the agreement. One of the main issues in this case was whether the plaintiff was barred from doing so because of the Covid-19 Act. Having carefully considered the parties’ submissions on this and other issues, I allow the plaintiff’s claim for the outstanding sum, but reduced it to a sum of $18,326.16 with interests. I dismiss the second defendant’s counterclaims. I now set out the reasons for my decision.

Facts The parties

The plaintiff is a finance company in the business of extending loans, including loans for the purchase of vehicles.²

The first defendant is a car leasing company. Its directors are Melvin Lau Kiat Ping (“Lau”) and his father, Bernard Low Ngee Fatt (“Low”).³

The second defendant is Lau’s mother. She was a manager of the first defendant and its secretary from 6 September 2020 to 29 November 2020.⁴

The hire-purchase agreement and the guarantee

In or around February 2020, the first defendant wanted to purchase a used Toyota C-HR Hybrid for the purpose of leasing it out to private-hire car drivers. It submitted an application to the plaintiff seeking financing in the sum of $77,000.⁵

On 17 March 2020, the plaintiff entered into a hire-purchase agreement with the first defendant.⁶ According to the hire-purchase agreement, the price of the vehicle was $129,750, and there was a “deposit cash of/trade in of” $52,750. The eventual sum borrowed was $77,000 with term charges of $25,602.50 (4.75% per annum). The loan was to be repaid by monthly instalments over seven years. For overdue instalment payments, this was subject to an interest rate of 24% per annum, and a late payment charge of $50 per instalment. This agreement was signed by Lau on behalf of the first defendant.

On the same day, Lau, Low and the second defendant also signed a document entitled “Guarantee of Hire-Purchase Agreement” (“the Guarantee”). They therefore became the three guarantors to the hire-purchase agreement described in the previous paragraph.

Significantly, Clause 2 of the Guarantee states:

A certificate by you [i.e. the Plaintiff] as to the indebtedness for the time being due to you by the Hirer under the Hire Purchase Agreement, any admission or acknowledgement in writing of such indebtedness by the Hirer or on its behalf, any judgment or order obtained by you against the Hirer or any proof by you in wind-up or bankruptcy which is admitted shall be binding and conclusive on me/us [i.e. the guarantors].

[emphasis added]

Initially, the first defendant duly made the requisite monthly instalment repayments under the hire-purchase agreement. However, after the Covid-19 pandemic struck in early 2020, the first defendant submitted a request for the plaintiff to review the instalment repayments under the agreement. In an “Agreement to Proposed Solution to Notification of Relief” dated 29 April 2020,⁷ the plaintiff agreed to reduce the instalments payable from May to July 2020, and to waive the overdue interest and charges for those months. Based on the documents tendered, it appears that the first defendant filed two other Notifications for Relief on 1 and 17 May 2020, pursuant to s 9(1) of the Covid-19 Act, requesting for further deferments of instalment repayments and extension of instalment timelines, but there was no indication that these requests were acceded to.⁸

Default on instalment payments

Despite the revised instalment plan, the first defendant defaulted on its monthly instalment repayments from 17 August 2020.

On 24 September 2020, the plaintiff served a notice under the Fourth Schedule to the Hire-Purchase Act (Cap 125, 2014 Rev Ed) informing the first defendant of its intention to repossess the car.⁹

In response, the first defendant (a) filed another Notification for Relief on 6 October 2020 stating that it was unable to make its instalment repayments from 17 August 2020. It sought amortisation of the loan or a transfer of the vehicle to a new company and (b) followed up with a “Notice to Surrender Vehicles” (“Notice to Surrender”) stating that it would like to surrender the vehicle to the plaintiff, because of the “economic devastation brought about by COVID-19, which ha[d] caused rental rates to drop and vehicles to be not rented out”. It then suggested either selling the vehicle itself or surrendering the vehicle to the plaintiff for auction. In the latter case, it asked for the place that the plaintiff would like the vehicle to be delivered.¹⁰ The plaintiff replied on WhatsApp on the same day, acknowledging receipt of the Notice to Surrender, agreeing for the vehicle to be surrendered to it, and requesting for the vehicle to be delivered to its office address the next day.¹¹

However, the first defendant did not return the vehicle for the next two months. As such, the plaintiff engaged a company to repossess the vehicle on 28 December 2020. It duly issued a notice of the repossession under the Fifth Schedule of the Hire-Purchase Act, and thereafter advertised and sold the car to the highest offeror at $69,000.

The present suit

When the first defendant failed to make instalment repayments despite the plaintiff’s demands, the plaintiff commenced the present suit on 15 October 2021 against the first defendant as the hirer, and the second defendant as guarantor, for the outstanding sums under the hire-purchase agreement. The suit was not brought against Lau and Low, the two other guarantors, as they were facing bankruptcy proceedings at that time. The plaintiff claimed a total sum of $22,322.12 – comprising the outstanding amount under the agreement, less the sale proceeds of the vehicle and rebate, plus overdue late interest and various other fees – as well as interest at the rate of 24% per annum from date of writ to full payment.¹²

However, in the affidavit of evidence-in-chief (“AEIC”) of the director of the first defendant, See Chye Seng (“Mr See”), he admitted that there was an error in the calculation of the rebate amount, and that the total outstanding amount should instead be $18,326.16.¹³

The breakdown of the sums claimed is as follows:

Description	Amount
Total amount outstanding under the hire-purchase agreement	$102,602.50
Less instalments paid	$6,110
Less rebate	$11,777.15 (Statement of Claim) $15,863.51 (AEIC)
Add overdue late interest	$952.59
Add penalty charges	$2,310
Add cost of storage & repair fee	$720
Add cost of repossession	$800
Add towing fee	$300
Add processing fee	$150
Add advertisement fee	$82.18
Add e-transfer fee	$25
Add road tax renewal	$487
Add LTA fine	$100
Add total postage (Fourth and Fifth Schedule Notices)	$480
Add administrative fee	$200
Less proceeds of vehicle	$69,000
Total outstanding	$22,322.12 (Statement of Claim) $18,326.16 (AEIC)

On 19 January 2022, judgment in default of defence was entered against the first defendant for the sum of $22,322.12 and 24% interest per annum. On 3 March 2022, the first defendant filed two summonses: (a) MC/SUM 901/2022, a summons for Low to represent the company instead of a solicitor and (b) MC/SUM 902/2022, a summons to set aside the judgment in default of defence. MC/SUM 901/2022 was dismissed on its merits on 19 April 2022, while MC/SUM 902/2022 was dismissed on 26 May 2022 as no solicitors had been appointed to represent the first defendant. No appeal was lodged in respect of either of these applications. As such, the default judgment against the first defendant remained valid and enforceable.

On 6 September 2022, the second defendant failed to attend a Case Management Conference. Judgment was therefore entered for the plaintiff pursuant to O 108 r 3(7) of the Rules of Court 2014 (Cap 322, R 5, 2014 Rev Ed), in the...