Letts Charles v Soh Kim Wat: Illegal Moneylending & Loan to Company Dispute
In a suit before the High Court of Singapore, Charles Letts claimed $338,981.74 from Soh Kim Wat, representing the balance of a $500,000 loan. Soh Kim Wat argued the loan was to LKE Electric (M) Bhd, not him personally, and that Letts was an unlicensed moneylender charging illegal interest. The court, presided over by Justice Lai Siu Chiu, dismissed Letts' claim, finding the loan was to the company and that Letts was engaged in illegal moneylending.
1. Case Overview
1.1 Court
High Court1.2 Outcome
Plaintiff's action dismissed with costs to the defendant.
1.3 Case Type
Civil
1.4 Judgment Type
Judgment reserved.
1.5 Jurisdiction
Singapore
1.6 Description
Charles Letts sued Soh Kim Wat for a loan balance. The court found the loan was to a company, and Letts was an unlicensed moneylender.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Letts Charles | Plaintiff | Individual | Claim Dismissed | Lost | |
| Soh Kim Wat (alias Soh Kim Leng) | Defendant | Individual | Judgment for Defendant | Won |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Lai Siu Chiu | Judge | Yes |
4. Counsels
4. Facts
- Charles Letts claimed Soh Kim Wat owed him $338,981.74 from a $500,000 loan made in 2000.
- Soh Kim Wat argued the loan was to LKE Electric (M) Bhd, where he was a director.
- Letts insisted on a personal guarantee from Kaare Vagner, chairman of LKE Electric (M) Bhd.
- Vagner refused to provide a personal guarantee, offering only a company guarantee.
- The loan was used to pay suppliers of LKE Electric (M) Bhd.
- LKE Electric (M) Bhd's board passed a resolution to accept the loan at 9% interest.
- LKE Electric (M) Bhd made partial repayments of the loan.
- Letts had previously made loans to Soh Kim Wat and his companies, charging interest.
5. Formal Citations
- Letts Charles v Soh Kim Wat (alias Soh Kim Leng), Suit 455/2006, [2007] SGHC 202
6. Timeline
| Date | Event |
|---|---|
| Loan of $500,000 made by Charles Letts to Soh Kim Wat | |
| Soh Kim Wat approached Charles Letts for a loan | |
| Fax from Soh Kim Wat to Charles Letts acknowledging the loan | |
| Charles Letts received handwritten undertaking from Kaare Vagner | |
| Email from Kaare Vagner to Soh Kim Wat regarding personal guarantee | |
| Kaare Vagner gave another handwritten undertaking to Charles Letts | |
| Company's board of directors passed a circular resolution to accept the plaintiff’s loan | |
| Company wrote to the plaintiff offering to settle the loan in five installments | |
| Company remitted $92,250.92 to the plaintiff’s Singapore bank account | |
| Company remitted $69,188.19 to the plaintiff’s Singapore bank account | |
| Plaintiff’s solicitors made a demand on the defendant for payment | |
| Plaintiff commenced action to recover the balance of the loan | |
| Judgment reserved |
7. Legal Issues
- Illegal Moneylending
- Outcome: The court found that the plaintiff was engaged in illegal moneylending, rendering the claim unenforceable.
- Category: Substantive
- Loan to Company vs. Loan to Individual
- Outcome: The court found that the loan was extended to the company, not the defendant personally.
- Category: Substantive
- Interest Charges
- Outcome: The court found that the plaintiff charged interest on the loan, further supporting the finding of illegal moneylending.
- Category: Substantive
8. Remedies Sought
- Monetary Damages
9. Cause of Actions
- Breach of Contract
- Recovery of Debt
10. Practice Areas
- Commercial Litigation
11. Industries
- Finance
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Subramaniam Dhanapakiam v Ghaanthimathi | High Court | Yes | [1991] SLR 432 | Singapore | Cited for the test of system and continuity to determine moneylending activities. |
| Bhagwandas v Brookes Exim Pte Ltd | High Court | Yes | [1994] 2 SLR 431 | Singapore | Cited for the test of system and continuity to determine moneylending activities. |
| Bhagwandas v Brookes Exim Pte Ltd | Court of Appeal | Yes | [1995] 2 SLR 13 | Singapore | Cited for affirming the test of system and continuity to determine moneylending activities. |
| Pankaj s/o Dhirajlal v Donald McArthy Trading Pte Ltd | High Court | Yes | [2006] 4 SLR 79 | Singapore | Cited for the test of system and continuity to determine moneylending activities. |
| Pankaj s/o Dhirajlal v Donald McArthy Trading Pte Ltd | Court of Appeal | Yes | [2007] 2 SLR 321 | Singapore | Cited for affirming the test of system and continuity to determine moneylending activities. |
| Loraine Esme Osman v Elders Finance Asia Ltd | Court of Appeal | Yes | [1992] 1 SLR 369 | Singapore | Cited for the principle that the Moneylenders Act was intended to apply to persons carrying on the business of moneylending as a business. |
| Litchfield v Dreyfus | King's Bench Division | Yes | [1906] 1 KB 584 | England and Wales | Cited for the principle that the Moneylenders Act was intended to apply to persons carrying on the business of moneylending as a business. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Moneylenders Act (Cap 188, 1985 Rev Ed) | Singapore |
| Evidence Act (Cap 97, 1997 Rev Ed) | Singapore |
| Malaysian Income Tax Act 1967 (Act 53) | Malaysia |
| Income Tax Act (Cap 134, 2004 Rev Ed) | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Moneylending
- Personal Guarantee
- Company Loan
- Interest Rate
- Unlicensed Moneylender
- LKE Electric (M) Bhd
- Undertaking
- Circular Resolution
15.2 Keywords
- moneylender
- loan
- interest
- company
- Singapore
- High Court
17. Areas of Law
| Area Name | Relevance Score |
|---|---|
| Money and moneylenders | 95 |
| Contract Law | 30 |
| Banking and Finance | 25 |
16. Subjects
- Credit and Security
- Moneylending
- Contract Law