Sheagar v Belfield: Guarantee, Moneylending Act, Business Registration Act, International Comity
In Sheagar s/o T M Veloo v Belfield International (HongKong) Ltd, the Court of Appeal of Singapore dismissed an appeal against the High Court's decision in favor of Belfield International (Hongkong) Ltd. The Respondent, Belfield International (Hongkong) Ltd, claimed US$358,000 with contractual interest plus costs on an indemnity basis from the Appellant, Sheagar s/o T M Veloo, pursuant to a guarantee given by the Appellant in respect of a loan extended to Blue Sea Engineering Pte Ltd by the Respondent. The Appellant raised defenses based on illegality under the Moneylenders Act, the Business Registration Act, and the Hong Kong Money Lenders Ordinance. The Court of Appeal dismissed the appeal, finding that the Moneylenders Act did not apply, the Appellant could not rely on illegality under the Business Registration Act because it had not pleaded this, and the giving of the loans did not contravene the Hong Kong Money Lenders Ordinance.
1. Case Overview
1.1 Court
Court of Appeal1.2 Outcome
Appeal Dismissed
1.3 Case Type
Civil
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
Appeal dismissed. The Court of Appeal held that the Moneylenders Act did not apply and the appellant could not rely on illegality.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Sheagar s/o T M Veloo | Appellant | Individual | Appeal Dismissed | Lost | Foo Soon Yien, Fatima Musa |
| Belfield International (HongKong) Ltd | Respondent | Corporation | Judgment for Respondent | Won | R Dilip Kumar |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Sundaresh Menon | Chief Justice | Yes |
| Chao Hick Tin | Justice of the Court of Appeal | No |
| V K Rajah | Justice of the Court of Appeal | No |
4. Counsels
| Counsel Name | Organization |
|---|---|
| Foo Soon Yien | Bernard & Rada Law Corporation |
| Fatima Musa | Bernard & Rada Law Corporation |
| R Dilip Kumar | Gavan Law Practice LLC |
4. Facts
- The Respondent claimed US$358,000 with contractual interest plus costs on an indemnity basis from the Appellant.
- The claim was made pursuant to a guarantee given by the Appellant in respect of a loan extended to Blue Sea Engineering Pte Ltd by the Respondent.
- The Appellant raised defences based on illegality under the Moneylenders Act, the Business Registration Act and the Hong Kong Money Lenders Ordinance.
- The Appellant was the managing director of Blue Sea Engineering Pte Ltd at all material times.
- The Respondent is a company incorporated in Hong Kong and claims to be in the business of providing commodities brokerage and the structuring of trade finance services.
- The Appellant needed a loan to overcome some cash-flow problems faced by the GSH group.
- The First Loan amount of US$348,000 was paid into BSE’s bank account in Singapore.
- The Second Loan amount of US$ 358,000 was paid into BSE’s bank account in Singapore.
- The Appellant did not inform the Respondent of the sale of BSE to Holcroft Finance Corporation and his stepping down as a director of BSE.
- The First Loan, including all interest and management fees, was duly repaid in full.
- The Second Loan remained outstanding.
5. Formal Citations
- Sheagar s/o T M Veloo v Belfield International (HongKong) Ltd, Civil Appeal No 127 of 2013, [2014] SGCA 26
- Belfield International (Hong Kong) Ltd v Sheagar s/o T M Veloo, , [2014] 1 SLR 24
6. Timeline
| Date | Event |
|---|---|
| Appellant needed a loan to overcome cash-flow problems faced by the GSH group. | |
| Respondent held a directors’ meeting and passed a resolution to extend the First Loan to BSE. | |
| First Loan Agreement, First Subordination Agreement and First Deed of Guarantee were signed. | |
| First Loan amount of US$348,000 was paid into BSE’s bank account in Singapore. | |
| Appellant sought assistance to procure a further loan of US$358,000 from the Respondent. | |
| Second Loan Agreement, the Second Subordination Agreement and the Second Deed of Guarantee were signed. | |
| Second Loan amount of US$ 358,000 was paid into BSE’s bank account in Singapore. | |
| Appellant was sued in his personal capacity by another party. | |
| Appellant arranged to sell BSE to Holcroft Finance Corporation. | |
| BSE was placed in provisional liquidation. | |
| Respondent sent four letters of demand, two to BSE and two to the Appellant, in relation to the Loans. | |
| Appellant signed two letters of undertaking to fulfil his obligations under the First and Second Deeds of Guarantee. | |
| First Loan, including all interest and management fees, was duly repaid in full. | |
| Second Loan remained outstanding. | |
| Appellant asked for an extension of time to repay the principal amount of the Second Loan. | |
| Appellant met Henri and Eric to discuss the repayment of the Second Loan. | |
| Appellant’s solicitors wrote to the Respondent stating that the Appellant was seeking legal advice on the draft Third Letter of Undertaking. | |
| Appellant met with Henri and Daya again to discuss a proposed repayment plan. | |
| Respondent served a statutory demand on the Appellant. | |
| Respondent filed S 876/2011 against the Appellant. | |
| Court of Appeal dismissed the appeal. |
7. Legal Issues
- Illegality under the Moneylenders Act
- Outcome: The Court of Appeal found that the Moneylenders Act did not apply because the Respondent was an “excluded moneylender” under s 2 of that Act.
- Category: Substantive
- Illegality under the Business Registration Act
- Outcome: The Court of Appeal found that the Appellant could not rely on illegality under the Business Registration Act because it had not pleaded this.
- Category: Substantive
- Illegality under the Hong Kong Money Lenders Ordinance
- Outcome: The Court of Appeal found that the giving of the loans did not contravene the Hong Kong Money Lenders Ordinance.
- Category: Substantive
8. Remedies Sought
- Monetary Damages
- Contractual Interest
- Costs on an indemnity basis
9. Cause of Actions
- Breach of Guarantee
10. Practice Areas
- Commercial Litigation
- Appeals
- Banking Litigation
11. Industries
- Finance
- Marine
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Litchfield v Dreyfus | King's Bench Division | Yes | [1906] 1 KB 584 | England and Wales | Cited for the principle that the English legislation was intended to protect the foolish from extortionate moneylenders. |
| City Hardware Pte Ltd v Kenrich Electronics Pte Ltd | High Court | Yes | [2005] 1 SLR(R) 733 | Singapore | Cited for the description of the Moneylenders Act as social legislation designed to regulate rapacious conduct by unscrupulous unlicensed moneylenders and that the MLA prohibits the business of moneylending rather than the act of lending money. |
| Lorrain Esme Osman v Elders Finance Asia Ltd | Court of Appeal | Yes | [1992] 1 SLR(R) 50 | Singapore | Cited in support of the description of the Moneylenders Act as social legislation. |
| Donald McArthy Trading Pte Ltd and others v Pankaj s/o Dhirajlal (trading as TopBottom Impex) | High Court | Yes | [2007] 2 SLR(R) 321 | Singapore | Cited in support of the description of the Moneylenders Act as social legislation. |
| E C Investment Holding Pte Ltd v Ridout Residence Pte Ltd and another (Orion Oil Ltd and another, interveners) | High Court | Yes | [2011] 2 SLR 232 | Singapore | Cited for the principle that the MLA prohibits the business of moneylending rather than the act of lending money. |
| United Dominions Trust Ltd v Kirkwood | Court of Appeal | Yes | [1966] 2 QB 431 | England and Wales | Cited for the English position that the burden of proving that the lender is carrying on the business of moneylending falls on the borrower. |
| Austin Distributors Ltd v A H Paterson Car Sales Pty Ltd | High Court | Yes | (1941) 65 CLR 118 | Australia | Cited for the Australian position that the burden of proving that the lender is carrying on the business of moneylending falls on the borrower. |
| Chow Yoong Hong v Choong Fah Rubber Manufactory | Privy Council | Yes | [1962] AC 209 | Malaysia | Cited for the rationale behind the presumption in s 3 of the MLA. |
| Mak Chik Lun and others v Loh Kim Her and others and another action | High Court | Yes | [2003] 4 SLR(R) 338 | Singapore | Cited for the suggestion that the lender bears the burden of proving that he is an “excluded moneylender”. |
| Agus Anwar v Orion Oil Ltd | High Court | Yes | [2010] SGHC 6 | Singapore | Cited for following the approach in Mak Chik Lun that the lender bears the burden of proving that he is an “excluded moneylender”. |
| Lena Leowardi v Yeap Cheen Soo | High Court | Yes | [2014] SGHC 44 | Singapore | Cited for following the approach in Mak Chik Lun that the lender bears the burden of proving that he is an “excluded moneylender”. |
| Lapin v Heavner | Supreme Court of New South Wales | Yes | (1929) 29 SR (NSW) 514 | Australia | Cited as authority for the proposition that the burden was on the borrower to show that the lender did not come within one of the exceptions to the definition of money lender in s 3 of the Victoria Money Lenders Act. |
| Walton v Regent Insurance Ltd | Supreme Court of New South Wales | Yes | [1966] NSWR 466 | Australia | Cited for the issue of whether the onus of proving that the lender fell within an exception fell on the plaintiff borrower or the defendant lender. |
| Neptune Oil Co Pty Ltd v Fowler | Supreme Court of New South Wales | Yes | [1964] NSWR 251 | Australia | Cited for the holding that the exclusion of certain classes of persons from the definition of “Money-lender” in s 3 of the Moneylenders and Infants Loans Act was by way of proviso rather than true definitional exceptions. |
| Belfield International (Hong Kong) Ltd v Sheagar s/o T M Veloo | High Court | Yes | [2013] SGHC 206 | Singapore | The grounds for the Judge’s decision are found in this case. |
| Hadmor Productions Ltd and others v Hamilton and another | House of Lords | Yes | [1983] 1 AC 191 | United Kingdom | Cited for the general rule that the parties, and for that matter the court, are bound by the pleadings. |
| Kammins Ballrooms Co Ltd v Zenith Investments (Torquay) Ltd | House of Lords | Yes | [1971] AC 850 | United Kingdom | Cited for the observation that the term “waiver” is often used in a loose sense to describe a number of legal grounds on which a person may be precluded from asserting a right which he once possessed or from raising a particular defence to a claim against him which would otherwise have been available. |
| In re Pritchard, decd | Chancery Division | Yes | [1963] Ch 502 | England and Wales | Cited for the definition of a nullity as a step in the proceedings which was incurable by the Court and incapable of waiver by the parties. |
| Harkness v Bell’s Asbestos and Engineering Ltd | Queen's Bench Division | Yes | [1966] 2 QB 729 | England and Wales | Cited for the explanation that the new rule does away with the old distinction between nullities and irregularities. |
| Lee Hsien Loong v Singapore Democratic Party and others and another suit | Court of Appeal | Yes | [2008] 1 SLR(R) 757 | Singapore | Cited for the observation that prima facie, the Rules are meant to be complied with. |
| Roebuck v Mungovin | House of Lords | Yes | [1994] 2 AC 224 | United Kingdom | Cited for the issue of how a balance can and ought to be struck between the need to ensure compliance with the Rules and the need to ensure that objections are made in a timely manner. |
| Mercurine Pte Ltd v Canberra Developments Pte Ltd | Court of Appeal | Yes | [2008] 4 SLR(R) 907 | Singapore | Cited for the principles to be applied in the setting aside of an irregularly obtained default judgment where a defendant had been guilty of undue delay. |
| Pertamina Energy Trading Limited v Credit Suisse | Court of Appeal | Yes | [2006] 4 SLR(R) 273 | Singapore | Cited for the holding that the onus remains on the respondent (or any party for that matter) to plead its case fully and properly. |
| Wright Norman and another v Overseas-Chinese Banking Corp Ltd | Court of Appeal | Yes | [1993] 3 SLR(R) 640 | Singapore | Cited for the principle that an amendment which would enable the real issues between the parties to be tried should be allowed subject to penalties on costs and adjournment, if necessary, unless the amendment would cause injustice or injury to the opposing party which could not be compensated by costs or otherwise. |
| Review Publishing Co Ltd & Anor v Lee Hsien Loong and another appeal | Court of Appeal | Yes | [2010] 1 SLR 52 | Singapore | Cited for the principle that courts must also ensure that the party seeking to amend is not being given a second bite of the cherry. |
| Ketteman and others v Hansel Properties Ltd and others | House of Lords | Yes | [1987] 1 AC 189 | United Kingdom | Cited for the public interest that judicial proceedings be conducted efficiently and with finality. |
| Foster v Driscoll and others | King's Bench Division | Yes | [1929] 1 KB 470 | England and Wales | Cited for the principle of international comity. |
| Peh Teck Quee v Bayerische Landesbank Giroztrale | Court of Appeal | Yes | [1999] 3 SLR(R) 842 | Singapore | Cited for the acceptance of the principle of international comity. |
| Hong Kong Shanghai (Shipping) Ltd v The owners of the ship or vessel “Cavalry” (Panamanian Flag) and Ors | High Court | Yes | [1987] HKLR 287 | Hong Kong | Cited for the principle that the HKMLO is plainly directed primarily to domestic transactions. |
| China Merchants Bank v Minvest International Ltd and Anor | Unknown | Yes | [2001] HKCU 982 | Hong Kong | Cited for the approval of Cavalry. |
| Pacific Recreation Pte Ltd v S Y Technology Inc and other appeal | Court of Appeal | Yes | [2008] 2 SLR(R) 491 | Singapore | Cited for the principles as regards the admissibility of expert evidence to prove foreign law. |
13. Applicable Rules
| Rule Name |
|---|
| Rules of Court (Cap 322, R 5, 2006 Rev Ed) |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Moneylenders Act (Cap 188, Act 31 of 2008) | Singapore |
| Business Registration Act (Cap 32, 2004 Rev Ed) | Singapore |
| Securities and Futures Act (Cap. 289) | Singapore |
| Co-operative Societies Act (Cap. 62) | Singapore |
| Pawnbrokers Act (Cap. 222) | Singapore |
| Monetary Authority of Singapore Act (Cap. 186) | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Moneylender
- Excluded Moneylender
- Unlicensed Moneylender
- Guarantee
- Illegality
- International Comity
- Business Registration
- Loan Agreement
- Letter of Undertaking
15.2 Keywords
- Moneylenders Act
- Business Registration Act
- Hong Kong Money Lenders Ordinance
- Guarantee
- Illegality
- International Comity
16. Subjects
- Contract Law
- Agency Law
- Banking Law
- Business Law
- Civil Procedure
- International Law
17. Areas of Law
- Contract Law
- Agency Law
- Banking Law
- Business Law
- Civil Procedure
- International Law