Ochroid Trading v Chua Siok Lui: Unenforceability of Loan Agreements due to Illegal Moneylending
In Suit No 238 of 2014, the High Court of Singapore heard a claim by Ochroid Trading Limited and Ole Prytz Rasmussen against Chua Siok Lui and Sim Eng Tong for breach of contract, unjust enrichment, fraudulent misrepresentation, and conspiracy to defraud, arising from a series of agreements. The plaintiffs alleged that they invested in the defendants’ wholesale food business and advanced money that was not repaid. The defendants argued that the agreements were unenforceable loans due to unlicensed moneylending. The court dismissed the plaintiffs' claims, finding the agreements to be unenforceable under the Moneylenders Act.
1. Case Overview
1.1 Court
High Court of the Republic of Singapore1.2 Outcome
Plaintiffs' claim dismissed
1.3 Case Type
Civil
1.4 Judgment Type
Judgment
1.5 Jurisdiction
Singapore
1.6 Description
The High Court found loan agreements between Ochroid Trading and Chua Siok Lui unenforceable due to unlicensed moneylending, dismissing claims of breach of contract, unjust enrichment, fraudulent misrepresentation, and conspiracy to defraud.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Sim Eng Tong | Defendant | Individual | Judgment for Defendant | Won | |
| Ochroid Trading Limited (formerly known as Orion Trading Limited) | Plaintiff | Corporation | Claim Dismissed | Lost | |
| Ole Prytz Rasmussen | Plaintiff | Individual | Claim Dismissed | Lost | |
| Chua Siok Lui (trading as VIE Import & Export) | Defendant | Individual | Judgment for Defendant | Won |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Audrey Lim | Judicial Commissioner | Yes |
4. Counsels
4. Facts
- Plaintiffs claimed breach of contract, unjust enrichment, fraudulent misrepresentation, and conspiracy to defraud.
- The claims arose from 76 agreements between December 2007 and March 2008.
- The agreements were between the first plaintiff and the first defendant (Orion Agreements) and the second plaintiff and the first defendant (Ole Agreements).
- Plaintiffs alleged a joint venture to invest in the defendants’ wholesale food business.
- Plaintiffs claimed $10,253,845, including $8,909,500 advanced and $1,344,345 in profit.
- Defendants argued the agreements were unenforceable loans due to unlicensed moneylending.
- Defendants also denied misrepresentation or conspiracy, claiming plaintiffs knew the agreements were improper.
5. Formal Citations
- Ochroid Trading Ltd and another v Chua Siok Lui (trading as VIE Import & Export) and another, Suit No 238 of 2014, [2017] SGHC 56
6. Timeline
| Date | Event |
|---|---|
| VIE Import & Export started | |
| Orion Agreements concluded | |
| Ole Agreements concluded | |
| VIE Import & Export de-registered | |
| Suit commenced against Ms Chua | |
| Mr Sim added to the Suit as a defendant | |
| Trial began | |
| Trial continued | |
| Trial continued | |
| Judgment reserved |
7. Legal Issues
- Enforceability of Loan Agreements
- Outcome: The court held that the loan agreements were unenforceable due to unlicensed moneylending under the Moneylenders Act.
- Category: Substantive
- Sub-Issues:
- Unlicensed Moneylending
- Illegality of Contract
- Fraudulent Misrepresentation
- Outcome: The court found that the claim for fraudulent misrepresentation failed because the plaintiffs were aware of the fabricated invoices.
- Category: Substantive
- Conspiracy to Defraud
- Outcome: The court found that the claim for conspiracy to defraud failed because there was no agreement between the defendants to cause damage to the plaintiffs.
- Category: Substantive
- Unjust Enrichment
- Outcome: The court found that the claim for unjust enrichment failed as it was a backdoor attempt to enforce the illegal loan agreements.
- Category: Substantive
8. Remedies Sought
- Monetary Damages
9. Cause of Actions
- Breach of Contract
- Unjust Enrichment
- Fraudulent Misrepresentation
- Conspiracy to Defraud
10. Practice Areas
- Commercial Litigation
11. Industries
- Food Trading
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| City Hardware Pte Ltd v Kenrich Electronics Pte Ltd | High Court | Yes | [2005] 1 SLR(R) 733 | Singapore | Cited to define what constitutes lending or a loan and the court's approach to determining the true nature of a transaction. |
| E C Investment Holding Pte Ltd v Ridout Residence Pte Ltd and others and another appeal | Court of Appeal | Yes | [2012] 1 SLR 32 | Singapore | Cited for the principle that the court should look at the substance, as opposed to the form, of the transaction to determine its true nature. |
| The Law Society of Singapore v Ong Teck Ghee | Singapore Disciplinary Tribunal | Yes | [2014] SGDT 7 | Singapore | Cited for the definition of the word 'investment'. |
| Tan Sim Lay and another v Lim Kiat Seng and another | High Court | Yes | [1996] 2 SLR(R) 147 | Singapore | Cited as an example where advancements were found to be loans due to the lack of a detailed agreement and the obligation to pay regardless of profit. |
| Chow Yoong Hong v Choong Fah Rubber Manufactory | Privy Council | Yes | [1962] AC 209 | Malaysia | Cited for the principle that the court will call a transaction by its real name if the form is a sham and the parties really agreed upon a loan. |
| Sheagar s/o T M Veloo v Belfield International (Hong Kong) Ltd | Court of Appeal | Yes | [2014] 3 SLR 524 | Singapore | Cited for the principle that the MLA prohibits the business of moneylending and not the act of moneylending per se, and that the burden of proving that a lender is not an excluded moneylender falls on the borrower. |
| Lim Beng Cheng v Lim Ngee Sing | High Court | Yes | [2016] 1 SLR 524 | Singapore | Cited for the interpretation of the term 'excluded moneylender' and the test that must be satisfied for a loan to be made 'in the course of' a business. |
| Premor Ltd v Shaw Brothers (a firm) | English Court of Appeal | Yes | [1964] 1 WLR 978 | England and Wales | Cited for the principle that a loan must be associated with a transaction of the business and made with the object of promoting that business to fall within the exception for excluded moneylenders. |
| 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 tests for determining if a lender was carrying on the business of moneylending, specifically the primary test of whether there was a system and continuity in the transactions. |
| Ng Kum Peng v Public Prosecutor | High Court | Yes | [1995] 2 SLR(R) 900 | Singapore | Cited for the requirements of continuity and system in moneylending transactions. |
| Agus Anwar v Orion Oil Ltd | High Court | Yes | [2010] SGHC 6 | Singapore | Cited for adopting the principles in Ng Kum Peng v Public Prosecutor regarding continuity and system in moneylending transactions. |
| Ang Eng Thong v Lee Kiam Hong | High Court | Yes | [1998] SGHC 64 | Singapore | Cited for the principle that loans to one individual or a restricted class do not negate the finding of a moneylending business so long as there is a system and continuity. |
| Pankaj s/o Dhirajlal v Donald McArthy Trading Pte Ltd and others | High Court | Yes | [2006] 4 SLR(R) 79 | Singapore | Cited for the principle that a person who lends on a commercial basis to even only one regular borrower whom he trusts can nevertheless be carrying on moneylending as a business. |
| Bhagwandas Naraindas v Brooks Exim Pte Ltd | High Court | Yes | [1994] 1 SLR(R) 932 | Singapore | Cited for the principle that one solitary transaction can, if the facts so justify, amount to a moneylending transaction. |
| Edgelow v MacElwee | King's Bench Division | Yes | [1918] 1 KB 205 | England and Wales | Cited for the principle that occasional loans to a friend or acquaintance are not considered moneylending. |
| Panatron Pte Ltd and another v Lee Cheow Lee and another | High Court | Yes | [2001] 2 SLR(R) 435 | Singapore | Cited for the essential elements of fraudulent misrepresentation. |
| Belfield International (Hong Kong) Ltd v Sheagar s/o T M Veloo | High Court | Yes | [2014] 1 SLR 24 | Singapore | Cited for the principle that the definition of 'business' in s 2 of the BRA requires a degree of system and continuity. |
| Federal Lands Commissioner v Benfort Enterprise and another and other actions | High Court | Yes | [1997] 3 SLR(R) 895 | Singapore | Cited for the mischief which the BRA seeks to prevent, which is to ensure that those who do business in Singapore disclose their particulars. |
| Aqua Art Pte Ltd v Goodman Development (S) Pte Ltd | High Court | Yes | [2011] 2 SLR 865 | Singapore | Cited regarding unjust enrichment claims in the context of illegal loan agreements. |
13. Applicable Rules
| Rule Name |
|---|
| Rules of Court (Cap 322, R 5, 2014 Rev Ed) |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Moneylenders Act (Cap 188, 1985 Rev Ed) | Singapore |
| Business Registration Act (Cap 32, 2004 Rev Ed) | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Moneylending
- Loan Agreements
- Unjust Enrichment
- Fraudulent Misrepresentation
- Conspiracy to Defraud
- VIE Import & Export
- Orion Agreements
- Ole Agreements
- Unlicensed Moneylending
15.2 Keywords
- Moneylending
- Loan
- Contract
- Singapore
- High Court
- Civil Case
17. Areas of Law
16. Subjects
- Contract Law
- Moneylending Law