Mak Chik Lun and Others v Loh Kim Her and Others and Another Action [2003] SGHC 220

Case Details

• Citation: [2003] SGHC 220
• Court: High Court of the Republic of Singapore
• Decision Date: 25 September 2003
• Coram: Belinda Ang Saw Ean J
• Case Number: Suit 203/2002/H; 249/2002/F
• Hearing Date(s): 23 September 2003
• Counsel for Claimants: K Shanmugam SC, Christopher Anand Daniel and Esther Ling (Allen and Gledhill)
• Counsel for Respondent: Hri Kumar and Wilson Wong (Drew and Napier)
• Practice Areas: Credit and Security; Money and moneylenders; Statutory Interpretation

Summary

The judgment in Mak Chik Lun and Others v Loh Kim Her and Others and Another Action [2003] SGHC 220 serves as a definitive authority on the territorial limitations of the Moneylenders Act (Cap 188, 1985 Rev Ed). The core of the dispute centered on whether a lender’s activities outside the jurisdiction of Singapore could be admitted as evidence to establish that the lender was "carrying on the business of moneylending" within the meaning of the Act. This determination is critical because, under s 15 of the Act, any contract for the repayment of money lent by an unlicensed moneylender is rendered unenforceable, providing a powerful, and often absolute, defense to borrowers seeking to avoid repayment obligations.

The High Court, presided over by Belinda Ang Saw Ean J, held that the Moneylenders Act is strictly concerned with moneylending activities occurring within Singapore. The court applied the long-standing canon of statutory construction that domestic legislation is presumed not to apply to foreigners in respect of acts committed outside the sovereign’s dominions. Consequently, the court ruled that evidence of purported loan transactions in China and other foreign jurisdictions was irrelevant to the determination of whether a party was an unlicensed moneylender in Singapore. This decision effectively prevents defendants from embarking on "fishing expeditions" into a plaintiff's global financial dealings to construct a defense under the Act.

Doctrinally, the case reinforces the "mischief" rule in statutory interpretation. Justice Ang identified that the specific mischief the Act seeks to arrest is the unregulated business of moneylending within the domestic Singaporean market. By tethering the definition of a "moneylender" to localized activity rather than a global "status," the court ensured that the Act remains a tool for domestic regulation rather than a mechanism for extraterritorial judicial overreach. This distinction is vital for practitioners handling cross-border debt recovery and settlement agreements, as it clarifies the evidentiary boundaries of the "unlicensed moneylender" defense.

The broader significance of the ruling lies in its impact on the "system and continuity" and "ready and willing" tests used to identify moneylending businesses. The court clarified that these tests must be applied exclusively to the lender's conduct within Singapore. Even if a lender is proven to be a professional moneylender in multiple foreign jurisdictions, such a status does not automatically translate to being a "moneylender" under the Singapore Act unless the requisite system, continuity, or willingness is demonstrated through acts performed within Singapore’s borders. This provides a necessary safeguard for international investors and entities who may engage in lending activities globally but only occasional or isolated transactions in Singapore.

Timeline of Events

1. 25 January 1996: Earliest date referenced in the context of the parties' dealings and alleged historical transactions.
2. 19 March 1996: Further date associated with the background factual matrix of the dispute.
3. 6 March 1998: A significant date in the chronology of the financial relationship between the parties.
4. December 1998: The specific timeframe of the underlying loan transaction which the Defendants alleged contravened the Moneylenders Act.
5. 4 April 2001: The parties entered into a Deed of Settlement intended to resolve existing disputes.
6. 2002: Commencement of Suit No. 203 of 2002/H and Suit No. 249 of 2002/F.
7. 23 September 2003: The hearing of the Plaintiffs’ application to exclude certain affidavits of evidence-in-chief.
8. 25 September 2003: Delivery of the judgment by Belinda Ang Saw Ean J.

What Were the Facts of This Case?

The litigation comprised two consolidated actions: Suit No. 203 of 2002 and Suit No. 249 of 2002. In the primary action, the Plaintiffs (Mak Chik Lun and others) sought to enforce the terms of a Deed of Settlement dated 4 April 2001. The Plaintiffs alleged that the Defendants had breached the terms of this Deed, which was executed to settle various outstanding financial issues between the parties. The Defendants, however, raised a fundamental challenge to the legality and enforceability of the Deed itself. They contended that the Deed of Settlement was void and unenforceable because its subject matter was inextricably linked to a loan transaction concluded in December 1998. According to the Defendants, this 1998 transaction contravened the Moneylenders Act (Cap 188, 1985 Rev Ed) because the 1st Plaintiff, Mak Chik Lun ("Mak"), was allegedly carrying on the business of moneylending without the requisite license.

To support this defense, the Defendants sought to establish that Mak was a "moneylender" within the meaning of s 2 of the Act. The Defendants’ strategy was to demonstrate that Mak’s lending activities were not isolated incidents but part of a broader, systematic business. To this end, they filed several affidavits of evidence-in-chief (AEICs) from four specific witnesses: Tam Wo Ping, Wu De Liang, Feng Gua Qi, and Chen Guo Biao. These affidavits detailed a series of purported loan transactions involving Mak and his various companies. Crucially, the loans described in these AEICs took place between 1996 and 1999 and were situated in China and Hong Kong, rather than Singapore.

The Defendants argued that these foreign transactions were essential to proving Mak’s "status" as a moneylender. They maintained that the court should look at the totality of Mak’s activities, regardless of geography, to determine if he possessed the characteristics of a person in the business of moneylending. The Defendants' position was that if Mak was shown to be a moneylender in China, that status would inform the court's assessment of his activities in Singapore, particularly the December 1998 loan. They alleged that Mak operated through companies in Hong Kong, China, and Singapore, and that the global nature of his operations was relevant to the "system and continuity" of his business.

The Plaintiffs took a different view and filed an interlocutory application to exclude the AEICs of the four witnesses. They argued that the Moneylenders Act is a territorial statute intended only to regulate the business of moneylending within Singapore. From the Plaintiffs' perspective, any evidence regarding loans made in China or Hong Kong was legally irrelevant to the question of whether Mak was an unlicensed moneylender under Singapore law. They contended that the court’s inquiry must be confined to moneylending activities occurring within the jurisdiction of Singapore. If the foreign transactions were irrelevant, the AEICs served no purpose other than to unnecessarily prolong the trial and increase costs.

The procedural history of the case involved the consolidation of the two suits and the subsequent filing of these AEICs as part of the trial preparation. The Plaintiffs' application to exclude the evidence was a strategic move to narrow the scope of the trial and eliminate what they characterized as an impermissible attempt to give the Moneylenders Act extraterritorial effect. The court was thus required to determine the threshold question of the Act's territorial scope before the trial could proceed on the merits of the moneylending defense.

What Were the Key Legal Issues?

The primary legal issue before the High Court was the territorial scope of the Moneylenders Act and the resulting relevance of foreign evidence. This issue was broken down into several specific doctrinal questions:

• Territoriality of the Moneylenders Act: Does the Act apply to moneylending activities conducted outside Singapore, or is its regulatory and prohibitive scope limited to the domestic market?
• Definition of "Moneylender" under Section 2: Is the definition of a "moneylender" in s 2 of the Act restricted to persons carrying on the business of moneylending in Singapore, or does it encompass anyone who carries on such a business anywhere in the world?
• Relevance of Foreign Transactions to the "System and Continuity" Test: Can evidence of loans made in foreign jurisdictions be used to establish the "system and continuity" required to prove that a person is carrying on the business of moneylending in Singapore?
• Relevance of Foreign Transactions to the Litchfield Test: Is evidence of a lender’s willingness to lend to "all and sundry" in foreign countries relevant to determining if they are "ready and willing" to lend in Singapore?
• Application of the Section 3 Presumption: Does the rebuttable presumption in s 3 of the Act—which presumes a person to be a moneylender if they lend a sum of money in consideration of a larger sum being repaid—apply to transactions or activities occurring outside Singapore?

These issues were framed by the tension between the Defendants' "status-based" interpretation of the Act (where a person's global identity as a moneylender is what matters) and the Plaintiffs' "activity-based" interpretation (where only the specific business conducted within Singapore is regulated). The resolution of these issues would determine the admissibility of the AEICs of Tam Wo Ping, Wu De Liang, Feng Gua Qi, and Chen Guo Biao.

How Did the Court Analyse the Issues?

The court’s analysis began with the fundamental principle of statutory construction regarding the territorial limits of legislation. Justice Belinda Ang invoked the "general canon of construction" as articulated by Lord Russell CJ in R v Jameson [1896] 2QB 425 at 430:

"…One other general canon of construction is this – …an Act will not be construed as applying to foreigners in respect to acts done by them outside the dominions of the sovereign power enacting." (at [5])

The court noted that this principle is well-established in Singapore jurisprudence, citing Public Prosecutor v Taw Cheng Kong [1998] 2 SLR 410 at 432, Public Prosecutor v Pong Tek Yin [1990] SLR 575, and Parno v SC Marine Pte Ltd [1999] 4 SLR 579. These authorities collectively support the presumption that Parliament intends its statutes to operate only within the territorial limits of the state, unless a contrary intention is clearly expressed.

Applying this to the Moneylenders Act, the court observed that the scheme of the Act is to regulate moneylending transactions in Singapore, the licensing of moneylenders, and their activities as licensed entities. The Act imposes criminal sanctions for unlicensed moneylending and provides for the unenforceability of contracts under s 15. Justice Ang concluded that the Act falls into the category of statutes that regulate activities taking place within the jurisdiction. She stated at [7]: "It is not disputed that the Act is concerned with moneylending activities in Singapore and that the residence of the moneylender is immaterial."

The court then addressed the Defendants' argument that s 2 of the Act, which defines "moneylender," is not expressly restricted to Singapore. The Defendants had relied on the absence of the words "in Singapore" in the definition to argue that the "status" of being a moneylender could be established by global activities. The court rejected this "status-based" approach, relying on Tozer Kemsley & Millbourn (A/Asia) Pty Ltd v Point [1961] NSWR 466 and Walton v Regent Insurance Ltd [1962] 79 WN 644. These Australian cases, which interpreted similar moneylending legislation, held that the "business" being regulated is the business conducted within the enacting state. Justice Ang agreed with the reasoning in Tozer Kemsley that the Act is directed at the carrying on of the business, which is a localized activity, rather than the personal status of the individual.

The court further analyzed the two primary tests for determining if a person is "carrying on the business of moneylending":

1. The "System and Continuity" Test: This test requires showing a certain degree of regularity and a series of transactions.
2. The Litchfield Test: Derived from Litchfield v Dreyfus [1906] 1 KB 584, this test asks whether the alleged moneylender is "one who is ready and willing to lend to all and sundry provided that they are from his point of view eligible."

Justice Ang held that both tests must be applied with a focus on Singapore. For the "system and continuity" test, the court must look for a system of moneylending in Singapore. For the Litchfield test, the question is whether the person is ready and willing to lend to all and sundry in Singapore. The court reasoned that the "mischief" the Act seeks to arrest is the business of moneylending in Singapore. Therefore, factors such as setting up an office in Singapore, advertising in Singapore, or having a localized system of debt collection would be relevant. Conversely, the court held at [13]:

"It seems to me that the affidavits of evidence-in-chief setting out the purported loans in China are not relevant in that they would not assist in either of the two tests mentioned."

The court also considered the s 3 presumption, which presumes a person to be a moneylender if they lend money in consideration of a larger sum being repaid. While this presumption is rebuttable, the court clarified that it only applies to transactions that fall within the scope of the Act—namely, transactions in Singapore. The court distinguished Subramaniam Dhanapakiam v Ghaanthimathi [1991] SLR 432, noting that while that case allowed for the consideration of transactions before or after the impugned loan to show system and continuity, those transactions must still be connected to the lender's activities in Singapore. The foreign loans in the present case had no such connection.

Finally, the court addressed the Defendants' contention that the 1st Plaintiff’s companies in Singapore were part of a global network. The court found that even if Mak had companies in Singapore, the evidence sought to be introduced related specifically to loans made in China. Since those China-based loans did not constitute the carrying on of a moneylending business in Singapore, they remained irrelevant. The court emphasized that the Act is not intended to police the global morals or business practices of individuals, but to regulate the domestic credit market.

What Was the Outcome?

The High Court allowed the Plaintiffs’ application to exclude the evidence. The court’s primary order was the exclusion of the affidavits of evidence-in-chief of the four witnesses: Tam Wo Ping, Wu De Liang, Feng Gua Qi, and Chen Guo Biao. The court found that the evidence contained within these affidavits, which detailed loan transactions in China, was irrelevant to the legal determination of whether the 1st Plaintiff was a "moneylender" under the Moneylenders Act of Singapore.

The operative ruling was stated at [15]:

"I allowed the Plaintiffs’ application to exclude the affidavits of evidence-in-chief of Tam Wo Ping, Wu De Liang, Feng Gua Qi and Chen Guo Biao."

In addition to the exclusion of the evidence, the court made a specific order regarding costs. Despite the Plaintiffs being the successful party in the application to exclude the evidence, the court ordered them to bear certain costs. This was recorded at [16]:

"I ordered the wasted costs and expenses of these four witnesses to be borne by the Plaintiffs on an indemnity basis."

This costs order is significant as it was made on an indemnity basis, which is a higher scale than the standard party-and-party basis. The judgment does not explicitly detail the conduct that led to this specific costs arrangement, but the order stands as a final disposition of the expenses related to the four witnesses whose evidence was deemed irrelevant and excluded from the trial. The effect of the ruling was to significantly narrow the scope of the Defendants' "unlicensed moneylender" defense, confining it to evidence of Mak's activities within the jurisdiction of Singapore.

Why Does This Case Matter?

This case is a cornerstone for understanding the territorial limits of Singapore’s regulatory statutes, particularly those with severe civil consequences like the Moneylenders Act. Its importance can be analyzed across three main dimensions: statutory interpretation, evidentiary relevance, and commercial certainty.

Firstly, the judgment reinforces the presumption against extraterritoriality. In an increasingly globalized financial world, there is often a temptation to argue that a person's "status" or "character" travels with them across borders. Mak Chik Lun firmly rejects this in the context of the Moneylenders Act. By adopting the reasoning from Tozer Kemsley, the court established that the Act regulates conduct within Singapore, not the person. This ensures that the Singapore courts do not become arbiters of foreign business activities that have no nexus to the domestic market. It places a clear boundary on the "mischief" the Act is intended to address—the protection of the Singaporean public from unregulated domestic moneylending.

Secondly, the case provides procedural and evidentiary clarity for practitioners. The "unlicensed moneylender" defense is often used as a "silver bullet" to strike down debt recovery claims. Before this judgment, there was ambiguity as to how far a defendant could go in investigating a plaintiff's global financial history to prove they were a "moneylender." This case sets a high bar for relevance: foreign transactions are generally inadmissible. This prevents trials from being derailed by extensive discovery and witness testimony regarding overseas loans that have no bearing on the Singaporean business environment. It streamlines litigation and prevents the "moneylender" defense from being used as a tool for procedural harassment through "fishing expeditions."

Thirdly, the decision promotes commercial certainty for international investors and lenders. Many high-net-worth individuals and foreign corporations engage in lending as part of their global investment strategies. If the Moneylenders Act were interpreted as a "status-based" statute, any person who is a professional lender in Hong Kong or London could potentially be classified as an "unlicensed moneylender" in Singapore for even a single, isolated loan made here. By requiring that the "system and continuity" or "readiness to lend" be demonstrated within Singapore, the court protects legitimate international commercial activity from the draconian consequences of s 15 of the Act.

Furthermore, the case clarifies the application of the s 3 presumption. By holding that the presumption only applies to transactions within the scope of the Act, the court prevents the reversal of the burden of proof from being applied to foreign acts. This maintains a fair balance in litigation, requiring the party alleging unlicensed moneylending to first establish a jurisdictional nexus before they can benefit from statutory presumptions.

In the broader landscape of Singapore law, Mak Chik Lun stands alongside cases like PP v Taw Cheng Kong as a reminder that the legislative power of the Singapore Parliament is primarily territorial. It serves as a warning to practitioners that when raising a defense under the Moneylenders Act, the focus must remain squarely on the lender's activities within the "dominions of the sovereign power enacting" the law. The indemnity costs order also serves as a cautionary tale regarding the late or improper introduction of irrelevant foreign evidence, even if the underlying legal point is ultimately won.

Practice Pointers

• Focus on Domestic Nexus: When alleging that a counterparty is an unlicensed moneylender, practitioners must focus exclusively on the lender's activities within Singapore. Evidence of foreign loans is likely to be excluded as irrelevant.
• Distinguish Status from Activity: Do not rely on a lender's "status" as a professional moneylender in other jurisdictions. The court requires proof of a "business of moneylending" conducted specifically within Singapore.
• Evidentiary Threshold for "System and Continuity": To satisfy the "system and continuity" test, look for localized indicators such as a Singapore office, local advertising, Singapore-based staff, or a pattern of multiple loans to different parties within the jurisdiction.
• Section 3 Presumption Limits: Remember that the s 3 presumption (presuming a person is a moneylender if they lend for a larger return) only applies to transactions that fall within the Act's territorial scope. It cannot be used to "bootstrap" foreign transactions into the Singapore regulatory net.
• Interlocutory Challenges to AEICs: If an opponent files AEICs detailing foreign transactions to support an MDA defense, consider an early application to exclude that evidence on the grounds of irrelevance, citing Mak Chik Lun.
• Costs Risks: Be mindful of the costs implications of introducing foreign witnesses. As seen in this case, even if an application is successful, the court may make specific wasted costs orders on an indemnity basis if the procedural handling of those witnesses is deemed improper.
• Drafting Settlement Agreements: When drafting Deeds of Settlement (like the one dated 4 April 2001 in this case), ensure that the underlying transactions are clearly documented and, where possible, fall within the exceptions provided in the Moneylenders Act (e.g., s 2(c) regarding excluded moneylenders).

Subsequent Treatment

The ratio in Mak Chik Lun—that the Moneylenders Act is concerned only with moneylending activities in Singapore—has remained a settled principle in Singapore's credit and security law. It is frequently cited in interlocutory applications where parties attempt to introduce evidence of a lender's global financial footprint. The case is recognized for its clear application of the Litchfield test within a strictly territorial framework, ensuring that the "business of moneylending" is not interpreted so broadly as to capture foreign acts. It continues to serve as the primary authority for excluding irrelevant foreign loan evidence in MDA-related disputes.

Legislation Referenced

• Moneylenders Act (Cap 188, 1985 Rev Ed), ss 2, 2(c), 3, 15

Cases Cited

• Relied on:
  • Tozer Kemsley & Millbourn (A/Asia) Pty Ltd v Point [1961] NSWR 466
  • Walton v Regent Insurance Ltd [1962] 79 WN 644
  • Public Prosecutor v Taw Cheng Kong [1998] 2 SLR 410
  • Public Prosecutor v Pong Tek Yin [1990] SLR 575
  • Parno v SC Marine Pte Ltd [1999] 4 SLR 579
  • R v Jameson [1896] 2QB 425
  • Brooks Exim Pte Ltd v Bhagwandas [1995] 2 SLR 13
  • Chellappah v Official Assignee [1970] 1 MLJ 220
  • Subramaniam Dhanapakiam v Ghaanthimathi [1991] SLR 432
  • Litchfield v Dreyfus [1906] 1 KB 584

Source Documents

• Original judgment PDF: Download (PDF, hosted on Legal Wires CDN)
• Official eLitigation record: View on elitigation.sg