Man sues friend of over 20 years to recover $1.62m in interest-free loans

SINGAPORE - A renovation contractor sued his friend of more than 20 years, seeking the return of $1.62 million in what he said were interest-free loans he had made in cash without any written agreement.

However, the defendant, who works in the finance industry, said he borrowed only $550,000, was charged interest, and had repaid $1.5 million.

"This is an acrimonious dispute where the versions of events offered by both parties are wildly different," High Court judge Chan Seng Onn noted in a judgment last week.

After examining the two disparate accounts, Justice Chan came down on the side of the lender, Mr Teo Yong Soon, and ruled that he can recover $1.62 million from the borrower, Mr Kwan Yuen Heng.

The two men had been friends since 1997 and had commercial dealings with each other.

Mr Teo, whose highest education level was primary school, started work as an odd-job labourer before setting up his own business.

Mr Kwan, who has a master's degree in accountancy, engaged Mr Teo to renovate his properties: an apartment in Tanjong Rhu in 1999, an apartment in Sentosa in 2007, and a commercial unit in Alexandra Road in 2008.

In 2008, Mr Teo and his wife invested $200,000 with Mr Kwan and got back $289,350 in a year.

The two men also had an arrangement in which Mr Teo was appointed as an agent to broker property deals for Mr Kwan's clients.

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In his suit, Mr Teo contended that he extended the loans without a written agreement because he treated Mr Kwan as a "brother" and believed he was creditworthy.

Mr Teo produced bank statements showing seven cash withdrawals between Nov 13, 2014, and Oct 20, 2017.

He said Mr Kwan needed to pay investors who pulled out of the projects he was working on, employees' salaries and legal costs.

Mr Teo said he also stood as guarantor for a sum of $800,000 that Mr Kwan borrowed from loan sharks in Malaysia.

But Mr Kwan argued that any loans advanced were unenforceable because he had to pay interest and thus, Mr Teo was an unlicensed moneylender under the law.

He relied on a series of text messages to contend that Mr Teo was chasing him for interest payments.

Mr Kwan said he was forced to return the loans and interest after he rejected Mr Teo's proposed property deals. He also claimed that Mr Teo had threatened him and his family.

In his judgment, Justice Chan concluded that Mr Teo's version of events was more probable.

The judge noted that Mr Kwan had issued post-dated cash cheques for a total sum that matched the total loan quantum. This pointed towards an intended repayment or an assurance of repayment, he said.

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Justice Chan added that Mr Kwan's version of events was contradicted by his own police report against Mr Teo in June 2018. In the report, he stated that he received a total of $800,000 from Mr Teo.

Justice Chan accepted Mr Teo's explanation for the text messages - that he was only acting as a middleman between Mr Kwan and the Malaysian loan sharks.

In one message, Mr Teo told Mr Kwan: "Bro look at it... I'm putting my neck (sic) for you till today."

The judge also found that Mr Kwan had failed to show that he had made any repayments to Mr Teo.

This article was first published in The Straits Times. Permission required for reproduction.