VC George J

Shing Loong Finance Ltd was a licensed finance company incorporated and operating in Singapore. It caused the writ herein to issue. As a consequence of a scheme of arrangement and amalgamation, inter alia, the assets and rights of the company were vested in a company called Sim Lim Finance Ltd which as a result of a name change became KeppelFinance Ltd. On 23 June 1989, the plaintiffs, Shing Loong Finance Ltd, were substituted by Keppel Finance Ltd as plaintiffs. However, all reference to 'plaintiff/plaintiffs' in this judgment will be in effect a reference to Shing Loong Finance Ltd. The defendant is a citizen of Malaysia and at all relevant times was resident in Malaysia.

On or about 17 July 1985, the defendant sent by post from Malaysia, a written application addressed to the plaintiffs in Singapore applying for a loan in response to which the plaintiffs by letter dated 6 August 1985, addressed to the defendant in Malaysia, offered the defendant a loan of S$1.6m pursuant to which on the next day, 7 August 1985, the plaintiffs and the defendant executed in Singapore a written loan agreement. The amount lent pursuant to the agreement was, on the instructions of the defendant, released by the plaintiffs to one Ng Wing Fatt, a citizen of Singapore, resident in Singapore. The tenure of the loan was 12 months from first drawdown. The loan was secured by deposits from time to time of public quoted shares deposited with (and pledged in favour of) the plaintiffs in Singapore in respect of which there was a memorandum of deposit executed by the defendantin Singapore by which, inter alia, the plaintiffs were given the liberty to sell the shares if and whenthe value of the shares did not exceed 154% of the defendant's indebtedness to the plaintiffs, the proceeds of sale to be used to reduce the liability of the defendant. The defendant was however entitled to avert such sale by pledging more shares to meet the required margin or by reducing the outstanding debt. The loan agreement itself provides for the plaintiffs to enforce the security on default.

The plaintiffs had also lent money to Ng Wing Fatt, whose loan was also secured by deposits of public quoted shares. On or about 7 July 1986, the defendant assumed liability for Ng Wing Fatt's debt to the plaintiffs and the amount owing was debited to the defendant's account. The defendant was given the benefit of the security cover given by the shares deposited by Ng Wing Fatt with the plaintiffs.

Neither the plaintiffs nor the defendant had obtained the permission of the Malaysian Controller of Foreign Exchange for the loan to the defendant or for his assuming the liability of the loan to Ng Wing Fatt.

It would appear that from time to time the value of the deposited shares fell below 154% of the indebtedness but the plaintiffs did not take advantage of the said right given to them to sell the shares. It was only soon after the expiry of the 12-month tenure of the loan that the plaintiffs commenced selling the deposited shares. The amounts realized were credited to the defendant's account but there was a considerable shortfall and hence the writ. A statement of defence and counterclaim was filed. However, the plaintiffs took out an O 14 application. The learned senior assistant registrar gave leave to defend, conditional on the defendant depositing the amount claimed in court pending the trial. Both sides have appealed. The plaintiffs say that summary judgment should have been entered for the amount claimed and the defendant says that he should have been given unconditional leave to defend.

One point raised as a triable issue was based on the plaintiffs seeking default interest up to and after judgment, it being contended that the plaintiffs were only entitled to default interest up to judgment. It was also contended that the plaintiffs had, in computing default interest, charged interest upon the arrears of interest (ie interest upon interest) which it was submitted the plai