NA YONG CHEN v SIOW KHIEN MENG

Case Significance

Illustrates how the law of unjust enrichment can fix a defendant with liability to repay money actually received and benefited from, notwithstanding the absence of privity of contract, and the evidential burden on a defendant to account for the use of the money once receipt is established.

This High Court decision concerns a civil appeal by a defendant against a Sessions Court judgment that, after a full trial, had allowed the plaintiff's claim with costs. The claim concerned the recovery of the outstanding balance of a loan, and the defendant sought to resist liability by raising the absence of privity of contract between the parties. The court rejected that defence. It held that the defendant could not be allowed to hide behind the issue of a lack of privity of contract in order to negate liability to refund the outstanding balance of the loan, having failed to discharge the evidential burden that lay on the defendant to account for how the money had been utilised. The governing principle was one of unjust enrichment: the defendant had enjoyed the benefit of the loan monies, and having received and had the use of that benefit, was bound to be responsible for repaying it. The absence of a direct contractual nexus did not answer a claim founded on the defendant's actual receipt and enjoyment of the money, particularly where the defendant could not show that the funds had been applied in a way that discharged the obligation to repay. On that basis the court was satisfied that the Sessions Court had been right to hold the defendant liable, and it disposed of the appeal accordingly. The court's approach shows that liability to repay does not always depend on a contract between the very parties before the court: where a person has taken and used the benefit of another's money, the law of restitution can require repayment, and it falls to that person to explain, with evidence, why the money should not be repaid. The judgment is a useful illustration of how the law of unjust enrichment can fix a defendant with liability to repay money received and benefited from, notwithstanding the absence of privity of contract, and of the evidential burden on a defendant to account for the use of money once receipt of it is established.