On unlicensed loans, litigation, and logical outcomes: part 2.¹

To recap:

VF invested $408,000 with THK. THK eventually only returned $38,000. VF sued THK.²

THK argued, unsuccessfully, that the loan agreement was unenforceable because the loan was prohibited under the Moneylenders Act 2008 ("MLA"). THK was ordered to repay VF the invested / loaned sum, plus legal costs and interest.

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I share below 2 further observations for savvy businesspeople, as a continuation from my 1st post in this series.³

2️⃣ Before bringing a claim or a defence, consider the equities of the matter.

This is not the first time I have discussed this principle, albeit in a different context.⁴

But the point is this:

Before a lawsuit even commences, consider how you plan to convince the Court that you are the good guy.

Because the practical reality is that the Court and Judges find it easier to rule in favour of the good guy.

Now, I recognise that it may not always be possible.

But at the very least - think about it, and have a plan.

In the present matter, it was THK who had asked VF for funds, which THK then failed to repay.

And when you hear that THK had tried to avoid repaying VF by arguing that VF was a "moneylender" under the MLA...

...what's your instinctive reaction?

And why should any Judge have a different instinctive reaction?

It does appear that THK did himself no favours by running this argument, and especially since the argument failed.

3️⃣ Even before bringing a claim, consider enforcement.

So since VF has succeeded in obtaining judgment against THK, surely it must only be a matter of time before VF is repaid?

Well - maybe, maybe not.

Because, as most commercially-minded lawyers will tell you, it is not always the case that the losing party will, of their own volition, make payment pursuant to a judgment.

Oftentimes, the winning party is forced to incur more costs to enforce the judgment - and with no guarantee of recovery. Where the losing party is impecunious, the winning party may end up simply throwing good money after bad.

Quite often, the party who brings the claim proceeds with enforcement action as a matter of principle, because they can't stomach the defaulting party getting off scot-free.⁵

And that's perfectly fine - respectable, even.

But just as one should find out, before stepping onto the football pitch, how long the match is expected to last, what are the pitch fees, and the consequences of winning or losing (if any)...

...litigants should know what they are in for before commencing a lawsuit, or starting to defend against one.