TAN 

Hong Chia

Hong Chia graduated from the National University of Singapore’s Faculty of Law in 2014. He is currently attending the Preparatory Course leading to Part B of the Singapore Bar Examinations, and will be training in corporate law thereafter. The practice areas in which he is interested in include mergers and acquisitions, joint ventures, corporate finance, and private equity investments. Hong Chia’s research project with the CBFL focuses on the application of the doctrine of illegality in contract law to finance and commercial agreements, for which the certainty of enforceability is important. In particular, it will explore the ramifications of the factors-based proportionality approach articulated recently by the Court of Appeal in Ting Siew May v Boon Lay Choo [2014] SGCA 28.

The Perils of Letting an Illegal Purpose Accompany the Entering Into Of a Contract
The lower loan-to-value ratios imposed by MAS to cool the property market in 2012 reduced the amount of loan that financial institutions could lend to property buyers. While the Notice to banks imposed duties only on the financial institutions and not on its customers, the recent case of Ting Siew May v Boon Lay Choo [2014] SGCA 28 demonstrates that backdating the option to purchase in order to avoid the more stringent ratios can attract application of the doctrine of illegality. In adopting and articulating its view on the proportionality approach in dealing with contracts entered into with an unlawful purpose, the decision by the Singapore Court of Appeal has broad ramifications, in particular the enforceability of the financing package of which the contract associated with the illegality is a component. This proposed paper seeks to examine the application of the proportionality approach to the different types of situations in which an illegal purpose may accompany the entering into of a contract, and accordingly the implications for finance and commercial agreements for which the certainty of enforceability is important.