An unnamed woman can now take possession of a River Valley condominium, after the High Court invalidated a $5,000 loan with a 791.61 percent interest rate, along with its caveat.
According to media reports, the $2 million condo unit was awarded to the 41-year-old senior executive in a 2012 divorce settlement. However, she failed to transfer the flat to her name as her ex-husband took out a $5,000 loan from Prosper Credit, which put a caveat on the property.
This means the condo cannot be transferred or sold until the debt was paid. The plaintiff’s ex-husband was declared bankrupt in March 2013 and he failed to fully settle his loans.
The lender’s attorney, S. R. Shanmugam argued that the ex-husband had consented to the caveat, giving Prosper Credit an interest in the property.
However, Justice Choo Han Teck noted that the main issue is the loan’s exorbitant interest rate.
Under the Moneylenders Act, the court can “re-open” a transaction if the interest rate of a secured loan surpasses 13 percent per annum and the debtor earns less than $30,000 per year.
“I am of the view that the interest charged is exorbitant and not just substantially unfair but grossly unfair,” he said.
The ex-husband’s annual income last year is unclear but “the rate of interest in this case is undoubtedly excessive within the meaning of (the Act),” added the judge.