Signed in haste; repented at leisure: Tze Hwai Loh came to regret a $1.09 million contract buying his business partner out of their Christchurch PappaRich restaurant. His claim to have signed under duress failed when ordered to pay up.
The High Court was told Mr Loh teamed up with investor Peter Kuok in late 2020 to set up a PappaRich restaurant in Christchurch’s Riccarton Westfield Mall at a time when the Malaysian restaurant chain was expanding in New Zealand. Mr Loh was described as holding the master franchise for PappaRich in New Zealand.
They set up a joint venture company for the Riccarton business with Mr Kuok’s Baba Nyonya Ltd eventually holding a 51 per cent stake, Mr Loh the balance.
It was not a success. Mr Kuok wanted out. A deal was struck in early 2023 having Mr Loh buy out Mr Kuok for $1.09 million.
Manner of payment shifted. Initially, the $1.09 million was to be settled by Mr Loh transferring two Melbourne properties to Mr Kuok, with a cash adjustment. That did not happen. Instead, it was agreed Mr Kuok would leave in vendor finance for the full amount of $1.09 million, repayment to be made on sale of the Melbourne properties with weekly repayments of $10,000 in the interim.
A failure to keep up weekly payments amounted to default. The loan fell due, triggering penalty interest at eighteen per cent, compounding daily.
Mr Loh resisted repayment. Mr Kuok put him under duress by constantly demanding he sign the loan contract, leaving no room for negotiations, he said. Mr Loh claimed to have not understood his repayment obligations due to the haste in which he signed.
Duress requires proof of illegitimate pressure to sign, or overbearing circumstances forcing signature.
There was no evidence of duress, Associate Judge Sussock said.
Mr Loh was aware of the Riccarton restaurant’s financial position before signing. He received professional advice about terms of the loan contract.
The contract was enforceable.
Mr Loh was ordered to pay $1.13 million, being amount of the loan plus default interest accruing to date of the court hearing. He was also ordered to pay $104,500 for guaranteed debts Mr Kuok was required to clear. As part of the loan contract, Mr Loh had agreed to use his best endeavours to have Mr Kuok released from guarantees previously agreed with restaurant suppliers.
The Riccarton restaurant is currently in liquidation.
Baba Nyonya Ltd v. Loh – High Court (2.07.24)
24.169