Abstract:
This note discusses the House of Lords decision in National Westminster Bank plc v Spectrum Plus Ltd [2005] 2 AC 680 and the Singapore High Court decision in Cheah Geok Tuan v Lie Khin Sin [2006] 1 SLR 340 in the context of when a transaction, particularly one ostensibly involving a sale and repurchase agreement, would be characterised instead as a loan. It is suggested that that lawyers giving true sale opinions to structures that have a borrowing or lending effect must now quite often qualify those opinions or at least word them more conservatively because it is a question of fact whether a transaction is viewed as a sham or pretence. Quite often, policy considerations dictate how closely a court scrutinises the surrounding circumstances, including post-contractual evidence.