D2D Bizhub Sdn. Bhd. v Alpha Fintech Sdn. Bhd. (WA-22NCC-641-09/2024)

ALPHA FINTECH SDN. BHD. (Company No: 202001002827

KOH CHEE SIONG (NRIC No: 840621-04-5247) ...DEFENDANTS (IN THE ORIGINAL CLAIM)

ALPHA FINTECH SDN. BHD. [Company No: 202001002827 (1359146-P)]

KOH CHEE SIONG (NRIC No: 840621-04-5247) ...PLAINTIFFS

D2D BIZHUB SDN. BHD. [Company No: 201801026349 (1288370-P)]

TEOH WENG BOON (NRIC No: 810704-08-5175) [Trading as sole proprietor under the name and style “GEFORCE HARDWARE WHOLESALE” (Business Registration No: 202103290059/JR0127236-K)]

JACK LEE KIM CHUAN (NRIC No: 860831-35-5727) [Trading as sole proprietor under the name and style “GOLDEN EMPIRE MANAGEMENT” (Business Registration No: 201603140271/002538520-M)] ...DEFENDANTS (IN THE COUNTERCLAIM) GROUNDS OF JUDGMENT (Enclosure 33) Introduction [1] Before the court is the application of D2D Bizhub Sdn. Bhd., the Plaintiff in the Original Action and First Defendant in the Counterclaim (“the Applicant”) in Enclosure 33 to strike out the Counterclaim of Alpha Fintech Sdn. Bhd. and Koh Chee Siong, the Defendants in the Original Action and Plaintiffs in the Counterclaim (“the Respondents”) pursuant to Order 18 Rule 19(1)(a), (b), (c), and (d) of the Rules of Court 2012 (“ROC 2012”). [2] This application was heard together with Enclosure 35, which is the application by the Second Defendant in Counterclaim, Teoh Weng Boon (“Teoh”), to strike out the counterclaim against it on similar grounds. Having considered the materials before me, including the affidavits, written submissions, and authorities cited by the parties, I allowed both applications. These grounds of judgment deal specifically with the application in Enclosure 33 concerning the Applicant, D2d Bizhub Sdn Bhd. Background Facts [3] The Applicant is a company incorporated in Malaysia. The First Respondent, Alpha Fintech Sdn. Bhd. (“Alpha Fintech”), is also a company incorporated in Malaysia. The Second Respondent, Koh Chee Siong (“Koh”), is a director of Alpha Fintech. [4] Between May 2023 and July 2023, Alpha Fintech obtained and received loans from the Applicant totalling RM1,250,000.00. The loans were disbursed in three tranches: RM285,000.00 on 29.5.2023; RM650,000.00 on 13.7.2023; and RM315,000.00 on 13.7.2023. The first two tranches were transferred through the bank account of Geforce Hardware Wholesale at the Applicant’s request to Geforce Hardware Wholesale. The third tranche was paid in cash. Geforce Hardware Wholesale is a sole proprietorship owned and operated by Teoh, the 2nd Defendant in the Counterclaim. [5] On 11.12.2023, a Settlement Agreement (“the Settlement Agreement”) was executed between the Applicant and Alpha Fintech. Under this Settlement Agreement, Alpha Fintech acknowledged receiving a friendly loan of RM1,250,000.00 from the Applicant and agreed to repay this amount in four monthly instalments from 15.12.2023 to 15.4.2024. The first three instalments were to be RM300,000.00 each, with the final instalment being RM350,000.00. The Settlement Agreement provided that in the event Alpha Fintech failed to pay any instalment, it would be liable to pay late payment compensation at the rate of 18% per annum on the loan amount from the date the instalment was due until full settlement. [6] On the same date, 11.12.2023, a Letter of Guarantee was executed by Koh. Through this Letter of Guarantee, Koh agreed to indemnify the Applicant against losses, injuries, costs, and expenses incurred by the Applicant due to Alpha Fintech’s default or failure to perform or comply with the Settlement Agreement. [7] Alpha Fintech and Koh failed to make any payments under the Settlement Agreement. By letter dated 21.1.2024, the Applicant’s solicitors terminated the Settlement Agreement and demanded payment. [8] Alpha Fintech responded through letters dated 24.1.2024 and 6.2.2024, requesting more time to make payment. These letters acknowledged the existence of an obligation to pay the Applicant. [9] Subsequently, the Applicant filed Civil Suit No. WA-22NCC- 98-02/2024 in this court against the Respondents. The parties then reached a settlement through an exchange of letters between their respective solicitors. Under this settlement, documented in the Applicant’s solicitor’s letter dated 19.4.2024 and the Respondents’ solicitor’s reply dated 30.4.2024, the Respondents agreed to pay RM1,250,000.00 in eight instalments, with late payment compensation reduced to 8% per annum. [10] The first post-dated cheque for the first instalment of RM28,000.00 dated 30.5.2024 was dishonoured when presented for payment. Consequently, the Respondents defaulted on all subsequent instalments, including the second instalment of RM600,000.00 due on or before 30.6.2024. By letter dated 16.7.2024, the Applicant’s solicitors gave the Respondents a two-week grace period to settle all outstanding arrears, failing which the Applicant reserved the right to proceed with the matter. [11] The Respondents failed to pay within the two-week period. The Applicant then filed the present action on 20.9.2024, claiming RM1,250,000.00 together with late payment compensation at 8% per annum from 31.5.2024 until full payment, costs on a solicitor-client basis, and interest at 8% per annum on costs. [12] On 12.11.2024, the Respondents filed their Defence and Counterclaim. In their pleadings, the Respondents denied that they had entered into any loan agreement with the Applicant. Instead, they alleged that they dealt with one “Zack Low” from Vanta Credit Sdn. Bhd. The Respondents alleged that the Applicant, together with Teoh (trading as Geforce Hardware Wholesale) and Jack Lee Kim Chuan (trading as Golden Empire Management) (“Jack Lee”), were involved in illegal moneylending activities, charging exorbitant interest rates of 5% per month. [13] The Respondents pleaded that between 15.6.2023 and 24.11.2023, they had paid RM323,000.00 to Golden Empire Management, which they claimed represented illegal interest charges. Based on these allegations, the Respondents filed a Counterclaim against the Applicant, Teoh, and Jack Lee, seeking declarations that the loan agreement was void and that they had no indebtedness to the Applicant, repayment of RM323,000.00, general damages, exemplary damages, aggravated damages, interest at 5% per annum, and costs on a solicitor-client basis. [14] On 18.4.2025, this court delivered judgment in the Applicant’s application for summary judgment under Enclosure 7. The court found that the Respondents had failed to raise any triable issues and granted summary judgment in favour of the Applicant for RM1,250,000.00 together with late payment compensation and costs. [15] The Applicant then filed the present application on 2.5.2025 to strike out the Respondents’ Counterclaim under Order 18 Rule 19(1)(a), (b), (c), and (d) of the ROC 2012. The Application in Enclosure 33 [16] Enclosure 33 is the Applicant’s application to strike out the Respondents’ Counterclaim. The application is made under Order 18 rule 19(1)(a), (b), (c), and (d) of the ROC 2012 and/or the court’s inherent jurisdiction, seeking an order that the Counterclaim be struck out, together with costs and such further relief as the court deems suitable. [17] The grounds for the application are that the Respondents’ Counterclaim discloses no reasonable cause of action, is scandalous, frivolous or vexatious, may prejudice, embarrass or delay the fair trial of the action, and is otherwise an abuse of the process of the court. The Applicant argues that the Counterclaim essentially recasts the same allegations that were already examined and rejected during earlier Order 14 summary judgment proceedings in Enclosure 7 concerning the loan transaction, and that the Respondents cannot recover through a counterclaim sums they have already been ordered to pay, nor can they convert a failed defence into a viable counterclaim by rephrasing the same allegations. Respective Parties’ Submissions The Applicant’s Submissions [18] The Applicant submits that the Respondents’ Counterclaim should be struck out on multiple grounds. First, the Applicant argues that all issues raised in the Counterclaim had already been examined and rejected by this court in the earlier summary judgment proceedings under Enclosure 7. The Applicant relies on the principle established in Nakano (M’sia) Sdn Bhd v Oriental Wealth (M) Sdn Bhd [2002] MLJU 379 (HC) that issues already scrutinised and found to be without merit cannot become triable simply by recasting them as a counterclaim. [19] Second, the Applicant contends that the Counterclaim discloses no reasonable cause of action. The Applicant submits that even if the allegations of illegal moneylending were true, the Respondents would not be entitled to any relief based on the principle that “loss lies where it falls”. The Applicant argues that the Respondents, having participated in an allegedly illegal transaction, cannot now seek the court’s assistance to recover moneys paid. [20] Third, the Applicant argues that the Counterclaim is scandalous, frivolous, and vexatious. The Applicant points out that the Respondents’ allegations of conspiracy, fraud, and illegal moneylending were only raised after the commencement of legal action, despite multiple prior opportunities to do so, such as during the execution of the Settlement Agreement in December 2023 or in their subsequent letters of acknowledgment in early 2024. The timing suggests these allegations are merely an afterthought and a subterfuge designed to avoid their payment obligations. Furthermore, as these issues were already scrutinised and found to be meritless by this court during the summary judgment proceedings, re-pleading them in a Counterclaim constitutes an abuse of process. [21] Fourth, the Applicant submits that the Counterclaim will prejudice, embarrass, and delay the fair trial of the action. The Applicant notes that the substantive dispute regarding the loan has already been determined through the summary judgment. Allowing the Counterclaim to proceed would simply be a waste of time and costs for all parties and the court. [22] Finally, the Applicant contends that the Counterclaim constitutes an abuse of process. The Applicant argues that the real purpose of the Counterclaim is not to obtain legitimate relief but to relitigate issues that have already been decided and to delay or avoid payment of the judgment debt. The Respondents’ Submissions [23] The Respondents oppose the striking out application on several grounds. First, they argue that the Counterclaim raises different issues from those considered in the summary judgment proceedings. They contend that the summary judgment focused on whether there were triable issues in relation to the Applicant’s claim for RM1,250,000.00, whereas the Counterclaim seeks recovery of RM323,000.00 allegedly paid as illegal interest to different entities. [24] Second, the Respondents submit that the Counterclaim against Teoh and Jack Lee was not addressed in the summary judgment proceedings, as these individuals were not parties to that application. The Respondents argue that viva voce evidence from these individuals would be necessary to determine the full extent of the alleged conspiracy and illegal moneylending scheme. [25] Third, the Respondents challenge the technical validity of the striking out application itself, arguing that the Applicant failed to specify which particular limb under Order 18 Rule 19(1) ROC 2012 it was relying upon. The Respondents cite Syarikat Faiza Sdn Bhd & Anor v Faiz Sdn Bhd & Anor [2016] MLJU 1046 (HC) for the proposition that an applicant must be specific about which sub-paragraph it is relying on, as Order 18 Rule 19(2) prohibits the admission of evidence under sub-paragraph (1)(a). [26] Fourth, the Respondents argue that their Counterclaim raises triable issues that require full examination at trial. They maintain that there are factual disputes regarding whether the Applicant was engaged in illegal moneylending, whether exorbitant interest rates were charged, and whether they made payments totalling RM323,000.00 to entities connected to the Applicant. [27] Fifth, the Respondents contend that they are not complicit in any alleged illegality. They submit that the principle of “loss lies where it falls” is a remedial principle, not a determination of guilt or complicity. They rely on Worldwide Platinum Records Sdn Bhd v Tan Siew Cheng [2025] 1 MLJ 487 (CA) to argue that the burden lies on the Applicant to prove the validity and legality of the loan agreement. The Legal Framework for Striking Out [28] Order 18 Rule 19(1) of the ROC 2012 provides as follows: “The Court may at any stage of the proceedings order to be struck out or amended any pleading or the endorsement, of any writ in the action, or anything in any pleading or in the endorsement, on the ground that –

it discloses no reasonable cause of action or defence, as the case may be;

it is scandalous, frivolous or vexatious;

it may prejudice, embarrass or delay the fair trial of the action; or

it is otherwise an abuse of the process of the Court, and may order the action to be stayed or dismissed or judgment to be entered accordingly, as the case may be.” [29] Order 18 Rule 19(2) provides that no evidence shall be admissible on an application under subparagraph (1)(a). Order 18 Rule 19(3) provides that this rule shall, as far as applicable, apply to an originating summons as if it were a pleading. [30] Order 92 Rule 4 of the ROC 2012 provides that for the removal of doubt it is hereby declared that nothing in these Rules shall be deemed to limit or affect the inherent powers of the court to make any order as may be necessary to prevent injustice or to prevent an abuse of the process of the court. [31] The principles governing striking out applications are well-established. In Bandar Builder Sdn Bhd & Ors v United Malayan Banking Corporation Bhd [1993] 3 MLJ 36, the Supreme Court held that it is only in plain and obvious cases that recourse should be had to the summary process under Order 18 Rule 19(1), and the summary procedure can only be adopted when it can clearly be seen that a claim or answer is on the face of it obviously unsustainable. The court cannot exercise this power by a minute examination of the documents and facts of the case in order to see whether the party has a cause of action or a defence. So long as the pleadings disclosed some cause of action or raised some question fit to be decided by the judge, the mere fact that the case was weak and not likely to succeed at the trial was no ground for the pleadings to be struck out. [32] In Tan Wei Hong & Ors v Malaysia Airlines Bhd & Other Appeals [2018] 9 CLJ 425, the Federal Court, referring to the principles in Bandar Builder, held that the principles upon which the court acts in exercising its power under any of the four limbs of Order 18 Rule 19(1) are well settled. The tests for striking out applications include: a) it is only in plain and obvious cases that recourse should be had to the summary process under the rule; b) this summary procedure can only be adopted when it can be clearly seen that a claim or answer is on the face of it obviously unsustainable; c) it cannot be exercised by a minute examination of the documents and facts of the case; d) if there is a point of law which requires serious discussion, an objection should be taken on the pleadings and the point set down for argument under Order 33 Rule 3; and e) the court must be satisfied that there is no reasonable cause of action or that the claims are frivolous or vexatious or that the defences raised are not arguable. [33] A striking out order should not be made summarily by the court if there is an issue of law that requires lengthy argument and mature consideration. It should also not be made if there is an issue of fact that is capable of resolution only after taking viva voce evidence during trial: Lai Yoke Ngan & Anor v Chin Teck Kwee & Anor [1997] 3 CLJ 305; [1997] 2 MLJ 565 (Federal Court). [34] However, the words “plain and obvious” also need clarification. In Tuan Haji Ishak Bin Ismail & Ors v Leong Hup Holdings Bhd and Other Appeals [1996] 1 MLJ 661, the Federal Court stated that what may be “plain and obvious” to a specialist in a particular field may not be so to another who does not have this specialised knowledge. The standard is an objective one and implies that the perception required is that of a person who has the required expertise. [35] In Abdul Latif Bin Puteh & Ors v Pentadbir Tanah Jajahan Pasir Mas & Anor [2023] 1 MLJ 330, the Federal Court held that the law on striking out is settled: so long as there is a reasonable cause of action, the matter should proceed to full trial. Analysis and Findings of the Court Whether the Applicant’s Application is Technically Defective [36] I shall first address the Respondents’ preliminary objection that the Applicant’s application is defective for failing to specify which particular limb of Order 18 Rule 19(1) ROC 2012 it is relying upon. [37] The Respondents submit that the word “or” appearing between sub-paragraphs (a), (b), (c), and (d) in Order 18 Rule 19(1) ROC 2012 should be read disjunctively and not conjunctively. They argue that an applicant must specify which particular limb it is relying on because if the applicant relies on sub-paragraph (a), it cannot depend on affidavit evidence due to the bar imposed by Order 18 Rule 19(2). The Respondents cite Syarikat Faiza and Sambu (M) Sdn. Bhd. v Stone World Sdn. Bhd. & Anor [1997] 1 CLJ 775 in support of this contention. [38] The Applicant submits that it has clearly stated in Enclosure 33 that it relies on Order 18 Rule 19(1)(a), (b), (c), and (d) of the ROC 2012. The Applicant argues that an applicant for striking out under Order 18 Rule 19 can rely on any one or more than one of the sub-paragraphs (a) to (d). The Applicant cites See Thong & Anor v Saw Beng Chong [2013] 3 MLJ 235, where the Court of Appeal held that there is no authority requiring that an applicant cannot rely on more than one sub-paragraph simultaneously, so long as the specific limbs relied upon are clearly stated. [39] I find that the Applicant’s application is not defective. The Applicant has expressly stated in its Notice of Application that it applies under Order 18 Rule 19(1)(a), (b), (c), and (d) ROC

This is a clear specification of the limbs relied upon. [40] While it is true that the word “or” in Order 18 Rule 19(1) should generally be read disjunctively, as held in Sambu, this does not mean that an applicant cannot rely on multiple limbs simultaneously. The Court of Appeal in See Thong has made it clear that an applicant can rely on any one or more of the sub-paragraphs, provided the specific limbs are identified. [41] In the present case, the Applicant has specifically identified all four limbs. The court is therefore able to consider the application under each limb separately and determine whether the Counterclaim satisfies the requirements for striking out under any of these grounds. [42] The concern raised in Syarikat Faiza regarding the evidential bar under Order 18 Rule 19(2) is noted. However, this bar only applies to applications under sub-paragraph (a). Where an applicant relies on sub-paragraphs (b), (c), or (d), affidavit evidence is admissible. In the present case, since the Applicant has also relied on sub-paragraphs (b), (c), and (d), the court is entitled to consider the affidavit evidence filed in support of the application insofar as it relates to those limbs. [43] Accordingly, I reject the Respondents’ preliminary objection and proceed to consider the substantive merits of the striking out application. Whether Issues in the Counterclaim Have Already Been Decided [44] I now turn to consider whether the issues raised in the Respondents’ Counterclaim have already been examined and decided by this court in the earlier summary judgment proceedings under Enclosure 7. [45] The Applicant submits that all the fundamental issues underlying the Respondents’ Counterclaim were thoroughly examined and rejected in the summary judgment proceedings. The Applicant points out that in those proceedings, the Respondents raised identical allegations of illegal moneylending, exorbitant interest rates, lack of direct payment from the Applicant, alleged dealings with “Zack Low” from Vanta Credit Sdn. Bhd., and claims to have paid RM323,000.00 to Golden Empire Management. The court examined all these allegations in the Enclosure 7 proceedings and found they did not raise any triable issues. [46] The Respondents contend that the Counterclaim raises different issues from those considered in the summary judgment application. They argue that the summary judgment was based on a threshold test of whether there were triable issues in relation to the Applicant’s claim, not a substantive determination of the Counterclaim’s merits. The Respondents maintain that the Counterclaim is an independent cause of action seeking different relief against different parties. [47] The Respondents emphasise that the alleged RM323,000.00 in illegal interest payments was not the subject of the summary judgment proceedings. They also point out that Teoh and Jack Lee were not parties to the summary judgment application, and therefore no determination was made regarding the allegations against them. The Respondents argue that viva voce evidence from these individuals would be necessary to determine the full extent of the transactions. [48] Having carefully reviewed the grounds of judgment in the summary judgment proceedings, I find that all the fundamental issues raised in the Respondents’ Counterclaim were indeed thoroughly examined and rejected by this court. [49] At paragraphs [47] to [54] of the Enclosure 7 Grounds of Judgment dated 8.7.2025, this court addressed the issue of the identity of the lender and the loan amount. The court noted in paragraph [48] that the Respondents had argued “that there is a genuine dispute regarding the identity of the lender and the loan amount. They claim that they did not receive any loans directly from the Plaintiff but from GeForce Hardware Wholesale. The Defendants specifically allege that they dealt with one ‘Zack Low’ who they claim was from Vanta Credit Sdn Bhd, and not with the Plaintiff.” [50] After considering the evidence, this court held at paragraph [49]: “I have carefully considered the evidence before me and find that there are no triable issues concerning the identity of the lender or the loan amount.” The court found at paragraph [50] that “The Settlement Agreement, which was signed by both the First Defendant and the Second Defendant as guarantor, clearly identifies the Plaintiff as the lender and the loan amount as RM1,250,000.00. This is a formal legal document that was voluntarily entered into by the parties.” [51] Significantly, at paragraphs [55] to [59], this court specifically addressed the Respondents’ allegations concerning the allegedly paid to Golden Empire Management. The court noted at paragraph [56] that “The Defendants claim that they have already repaid approximately to Golden Empire Management, which they allege the Plaintiff instructed them to pay. More specifically, the Defendants allege that one ‘Zack Low,’ whom they claim to have dealt with instead of the Plaintiff, instructed them to make these payments to Golden Empire Management.” [52] This court found at paragraph [57]: “I find that there are no triable issues concerning the alleged repayments. The Defendants have not provided any evidence to show that the Plaintiff instructed them to make payments to Golden Empire Management or that any payments allegedly made to this entity were in relation to the loan from the Plaintiff. There is no documentary evidence establishing any connection between the Plaintiff and ‘Zack Low’ or Vanta Credit Sdn Bhd, or authorising ‘Zack Low’ to collect payments on behalf of the Plaintiff.” [53] The court further stated at paragraph [58]: “The mere assertion that payments were made to Golden Empire Management is insufficient to establish a triable issue without any evidence linking these payments to the loan from the Plaintiff. The Defendants have not produced any receipts, acknowledgements, or other documents from the Plaintiff confirming that payments made to Golden Empire Management were to be treated as repayments of the loan.” [54] Most tellingly, at paragraph [59], this court observed: “In fact, the Settlement Agreement, which was entered into in December 2023, acknowledged the full loan amount of RM1,250,000.00 as being due and payable. If the Defendants had made any repayments prior to this date, one would expect the Settlement Agreement to reflect a reduced amount. The fact that it does not suggests that no repayments had been made or acknowledged by the Plaintiff.” [55] At paragraphs [71] to [80] of the Enclosure 7 grounds, this court examined the allegations of illegal moneylending and exorbitant interest rates. At paragraph [73], the court found: “I have carefully considered the evidence before me and find that there are no triable issues concerning the alleged illegality.” The court concluded at paragraph [83]: “The Defendants’ allegations of duress and illegality are not supported by any credible evidence and appear to be afterthoughts, raised only to avoid their payment obligations. Their claim to have made repayments to Golden Empire Management is similarly unsupported by any evidence linking these alleged payments to the loan from the Plaintiff.” [56] The principle established in Nakano is directly applicable to the present case. In that case, the High Court held that when issues have been raised and dealt with in summary judgment proceedings, and the court has carefully scrutinised all the affidavits and relevant documents and come to the conclusion that the counterclaim was frivolous, untenable or lacking in good faith, “by any stretch of imagination, the same counterclaim could not now become triable at this stage.” [57] Just as in Nakano, the issues raised in the Respondents’ Counterclaim were all examined and found to be without merit in the summary judgment proceedings. The Respondents cannot now convert these same failed defences into a viable counterclaim by simply rephrasing the allegations. [58] The Respondents’ argument that the Counterclaim is different because it seeks RM323,000.00 rather than defending against the claim for RM1,250,000.00 is unpersuasive. What matters is not the quantum claimed but the factual and legal foundation of the claim. The Respondents’ Counterclaim is entirely premised on the same factual allegations that were examined and rejected in the summary judgment: that the loan arrangement was illegal, that exorbitant interest of 5% per month was charged, that payments were made to Golden Empire Management pursuant to instructions from “Zack Low”, and that the Applicant was engaged in unlicensed moneylending. All of these allegations were thoroughly considered and rejected by this court in the Enclosure 7 grounds. [59] The fact that Teoh and Jack Lee were not parties to the summary judgment proceedings does not assist the Respondents. The fundamental issues in this case, whether the Applicant engaged in illegal moneylending, whether the loan transaction involved exorbitant interest rates, whether the Respondents dealt with “Zack Low” instead of the Applicant, and whether payments of RM323,000.00 were made to Golden Empire Management in connection with the loan, were all thoroughly examined and rejected in the summary judgment. The involvement of Teoh and Jack Lee is merely peripheral to these central issues. Moreover, as I shall explain below, the allegations against these individuals are bare and lacking in particulars. Whether the Counterclaim Discloses a Reasonable Cause of Action [60] The Applicant submits that even if the court were to accept all the allegations in the Counterclaim as true, the Respondents have no right to recover the RM323,000.00 they claim to have paid as interest. The Applicant argues that if the loan transaction was indeed illegal as alleged, the principle of “loss lies where it falls” applies. The court will not assist parties who come before it with unclean hands to recover money paid under an illegal transaction. [61] The Applicant contends that the Respondents’ own pleadings show they knowingly and voluntarily entered into the alleged loan arrangements. They agreed to borrow money at 5% monthly interest, made payments as instructed, and signed the Settlement Agreement without protest. The Respondents cannot now claim the benefit of illegality when they themselves participated in the alleged illegal transaction. [62] The Applicant argues that allowing recovery would legitimise illegal moneylending by permitting borrowers to recover interest payments made under illegal loans. This would encourage illegal moneylending rather than deter it. [63] The Respondents argue that the Applicant has misunderstood the “loss lies where it falls” principle. They submit that this principle is a remedial doctrine applied when a contract is void ab initio due to illegality, but it does not automatically determine whether a party is “complicit” or guilty of wrongdoing. [64] The Respondents contend that they have successfully discharged their evidential burden of proving illegality by questioning the Applicant on the illegal features of the transaction. When the Applicant could not satisfactorily explain the nature of the transaction, the burden shifted to the Applicant to prove the transaction was legal. [65] The Respondents submit that they should not be deemed “complicit” merely because they participated in a transaction that was subsequently found to be illegal. The burden of proving that a moneylending transaction is legal rests on the lender, not the borrower. [66] The Respondents argue that the undisputed fact is that they have actually paid RM323,000.00 between 15.6.2023 and 24.11.2023 to the account of Golden Empire Management as requested by the Applicant. Whether there was an illegal loan agreement and whether there were repayments stands as a triable issue. [67] I find that the Respondents’ Counterclaim discloses no reasonable cause of action and is liable to be struck out on this ground. [68] The principle that “loss lies where it falls” when an agreement is found to be illegal is well established. In Triple Zest Trading & Suppliers v Applied Business Technologies Sdn. Bhd. [2023] 6 MLJ 818, the Federal Court held: “The trite principle was that a loss should lie where it falls when an agreement was found to be illegal... The court would not assist those who came before it with unclean hands and the remedy of restitution under s 66 of the CA would not avail such litigants. The remedy under s 66 was only available where the contract was discovered to be void or when it became void and not where it was void ab initio as was the case with the loan agreement in the instant case.” [69] The Federal Court further observed that the disturbing precedent of allowing recovery of the principal sum would legitimise illegal moneylending: “If the court were to lend a helping hand to a person who charged exorbitant interest to claim back the principal amount lent, it would create a fertile breeding ground for illegal moneylenders aka ‘Ah Long’ because in the event the borrower did not repay, the principal loan sum was guaranteed to be recoverable through the court process. ‘Ah Longs’ would have nothing to lose.” [70] The same principle applies with equal force to borrowers seeking to recover interest payments allegedly made under an illegal transaction. To allow such recovery would indirectly enforce the illegal loan. This was made clear by the Court of Appeal in Mahmood bin Ooyub v Li Chee Loong [2020] 6 MLJ 755, where the court stated: “Indeed to allow even the lenders to claim the principal would be to stultify the public policy behind the Moneylenders Act 1951. It would be to negate all the efforts put in place by Parliament to try to contain the menace of illegal moneylending with its horror stories of being stripped bare to one’s tunic.” [71] The Court of Appeal cited with approval the House of Lords decision in Boissevain v Weil [1950] AC 327, which held that to allow a claim in restitution upon a finding of illegality would be to indirectly allow an enforcement of an illegal loan. Lord Radcliffe stated at page 341: “If this claim based on unjust enrichment were a valid one, the court would be enforcing on the respondent just the exchange and just the liability, without her promise, which the Defence Regulation has said that she is not to undertake by her promise. A court that extended a remedy in such circumstances would merit rather to be blamed for stultifying the law than to be applauded for extending it.” [72] The Respondents’ reliance on Worldwide Platinum Records Sdn. Bhd. v Tan Sew Cheng [2025] 1 MLJ 487 (Court of Appeal) is misplaced. That case dealt with the burden of proof in establishing illegality, not with whether recovery is permitted once illegality is established. The case confirms that when a defendant successfully discharges the evidential burden of proving illegality, the burden shifts to the plaintiff to prove the transaction was legal. However, it does not stand for the proposition that a borrower who participated in an illegal transaction can recover payments made under that transaction. [73] Even accepting the Respondents’ allegations as true, they cannot escape the fact that they knowingly and voluntarily participated in the alleged illegal transaction. Their own pleadings demonstrate this. They pleaded that they were offered loan terms containing interest elements and agreed to accept those loans and pay the interest. They made payments totalling RM323,000.00 over several months from 15.6.2023 to 24.11.2023. They entered into the Settlement Agreement on 11.12.2023 acknowledging the debt. They entered into a second settlement in April 2024. At no point until after they defaulted did they raise any objection to the alleged illegality. [74] The principle applicable in such cases was established in Chew Yee Hui v Tan Siew Nee [2020] 1 LNS 136 (affirmed by the Court of Appeal in Tan Siew Nee v Chiang Dyi Woei [2022] 1 LNS 2170). In that case, the High Court found that despite the transactions being illegal, the plaintiff’s claims had to be dismissed because: “She entered into those transactions knowingly, willingly and voluntarily and in my view, had abetted [the other parties] in executing Plan B... After weighing and considering both these issues, I am of the view that the loss will have to lie where it falls. I have reached this conclusion after considering the public interest in the integrity of the legal system; the proportionality of the outcome; the conduct of all parties to this action; the need to bring closure to the dispute; and above all, to demonstrate strong disapproval, condemnation and denunciation of these acts.” [75] On appeal, the Court of Appeal affirmed this approach, holding at paragraph [35]: “The learned Judicial Commissioner found that the Borrower/Vendor entered into those transactions knowingly, willingly and voluntarily and had abetted the other two in respect of these impugned transactions. The learned Judicial Commissioner was of the view that despite having the power to adopt a flexible approach to the question of reliefs, on the facts it would be disproportionate and unjust to grant any form of monetary relief to the Borrower/Vendor. Further, and since the houses had already been transferred to Miss Chew, the ‘loss should lie where it falls’.” [76] The facts in the present case are materially similar. The Respondents, by their own pleadings, knowingly entered into loan arrangements carrying 5% monthly interest. They made interest payments over several months without protest. They signed a Settlement Agreement acknowledging the debt without raising any issue of illegality. They even entered into a second settlement in April 2024. These facts demonstrate knowing, willing, and voluntary participation in the alleged illegal transaction. [77] The Respondents cannot now convert these payments into a recoverable claim merely by alleging that the transaction was illegal. To allow such recovery would be to permit parties to participate in illegal transactions, enjoy their benefits, and then recover their payments when it becomes convenient to do so. This would stultify the very purpose of the Moneylenders Act 1951. [78] I therefore find that even taking all the allegations in the Counterclaim as true, the Respondents have no reasonable cause of action. The principle that “loss lies where it falls” bars their claim for recovery of the RM323,000.00 allegedly paid under an illegal transaction in which they knowingly, willingly, and voluntarily participated. Counterclaim against Teoh and Jack Lee Not Addressed in Summary Judgment [79] The Respondents submit that the Counterclaim cannot be determined without viva voce evidence from Teoh and Jack Lee to establish the amounts allegedly given to and repaid by Alpha Fintech. They argue that allegations against these individuals were not substantively considered during the Applicant’s summary judgment application, as they were not parties to that application. The Respondents contend that the summary judgment only applied a threshold test for triable issues in the Original Claim and did not determine the Counterclaim, which they maintain is an independent cause of action warranting a full trial. [80] The Applicant submits that the Respondents’ own pleadings show that the Applicant was not directly involved in any alleged illegal loan or interest payments, and therefore no reasonable cause of action exists against the Applicant. The Respondents pleaded that they knowingly accepted loans with interest and did not allege deception or misrepresentation. The Applicant argues that the issues now raised in the Counterclaim were fully examined and rejected in the summary judgment proceedings, and that the Counterclaim is an impermissible attempt to re-litigate matters already decided, amounting to an abuse of process. [81] I have considered the submissions of both parties on this issue. The central question is whether viva voce evidence from Teoh and Jack Lee is necessary to determine the full extent of the alleged conspiracy and illegal moneylending scheme, and whether the fact that these individuals were not parties to the summary judgment application means that the issues concerning them require a full trial. [82] The Respondents’ argument that viva voce evidence is necessary proceeds on the premise that because Teoh and Jack Lee were not parties to the summary judgment application, the allegations against them have not been properly scrutinised or determined. The Respondents contend that the amounts allegedly given to and repaid by Alpha Fintech can only be determined through oral evidence from these witnesses. This submission, whilst superficially attractive, fails to address the fundamental nature of the striking out jurisdiction under Order 18 rule 19 of the ROC

[83] In the present case, I find that the Counterclaim against Teoh consists of bare allegations lacking in material particulars. The pleadings do not set out with any specificity what role Teoh is alleged to have played in the alleged conspiracy, what representations he is alleged to have made to the Respondents, what contractual relationship existed between him and the Respondents, or what amounts he personally received or paid. The Counterclaim simply names him as a party without articulating a cause of action against him with sufficient clarity or particularity. [84] More fundamentally, the evidence before the court demonstrates that Teoh acted merely as a financial conduit for the Applicant. There is no evidence of any direct contractual relationship between Teoh and the Respondents. The Respondents’ own pleadings acknowledge that the loan agreements and settlement agreements were entered into between the Applicant and the Respondents, with no mention of Teoh as a contracting party. [85] The Respondents’ argument that Teoh’s evidence is necessary to determine the amounts given and repaid fundamentally misconceives the nature of this striking out application. The question before the court is not whether viva voce evidence would be helpful or illuminating, but whether the Counterclaim as pleaded discloses a reasonable cause of action against Teoh. A claim cannot be saved from striking out merely because oral evidence might conceivably fill in the gaps left by inadequate pleadings. The pleadings must themselves disclose a cause of action, and bare allegations against a party who appears to have been a mere conduit, without any contractual relationship with the claimant, do not constitute a reasonable cause of action. [86] Furthermore, the Respondents’ submission that the issues concerning Teoh and Jack Lee were not considered in the summary judgment proceedings cannot stand scrutiny. Whilst it is true that these individuals were not named as parties to the summary judgment application, the substance of the allegations against them was very much before the court in those proceedings. The Respondents’ defence to the summary judgment application raised the same allegations of illegal moneylending, conspiracy, fraud, and the payment of RM323,000.00 in interest to third parties including “Golden Empire Management”. These are the very same allegations that now form the basis of the Counterclaim. [87] As elaborated earlier, in my earlier judgment on the summary judgment application in Enclosure 7, I made specific findings on these allegations. I found at paragraph [83] that “the Defendants’ allegations of duress and illegality are not supported by any credible evidence and appear to be afterthoughts, raised only to avoid their payment obligations. Their claim to have made repayments to Golden Empire Management is similarly unsupported by any evidence linking these alleged payments to the loan from the Plaintiff.” I also found at paragraph [24] that “the Plaintiff contends that there is no evidence to demonstrate that it instructed the Defendants to pay interest to any third party, including Golden Empire Management. The Plaintiff submits that the Defendants’ allegations of illegality are unsupported by any credible evidence and are merely afterthoughts to avoid repayment of the loan.” [88] These findings were made after a careful consideration of all the evidence and submissions before the court in the summary judgment proceedings. The fact that Teoh and Jack Lee were not formally named as parties to that application does not detract from the reality that the court examined and rejected the very allegations that the Respondents now seek to advance against them in the Counterclaim. The substance of the allegations was scrutinised and found wanting, and the Respondents cannot circumvent that adverse finding by simply adding these individuals as defendants to a counterclaim raising the same discredited allegations. [89] The principle in Nakano applies. Where allegations forming the basis of a counterclaim have already been scrutinised and found untenable, they cannot later be revived as triable issues by recasting them against additional parties. [90] In the present case, the issues that form the basis of the Counterclaim, namely, the allegations of illegal moneylending, fraud, conspiracy, and the payment of RM323,000.00 to third parties, were all raised in the summary judgment proceedings and were all examined and rejected by this court. The fact that the Counterclaim now seeks to pursue these claims against additional defendants (Teoh and Jack Lee) does not change the fundamental reality that the underlying factual and legal basis for these claims has already been found to be unsupportable. [91] I accept the Applicant’s submission that the Respondents’ attempt to characterise the summary judgment as merely applying a “threshold test” is an attempt to minimise the significance of the findings made in that judgment. The summary judgment proceedings involved a thorough examination of the evidence and the legal issues. The court did not merely find that there were triable issues; rather, the court made positive findings that the Respondents’ allegations of illegality, fraud, and conspiracy were afterthoughts unsupported by credible evidence. These were substantive findings on the merits of the allegations, not merely procedural rulings on whether issues were triable. [92] The Respondents’ further submission that the Counterclaim is an independent cause of action with its own distinct causes and reliefs does not assist them. Whilst it is true that a counterclaim is technically a separate proceeding, it cannot be used as a device to circumvent adverse findings made in related proceedings concerning the same subject matter. To allow the Respondents to proceed with a counterclaim based on allegations that have already been found to be without merit would be to permit an abuse of the court’s process and would make a mockery of the principles of finality in litigation. [93] With specific regard to Teoh, I find that the Respondents have failed to plead any facts that would establish a cause of action against him. The allegations are entirely general and lack the particularity required for a viable claim. There is no pleading of any contract between Teoh and the Respondents, no pleading of any specific representations made by him, no pleading of any amounts directly received by him from the Respondents, and no pleading of how he personally benefited from the alleged conspiracy. The Counterclaim simply names him as a defendant without articulating what he is alleged to have done wrong. [94] The evidence suggests that Teoh was merely acting as a financial intermediary or conduit for Alpha Fintech. Such a role, even if established, does not in itself give rise to a cause of action. There must be some wrongful act, some breach of duty, some misrepresentation, or some other legally recognised basis for liability. The Respondents have not pleaded any such basis with sufficient particularity. [95] The same analysis applies with equal force to Jack Lee, who is alleged to trade as “Golden Empire Management”. The Respondents allege that they made payments totalling RM323,000.00 to Golden Empire Management, but they have not pleaded any contractual or other legal relationship between themselves and Jack Lee that would give rise to a right to recover those payments. They have not pleaded that Jack Lee made any representations to them, that he owed them any duty, or that he was unjustly enriched at their expense. The claim against him is, like the claim against Teoh, a bare allegation without sufficient particularity. [96] In my judgment, this is precisely the type of case where the summary procedure under Order 18 rule 19 ROC 2012 should be invoked. The Counterclaim against Teoh and Jack Lee is, on the face of it, obviously unsustainable. It discloses no reasonable cause of action, it is based on allegations that have already been examined and rejected, and it constitutes an abuse of the court’s process. The fact that viva voce evidence might conceivably shed light on some aspects of the transactions does not save the Counterclaim from being struck out when it is fundamentally flawed in its conception and pleading. [97] For all these reasons, I find that viva voce evidence from Teoh and Jack Lee is not necessary to determine the Counterclaim. The Counterclaim is liable to be struck out on the basis that it discloses no reasonable cause of action, it is scandalous, frivolous, and vexatious, it would prejudice, embarrass, and delay the fair trial of the action, and it is an abuse of the court’s process. The fact that these individuals were not parties to the summary judgment application does not alter this conclusion, as the substance of the allegations against them was examined and rejected in those proceedings, and the Counterclaim as pleaded fails to articulate any viable cause of action against them with the necessary particularity. Whether the Counterclaim is Scandalous, Frivolous, or Vexatious [98] The Applicant submits that the Counterclaim is scandalous, frivolous, and vexatious. The Applicant argues that the allegations in the Counterclaim are wholly unnecessary and irrelevant, having already been examined and rejected in the summary judgment proceedings. The Applicant contends that the Respondents are attempting to relitigate issues that have already been determined, which constitutes an abuse of process. [99] The Applicant points out that the Counterclaim was only filed after the Respondents defaulted on the second settlement agreement in April 2024. The timing demonstrates that the Counterclaim is not a genuine claim but rather an afterthought designed to avoid their payment obligations. [100] The Applicant argues that the Counterclaim is obviously unsustainable given that the Respondents cannot recover payments allegedly made under an illegal transaction in which they knowingly participated. There is no credible documentary evidence supporting the allegations of illegal moneylending, exorbitant interest rates, or dealings with “Zack Low” from Vanta Credit Sdn. Bhd. [101] The Respondents submit that the application to strike out should only be exercised in plain and obvious cases. They argue that there are triable issues that require full examination, particularly concerning the alleged payments of RM323,000.00 to Golden Empire Management and the involvement of Teoh, who was not a party to the summary judgment proceedings. [102] The Respondents contend that the court should be cautious in striking out pleadings and should only do so when the case is clearly and obviously unsustainable. They maintain that the Counterclaim raises genuine disputes that merit trial, including the legitimacy of the loan transaction and the alleged illegal moneylending activities. [103] I find that the Counterclaim is scandalous, frivolous, and vexatious within the meaning of Order 18 rule 19(1)(b) of the ROC 2012. [104] In Indah Desa Saujana Corporation Sdn. Bhd. & Ors v James Foong Cheng Yuen & Anor [2008] 2 MLJ 11, the Court of Appeal explained the meaning of these terms at paragraphs [72]-[73]: “In the context of O 18 r 19(1)(b), ‘scandalous’ is taken to mean wholly unnecessary and irrelevant and not just unpleasant allegations... ‘Frivolous’ or ‘vexatious’ means that the pleadings are obviously unsustainable.” [105] The Counterclaim is scandalous because it is wholly unnecessary and irrelevant. The substantive dispute between the parties has already been determined by this court in the summary judgment proceedings. All the fundamental allegations now raised in the Counterclaim which are illegal moneylending, exorbitant interest rates, dealings with “Zack Low” and payments to Golden Empire Management were thoroughly examined and found to lack merit. To allow these same issues to be relitigated under the guise of a counterclaim serves no legitimate purpose. [106] The Counterclaim is frivolous and vexatious because it is obviously unsustainable. As I have found above, the principle that “loss lies where it falls” bars the Respondents from recovering payments allegedly made under an illegal transaction in which they knowingly participated. The Counterclaim has no prospects of success regardless of what evidence might be adduced at trial. In Sim Kooi Soon v Malaysia Airlines System [2010] 9 CLJ 924, the Court of Appeal held that it is an abuse of process for a party to relitigate issues after they have been tried and decided. The court stated: “…it is an abuse of the process of the court for a party to re-litigate the issue of fraud after it has been tried and decided... It is also an abuse of the process of the court and the claim will be struck out if it is groundless and unfounded in the sense that the plaintiff does not know any of the facts to support it.” [107] The timing of the Counterclaim further demonstrates its vexatious nature. The Respondents only raised these allegations after: (i) defaulting on the second settlement agreement of April 2024; and (ii) being faced with legal action for the recovery of the debt. Throughout the earlier proceedings, including their correspondence in January and February 2024 and the first settlement in December 2023, the Respondents made no mention of illegal moneylending or the alleged RM323,000.00 in interest payments. [108] Furthermore, these same allegations were already scrutinised and found to be meritless by this court during the summary judgment proceedings on 18.4.2025. The allegations are obviously unsustainable and appear to be nothing more than a belated attempt to avoid their payment obligations. Whether the Counterclaim Would Prejudice, Embarrass or Delay the Fair Trial [109] I also find that the Counterclaim would prejudice, embarrass, and delay the fair trial of the action within the meaning of Order 18 Rule 19(1)(c) of the ROC 2012. [110] The substantive issue in this case that is whether the Respondents are liable to pay RM1,250,000.00 to the Applicant has already been determined through the summary judgment. Allowing the Counterclaim to proceed would simply delay the enforcement of that judgment and would waste the time and resources of all parties and the court. [111] Moreover, the Counterclaim introduces multiple additional parties (Teoh and Jack Lee) and raises numerous allegations of conspiracy, fraud, and illegal moneylending that would require extensive investigation and trial. All of this would be for no purpose, given that the Counterclaim is bound to fail for the reasons I have set out above. [112] The Counterclaim would therefore cause significant delay and embarrassment without serving any legitimate purpose. This satisfies the requirements of Order 18 Rule 19(1)(c) ROC 2012. Conclusion and Order [113] For the reasons set out above, I find that the Respondents’ Counterclaim should be struck out under all four limbs of Order 18 Rule 19(1) of the ROC 2012. [114] The Counterclaim discloses no reasonable cause of action because even if all the allegations were true, the Respondents would be barred from recovery by the principle that “loss lies where it falls” when a transaction is tainted with illegality. [115] The Counterclaim is scandalous, frivolous, and vexatious because it seeks to relitigate issues that have already been examined and rejected in the summary judgment proceedings, and because the allegations appear to be an afterthought designed to avoid payment rather than genuine claims based on actual wrongdoing. [116] The Counterclaim would prejudice, embarrass, and delay the fair trial of the action by requiring extensive investigation and trial of allegations that are bound to fail and that serve no legitimate purpose. [117] The Counterclaim is an abuse of process because its real purpose is to relitigate decided issues and to delay or avoid enforcement of the summary judgment. [118] The key principle from Nakano applies with full force to this case: issues already scrutinised and found meritless cannot become triable by recasting them as a counterclaim. This court in the earlier Order 14 summary judgment proceedings examined the RM323,000.00 transaction and the surrounding allegations. The Respondents failed to produce credible evidence disputing the genuineness of the loan from the Applicant. The allegations of fraud, conspiracy, and illegal moneylending were found to be without merit and appeared to be afterthoughts made only after the Respondents were ordered to pay. [119] The Respondents cannot recover via counterclaim sums allegedly paid under a transaction that they themselves allege was illegal and void ab initio. Nor can they convert a failed defence into a viable counterclaim by rephrasing the same allegations and adding additional parties who played only peripheral roles. [120] Accordingly, I make the following orders: a) The Counterclaim of the Respondents filed on 12.11.2024 is hereby struck out. b) The Respondents shall pay to the Applicant costs of RM3,000.00 subject to allocatur. 29 December 2025 ATAN MUSTAFFA YUSSOF AHMAD Judge Kuala Lumpur High Court (Commercial Division) Counsel: For the Plaintiff/1st Defendant in the Counterclaim: Loke Yuen Hong with BL Chong (Messrs HL Foo & Co)