Gan Kah Loon v Tan Wei Leong (BA-12BNCC-11-08/2022)

This case concerns a matter where the Appellant/Plaintiff is alleged to have given a “friendly loan” to the Respondent/Defendant, a person the Appellant/Plaintiff had never met nor spoken to before. This led the learned Sessions Court Judge into remarking that such a friendly loan transaction caused her to “berasa hairan” as to why the Appellant/Plaintiff would agree to such a transaction.

The claim by the Appellant/Plaintiff against the Respondent/Defendant was for the return of RM380,000.00, being the balance of an alleged loan sum pursuant to an interest-free friendly loan S/N slQjYdjb80eqQDuWM8m6A **Note : Serial number will be used to verify the originality of this document via eFILING portal 2 of RM500,000.00. This claim was dismissed by the Sessions Court on 3 August, 2022, after a full trial. The Sessions Court also awarded costs of RM10,000.00 to the Respondent/Defendant.

The Appellant/Plaintiff has appealed against the decision of the Sessions Court to this Court.

The overriding issue in this appeal is whether the learned Sessions Court Judge had erred in law in evaluating the available evidence and testimonies of the witnesses before the Court.

Equally imperative is the issue of whether there existed a friendly loan transaction between the Appellant/Plaintiff and the Respondent/Defendant, as alleged by the former.

According to the Appellant/Plaintiff, the repayment terms of the supposed friendly loan are straightforward in that:

the Respondent/Defendant was to repay this friendly loan by way of thirteen (13) monthly instalments of RM40,000.00 per month; and

(ii) the repayment instalments were to commence in March 2016 and ending March 2017 with the last instalment payment in the sum of RM20,000.00. S/N slQjYdjb80eqQDuWM8m6A [7] The Appellant/Plaintiff acknowledged that the Respondent/Defendant did repay the Appellant/Plaintiff the first 3 monthly instalments of RM40,000.00 each totalling RM120,000.00. Thereafter, the Respondent/Defendant then “failed, refused and neglected to repay the remaining eleven (11) monthly instalment amounting to RM380,000.00”. [8] The Appellant/Plaintiff’s grounds of appeal against the decision of the learned Sessions Court Judge are as follows:

that the learned Sessions Court Judge failed to appreciate that there is undisputed evidence that the Respondent/Defendant has received RM500,000.00 and had repaid from his own account RM120,000.00 to the Appellant/Plaintiff;

that the learned Sessions Court Judge failed to appreciate that the Respondent/Defendant is obliged to return the monies that he has retained in the absence of evidence that it is a gift or that it need not be repaid;

that the learned Sessions Court Judge attached undue weight and/or consideration to the absence of a written loan agreement and failed to appreciate that a legally enforceable agreement need not necessarily be in writing;

that the learned Sessions Court Judge’s finding that the Appellant/Plaintiff’s cheques were issued to one Chong Bih Sing (“Bih Sing”) was contrary to both the Respondent/Defendant’s admission that he has received RM500,000.00 in his account and the documentary evidence S/N slQjYdjb80eqQDuWM8m6A admitted in the trial that took the form of cheques drawn in favour of the Respondent/Defendant;

that the learned Sessions Court Judge erred in accepting that the transactions made were between the Appellant/Plaintiff and Bih Sing as opposed to the Respondent/Defendant when such proposition was never put to the Appellant/Plaintiff at trial;

that the learned Sessions Court Judge attached undue weight to and/or was unduly concerned with the Appellant/Plaintiff not calling Bih Sing as his witness even though Bih Sing did testify at trial;

that the learned Sessions Court Judge erred in finding and giving undue weight that there was no basis for a friendly loan on account of the lack of relationship between the Appellant/Plaintiff and the Respondent/Defendant when such propositions were never put to the Appellant/Plaintiff at trial. [9] On the Respondent/Defendant’s admission of his failure to respond to the Appellant/Plaintiff’s letter of demand, the latter relied on David Wong Hon Leong v Noorazman Adnan [1996] 1 AMR 7; [1995] 4 CLJ 155; [1995] 3 MLJ 283; [1995] 1 MLRA 708 for the proposition that if there were no such friendly loan agreement, the latter ought to have responded to the letter of demand by denying the existence of such an agreement. [10] More importantly, the Appellant/Plaintiff drew this Court’s attention to a decision of the Court of Appeal in Tan Aik Teck v Tang Soon Chye [2007] 5 AMR 416; [2007] 5 CLJ 441; [2007] 6 MLJ 97; [2007] 2 MLRA 58 S/N slQjYdjb80eqQDuWM8m6A (“Tan Aik Teck”), the facts of which, the Appellant/Plaintiff submitted, are on all fours with the ones in our present case. [11] The Appellant/Plaintiff highlighted that in Tan Aik Teck

there was also an absence formal loan agreement between parties;

(ii) the plaintiff had also issued 2 cheques to the defendant;

(iii) the defendant admitted that the 2 cheques were credited into his account;

(iv) the plaintiff issued a letter of demand for the return of the loan through his solicitors;

the defendant claimed that he did not have any reason whatsoever to borrow money nor was he in need of any financial assistance at the material time;

(vi) the defendant contended that he hardly knew the plaintiff and as such the plaintiff could not be his friend and granted him the alleged friendly loan; and

(vii) both the plaintiff and the defendant have a common friend and the defendant’s request for the loan was made through this common friend. S/N slQjYdjb80eqQDuWM8m6A [12] The Court of Appeal in Tan Aik Teck held that the plaintiff had proven his claim on a balance of probabilities. On the plaintiff’s burden of proving the loan, the Court of Appeal opined as follows: [7] Since the defendant had admitted that he had received the two cheques and had credited them into his account, I am of the view that the plaintiff had discharged his burden that the money was a loan unless proven otherwise by the defendant. As such, the burden is on the defendant that the money given to him by the plaintiff was not a friendly loan. … [11] In my view, it does not matter whether the defendant was a millionaire and the plaintiff was a pauper, the undisputed facts remain that the plaintiff did issue two cheques amounting to the amount claimed to be the loan and the defendant admitted receiving those cheques and banked them into his account. As I have stated earlier, it is for the defendant to explain to the court what was the money for if it was not a friendly loan. [13] On the defendant’s submission in Tan Aik Teck’s case that the parties hardly knew each other and thus the plaintiff could not have granted the defendant a friendly loan, the clarification by the Court of Appeal on the meaning of the term “friendly loan” is most instructive. The Court of Appeal explained as follows: [12] It is clear to me that the defendant, in particular his counsel, was under the misconception what is meant by a friendly loan. A friendly loan is opposed to the normal borrowing from a moneylender or financial S/N slQjYdjb80eqQDuWM8m6A institution. A friendly loan is a loan between two persons based on trust. There may be an agreement such as an I.O.U. or security pledged to repayment but most important there will be no interest imposed. … I am of the view that the defendant was under the misconception that in order to qualify for a friendly loan, the amount advanced by the plaintiff to the defendant must be amongst friends. [14] Finally, the Appellant/Plaintiff underscored to this Court in this appeal regarding the test for intervention by an Appellate Court of a decision of a lower court, which the Appellant/Plaintiff argued, and this Court agrees, is settled law. This Court was referred to cases such as Lee Ing Chin @ Lee Teck Seng & Ors v Gan Yook Chin & Anor [2003] 2 AMR 357; [2003] 2 CLJ 19; [2003] 2 MLJ 9; [2003] 1 MLRA 95 and Gan Yook Chin (P) v Lee Ing Chin @ Lee Teck Seng [2004] 6 AMR 781; [2004] 4 CLJ 309; [2005] 2 MLJ 1; [2004] 2 MLRA 1. [15] Based on the settled principle that an appellate court will not intervene unless it was shown that the trial court was plainly wrong, or where there had been no or insufficient judicial appreciation of the evidence, the Appellant/Plaintiff submitted that the learned Sessions Court Judge was “plainly wrong” in her findings and committed errors of law and misappreciation of facts. [16] On the other hand, the Respondent/Defendant averred, inter alia, that: • the Appellant/Plaintiff and the Respondent/Defendant are total strangers to one another; S/N slQjYdjb80eqQDuWM8m6A • there is no documentary proof of the purportedly friendly loan; • the cheque for the sum of RM500,000.00 was issued in favour of the Respondent/Defendant at the behest of Bih Sing, a personal friend of the Appellant/Plaintiff, without any reference to the Respondent/Defendant and/or verification; • the Appellant/Plaintiff has confirmed that he has had a personal relationship with Bih Sing for many years prior to this transaction and together they have been involved in the money lending business; • the Respondent/Defendant is from Sabah but instead of handing over the cheque to the Respondent/Defendant, the Appellant/Plaintiff directly banked the payment into the Respondent/Defendant’s account in Maybank, which branch was in Medan Tunku, Kuala Lumpur, controlled by Bih Sing; and • both the Appellant/Plaintiff and Bih Sing have confirmed that the Maybank account was completely controlled by Bih Sing and this had not been challenged and/or disputed by the Appellant/Plaintiff. [17] Crucially, the Respondent/Defendant maintained that the monies were meant for a pyramid scheme, in a company known as GM Friday Services Sdn Bhd and handled by Bih Sing. Most importantly, the Respondent/Defendant submitted that it was a transaction between the Appellant /Plaintiff and Bih Sing. S/N slQjYdjb80eqQDuWM8m6A Decision of this Court [18] This Court has examined the cause papers and grounds raised by the parties and is guided by the principles of law relating to appellate intervention. [19] Based on the authority of the Court of Appeal decision in Tan Aik Teck, the fact that a lender and a borrower may not be friends does not negate the fact that a friendly loan may still have been given by the former to the latter. As explained by the Court of Appeal, a friendly loan is one that can be distinguished from those of normal borrowings from a licensed moneylender or a financial institution. The distinguishing feature is that no interest is imposed. However, the Court of Appeal in Tan Aik Teck did also say that a friendly loan is a loan between two persons “based on trust” and “there may be an agreement such as an I.O.U. or security pledged to repayment”. [20] The “mystery” surrounding the circumstances as to why a person of the knowledge and standing such as the Appellant/Plaintiff would trust the Respondent/Defendant and make payments via two cheques amounting to a total of RM500,000.00 into the latter’s account will be unraveled when one considers the role played by a gentleman whose name has been repeatedly mentioned by the parties, that is, Bih Sing. Despite having been alleged by the parties as having played a significant role in this entire transaction, Bih Sing had remained quiet – at least until he testified on behalf of the Respondent/Defendant. S/N slQjYdjb80eqQDuWM8m6A [21] To be fair to Bih Sing, he had remained silent because he was neither added as a defendant nor as a third party by the Appellant/Plaintiff and the Respondent/Defendant respectively. [22] The involvement of Bih Sing in this entire episode of events leading to the filing of the present Suit in the Session Court by the Appellant/Plaintiff against the Respondent/Defendant, and the further appeal to this Court, is crucial in assisting us to determine the true intentions of the parties and nature of this transaction. As acknowledged by the Appellant/Respondent, Bih Sing is the Appellant/Plaintiff’s childhood friend and the Respondent/Defendant’s business partner. [23] The findings by the learned Sessions Court Judge that the main protagonists are actually the Appellant/Plaintiff and Bih Sing are valid. [24] The arguments by the Appellant/Plaintiff that the facts in Tan Aik Teck are similar to those in our present case and yet the Court of Appeal had ruled that the there was a valid friendly agreement warrants consideration. [25] It is indeed true that the facts in these two cases are comparable. However, one crucial distinctive feature that separates Tan Aik Teck from our present case, once again, can be traced to the involvement of a third-party common friend. Unlike in Tan Aik Teck, the history of past dealings between the Appellant/Plaintiff and this third-party common friend, namely, Bih Sing, is vital to the outcome reached in this case. [26] This Court is satisfied that the learned Sessions Court Judge has considered all the evidence, the testimonies of the witnesses, the grounds S/N slQjYdjb80eqQDuWM8m6A advanced by the parties and had correctly reached her decision on a balance of probabilities. [27] This Court is not satisfied that the learned Sessions Court Judge had been “plainly wrong” in her findings or had committed errors of law and misappreciation of facts. [28] The decision of the learned Sessions Court Judge is hereby affirmed. [29] This appeal is dismissed with costs. [30] The Appellant/Plaintiff to pay costs of RM30,000 to the Respondent/Defendant, subject to allocator. Dated: 3 January, 2024 sgd [CHOONG YEOW CHOY] Judicial Commissioner High Court of Malaya Shah Alam S/N slQjYdjb80eqQDuWM8m6A Counsel: Sia Siew Mun with Kevin Wong and Tristan Ng for the Appellant (Messrs. Kevin Wong & Partners) Vincent Lawrence with Thrichelvam Rasiah for the Respondent (Messrs. Lawrence Hisham & Co.) S/N slQjYdjb80eqQDuWM8m6A