Loan for RM 50,000.00 on an oral agreement dated 10.5.2019 (‘Loan Agreement-3’) which was disbursed via online transfer on 10.6.2019. (collectively ‘the Loan Agreements’). [3] It is the Plaintiff’s case that the loans under the Loan Agreements were repayable ‘as soon as possible and shall be within the year 2019’. [4] The Defendant was obliged to pay interest on the loans at the rate of 5% per month under Loan Agreement-1 and Loan Agreement-2. [5] In this action, the Plaintiff is claiming the total sums due and owing by the Defendant under the Loan Agreements as at 15.10.2020 amounting to RM 1,425,000.00 together with interests. Particulars of the outstanding sum are: Loan Agreement-1 Loan Agreement-2 Loan Agreement-3 Date 15.01.2019 15.02.2019 10.05.2019 Loan Amount RM 300,000.00 RM 380,000.00 RM 50,000.00 Interest 5% monthly 5% monthly - Tenure The loan is repayable as soon as possible, and shall be within year 2019 The loan is repayable as soon as possible, and shall be within year 2019 The loan is repayable as soon as possible, and shall be within year 2019 [6] It is the Defendant’s case that the Loan Agreement-1 and Loan Agreement-2 are sham documents, that the true purpose for the Plaintiff disbursing the monies to the Defendant under the Loan Agreements was to invest in Seacera Group Berhad shares through the Defendant’s investment account with Maybank with the view to make a quick profit from trading the said shares. [7] According to the Defendant, the monies were disbursed to him to purchase the Seacera Group Berhad shares and to settle the margin calls for the trades made on the said shares. [8] Unfortunately, the market price for the Seacera Group Berhad shares fell after the purchases made in February/March 2019 and the Defendant was instructed by the Plaintiff to liquidate and sell the shares sometime between May to October 2019. [9] The proceeds from the sale of the Seacera Group Berhad Shares were paid to the Plaintiff sometime between August to October 2019. [10] The Defendant testified that he had signed the Loan Agreement-1 and Loan Agreement-2 because one Mr Liu Zhen (PW1) who was a director of the Plaintiff had represented to him that the said agreements were necessary in order to provide a legitimate reason for the withdrawal of the Plaintiff’s monies. The agreements were precautionary measures in case the authorities were to inspect the Plaintiff’s accounts. Court’s deliberation [11] Having heard the oral testimonies of the parties and having perused the documentary evidence before this Court, I am satisfied that the Plaintiff has failed to discharge its burden on a balance of probabilities that the monies that were disbursed to the Defendant were in fact loans made to the Defendant as claimed. [12] To begin, I must state that the Plaintiff’s principal activity is as an investment holding company and towards this end, the Defendant testified that the Plaintiff had sought and obtained from various private investors subscriptions to its Redeemable Convertible Preference Shares (‘RPS’). The Plaintiff was to use its best efforts to realize significant longterm capital gains for the investors through the implementation of its investment business. The monies received from the RPS constituted the primary source of funds of the Plaintiff. [13] In the present case, the Plaintiff has not produced the minutes of any meetings of its Board of Directors deliberating and approving the granting of any loans to the Defendant, including the Loan Agreements. No Board of Directors’ resolution was adduced before this Court in support of the Loan Agreements. [14] Significantly, although the monies amounting to RM 730,000.00 under the Loan Agreements were said to have been disbursed fully to the Defendant by 10.5.2019, the Plaintiff’s Audited Financial Statement as at 31.12.2019 did not state that the Plaintiff had made any loans at all to any director. Further, in the Plaintiff’s Audited Financial Statement as at 31.12.2020, although there was a reference to an ‘amount due from a director’, the sum stated was only for RM 32,000.00. [15] In fact, the Plaintiff’s Audited Financial Statement as at 31.12.2019 referred expressly to an ‘amount due to a director’ amounting to RM 15,000.00 instead. [16] Mr Liu Zhen had referred this Court to the entry for ‘Other receivables’ for the sum of RM 458,499.00 in the Plaintiff’s Audited Financial Statement as at 31.12.2019 to support the loans. Regrettably, there are simply too many problems with this contention. [17] Firstly, ‘Other receivables’ is quite different from ‘amount due from a Director’. The former does not usually refer to a loan to a director of a company. This is all the more so given that the Plaintiff’s Audited Financial Statement as at 31.12.2021 has both ‘Other receivables’ and ‘Amount due from a Director’. Mr Liu Zhen is not the author of the Plaintiff’s Audited Financial Statements and accordingly he has no personal knowledge at all as to whether ‘Other receivables’ included the purported loans to the Defendant. So, his testimony that ‘Other receivables’ represents the loans to the Defendant has little, if at all, any evidential value. This fact alone is sufficient to show that no loans to the Defendant was stated in the Plaintiff’s Audited Financial Statements. [18] In any case, if further reasons are needed, the figure ‘RM 458,499.00’ standing as at 31.12.2019 just does not match the loan sums said to have been made by the Plaintiff to the Defendant under the Loan Agreements. [19] Mr Liu Zhen’s attempt to explain the discrepancy in the figures saying that the Defendant had partly paid the loan sums when he deposited some RM 301,000.00 into the Plaintiff sometime in August 2019 to October 2019 beggar beliefs. [20] According to Mr Liu Zhen, the Defendant had paid the sum of RM 301,000.00 to the Plaintiff in order for the Plaintiff to pay one Universal Business Group (Hong Kong) Company Limited (‘UBG’) on behalf of the Defendant to subscribe for 14,688 ordinary shares of the said company. Reference was made to a letter dated 2.4.2019 to the Defendant from the said UBG. The payments to UBG from the Plaintiff on behalf of the Defendant was said to have been made sometime in end 2019. [21] There is absolutely no evidence to support that any such payment was made by the Plaintiff to UBG as testified by Mr Liu Zhen. [22] There is also a lack in logic to Mr Liu Zhen’s story. If the RM 301,000.00 was paid by the Defendant to the Plaintiff for the Plaintiff to subscribe the UBG shares on behalf of the Defendant as alleged, there ought to be no reason for any deduction to the amount due from the Defendant to the Plaintiff under the Loan Agreements. [23] On the other hand, I find the Defendant’s testimony to be more credible. From the various statements from the Defendant’s Maybank Investment Bank’s account, the Defendant has shown that sometime in February 2019, monies were in fact deposited into his trading account and trades were made for the purchase of Seacera Group Berhad shares. The statements further support the Defendant’s testimony that sometime in August 2019 to October 2019, these Seacera Group Berhad shares were sold. [24] I find that the Defendant’s oral testimony that the proceeds from the sale of the Seacera Group Berhad shares from his Maybank Investment Bank’s account aforesaid were paid to the Plaintiff is supported by the Plaintiff’s bank statements for the corresponding period. This piece of evidence corroborates the Defendant’s claim that the monies were transferred from the Plaintiff to him for the purpose of making the purchase of the shares for the Plaintiff and not as loans to the Defendant as claimed. [25] I also accept the Defendant’s testimony that the Loan Agreement-1 and Loan Agreement-2 are sham documents. As stated above, the loans are not supported by any Board of Directors’ resolutions of the Plaintiff. They are also not reflected in the Plaintiff’s Audited Financial Statements at all. [26] In fact, the Plaintiff has not satisfactorily explained how a company with only a RM 1,000.00 paid up capital with a loss before taxation of RM 1,332,673.00 in 2019 was able to provide a loan of RM 730,000.00 to the Defendant. The Plaintiff’s only source of funds come from its investors’ subscription to its RPSs which ought not to be used for speculating in shares. [27] There is therefore some basis for this Court to believe the Defendant’s claim that the Loan Agreements were nothing more than a devise use by the Plaintiff to explain away if the occasion arises the withdrawal of its funds received from its investors. [28] In any case, I agree with learned counsel for the Defendant that the Loan Agreements are illegal moneylending transactions. The interest charge at 5% per month is simply exorbitant. The interest alone as at 15.10.2020 came up to RM 695,000.00 and continues to be charged. [29] Although the Defendant has not pleaded illegality under the Moneylenders Act 1951, it is trite that that illegality need not be specifically pleaded and that once the illegality is brought to the attention of the Court before whom the action is tried, the Court, upon being satisfied that the transaction is indeed illegal, is obliged to act upon it [See: Mustafa bin Osman v. Lee Chua & Anor [1996] 2 MLJ 141]. [30] In the instant case, it is not disputed that the Plaintiff is not a holder of any moneylending license. It is also plain to all that the interest charged exceeds the stipulated limit stated in section 17A of the Moneylenders Act 1951 and pursuant to section 17A(3), it is expressly provided that where in a moneylending agreement the interest charged for a secured loan or an unsecured loan is more than that specified, that agreement shall be void and shall have no effect and shall not be enforceable. Conclusion [31] Accordingly, for the reasons stated above, I have no hesitation in dismissing the Plaintiff’s action herein against the Defendant with costs fixed at RM 10,000.00 subject to allocator. Dated on the 4th day of October 2022 ONG CHEE KWAN J Judge of the High Court of Malaya High Court of Kuala Lumpur, NCC2 COUNSEL: