Luminor Credit Sdn. Bhd. v Ronald Sim See Lei (WA-22NCC-483-07/2023)

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1 IN THE HIGH COURT OF MALAYA AT KUALA LUMPUR IN THE FEDERAL TERRITORY, MALAYSIA COMMERCIAL DIVISION WRIT NO: WA-22NCC-483-07/2023 BETWEEN LUMINOR CREDIT SDN. BHD. [COMPANY NO.: 200501002092 (679138-H)] … PLAINTIFF AND RONALD SIM SEE LEI (NRIC NO.: 810502-13-5189) … DEFENDANT GROUNDS OF JUDGMENT (AFTER TRIAL) A. Introduction Moneylending Transactions

Schedule

Schedule A. This is provided in sections 18 and 19 of the Moneylenders Act. The information may be in the form provided in First Schedule A of the Act. The statement must contain the following: - (a) the date on which the loan was made, the amount of the principal of the loan and the rate per centum per annum or the amount of interest charged; and (b) the amount of any payment already received by the licensee in respect of the loan and the date on which it was made; and (c) the amount of all sums due to the licensee for principal but unpaid and the dates upon which they became due and the amount of interest due and unpaid in respect of each such sum; and (d) the amount of every sum not yet due which remains outstanding and the date upon which it will become due. 42. These accounts must be kept and retained. They must also be produced when the Plaintiff sues the Defendant as seen in section 21 of the Moneylenders Act. (1) Where proceedings are taken in any Court by a licensee for the recovery of any money lent after the commencement of this Act or the enforcement of any moneylending agreement or security made or taken after the commencement of this Act in respect of money lent either before or after the commencement of this Act, he shall produce a statement of his account as prescribed in section 19. 43. I also note that the license holder / Plaintiff is not entitled to charge on account of costs, charges or expenses other than stamp duty, fees payable by law and legal costs allowed by law. If there is such charge, the it will be illegal and the said clause unenforceable rendering the said sums charged recoverable by the borrower or to be deducted from the sums outstanding. This does not mean that the said agreement is void as a whole. I refer to section 23 of the Moneylenders Act: - Any moneylending agreement between a licensee and a borrower or intending borrower for the payment by the borrower or intending borrower to the licensee of any sum on account of costs, charges or expenses other than stamp duties, fees payable by law and legal costs incidental to or relating to the negotiations for or the granting of the loan or proposed loan shall be illegal, and if any sum is paid to a licensee by a borrower or intending borrower as, for or on account of any such costs, charges or expenses other than as aforesaid that sum shall be recoverable as a debt due to the borrower or intending borrower, or in the event of the loan being completed, shall, if not so recovered, be set off against the amount actually lent and that amount shall be deemed to be reduced accordingly. 44. The protection for the general public is also provided in section 27 of the Moneylenders Act. The attestation of the agreement must be done by specific persons identified under the Act. Such persons must explain the consequences of the agreement. Failing which, the agreement will be void and unenforceable. I reproduce the relevant section: - (1) A moneylending agreement shall be attested by an Advocate and Solicitor of the High Court, an officer of the Judicial and Legal Service, a Commissioner for Oaths, District Officer, Justice of the Peace or such other person as may be appointed by the Minister generally for such purpose. (2) The attestor shall explain the terms of the moneylending agreement to the borrower, and shall certify on the agreement that the borrower appears to understand the meaning of the terms of the agreement. (3) Any moneylending agreement which is not attested in accordance with this section shall be void and have no effect and shall not be enforceable. 45. The Minister responsible for the Act, is entitled to make subsidiary legislation under Section 29H of the Act. The Minister has since caused the Moneylenders (Control and Licensing) Regulations 2003 to be enacted. 46. For our purposes section 10 of the said Regulation is important and I therefore reproduce relevant portions of the same: - (1) Every agreement for moneylending transaction without security shall be in the form prescribed in Schedule J and where the agreement for moneylending transaction with security shall be in the form prescribed in Schedule K and any moneylender who executes moneylending agreement other than any of the Schedules commits an offence under the Act and shall on conviction be liable to the fine and imprisonment specified under subsection 10P(2) of the Act. (4) No moneylender shall collect any payment by whatever name called except as prescribed in the moneylending agreement. 47. The Plaintiff has not shown that it has obtained any exceptions to the application of the Moneylenders Act that has been approved by the Minister of the Registrar. 48. I am of the opinion that MLA1 did breach the following applicable sections of the Moneylenders Act: - (i) Section 16 - Failure to date, stamp and forward a copy of the said Moneylending agreement to the Defendant. (ii) Section 27 - Failure to have the Moneylending agreement to be attested before the required persons e.g. before an advocate and solicitor. (iii) Section 23 - Unlawful deductions from the amount lent for fees and charges not allowed in law. No evidence of legal fees charged for preparation of the agreement. (iv) Sections 19 and 21 - Non Production of Accounts of MLA1 49. The above provisos are mandatory and may render the whole agreement unenforceable if they are followed by the Plaintiff. I find that breaches of section 16 and section 27 are serious and renders MLA1 not enforceable. Failure to comply with the said provisos renders the whole agreement unenforceable and void ab initio. (i) MLA 1 not stamped and a copy not sent to the Defendant. 50. It is clear to this Court that MLA 1 was not stamped and a stamped copy was not sent to the Defendant. The Defendant suggests that this is due to the fact that the Plaintiff did not receive the security for the said loan as promised by the Defendant. 51. This does not absolve the Plaintiff. It is mandatory for the Plaintiff to have the said money-lending agreement stamped and have such a copy be sent to the Defendant. Failure to have those documents sent renders the whole agreement unenforceable. The Plaintiff should then not have the loan drawdown until such a time the agreement is stamped and a copy is forwarded to the Defendant. 52. The Plaintiff did not deny that the loan for MLA1 was drawn down before the agreement was stamped. Until today, it has not been stamped and a copy was not sent to the Defendant. This is in breach of section 16 of the Moneylenders Act. The evidence before me shows that the sum of RM 1, 345,000.00 was disbursed before the MLA1 was stamped. The stamped agreement was also not forwarded to the Defendant. Plaintiff’s witness admitted to this error and said that the reason for the said failure is due to the delivery of the securities from the Defendant. I do not find that this fact could absolve the Plaintiff from the mandatory obligation of section 16 of the Moneylenders Act. 53. The statute clearly makes the requirement of stamping and delivery of the said document mandatory. Failure to do so renders the whole agreement unenforceable. 54. I refer to the decision of Ong Chee Kwan J in Golden Wheel Credit Sdn Bhd v Dato’ Siah Teong Din (No. 2) [2023] 6 CLJ 438 where he explained the effect of non-compliance with the statutory requirements by a licensed money lender: - “[79] However, I am in agreement with the judgment of Lee Swee Seng JCA in Mahmood Ooyub v. Li Chee Loong & Other Appeals (supra) which in any case is a judgment of the Court of Appeal for which I am bound. The whole purpose of the Moneylenders Act 1951 is to regulate the terms and conditions of the moneylending transaction between the parties such that unconscionable terms are not imposed by the moneylender on the borrower. In this regard, Parliament has, by legislation, determined what in its wisdom are deemed as unacceptable terms rendering any moneylending transaction to be void and unenforceable. … [82] Similarly, the wrongful deduction and retention of the loan sums is expressly prohibited and is, in fact, a feature most commonly found in illegal moneylending by loan sharks or 'Along'. The failure to provide stamped copies of the moneylending agreements and the statement of accounts are also serious breaches.” 55. I also refer to the decision of the Court of Appeal in Powernet Industries Sdn Bhd v Golden Wheel Credit Sdn Bhd [2020] 10 CLJ 374 where Nantha Balan JCA held: - “[76] It is important to emphasise that s. 16 of the Act “... protects the borrower by ensuring that he is in possession of the terms of his contract of repayment before he actually receives the loan.” (per Smith J in Teja Singh v. K Periasamy). [77] There is no doubt that s. 16 of the Act was intended to ensure that the duly stamped copy of the moneylending agreement was delivered to the borrower before the money is lent so that there is no dispute as to the terms of the agreement. Indeed, once the borrower is in possession of a stamped copy of the relevant moneylending agreement, then it will eliminate the possibility for any dispute later. … [78] A strict adherence to s. 16 of the Act will ensure that the version of the agreement relied upon by the moneylender, will be the same document which was previously executed by the borrower. If the agreement is executed before the money is lent and the stamped copy is not delivered before the money is lent, but is instead delivered later, then there could be an abuse of the "window of opportunity" and the moneylender could tamper with the agreement by replacing pages and adding more onerous terms and conditions. Indeed, in the extreme situation, even the amount lent or rate of interest could be altered. Hence, it is obvious enough that s. 16 of the Act is a necessary statutory safeguard to ensure that the moneylending agreement is not tampered with in any way. … [80] In our view, if waiver is allowed, then it will defeat the operation of s. 16 of the Act or any other provision of the Act and this will open the proverbial floodgates for a court sanctioned breach of the Act. It is not far-fetched to say that disingenuous and unscrupulous moneylenders will be able to prevail upon desperate borrowers to put it in writing that they (the borrowers) are waiving their rights with respect to the statutory provisions of the Act. …. [82] It is relevant in this context to note that a party may not contract out of the protection which Parliament had intended that they should have. The principle in this regard is to be found in the decision of the House of Lords in: Johnson v. Moreton [1980] AC 37; [1978] 3 All ER 37; [1978] 3 WLR 538; 37 P & CR 243; 122 Sol Jo 697, [1978] 2 EGLR 1; 241 Estates Gazette 759. …. [84] Based on the principles enunciated in the cases mentioned above, we are of the view that the Act is a manifestation of a social legislation and is designed to regulate the business of moneylending and to protect borrowers. As such, regardless of the circumstances which gave rise to the waiver/estoppel, a moneylender cannot rely on such waiver/estoppel to preclude the borrower from asserting his rights as provided for under the Act. Thus, in the context of a contravention of s. 16 of the Act, it is our view that the borrower is entitled to raise and rely upon the moneylender's contravention of the Act in opposing the claim for recovery of the monies that were lent.” 56. I also refer to Gopal Sri Ram JCA’s judgment in Chee Pok Choy & Ors v Scotch Leasing Sdn BHd [2001] 2 CLJ 321: - “I now turn to the third and final point that calls for mention. It has to do with s. 16 of the Act. That section, by way of paraphrase, strikes down a contract of loan and any security therefor absent a note or memorandum in writing in accordance with the terms of the section. That the section is mandatory and admits of no exceptions is illustrated by Subchent Kaur v. Chai Sau Kian [1957] CLJU 81; [1957] 1 LNS 81. In that case, the plaintiff, a registered moneylender, moved the court for an order that certain land charged to her by the defendant be sold to realise the amount due under the charge. No note or memorandum of the moneylender's contract was given to the defendant. Smith J, held that the contract for the repayment of the money lent and the security given by the borrower were unenforceable and granted a declaration to that effect. In the present case, there is an express admission by the respondent in correspondence that there is no note or memorandum. It follows therefore that both the loan and the charge were unenforceable. Nothing more need be said upon the point.” 57. I therefore find that the Plaintiff did not comply with section 16 of the Moneylenders Act. This is mandatory and failure to comply renders any applicable moneylending agreement to be unenforceable. For the said reason, I find that the failure to adhere to the said proviso, makes MLA1 void and cannot be enforced against the Defendant. (ii) Section 27 – Failure to have the Moneylending agreement to be attested before the required persons 58. It is also abundantly obvious to this Court that MLA1 did not comply with section 27 of the Moneylenders Act. 59. The attestation page does not contain any evidence that the said agreement was executed before the authorized persons such as an advocate and solicitors required by the statute. There is also no evidence that any advocate and solicitor did explain the contents of the said MLA1 to the Defendant. This is mandatory under the above-mentioned section. 60. There is no exception provided in law for failure to comply with this proviso and such failure is fatal. It renders the whole agreement to be void and not enforceable. (iii) Section 23 - Unlawful deductions from the amount lent for fees and charges not allowed in law. No evidence of legal fees charged for preparation of the agreement. 61. I also find that the Plaintiff had imposed charges that were deducted from the loan provided to the Defendant. It is clear that the Plaintiff deducted substantial sums from the loan and only paid the Defendant the sum of about RM 1.3 million instead of RM 1.5 million that was agreed upon. The deductions were allegedly for the following: - (i) (ii) Up front interest of RM 45,000.00. (iii) Legal Fees – RM 35,000.00. 62. The Plaintiff is not allowed to deduct these sums from the loan amount. As identified by Ong Chee Kwan J in the earlier cited case, this is one of the tell-tale signs of a “loan shark” business. As a result, the law was enacted to prevent such activities and failure to comply with the said legislative requirement are serious breaches of the Moneylenders Act. 63. I have also considered the Binding Term Sheet dated 9-10-2019 that contains the following clause: - 64. The Plaintiff suggests that the Defendant agreed that the above fees should not be considered as a deduction of the principal sum paid under the terms of MLA1. 65. I do not accept the said contention. The Moneylenders Act prohibits such deductions from being made and cannot be countenanced by another agreement agreed between parties. This is not legislation that could be contracted out of. See Philleoallied Bank (Malaysia) Bhd v. Bupinder Singh Avatar Singh & Anor [1999] 2 CLJ 1023. 66. Estoppel by conduct also does not apply against the Defendant. This is explained by Natha Balan JCA in Powernet Industries Sdn Bhd v Golden Wheel Credit Sdn Bhd [2020] 10 CLJ 374 as follows: - “[68] The jurisprudence on this area of the law is quite settled and there can be no estoppel against statutory provisions. (see Veetak Enterprise Sdn Bhd v. The Kuala Lumpur Finance Bhd [1985] CLJU 9; [1985] 1 LNS 9; [1987] 1 MLJ 407 HC ("Veetak ") per Gunn Chitt Tuan J (as he then was)). [69] In Veetak the learned judge said (p. 410 (MLJ)): It was another submission of counsel for the plaintiff that the defendant could not raise the issue of estoppel and he referred to the former Court of Appeal case of Puran Singh v. Kehar Singh Bahadur Singh [1937] CLJU 51; [1937] 1 LNS 51; [1939] MLJ 71 75. In that case reference was made by Thomas C.J. to Barrow's case [1880] 14 Ch D 432 in which was stated by Bacon, V.C. in the course of his judgment that: the doctrine of estoppel cannot be applied to an Act of Parliament. Estoppel only applies to a contract inter partes and it is not competent to parties to a contract to estop themselves or anybody else in the face of an Act of Parliament. It was held by the former Court of Appeal, inter alia, that there can be no estoppel against statutory provision in an Enactment which legislates on a matter of general interest. (emphasis added) [70] In this context, it is also necessary to refer to the case of Hotel Ambassador (M) Sdn Bhd v. Seapower (M) Sdn Bhd [1991] 1 CLJ 656; [1991] 1 CLJ (Rep) 174; [1991] 1 MLJ 404 (SC), where the Supreme Court (per Hashim Yeop A Sani CJ (Malaya)) said (p. 179 (CLJ); p. 407 (MLJ)): On the question of issue estoppel we agree with the learned judge that on the facts of this case the appellants cannot invoke the doctrine of issue estoppel. There can be no estoppel as against statutory provisions. (emphasis added) [71] In the context of moneylending legislation, it is highly relevant that in Kok Hoong, the Privy Council enunciated that estoppel does not operate against the Moneylenders Ordinance 1951. Whilst taking a strict and uncompromising position, the Privy Council was nevertheless prepared to recognise that vis-a-vis statutes which regulate procedure and which do not represent social policy and/or public interest, an estoppel may operate to preclude a party from setting up the statutory non-compliance as a ground for escaping from their legal obligations or liability.” 67. Therefore, I find that the said deductions are unlawful. The Plaintiff cannot make such deductions up front or try to hide them by an agreement executed on the side to render the Defendant agree that such deductions shall be allowed and not considered part of the deductions from the principal. This Court shall not be hoodwinked by such sham agreements. For the same reason I find the Binding Term Sheet dated 9-10-2019 is not an enforceable agreement. 68. This will render the Defendant not to be liable for the (i) fee – RM 75,000, (ii) Up front interest of RM 45,000.00 and (iii) Legal Fees - RM 35,000.00. The total sum of RM 155,000.00 will therefore have to be deducted from the loan sum of RM 1.5 million being the principal sum lent by the Plaintiff to the Defendant even if the said MLA1 is a valid enforceable agreement. 69. This issue does not arise as I have found that MLA1 is not an enforceable agreement for other reasons stated herein. (iv) Section 19 and Section 21 - Alleged Accounts not produced for MLA1 70. I also find that the Plaintiff did not provide for the accounts for MLA1. This is a compulsory under section 19 and section 21 of the Moneylenders Act. This is not fatal to the Plaintiff’s claim concerning MLA1 if the Plaintiff produces a Statement of Account at a later stage before judgment is pronounced to enable this Court to ascertain that the amount claimed is correct and has considered all payments made, if any, by the Defendant for MLA1. 71. Section 21 (2) of the Moneylenders Act also empowers this Court to reopen the transaction and take account between the Plaintiff and the Defendant. The Court could then adjudge what would be the reasonable sum claimable and chargeable against the Defendant for the said loan. This provision, however, does not absolve the Plaintiff of any failure to comply with the earlier statutory requirements. 72. However, in this case, the Plaintiff did not produce the statement of accounts for MLA1. This renders the whole agreement to be unenforceable against the Defendant. I again refer to the decision of Gopal Sri Ram JCA in Chee Pok Choy & Ors v Scotch Leasing Sdn Bhd [2001] 2 CLJ 321 where he held: - “Now, if the respondent had indeed made the requisite disclosure, it would have immediately triggered the provisions of RHC, O. 79. It would have obliged the respondent to provide specific information on a number of matters, including the date of the contract of loan and particulars of the amount repaid and the amount due but unpaid. In other words, it was obligatory upon the respondent not only to produce and exhibit a copy of the note or memorandum prescribed by s. 16 of the Act but also to exhibit a copy of the appellants' account as required by s. 21 of the Act. Of course, none of these matters were disclosed to the court by the simple method of concealing the truth, namely that the respondent was a licensed moneylender. There are three other points that I think may be conveniently made now. The first is that RHC O. 79 r. 5 calls for mandatory compliance of the requirements of rr. 2 and 3 where a moneylender's action is begun by originating summons. Since the respondent did not comply with the requirements of RHC O. 79, it follows that its originating summons was fatally flawed. An additional flaw that fatally infected the application for foreclosure was the non-compliance with the mandatory provisions of s. 21 of the Act. These matters, in particular the breach of the statute had the effect, in my view, of rendering the respondent's originating summons a nullity. If authority is required in support of this view, it is to be found in the judgment of the former Court of Appeal in Teja Singh v. Rattan Singh [1960] CLJU 138; [1960] 1 LNS 138, where Thomson CJ said: For myself I do not consider it necessary to examine the grounds of appeal in detail. The law in this country is perfectly well-settled and has been settled since as long ago as 1941. It is no case of a moneylender being taken by surprise by a new technical defence. The law has been well known to the moneylending community since 1941 and was discussed as recently as 1956 in the case of Ramasamy Chettiar v. Wong Poh Fatt [1956] CLJU 92; [1956] 1 LNS 92 where Pretheroe J, after referring to the decision of Terrell J, in the earlier case of Arjan Singh v. Hashim Angullia & Ors [1941] MLJ 55 held (I am reading from the headnote): When a moneylender embarks on any proceedings in any Court, a statement of his account as prescribed by s. 21(1) of the Moneylenders Ordinance 1951, must be produced at the time the Originating Summons was filed. Non-compliance with this statutory requirement is an irregularity which the Court cannot waive and will entitle the respondent to have the Originating Summons dismissed with costs. It is beyond doubt that this case falls clearly within these words. The account was not produced when the Originating Summons was issued and that was fatal to any subsequent proceedings on that summons.” … “The second point that needs to be made concerns the state of the respondent's accounts. Now, s. of the Act requires a moneylender to keep regular accounts. If he does not do so, then he cannot enforce either the contract of loan or any security given for it.” 73. Also refer to Chockalingam Kms Kumarappan Chettiar v Aziz Hj Asahari [2008] 3 CLJ 725, Arjan Singh, Son of Inder Singh v Hashim Angullia & Ors [1941] 1 MLJ 55 and Aseam Credit Sdn Bhd v Eminent Avenue Sdn Bhd [2008] 1 CLJ 12. 74. In Aseam Credit (supra), Suriyadi Halim Omar JCA held: - “[21] There is no shortage of authority, both English and local, that states that the provisions of the Moneylenders Act 1951 must be strictly complied with, the detraction of which will not get the sympathy of any court (Kartar Singh v. Mahinder Singh [1959] CLJU 42; [1959] 1 LNS 42; [1959] 25 MLJ 248; Subchent Kaur v. Chai Sau Kian [1957] CLJU 81; [1957] 1 LNS 81; [1958] 24 MLJ 32; Teja Singh v. Rattan Singh [1960] CLJU 138; [1960] 1 LNS 138; [1961] 27 MLJ 39; Arjan Singh Son of Inder Singh v. Hashim Angullia & Ors [1941] 10 MLJ (SSR) 55). Founded on those findings of facts, that the appellant had not sufficiently established that it was an exempted entity at the relevant time, coupled with the obvious evidence that it had breached a large number of provisions in the Moneylenders Act 1951, we were satisfied that ‘cause to the contrary’ had been established within the meaning of s. 256(3) of the National Land Code 1965. We thus unanimously had no reservation in dismissing this appeal with costs. We thereupon ordered that the order of the High Court be reaffirmed and the deposit of the appellant be paid to the respondent to account of its taxed costs.” 75. Therefore, I find that this failure is fatal and the Plaintiff is not entitled to enforce MLA1. The sums lent pursuant to the terms of MLA1 are not recoverable from the Defendant. (v) Alleged Failure of having the agreement to follow Form K as required under the subsidiary legislation. 76. This Court also finds that MLA 1 did not follow Form K in the exact words that appear in the said legislation. This can be seen in comparing Schedule K of the Moneylenders Regulations and the terms appearing in MLA1 and even MLA2. 77. Note that the remarks stated in the above table are the alleged variations that the Defendants contends were made contrary to Form K as prescribed in the Moneylenders Ordinance. 78. However, the changes made to the form by the Plaintiff and its non-compliance are not fatal. The intention of utilising Form K is to enable the Defendant to know his obligation to the Defendant. The Plaintiff had also provided the exact amount that must be paid by the Defendant and the number of instalments that would be applicable to the transaction between the parties. I also refer to section 62 of the Interpretation act 1948 and 1967 that states: - “Any written law prescribing a form shall be deemed to provide that an instrument or other document purporting to be in that from shall not be invalidated by reason of any deviation has no substantial effect and is not calculated to mislead.” 79. The deviation complained of did not have any substantial effect and is not calculated to mislead. I do not believe that Section 10P of the Moneylenders Act will be applicable to the facts of this case as the Plaintiff did follow the prescribed form but differed in the exact words chosen appearing in clause 1 of MLA1. As such I do not find that the said provisos have been breached by the Plaintiff. 80. Note however, as stated earlier, the Plaintiff attempted to escape the limitations provided under the Moneylenders Act and its subsidiary legislation by having the Defendant agree to the Binding Term Sheet dated 9-10-2019. As stated earlier, such a clause is not allowed by the Moneylenders Act: - 81. Therefore, I maintain that the Binding Term Sheet is not binding on the Defendant. (vi) Finding on the validity of MLA1 and the Binding Term Sheet 82. For the above reasons, I find that MLA1 and the Binding Term Sheet are not enforceable against the Defendant. The said instruments are unlawful, void and not enforceable. They do not comply with the mandatory requirements of the Moneylenders Act and are not enforceable against the Defendant. The sums due under MLA1 or under the Binding Term Sheet cannot be claimed against the Defendant. 83. I have considered the case of Mulpha Ventures Sdn Bhd v Mula Holdings Sdn Bhd & Ors [2024] CLJU 109 and Pang Mun Chung & Anor v Cheong Huey Charn [2018] 8 CLJ 663. I find that the principles of law laid down by the Court of Appeal and the High Court in those cases, are not applicable to the facts before me. 84. In this case, it is clear that there have been multiple failures by the Plaintiff to comply with the mandatory requirements of the Moneylenders Act. These failures cannot be condoned and the relevant provisos of the Moneylenders Act specifically provide that the said loan is void and not enforceable against the borrower. 85. For the above reasons, I find that MLA1 is not enforceable against the Defendant. Issue 2 – Whether MLA2 is a valid enforceable agreement? 86. After the Defendant did not pay the sums under the terms of MLA1, the parties then executed a new money-lending agreement in the form of MLA2 dated 23-6-2020. 87. I find that MLA2 did comply with the requirements of the Moneylenders Act save for section 16, section 17 and section 23 of the Moneylenders Act . 88. It must be remembered that MLA2 is not in reality a new loan. It is an agreement to restructure the first loan under MLA1. The sums that were allegedly due from the Defendant as at 17-6-2020 are to the sum of RM 1, 860,000.00 that consists of:- (i) RM 1.5 million – principal sums due that includes the unlawful deductions that were made by the Plaintiff earlier. (ii) RM 82, 849.32 interest due as at 24-6-2020. (iii) Administrative charges and legal costs of RM 150,000.00. This can be seen in the letter dated 17-6-2020 issued by the Plaintiff to the Defendant. 89. This sum was subsequently increased to RM 1.923 million as seen in the letter dated 23-6-2020. Therefore, the total sums were capitalized into a new loan under MLA2. This would include the following sums based on the terms of MLA1 and the Binding Term Sheet that were referred to earlier: - (i) Principal sum under MLA1: RM 1.5 million This principal sum paid to the Plaintiff was reduced to RM 1.345 million. The deductions that were unlawfully made by the Plaintiff were:- Up front interest of RM 45,000.00. Legal Fees – RM 35,000.00. (ii) Administrative charges and costs of RM 150,000.00 based on the previous letter dated 30-6-2020 (ii) The interest on the unpaid sum of RM 1.5 million = RM 273,000.00 Total sums under MLA2 = RM 1, 923,000.00 90. The MLA2 was executed on 23-6-2020. This Court accepts that the agreement was stamped and was duly forwarded to the Defendant following the requirements of the Moneylenders Act. There is no evidence to contradict this fact. 91. The said sum of RM 1.923 million was not paid to the Defendant in any way after the execution and stamping of MLA2. The sums were used to pay the sums that were allegedly due under the terms of MLA1. 92. This, however, does not mean that MLA 2 is not enforceable against the Defendant. A similar case can be seen in the decision of the Federal Court in Letchumanan v Kok Seng Fatt [1973] 1 MLJ 171. 93. The said case also concerns a series of money-lending transaction where the sums were renewed into a final money-lending agreement. One of the arguments put forth by the defendant in that case is that in the earlier money-lending agreement, the previous sums were overcharged. The Federal Court, however, held that the final moneylending agreement is not tainted by any alleged illegality raised by the Defendant and was enforceable as it did comply with the requirements of the Moneylenders Ordinance, 1951. 94. This is as per what is said by Azmi Ali LP said: - 95. In that case the previous agreements had breached the statutory interest limit as prescribed by the Moneylenders Ordinance 1951. This was rectified in the last Moneylenders’ agreement executed by the borrower. The Federal Court found that the earlier unenforceable agreements will not render the last agreement unenforceable. 96. However, I find that the sums claimed against the Defendant must be reduced to remove the sum of RM 578,000.00 from the amount claimable against the Defendant. This deduction must be undertaken by this Court in accordance with section 23 and section 21 (2) of the Moneylenders Act 1951. This Court must determine the appropriate amount to be paid by the borrower and is relieved from making any excessive amount paid or payable. This is provided in section 21(2) and section 23 of the Moneylenders Act. A similar proviso appears section 37 of the Singaporean Moneylenders Act as explained in Evan Lim Industrial v MWA Capital Pte Ltd [2018] SGCA 76. 97. Note that the sum of RM 578,000.00 deducted from the sums claimed is made up of the following: - (i) Sums charged wrongfully in MLA1 and rolled over in MLA2 Up front interest of RM 45,000.00. Legal Fees – RM 35,000.00. (ii) Administrative charges and costs of RM 150,000.00 based on the previous letter dated 30-6-2020 (ii) The interest on the unpaid sum of RM 1.5 million = RM 273,000.00 for MLA1. 98. On the issue of the failure to allegedly comply with Form K, I have found earlier, that the deviations or changes made did not materially alter the required form K. The said changes did not mislead the Defendant and he is aware of his obligations to the Plaintiff under the terms of MLA2. 99. I refer to the decision of Nallini Pathmanathan J in Amanah Raya Capital Sdn Bhd v Siti Zaharah Sulaiman [2013] 8 CLJ 516 where her ladyship held: - “[15] It is apparent from the foregoing that reg. 10(1) and s. 10P(3) fall for consideration and construction. Is the effect of the two provisions such that in the event the plaintiff inadvertently utilises the wrong form for the grant of a moneylending transaction, the entire transaction becomes void and unenforceable? [16] The other relevant parts of s. 10P provide as follows: (1) A licensee who intends to lend money to a borrower shall enter into a moneylending agreement with the borrower and that agreement shall be in the prescribed form. (2) Any licensee who contravenes this section shall be guilty of an offence under this Act and shall be liable to a fine of not less than ten thousand ringgit but not more than fifty thousand ringgit or to imprisonment for a term not exceeding five years or to both, and in the case of a second or subsequent offence shall also be liable to whipping in addition to such punishment... “[17] A reading of reg. 10(1) and s. 10P in its entirety appears to this court, to seek to ensure that all moneylending transactions are in the forms prescribed under the Act or Regulations. It seeks to punish those persons who function as moneylenders and enter into agreements otherwise than as prescribed by the Act and the Regulations. (emphasis added). In other words if a moneylender has executed a moneylending agreement which is not in either the prescribed form J or K or as otherwise provided under the Regulations and seeks to bind the borrower to terms and conditions which are inconsistent with or different from that set out in schedule J or K then such a moneylending agreement would be void and unenforceable. [18] In the instant case here however it is evident that the plaintiff has infact adopted the format set out in schedule J in keeping with the Regulations and the Act. The plaintiff's error was in utilising the wrong form, ie, the unsecured loan form rather than the secured loan form. The next issue that falls for consideration is whether on a reading of reg. 10(1) and s. 10P(1) - (3) the loan disbursed to the defendant under schedule J is therefore deemed void and unenforceable. This does not appear to be the correct construction to be accorded to these provisions. As stated earlier the mischief that the Act and Regulations promulgated under seek to contain or prevent, is the forcing upon borrowers of onerous and punishing terms and conditions in relation to moneylending transactions. To this end specific forms have been set out, the use of which is mandatory. As the plaintiff here has in fact complied in spirit and principle with the Act and Regulations by utilising one of the forms prescribed it does not appear to this court that the use of the wrong form renders the loan uncollectible. That might well have been the case if the plaintiff had utilised neither Forms J or K or any other form prescribed by the Act. But that is not the case here. [19] As such it appears to this court upon a reading of these provisions that the correct construction to be accorded to these provisions is to render void and unenforceable any moneylending agreement which fails to comply with any of the forms prescribed by the Act or Regulations. To determine otherwise, to my mind would lead to an absurdity. The net result would be that the plaintiff would be deprived of recovering monies it loaned to the defendant simply because it utilised the wrong form, albeit one prescribed under the Act. This appears to be an untenable construction to adopt. [20] In MBF Cards Services Sdn Bhd v. Chew Ah Too [2009] 1 CLJ 140; [2009] 1 MLJ 684, the Court of Appeal laid down the principle to be applied when construing a particular clause in a statute: ... The test thus is to see whether the interpretation is a sound one or not. If it leads to some injustice and/or absurdity, then a need arises to gauge the real and true intention of the Legislature (Interpretation of Statute by Bindra at page 235). Obviously a harmonious construction should be given in order to avoid making one provision of the Act conflict with the other... [21] Accordingly, I concur with learned counsel for the plaintiff that in order to read or construe reg. 10(1) and s. 10P(1) to (3) harmoniously these provisions should be read to mean that it is mandatory that any moneylending transaction entered into under the Act should conform in principle with the format prescribed thereunder. As that has in fact been done in the instant case, simply the wrong form that was utilized it follows that the loan is not rendered unenforceable.” 100. I agree that the words appearing in MLA2 may not follow exactly the words appearing in Form K or Form J. This, however, does not mean that the said terms did not comply with section 10P of the Moneylenders Act 1951 and the requirements of the applicable regulation. I find MLA2 did comply with the requirements of the Moneylenders Act, and as such, the changes made by the Plaintiff did not render MLA2 unlawful and unenforceable. 101. For ease of reference, I reproduce section 10P of the Moneylenders Act and Regulation 10 of the Moneylenders Regulations: - 10P Licensee and borrower must enter into a moneylending agreement (1) A licensee who intends to lend money to a borrower shall enter into a moneylending agreement with the borrower, and that agreement shall be in the prescribed form. 10 Moneylending agreement. (1) Every agreement for moneylending transaction without security shall be in the form prescribed in

Schedule

Schedule J and where the agreement for moneylending transaction with security shall be in the form prescribed in

Schedule

Schedule K and any moneylender who executes moneylending agreement other than any of the Schedules commits an offence under the Act and shall on conviction be liable to the fine and imprisonment specified under subsection 10P(2) of the Act. …. (3) Any moneylending agreement which does not comply with the prescribed form shall be void and have no effect and shall not be enforceable. 102. I agree that the format chosen by the Plaintiff, in particular the table appearing in MLA2, did not comply strictly with Form K or Form J. However, the particulars as required under the Moneylending Act, the regulation and Form K or Form J have been provided in the First Schedule to MLA 2. The First Schedule to the said loan did provide: - (i) The principal sums lent by the Plaintiff to the Defendant (ii) Interest rate applicable and how the interest is to be calculated (iii) Duration of the agreement and how the sums due are to be paid (iv) Particulars of security 103. My approach to the issue raised by the Defendant on whether MLA2 is invalid due to the failure to use the exact form K or form J is based on the judgment of Nallini Pathmanathan J (as she then was) in Amanah Raya Capital Sdn Bhd v Siti Zaharah (supra) cited earlier. 104. Note that I do agree that the sum of RM 1,923,000.00 being the principal is not the correct principal amount that is claimable against the Defendant. Section 21(2) of the Moneylenders Act provides this Court with the power to reopen the transaction when it finds that the loan claimed is harsh and unconscionable or substantially unfair. 105. This Court once exercises such powers under section 21(2) of the Moneylenders Act will then reopen the said transaction and determine the actual amount that must be paid and relieve the Defendant from payment of any sum that it finds in excess of the sum adjudged by this Court to be fairly due in respect of such principal, interest and legal Court. This Court will determine and adjudge the amount that is reasonable and payable by the borrower to the lender and vice versa. 106. I also note that the statement of accounts for MLA2 has been produced at trial by the Plaintiff. What is important to this Court is that the statement of accounts has been produced at the trial. This enables this Court to undertake the test required under section 22(2) of the Moneylenders Act and will enable the Defendant to ascertain the amount claimable against him. 107. I refer to the decision of the Court of Appeal in Chockalingam KMS Kumarappan Chettiar v Azizah Harun [2016] 5 CLJ 306 where it was stated: - “[29] With due respect to the judgment of the High Court Judge, I beg to differ with His Lordship's view that it is a condition-precedent for the lender to first satisfy the court that he has complied with s. before his claim can succeed under the Act. I am of the considered view that s. 21 of the Act only requires the licensed money lender to produce an account under s. 19 when he sues the borrower/debtor in court.” 108. Furthermore, the Defendant himself has never asked for the statement of account at any material time. This appears in the evidence before this Court: - DN Sure. Now, Mr Ronald, would you agree with me at all material times, you never requested from the Plaintiff statement of accounts, monthly statement of accounts, to be provided to you monthly? Correct? RONALD Yes. 109. As such, I do not find that the Defendant’s contention that there is a breach of section 18 and section 19 of the Moneylenders Act. Thus, the said MLA2 is not void or unenforceable as suggested by the Defendant. 110. For the above reasons, I do not find that MLA2 is in breach of the Moneylenders Act. I do, however, find that this Court must ascertain the amount that is fair and reasonable based on the terms of the agreement and following the principles laid down under the Moneylenders Act. 111. This has been undertaken in paragraphs 93 to 98 earlier. I have also considered that the Defendant has not made any payment of any sums to the Plaintiff either under MLA1 or MLA2. F. Orders of this Court 112. For the above reasons, I allow the Plaintiff’s claim only for the following sums assessed by this Court under the powers provided under section 21 (2) and section 23 of the Moneylenders Act. 113. I therefore enter Judgement against the Defendant for the following: - (i) The Defendant pay the Plaintiff the sum of RM 1,345,000.00. (ii) The Defendant pays the Plaintiff interest at the rate of 12% per annum on the sum of RM 1, 345,000.00 from 23-6-2020 to 22-9-2020. (iii) Interest at the rate of 5% per annum on the judgment sum from the date of judgment to the date of full realization to be paid by the Defendant to the Plaintiff.