Mulpha Ventures Sdn Bhd v Mula Holdings Sdn Bhd (BA-22NCC-3-01/2021)

MULA HOLDINGS SDN. BHD.

BESTARI SEPANG SDN. BHD.

SPANSTEAD SDN. BHD.

SERI EHSAN (SEPANG) SDN. BHD. (NO. SYARIKAT: 270424-A) … DEFENDAN-DEFENDAN JUDGMENT Introduction [1] “Never lend books, for no one ever returns them; the only books I have in my library are books that other folks have lent me.” Does this apply to money lent? After all, as observed by one economist, “all loans, in the eyes of honest borrowers, must eventually be repaid”. [2] In a matter that involves a moneylending transaction, as in the present case, the law that governs moneylending dealings are well established. These precepts have repeatedly been invoked and applied by the courts. Nevertheless, the matter before this Court requires it to once again examine one of the principles relating to moneylending transactions by a licensed moneylender and a number of related legal issues. [3] The Plaintiff’s principal claim against the Defendants is predicated on 3 Loan Agreements pursuant to which the Plaintiff had lent the Second Defendant a total sum of RM41,191,801.20 (“Loans”). The Plaintiff is also seeking to recover from the Defendants charges incurred for and on account of the Fourth Defendant comprising the overdue and outstanding quit rent and assessments in respect of the land belonging to the Fourth Defendant amounting to RM7,652,603.60 plus accrued interest (“Outgoings”). [4] This matter was filed as a Writ action. However, the parties reached an agreement that it be decided pursuant to Order 14A of the Rules of Court 2012 on the following Questions of Law:

Whether the Loan Agreements are void and unenforceable due to a breach of s 16 of the Moneylenders Act 1951.

1.1. If yes, then whether the Loans and/or Outgoings are recoverable by virtue of:

money had and received to the use of the Plaintiff; and/or

s 66 of the Contracts Act 1950; and/or

unjust enrichment.

1.2. If no, then whether the Loans and/or Outgoings are recoverable for a breach of the Loan Agreements, Security Documents and the Restructuring Documents collectively known as ‘the Documents’.

Whether the Defendants are barred by res judicata (in the wider sense) and/or by judicial admission from challenging the validity of the Loan Agreements based on the pleadings, evidence given and affidavits filed in the Shah Alam High Court Civil Suit No. 22NCvC57-01/2015 (‘Shah Alam Suit’), and Shah Alam High Court Originating Summons No. BA- 243NCvC-1001-09/2020 (‘OS Proceedings’).

Whether the Plaintiff is debarred by limitation from pursuing recovery of the Loans and/or Outgoings. In this regard:

3.1. Whether limitation applies if the Loan Agreements are held to be illegal, void and/or unenforceable.

3.2. Whether the Defendants acknowledged that the Loans are due and owing in the Shah Alam Suit and/or OS Proceedings thereby resulting in a fresh accrual of the Plaintiff’s claim on the respective dates of acknowledgment by the Defendants and consequently extending the period by which limitation sets in on the Plaintiff’s claim for recovery of the Loans and/or Outgoings. The Core Issues [5] The first of three principal issues to be resolved is whether the Loan Agreements are void and unenforceable due to a breach of section 16 of the Moneylenders Act 1951? [6] In the event that the answer to the above issue is in the affirmative, the next key question for consideration is whether the Plaintiff is entitled to its alternative claims for (i) Restitution under section 66 of the Contracts Act 1950; and/or (ii) Restitution for Money Had and Received and/or Unjust Enrichment? [7] If this Court were to conclude that the Plaintiff is entitled to pursue its alternative claims, the third major issue relating to the defence of limitation becomes relevant. The Parties and Their Contentions [8] The Plaintiff, Mulpha Ventures Sdn Bhd, is a company and a licensed moneylender under the Moneylenders Act 1951. [9] The First Defendant, Mula Holding Sdn Bhd, is the Ultimate Holding Company of the Second, the Third and the Fourth Defendants, namely, Bestari Sepang Sdn Bhd, Spanstead Sdn Bhd and Seri Ehsan (Sepang) Sdn Bhd respectively. The Defendants are part of a Group of Companies. [10] The loans were disbursed to the Second Defendant. The First, the Third and the Fourth Defendants are the security parties to these moneylending transactions. Validity and Enforceability of the Loan Agreements [11] On the issue of whether the Loan Agreements are valid and enforceable, the Defendants in this suit have raised the defence that these moneylending transactions are illegal on the ground that they violate section 16 of the Moneylenders Act 1951 and consequently the agreements are unenforceable and/or void. [12] Section 16 of the Moneylenders Act 1951 provides as follows: Moneylending agreement to be given to the borrower

16.

No moneylending agreement shall be enforceable unless the agreement has been signed by all the parties to the agreement and a copy of the agreement duly stamped is delivered to the borrower by the licensee before the money is lent.

A licensee who executes a moneylending agreement which does not comply with this section shall be guilty of an offence under this Act and shall be liable to a fine not exceeding ten thousand ringgit or to imprisonment for a term not exceeding twelve months or to both. [13] The Defendants also referred to section 2(g) of the Contracts Act 1950 (interpretation section) which states that “an agreement not enforceable by law is said to be void”. [14] It is not disputed that the loan sums pursuant to the 3 agreements were released to the Second Defendant before the agreements were stamped. As a matter of fact, and as noted below, one of these Loan Agreements remains unstamped. The dates in which the pertinent event had taken place re the 3 Loan Agreements are as follows: 1st Moneylending Agreement Details Date

Moneylending Agreement

10.9.2013 2. Agreement signed

10.9.2013 3. Loan amount 3,500,000.00 4. Loan released/disbursed

10.9.2013 5. Moneylending Agreement stamped

18.9.2013 6. Date of delivery of the duly stamped copy of the Moneylending Agreement to Defendants

24.9.2013 2nd Moneylending Agreement

Moneylending Agreement

25.3.2014 2. Agreement signed

25.3.2014 3. Loan amount 34,700,000.00 4. Loan released/disbursed

25.3.2014 5. Moneylending Agreement stamped

28.3.2014 6. Date of delivery of the duly stamped copy of the Moneylending Agreement to Defendants

2.4.2014 3rd Moneylending Agreement

Moneylending Agreement

13.6.2014 2. Agreement signed

13.6.2014 3. Loan amount 3,000,000.00 4. Loan released/disbursed

Moneylending Agreement was stamped

Date of delivery of the copy of the

24.8.2014 [15] In other words, the above point to a clear violation of the express requirements mandated in section 16(1) of the Moneylenders Act 1951. [16] The Defendants argued that this section does not call for any rule of interpretation as it is crystal clear. [17] In addition, the Defendants further submitted that as a result of the contravention of section 16 of the Moneylenders Act 1951, the 3 impugned Loan Agreements are rendered illegal and that this Court should not lend any assistance to the Plaintiff to enforce an illegal contract as there are no exceptions provided for any violation of Section 16 of the Moneylenders Act 1951. [18] As section 2(h) of the Contracts Act 1950 provides that an agreement enforceable by law is a contract, the Defendants reasoned and submitted that “an agreement unenforceable in law is not a contract”. [19] The Defendants also relied on Golden Wheel Credit Sdn Bhd v Dato’ Siah Teong Din (No 2) [2023] AMEJ 0798; [2023] 6 CLJ 438; [2023] 11 MLJ 647; [2023] MLRHU 661 (“Golden Wheel Credit No 2) to support their argument that the Loan Agreements in this instant case ought to be declared as void and/or unenforceable. [20] On the decision of the Supreme Court in Patel v Mirza [2016] UKSC 42, the Defendant urged this Court take cognizance of section 3(1) of the Civil Law Act 1956 and to draw a distinction between a statutory illegality, which they submit as forming the root of the present case, as opposed to common law illegality, as was the substance before the Supreme Court in Patel v Mirza. In other words, for purposes of the present matter, the Defendants is urging this Court to disregard Patel v Mirza. [21] In response, the crux of the Plaintiff’s arguments is that a transgression of section 16 of the Moneylenders Act 1951 merely renders a moneylending agreement as void and unenforceable but not illegal nor prohibited. [22] This Court was also referred to section 17A of the Interpretations Acts 1948 and 1967 which requires one to construe a provision of an Act in a manner “that would promote the purpose and object underlying the Act”. In this regard, this Court was urged to take judicial notice of the purpose and object of the Moneylenders Act 1951, which as spelt out in its preamble is “for the regulation and control of the business of moneylending, the protection of borrowers of the monies lent in the course of such business, and matters connected therewith”. [23] The Plaintiff reasoned that “the underlying purpose (object) or mischief sought to be addressed by section 16 of the Moneylenders Act 1951 is the protection of the borrower by ensuring that he is in possession of the terms of his contract of repayment prior to the loan being disbursed and received”. Whereas section 27 of the Moneylenders Act 1951 “calls for the attestation of the moneylending agreement with the attestor explaining the terms of the moneylending agreement to the borrower and certifying the borrowers understanding of it”. Hence, according to the Plaintiff, when section 16 is read together with section 27 of the Moneylenders Act 1951, one will see that the “underlying purpose (object)/mischief is not violated in this case”. [24] The Plaintiff repeatedly alluded to the fact that the Defendants, being “sophisticated entities who were always legally represented”, were not prejudiced by the alleged non-compliance with section 16 of the Moneylenders Act 1951. [25] In addition to the above submissions, it was also contended by the Plaintiff that even if the section 16 defence applies, it only affects the Loan Agreements, that is, claim for the sum of RM41,191,801.20. According to the Plaintiff, this section 16 defence has no bearing on its claim for the charges incurred for and on account of the Fourth Defendant comprising the overdue and outstanding quit rent and assessments in respect of the land belonging to the Fourth Defendant amounting to RM7,652,603.60 plus accrued interest. Judicial Estoppel and Res Judicata [26] The Plaintiff alluded to two previous Suits involving the same parties and contended that since the Defendants had “treated the Loans as valid and regular in the Shah Alam Suit and the OS Proceedings, the Mula Parties are estopped and barred by res judicata from now asserting that the Loans are void and unenforceable – which is a diametrically opposite and mutually exclusive position from that taken previously by the Mula Parties”. The point raised by the Plaintiff is that the Defendants “could have raised the alleged non-compliance of s 16 of the Moneylenders Act 1951 in the previous proceedings but they failed to do so” and instead “elected to treat the Loan Agreements as valid and regular”. [27] On this ground, the Plaintiff relied on Leisure Farm Corp Sdn Bhd v Kabushiki Kaisha Ngu (formerly known as Dai-Ichi Shokai) & Ors [2017] 5 MLJ 63 (FC) at para [16]; [2017] CLJU 499, Syarikat Rodziah v Malayan Banking Bhd [2021] 5 CLJ 170 (CA) at paras [45] to [49]; [2021] AMEJ 0133; [2021] MLJU 166; [2021] 3 MLRA 556, Asia Commercial Finance (M) Bhd v Kawal Teliti [1995] 3 CLJ 783 (SC) at 791 F-G, 792 A-B, 793 E-I; [1995] 3 AMR 2559; [1995] 3 MLJ 189; [1995] 1 MLRA 611 and Lin Wen-Chih v Pacific Forest Industries Sdn Bhd [2023] 6 AMR 561; [2023] 8 CLJ 671; [2023] 6 MLRA 1 (FC). [28] In reply, the Defendants pointed out that the provisions of law raised in the previous suits were sections 67 and section 132(g) of the Companies Act 1965 and that the issue of section 16 of the Moneylenders Act 1951 was never raised and considered. Hence, there was no final determination by the Shah Alam High Court on the validity of the 3 moneylending agreements mentioned herein. Alternative Claims [29] In the event that the Defendants are successful in invoking section 16 of the Moneylenders Act 1951 with the Loan Agreements declared as void and unenforceable, the Plaintiff has proffered the following alternative claims, namely:

Restitution under s 66 of the Contracts Act 1950; and

Money had and received and unjust enrichment under common law. [30] In advancing its argument that it is entitled in law to the above alternative claims, the Plaintiff underscored the following points, that is, (i) the Loan Agreements were not prohibited moneylending agreements; (ii) there is no statutory prohibition for the granting of the loans as the purpose of the loan was not made with the object to commit an illegal act; and (iii) since there is neither statutory nor common law illegality about these loans, none of the limbs in section 24 of the Contracts Act 1950 is engaged. [31] The position that the Plaintiff has adopted is that even though the Loan Agreements were unenforceable under the Moneylenders Act 1951, its recovery of the money lent is not confined to the said Act. In other words, the Plaintiff is nevertheless entitled to recover the loan under “any other principle of law”. Indeed, Mary Lim J (as she then was) had made the above observation in Orix Credit Malaysia Sdn Bhd v Choong Keong Kor [2011] 1 LNS 111 at paras [25]-27]; [2011] 2 AMCR 110; [2011] MLJU 182; [2011] 2 MLRH 891 (“Orix Credit Malaysia”). Restitution under Section 66 of the Contracts Act 1950 [32] Section 66 of the Contracts Act 1950 reads as follows:

Obligation of person who has received advantage under void agreement, or contract that becomes void When an agreement is discovered to be void, or when a contract becomes void, any person who has received any advantage under the agreement or contract is bound to restore it, or to make compensation for it, to the person from who he received it” [33] It is the Plaintiff’s contention that since the Loan Agreements are not agreements that are void ab initio, section 66 of the Contracts Act 1950 applies to the present case. Based on this provision and the Federal Court case of Tan Chee Hoe & Sons Sdn Bhd v Code Focus Sdn Bhd [2014] 3 AMR 9; [2014] 3 CLJ 141; [2014] 3 MLJ 301; [2014] 4 MLRA 11, the Plaintiff submitted that it must succeed in its alternative claim for restitution premised on section 66 of the Contracts Act 1950. [34] In reply to the above submissions, the Defendants asserted instead that as a result of the contravention of section 16 of the Moneylenders Act 1951, the 3 moneylending agreements are thus illegal. The Defendants further submitted that this Court should not lend any assistance to the Plaintiff to enforce an illegal contract and that there are no exceptions provided for any violation of section 16 of the Moneylenders Act 1951. The defendants then argued that since section 2(h) of the Contracts Act 1950 provides that “an agreement enforceable by law is a contract”, an agreement unenforceable in law is not a contract. [35] It is noteworthy that the Defendants made reference to Golden Wheel Credit (No. 2) and Mahmood bin Ooyub v Li Chee Loong & Other Appeals [2020] 1 LNS 660; [2020] 6 MLJ 755; [2021] 1 MLRA 609 (“Mahmood bin Ooyub”). In the latter case, it was pointed out by the Defendants that the Court of Appeal had made further reference to section 24 of the Contracts Act 1950, which outlines “what considerations and objects are lawful, and what not”, with “an agreement which is forbidden in law” as falling under the latter category. Money had and received and unjust enrichment [36] The elements for a claim of money had and received are:

that the defendant must have been enriched by the receipt of a benefit;

that the benefit must have been obtained at the plaintiff’s expense; and 3. that it would be unjust to allow the defendant to retain that benefit. [See Golf & Jones – The Law of Restitution] and those for unjust enrichment are:

that the respondent was enriched by receiving a benefit;

that the benefit received was at the appellant’s expense; and

that the retention of the benefit by the respondent was unjust. [See Air Express International (M) Sdn Bhd v MISC Agencies Sdn Bhd [2012] 4 MLJ 59] [37] The Plaintiff referred this Court to the Federal Court case of Dream Property Sdn Bhd v Atlas Housing Sdn Bhd [2015] 2 AMR 601; [2015] 2 CLJ 453; [2015] 2 MLJ 441; [2015] 2 MLRA 247 which elucidated the nature and concept of restitutionary remedies and the United Kingdom Supreme Court case of Patel v Mirza concerning the “trio of considerations” when dealing with the illegality doctrine. [38] According to the Plaintiff, based on the facts in this case, all the elements for a claim in money had and received, and unjust enrichment are clearly met and fulfilled. Hence, the Plaintiff argued that it must succeed also in its alternative claim for restitution premised on money had and received and unjust enrichment for the sums claimed. Limitation [39] Another defence raised by the Defendants is that the Plaintiff’s claims are statute barred by section 6 of the Limitation Act 1953. The basis of this limitation defence is that the Plaintiff’s cause of action would have arisen in the year 2013, when the monies were disbursed under the agreements. [40] The Defendants placed reliance on AmBank (M) Bhd v Abdul Aziz bin Hassan & Ors [2010] 7 CLJ 553; [2010] 3 MLJ 784; [2009] 4 MLRA 458 and Thameez Nisha Hasseem (as the administrator of the estate of Bee Fathima @ dll, deceased) v Maybank Allied Bank Bhd [2023] 5 AMR 581; [2023] 5 CLJ 874; [2023] 4 MLJ 145; [2023] 4 MLRA 492 in support of their limitation defence. [41] Predictably, the Plaintiff argued otherwise, contending that the claim and/or the alternative claims to recover the loans were filed within the statutory limitation period. The Plaintiff put forward two principal reasons. [42] The first reason relates to the terms in the Loan Agreements. The Plaintiff pointed out that all the 3 Loan Agreements contain the following “Right of action”, clauses, that is: Right of action

5.

If the Borrower –

fails to repay any sum of instalment payable or any part thereof and any interest payable specified in Section 5 of the First Schedule for any period in excess of twenty-eight days after its due date; or

commits an act of bankruptcy or enters into any composition or arrangement with his creditors or, being a company, enters into liquidation, whether compulsory or voluntary, the Lender may terminate this Agreement.

Upon the occurrence of any of the events specified in subclause

herein, the Lender shall give the Borrower not less than fourteen days a written notice to treat this Agreement as having been repudiated by the Borrower and unless in the meanwhile such default alleged is rectified or such unpaid sum of instalment and interest are paid, this Agreement shall at the expiry of the said notice, at the option of the Lender be deemed to be annulled.

In the event this Agreement has been terminated or annulled, the Lender may claim the balance outstanding from the Borrower in accordance with the provisions under Order 45 of the Subordinate Court Rules 1990 [P.U. (A) 97/1990] in case the balance outstanding does not exceed two hundred and fifty thousand ringgit or Order 79 of the Rutes of the High Court 1980 [P.U. (A) 50/1980] in case the balance outstanding is higher than two hundred and fifty thousand ringgit. [43] The Plaintiff alluded to the fact that a demand for the principal sum of RM41,191,801.20 was made on 21 January, 2015 and a 7-day period for payment of it to be made was given. The 7-day period expired on 28 January, 2015. The Second Defendant was given a notice on 27 February, 2015 to rectify the default or pay the sum demanded within 14 days of 27 February, 2015, failing which the Loan Agreements will be terminated at the expiry of the said 14 days. As the 14-day period had passed without any rectification of the default or payment, the Loan Agreements terminated at the end of it, that is, on 14 March, 2015. This date, according to the Plaintiff, is the date on which date the cause of action to sue arose. That being the case, limitation would only set in on 13 March, 2021. Since the action was filed on 8 January, 2021, the action is not time barred. [44] As for the alternative claims, as these were added by way of amendment on 3 March, 2021. The application of the doctrine of relation back meant that these alternative claims are deemed to have been commenced on 8 January 2021, the date the writ was issued. In any event, these alternative claims were added even before limitation had set in on 13 March, 2021. [45] The second ground relied by the Plaintiff to challenge the limitation defence is premised on a proposition enunciated by the Court of Appeal in Khatijah bt Abdullah & Ors v Mohd Isa bin Biran [2017] 2 AMR (refd); [2017] 7 CLJ 513; [2017] 2 MLJ 1; [2017] 2 MLRA 509. The relevant part of the judgment reads as follows: [31] We agree with the appellants that the SPA had become void and s 33 of the Contracts Act 1950 applies. A void contract does not generate any enforceable right or duty. Where there is neither right nor duty, limitation cannot be invoked (see Hubah Sdn Bhd & Ors v Koperasi Pusaka (Penampang) Bhd & Ors. The defence of limitation is thus not available to the respondent. [46] Last but not least, the Plaintiff also raised the provisions in sections 26 and 27 of the Limitation Act 1953 in support of its assertion that its claims are not time barred under the Limitation Act 1953. This line of argument is raised in the event that this Court finds that the cause of action had arisen more than six years before the writ was issued. [47] The Plaintiff highlighted the following facts as amounting to an acknowledgment of debts and thereby giving rise to a fresh accrual of action, that is, (i) when the Defendants filed the Amended Defence & Counterclaim in the Shah Alam Suit on 17 August, 2015; and (ii) more recently on 21 September, 2020 when they filed the Originating Summons Proceedings to repay the debts and to redeem the land/securities; and (iii) when the Defendants through their principal and primary director acknowledged and admitted in the Shah Alam Suit the sums advanced by the Plaintiff towards the Outgoings Incurred, and that it was a continuing loss that the Plaintiff had to incur. Hence, it is the Plaintiff’s contention that the right of action to recover the Loans and Outgoings Incurred shall be deemed to have accrued on 17 August, 2015 or 21 September, 2020, rendering the claim and/or the alternative claims to recover the loans as not time-barred. [48] This acknowledgement and henceforth fresh accrual of action argument was met with the counter argument by the Defendants that there was an absence of an unequivocal admission of any precise amount owed by the Defendants. [49] In rejecting this acknowledgment ground as raised by the Plaintiff, the Defendants relied on the provisions in sections 26(2) and 27 of the Limitation Act 1953, the Federal case of Wee Tiang Teng v Ong Chong Hooi & Anor [1978] 1 LNS 234; [1978] 2 MLJ 54; [1978] 1 MLRA 366 on what constitutes as a sufficient acknowledgment and the Court of Appeal decision of Lay Hong Food Corp Sdn Bhd (previously known as Lay Hong Poultry Processing Sdn Bhd) v Tiong Nam Logistics Solutions Sdn Bhd [2017] 10 CLJ 680; [2018] 2 MLJ 66 that had explained that an acknowledgement must be unequivocal. The Decision of this Court [50] On the first principal issue of whether there has been a breach or non-compliance with section 16 of the Moneylenders Act 1951, the answer is undoubtedly in the affirmative. The strict and express requirement in the said provision mandates that the Loan Agreements are to be stamped and delivered to the borrower before the loans are disbursed. This explicit pre-requisite has been flouted by the Plaintiff lender. [51] Crucially, the legal effect of such non-compliance with section 16 of the Moneylenders Act 1951 must be determined. In this regard, references may be made to section 16 of the Moneylenders Act 1951 itself and section 2(g) of the Contracts Act 1950. [52] Section 16 of the Moneylenders Act 1951 unmistakeably declares any such moneylending agreement as unenforceable and by virtue of section 2(g) of the Contracts Act 1950, “an agreement not enforceable by law is said to be void”. [53] This Court is of the considered view that the argument by the Plaintiff to the effect that the Defendants are “sophisticated entities” and were at all times “legally represented” and thus were not prejudiced by the alleged non-compliance with section 16 of the Moneylenders Act 1951 does not hold water. The same can also be said of the Plaintiff. It too must be a sophisticated entity and not wanting in legal representation. [54] This Court has also considered the contention by the Plaintiff that in construing section 16 of the Moneylending Act 1951, it should be carried out in a manner that would promote the purpose and object underlying the said Act and when section 16 is read together with section 27 of the Moneylenders Act 1951, one will see that the underlying purpose or mischief is not violated in this case. [55] However, in light of the clear contravention of an express and explicit requirement laid down in the Moneylenders Act 1951 and the obvious resulting legal consequence, the 3 Loans Agreements in this present case are unenforceable and void. [56] Be that as it may, while the breach of section 16 of the Moneylenders Act 1951 has adversely affected the Loan Agreements, this section 16 defence has no bearing on the Plaintiff’s claim for the charges incurred for and on account of the Fourth Defendant comprising the overdue and outstanding quit rent and assessments in respect of the land belonging to the Fourth Defendant amounting to RM7,652,603.60 plus accrued interest, that is, the outgoings incurred. [57] As for the Judicial Estoppel and Res Judicata ground raised by the Plaintiff, this Court has carefully considered the authorities cited by the Plaintiff against the background of this case. Unfortunately, it is unable to agree with the Plaintiff that Judicial Estoppel or the concept of Res Judicata, even in the wider sense, applies in the instant case. [58] This brings us to the Plaintiff’s alternative claims. As noted in paragraphs [29] – [31] above, the crux of the Plaintiff’s contention is that it is entitled to seek Restitution under section 66 of the Contracts Act 1950 and for money had and received and unjust enrichment under common law. [59] As this Court is in total agreement with the High Court in Orix Credit Malaysia Sdn Bhd that a Plaintiff is not confined to invoking the Moneylenders Act 1951 when seeking to recover a loan but may resort to “any other principle of law”, it is apposite that the provision in section 66 of the Contracts Act 1950 be examined detail. [60] The Defendants have adopted the position that as a result of the contravention of section 16 of the Moneylenders Act 1951, the 3 moneylending agreements are illegal. [61] Section 66 of the Contracts Act 1950 deals with situations “when an agreement is discovered to be void, or when a contract becomes void”. There is no mention of illegality. [62] The authorities cited by the Defendants, namely, Golden Wheel (No 2) and Mahmood bin Ooyub did refer to section 66 of the Contracts Act

Nevertheless, this Court observes that in these cases, there were elements of illegality in the moneylending transactions. [63] In Mahmood bin Ooyub, the Court of Appeal held that the sale and purchase agreements were a sham, to disguise illegal moneylending transactions to circumvent the strict provisions of the Moneylenders Act

Two of the lenders were also unlicensed moneylenders. [64] Likewise, in Golden Wheel (No 2), one of the material provisions of the Moneylenders Act 1951 that the plaintiff had contravened was section 17 which stipulated that the interest for a secured loan shall not exceed 12% per annum. As observed by the High Court in that case, the contravention of this provision was a serious matter. More importantly, there was wrongful deduction and retention of the loan sums, conduct expressly prohibited and, as once again noted by the High Court, “a feature most commonly found in illegal moneylending by loan sharks or 'Along'”. These were in addition to the failure to provide stamped copies of the moneylending agreements and the statements of accounts. These factors clearly distinguish Golden Wheel (No 2) from the present case. [65] Unlike the above cases cited and relied on by the Defendants, there is no such element of illegality in the present case. [66] Admittedly, the 3 Loan Agreements are not agreements that were discovered to be void. However, they are contracts that subsequently became void. The events that rendered the contracts as subsequently becoming void was the release of the monies before the agreement were stamped and delivered. When the first Loan Agreement was signed on 10 September, 2013, it was a valid agreement. Similarly, when the second Loan Agreement was signed on 25 March, 2014, it was a valid agreement. The same can be said of the third Loan Agreement, when it was signed on 13 June, 2014. There was no evidence before this Court to suggest that these agreements are tainted by elements of illegality. [67] The upshot to this is that the Plaintiff may avail itself the provision in section 66 of the Contracts Act 1950. [68] In the event that this Court is incorrect in invoking section 66 of the Contracts Act 1950, it is also of the considered view that the Plaintiff may rely on the doctrine of money had and received and/or unjust enrichment. [69] The elements for these restitutionary remedies as outlined paragraph [36] are present in the instant case. [70] As it is this Court’s findings that the issue of illegality does not arise in the present case, there is no necessity to deliberate on Patel v Mirza’s trio of consideration to the present case. [71] This Court is also aware of the recent decision in Triple Zest Trading & Supplies & Ors v Applied Business Technologies Sdn Bhd [2023] 8 AMR 225; [2023] 10 CLJ 187; [2023] 6 MLJ 818; [2023] 1 MLRA 144 where the Federal Court had disallowed the return of the principal loan sum, which the Court of Appeal had ordered the borrowers to pay back to the lender. Suffice to say that this decision of the Federal Court is distinguishable from the present case and the principle enunciated therein is not applicable to the instant case. [72] On the issue of limitation, this Court finds that the requirement for a valid acknowledgement has not been made out by the Plaintiff. Hence, the issue of a fresh accrual of action does not arise. [73] Regardless, the absence of acknowledgment has no bearing on this limitation point. Since the 3 Loan Agreements are unenforceable and void, the terms relating to the “Right of action” cannot be invoked. However, this Court is bound by the principle enunciated by the Court of Appeal in Khatijah bt Abdullah & Ors v Mohd Isa bin Biran that “a void contract does not generate any enforceable right or duty” and “where there is neither right nor duty, limitation cannot be invoked”. As in Khatijah bt Abdullah & Ors v Mohd Isa bin Biran the defence of limitation is thus not available to the Defendants in the present case. [74] In view of the above findings, the Plaintiff’s claims for the loans disbursed to the Second Defendant amounting to RM41,191,801.20 with interest of 5% per annum from the date of the Writ until date of full payment and the outgoings incurred amounting to RM7,652,603.60 plus interest incurred as pleaded in paragraph 22(4) of the Amended Statement of Claim are allowed with costs. [75] The Defendants to pay costs of RM40,000 to the Plaintiff, subject to allocator. Dated: 18 January, 2024 sgd [CHOONG YEOW CHOY] Judicial Commissioner High Court of Malaya Shah Alam Counsel: Gopal Sreenevasan with Conrad Young, Mark Lau and Kristen Tan for the Plaintiff (Messrs. Sreenevasan Young) Ahmad Amir Mahmood for the Defendants (Messrs. Gunaseelan & Associates)