Ong Seow Lee v Lee Ee Fong (P-04(NCC)(W)-482-10/2024)

What is the legal effect of tendering a digital asset in satisfaction of a monetary debt;

Did the Respondent prove that the Appellant agreed to accept the 50 units of Litecoin in satisfaction of this loan; and

Was the High Court entitled to reverse the learned Magistrate's conclusion on the evidence? [30] The first issue is one of law. The second is a question of fact to be determined from the evidence. The third concerns the proper limits of appellate intervention. [31] We shall address the applicable contractual principles before turning to the evidence.

Burden of Proof [32] The legal burden rested throughout on the Respondent. Under sections 101 and 102 of the Evidence Act 1950, a party who asserts that an admitted debt has been discharged must prove the facts constituting that discharge. The standard is the balance of probabilities. [33] That legal burden must be distinguished from the evidential onus which may shift as evidence is adduced. The distinction is explained by the Federal Court in Letchumanan Chettiar Alagappan v Secure Plantation Sdn Bhd [2017] 4 MLJ 697; [2017] 5 CLJ 418; [2017] 3 AMR 625; [2017] 3 MLRA 501, FC and Teoh Kiang Hong v Theow Say Kow [2025] 1 MLJ 813; [2025] 2 CLJ 683; [2025] 2 AMR 381; [2025] 2 MLRA 504, FC. The question is whether, on the evidence as a whole, the Respondent proved the alleged discharge.

Accord and satisfaction under section 64 of the Contracts Act [34] The statutory starting point is section 64 of the Contracts Act 1950. It permits a promisee to dispense with or remit performance of a promise, wholly or in part, and to accept instead of it any satisfaction which the promisee thinks fit. Section 64 reads: 64 Promise may dispense with or remit performance of promise Every promisee may dispense with or remit, wholly or in part, the performance of the promise made to him, or may extend the time for such performance, or may accept instead of it any satisfaction which he thinks fit. ILLUSTRATIONS

A promises to paint a picture for B. B afterwards forbids him to do so. A is no longer bound to perform the promise.

A owes B RM5,000. A pays to B, and B accepts, in satisfaction of the whole debt, RM2,000 paid at the time and place at which the RM5,000 were payable. The whole debt is discharged.

A owes B RM5,000. C pays to B RM1,000 and B accepts them, in satisfaction of his claim on A. This payment is a discharge of the whole claim.

A owes B under a contract, a sum of money, the amount of which has not been ascertained. A, without ascertaining the amount, gives to B, and B, in satisfaction thereof, accepts the sum of RM2,000. This is a discharge of the whole debt, whatever may be its amount.

A owes B RM2,000, and is also indebted to other creditors. A makes an arrangement with his creditors, including B, to pay them a composition of fifty cents in the dollar upon their respective demands. Payment to B of RM1,000 is a discharge of B's demand. [35] Section 64 recognises the autonomy of a creditor to accept substituted performance. Thus, a creditor entitled to payment of money may agree to accept a lesser sum, goods, property, services or another asset in satisfaction of the obligation. Once the agreed satisfaction is furnished, the original obligation is discharged according to the terms of the accord. [36] The doctrine is commonly described as “accord and satisfaction”. The accord is the agreement by which the creditor accepts substituted performance in discharge of the existing obligation. The satisfaction is the substituted performance furnished pursuant to that agreement. In the present case, the alleged accord was the Appellant’s agreement to accept 50 units of Litecoin in place of RM70,000.00 in cash, and the alleged satisfaction was the 50 units of Litecoin standing to the credit of her wallet. [37] The creditor’s agreement need not invariably be expressed in words. In Kerpa Singh v Bariam Singh [1966] 1 MLJ 38; [1965] CLJU 11 66; [1965] 1 MLRA 272, FC, a cheque for a lesser sum was expressly tendered in full settlement of the debt, with a request that it be returned if the offer was not accepted. The creditor cashed the cheque and retained the proceeds. The Federal Court held that, by doing so, the creditor had agreed to discharge the debtor from further liability. [38] The converse is illustrated by Ong Kim Khoon v Gaya Filem Bhd [1979] 1 MLJ 79; [1978] CLJU 135; [1978] 1 MLRA 89, FC. The contract required payment in cash, and there was no evidence that the creditor had agreed to a variation in the form of tender. The mere receipt of a copy of the letter proposing a different mode of payment did not amount to acceptance. [39] It follows that the receipt or retention of money or property is not, by itself, conclusive. Its significance depends on whether, viewed objectively and in its proper context, the creditor’s conduct evidences an agreement to accept the performance tendered in satisfaction of the debt. [40] The applicable propositions from these authorities may therefore be stated as follows:

first, the debtor bears the burden of proving discharge;

second, the substituted performance may consist of an asset of value;

third, the creditor must agree to accept that asset in satisfaction of the debt; and

fourth, the creditor's agreement may be express or inferred objectively from conduct.

Digital assets, value and legal tender [41] The concept of legal tender performs a different function. Section 10 of the Currency Act 2020 provides that only currency notes and currency coins issued by Bank Negara Malaysia are legal tender in Malaysia, subject to the statutory limits stipulated in the Act. Litecoin is plainly not legal tender. [42] That conclusion does not answer the present appeal. Legal tender identifies the currency in which a debtor may make a legally valid tender of payment. Section 64 of the Contracts Act 1950 concerns a different situation in which the creditor voluntarily agrees to accept another form of satisfaction. An asset does not have to be legal tender before it may form the subject matter of such an agreement. [43] At the material time, the Capital Markets and Services (Prescription of Securities) (Digital Currency and Digital Token) Order 2019 defined digital currency as “a digital representation of value which is recorded on a distributed digital ledger whether cryptographically-secured or otherwise, that functions as a medium of exchange and is interchangeable with any money, including through the crediting or debiting of an account”. Digital currencies satisfying the conditions prescribed by the Order are treated as securities for the purposes of the capital-markets legislation. The Order did not make cryptocurrency legal tender. [44] Malaysian decisions have nevertheless recognised, in their respective statutory and factual contexts, that cryptocurrency is capable of being property or an asset to which value attaches. In Robert Ong Thien Cheng v Luno Pte Ltd & Anor [2019] 1 LNS 2194; [2020] MLRHU 1068, HC, Bitcoin was treated as a commodity-like asset with value. [45] In Lee Kuang Gen v Tan Sri Dato' Seri Dr M Mahadevan a/l Mahalingam and other appeals [2024] 1 MLJ 825; [2024] 2 CLJ 20; [2024] 2 MLRA 219, CA, this Court observed, in construing the Moneylenders Act 1951, that the concept of money was capable of including assets readily convertible into cash, including cryptocurrency. That observation must be understood in its statutory context. It nevertheless confirms that a digital asset is not devoid of value merely because it is not legal tender. [46] The High Court in Johnathan Wong Futt Po v Koh Chin Wei & Anor [2024] MLJU 2925; [2024] CLJU 2525; [2025] 2 MLRH 213, HC, recognised that cryptocurrency may constitute valuable consideration where the recipient is willing to accept it. We agree with that limited proposition. The legal effect comes from the recipient's agreement to accept the asset, not from describing the asset as money or legal tender. [47] The materials before us did not establish that the private ownership or voluntary transfer of Litecoin was prohibited at the material time. The regulatory status of the platform on which the asset was held is distinct from the legal character of the asset and from the parties' contractual agreement. Our Analysis and Findings Issue 1: What is the legal effect of tendering a digital asset in satisfaction of a monetary debt? [48] The Appellant’s legal-tender argument proceeds on the premise that a monetary debt can only be discharged by payment in currency which the law recognises as legal tender. That argument overlooks section 64 of the Contracts Act 1950. Section 64 expressly permits a creditor to accept a different satisfaction in place of the performance originally promised. [49] The distinction is between legal tender and consensual satisfaction. Because Litecoin is not legal tender, the Respondent could not compel the Appellant to accept it. However, if she agreed to receive 50 units of Litecoin in full satisfaction of the loan, the fact that Litecoin was not legal tender did not prevent the agreement from taking effect. [50] Nor does the volatility of a digital asset prevent it from constituting satisfaction. Volatility may influence whether a creditor would agree to accept the asset and may be relevant when the existence or terms of that agreement are disputed. It does not, as a matter of law, deprive the asset of value or invalidate an accord once proved. Findings on Issue 1 [51] We therefore find that a debtor cannot, without the creditor’s agreement, discharge a debt denominated in Ringgit Malaysia by tendering cryptocurrency. [52] Cryptocurrency may nevertheless constitute valid satisfaction where the creditor agrees, either expressly or by conduct, to accept it for that purpose. Issue 2: Did the Respondent prove that the Appellant agreed to accept the 50 units of Litecoin in satisfaction of this loan?

The existence and receipt of the 50 units of Litecoin [53] We now turn to the evidence. The Appellant admitted that at least 50 units of Litecoin were present in the Binance wallet opened in her name and that she was able to view them there. The presence of those Litecoin in the wallet, and the Appellant’s knowledge of them, were therefore proved. [54] That admission did not, by itself, prove the purpose for which the Litecoin were credited or retained. It also did not prove that the Appellant had accepted them in full satisfaction of the loan. Those matters depended upon the Respondent discharging his burden of proving the Appellant’s alleged agreement on a balance of probabilities. [55] The Appellant’s admission made it unnecessary to trace every fractional credit recorded in the mining reports. The criticisms concerning interruptions to the electricity supply and the dates of particular mining entries remained relevant to the Respondent’s assertion that repayment occurred on 16 March 2020. They did not, however, determine the separate question of whether the parties had agreed to treat 50 of the Litecoin standing to the credit of the Appellant’s wallet as satisfaction of the loan. That question depended upon the evidence of the alleged oral agreement, considered together with the parties’ dealings with the Litecoin.

Whether there was an accord [56] We agree with the Appellant that receipt and retention alone were insufficient. A digital asset may be credited to a wallet without the recipient having agreed to accept it in satisfaction of an existing obligation. Knowledge that the asset possesses value is likewise not proof of an accord. [57] The Respondent, however, gave direct evidence that the parties had orally agreed that 50 units of Litecoin would be accepted in satisfaction of the friendly loan. Although there was no contemporaneous written record of that agreement, his evidence had to be evaluated together with the parties’ dealings with the Binance wallet and the Litecoin. [58] The Binance wallet was opened in the Appellant’s name. She supplied the relevant account particulars, had access to the wallet, monitored its balance and knew that at least 50 units of Litecoin were present. She discussed the value and conversion of the Litecoin with the Respondent and requested his assistance to sell them. [59] We do not regard any one of those matters as conclusive. In particular, the request for assistance to sell the Litecoin was capable of more than one interpretation. It was consistent with the Appellant’s evidence that she ultimately wanted RM70,000.00 in cash. It was also consistent with the Respondent’s evidence that she had accepted the Litecoins and thereafter wished to realise them. [60] The Appellant’s request for assistance to sell the Litecoin nevertheless assumes significance when considered together with the Respondent’s evidence of the oral agreement. She did not reject the 50 units of Litecoin or ask that they be returned. Instead, she sought to realise them for her own benefit. That conduct was consistent with the Respondent’s account, although it did not, standing alone, establish the alleged accord. [61] This conduct must be viewed in its proper context. The parties had earlier agreed to convert the Appellant’s contribution to the mining venture into a friendly loan. There was no evidence of any separate agreement under which the Appellant remained entitled both to repayment of RM70,000.00 in cash and to retain the 50 units of Litecoin as her share of the venture. In that context, her dealings with the Litecoin supported the Respondent’s evidence that they had been accepted in satisfaction of the loan. [62] We have not overlooked the Appellant's demands of 18 August 2020 and 26 October 2020. Nor have we overlooked the Respondent's failure to answer those demands in writing by asserting payment had already been made. Those matters weighed against his account and required his oral evidence to be examined with care. They were not, however, decisive. [63] The evidence had to be considered as a whole. Weighed against the Respondent were the absence of any written record of the accord, the Appellant’s subsequent demands and his failure to answer them. In his favour were his direct evidence of the agreement, the admitted presence of the 50 units of Litecoin in the Appellant’s wallet and her knowledge of them, her discussions with him concerning their value and conversion, and her request for his assistance to sell them. On the balance of probabilities, we accept the Respondent’s evidence that the parties agreed to treat the 50 units of Litecoin as repayment of the loan.

Valuation and the counterclaim [64] The finding of satisfaction does not validate the Respondent's asserted valuation of RM87,134.56. His calculation depended on a Litecoin price of USD412.96 and a particular exchange rate. The evidence did not establish that USD412.96 was the market price on 16 March 2020 or on any other agreed valuation date. [65] The Appellant's acceptance that a unit of Litecoin could reach USD412.96 was not an admission that the 50 units of Litecoin were worth RM87,134.56 when the alleged repayment occurred. The market was volatile and no valuation mechanism was agreed or proved. The High Court’s dismissal of the counterclaim was therefore correct and remains undisturbed. [66] For the purposes of the Appellant’s claim, section 64 of the Contracts Act 1950 permits a promisee to accept an asset in satisfaction of a debt whether or not its market value corresponds exactly with the amount due. The court does not re-price an agreed substitute merely because its market value subsequently rises or falls.

Binance and the regulatory argument [67] The later regulatory action against Binance does not determine whether the loan was discharged. The material events and the parties’ dealings with the Litecoin occurred before the Securities Commission’s directions in 2021 concerning Binance’s operation as an unregistered digital asset exchange. [68] More fundamentally, the regulatory status of the exchange operator does not render every asset held through the platform valueless or every private transfer void. The Appellant did not identify any statutory provision that invalidated her ownership or acceptance of the 50 units of Litecoin at the material time. [69] It is also unnecessary to consider the Respondent's alternative reliance on estoppel or unjust enrichment. Neither doctrine can substitute for proof of an accord. If the Respondent failed to prove acceptance, those alternatives could not cure the deficiency. If acceptance was proved, the contractual claim was discharged without resorting to either doctrine. Findings on Issue 2 [70] For these reasons, we find that the Respondent proved, on the balance of probabilities, that the Appellant agreed to accept the 50 units of Litecoin in satisfaction of the loan. [71] Our conclusion does not rest upon the presence or retention of the Litecoin in the Appellant’s wallet, or on her request for assistance to sell them, considered separately. It rests upon the cumulative effect of the Respondent’s direct evidence of the oral agreement and the Appellant’s objective dealings with the 50 units of Litecoin that the Respondent said constituted repayment. [72] We have also taken into account the Appellant’s demands of 18 August 2020 and 26 October 2020 and the Respondent’s failure to answer them. Those matters weakened the Respondent’s account, but did not displace it when the evidence was considered as a whole. The demands showed that the Appellant subsequently maintained that RM70,000.00 remained payable in cash. They did not, however, outweigh the Respondent’s evidence of the oral agreement when considered together with the Appellant’s dealings with the Litecoin. Issue 3: Was the High Court entitled to reverse the learned Magistrate's conclusion on the evidence? [73] An appellate court does not intervene merely because it might have reached a different conclusion on the evidence. Intervention is warranted where the decision below is plainly wrong because it proceeds upon an error of law or an insufficient judicial appreciation of the evidence: Ng Hoo Kui & Anor v Wendy Tan Lee Peng (administratrix for the estate of Tan Ewe Kwang, deceased) & Ors [2020] 12 MLJ 67; [2020] 10 CLJ 1; [2020] 8 AMR 227, FC. [74] The learned Magistrate approached the case on the premise that repayment required the Appellant to receive RM70,000.00 in cash and that, if the Litecoin possessed value, the Respondent ought to have sold them and paid the proceeds to her. [75] The correct question was not whether the Appellant had received RM70,000.00 in cash. It was whether she had agreed, pursuant to section 64 of the Contracts Act 1950, to accept 50 units of Litecoin in satisfaction of the RM70,000 owed. If such an accord was proved, the Respondent was not additionally required to sell the Litecoin and pay the Appellant in cash unless that obligation formed part of the accord. [76] The learned Magistrate accepted that the 50 units of Litecoin were present in the Appellant’s Binance wallet. His decision did not turn on any adverse finding as to the Respondent’s credibility based on the demeanour of the witnesses. Rather, he concluded that the loan had not been repaid because the Appellant did not receive RM70,000.00 in cash and the Respondent ought to have sold the Litecoin for her. With respect, that conclusion proceeded on an erroneous legal premise. [77] Once that premise is removed, the issue was whether the Appellant had agreed to accept the 50 units of Litecoin in satisfaction of the loan. The learned Magistrate did not determine that issue. Although he referred to the Appellant’s knowledge of the Litecoin and her request for assistance to sell them, he did not evaluate those matters by reference to the correct legal test. The High Court was therefore entitled to examine the evidence and determine whether the alleged accord had been proved. Findings on Issue 3 [78] For these reasons, we find that the learned Magistrate’s decision was plainly wrong. The High Court was entitled to intervene, apply the correct principle under section 64 of the Contracts Act 1950, and assess the evidence in its totality. [79] The High Court’s conclusion that the Appellant had accepted the 50 units of Litecoin in satisfaction of the loan was reasonably open on the evidence. The Scope of this Decision [80] Our decision is confined to the contractual issue before us. We do not hold that cryptocurrency is legal tender. Nor do we hold that the unilateral transfer of cryptocurrency discharges a debt denominated in Ringgit Malaysia. Mere receipt, silence or passive retention will not establish satisfaction. [81] We hold that a debt may be discharged by cryptocurrency, or by another asset, where the creditor agrees to accept that asset in satisfaction of the obligation. The agreement may be express or inferred objectively from conduct, but it must be proved by the debtor on the balance of probabilities. Whether such an agreement exists is a question of fact. Conclusion [82] For the reasons stated above, we conclude as follows. First, although cryptocurrency is not legal tender, it may constitute valid satisfaction of a monetary debt where the creditor agrees to accept it for that purpose. Secondly, the Respondent proved, on the balance of probabilities, that the Appellant agreed to accept the 50 units of Litecoin in satisfaction of the loan. That finding rests upon the Respondent’s direct evidence of the oral agreement, considered together with the Appellant’s objective conduct in relation to the Litecoin. Thirdly, the learned Magistrate’s decision proceeded upon an error of principle and the High Court was entitled to intervene. [83] We therefore dismissed the appeal and affirmed the order of the High Court. The Appellant shall pay the Respondent costs of RM30,000.00 for this appeal and the leave application, subject to the allocatur fee. Dated: 27 July 2026 -SGD- (FAIZAH BINTI JAMALUDIN) JUDGE COURT OF APPEAL, MALAYSIA COUNSEL: For the Appellant: Eng Khin Hock Afiqah Binti Abdul Razak [Messrs. Stephen & Co.] For the Respondent: Joshua Kevin Leng Wie Mun Reuben Ong Shen Myn [Messrs. Kevin & Co.]