The recent Federal Court’s judgment delivered by Abang Iskandar FCJ (as he then was) in Yogananthy a/p AS Thambaiya v Harta Pusaka Idris bin Osman [2020] 5 MLJ 455, at [32] to [34], supports the above decision in Uzma Engineering that the court may consider all evidence, including evidence which is extraneous to a contract, to decide whether the contract is a sham or otherwise: “[32] The learned JC had treated the agreement as a sham document. But was it a sham document? In Dr Mansur bin Hussain & Ors v Barisan Tenaga Perancang (M) Sdn Bhd & Ors [2019] MLJU 1552; [2019] 1 LNS 661 (‘Mansur Hussain case’), the COA had referred to Snook v London and West Riding Investments Ltd [1967] 2 QB 786 (‘the Snook case’) where Lord Diplock LJ (as His Lordship then was) had occasion, at p 802, to say the following: … [33] In a subsequent case, about three decades down the road, the English Court of Appeal in Hitch and others v Stone (Inspector of Taxes) (2001) STC 214 (‘Hitch case’) referred to the Snook’s case and laid down the applicable test to ascertain a sham document, which to our minds, would serve us well by reproducing the said test here. The steps to be taken in such determination as outlined by Arden LJ, had been stated as follows: [64] An inquiry as to whether an act or document is a sham requires careful analysis of the facts and the following points emerge from the authorities. [65] First, in the case of a document, the court is not restricted to examining the four corners of the document. It may examine external evidence. This will include the parties’ explanations and circumstantial evidence, such as evidence of the subsequent conduct of the parties. [66] Second, as the passage from Snook makes clear, the test of intention is subjective. The parties must have intended to create different rights and obligations from those appearing from (say) the relevant document, and in addition they must have intended to give a false impression of those rights and obligations to third parties. [67] Third, the fact that the act or document is uncommercial, or even artificial, does not mean that it is a sham. A distinction is to be drawn between the situation where parties make an agreement which is unfavourable to one of them, or artificial, and a situation where they intend some other arrangement to bind them. In the former situation, they intend the agreement to take effect according to its tenor. In the latter situation, the agreement is not to bind their relationship. [68] Fourth, the fact that parties subsequently depart from an agreement does not necessarily mean that they never intended the agreement to be effective and binding. The proper conclusion to draw may be that they agreed to vary their agreement and that they have become bound by the agreement as varied (see for example Garnac Grain Co Inc v HMF Faure & Fairclough Ltd [1966] 1 QB 650 at 683–684 per Diplock LJ, which was cited by Mr Price). [69] Fifth, the intention must be a common intention (see Snook). This is relevant to issue 3 below. [34] It had been observed that the policy considerations that underpin the concept of sham are the protection of the rule of law, to prevent abuse of fundamental legal principles and the prevention of evasion of statutes, among others. It was also commented that the Snook case had narrowed down the test for sham. See the relatively recent case of Autoclenz Ltd v Belcher and others [2011] UKSC 41, a landmark case in the UK on labour law and contract law; and the related article by Toby Graham, appearing in Trusts and Trustees, Vol 22, Issue 8, October 2016. Indeed, on the authority of the case of Sri Kelangkota-Rakan Engineering JV Sdn Bhd & Ors v Arab Malaysian Prima Realty Sdn Bhd & Ors [2001] 1 MLJ 324, the courts are entitled to go behind the impugned agreement or transaction to ascertain the true nature of such agreement or transaction. In the case of Lori (M) Bhd (interim receiver) v Arab-Malaysian Finance Bhd [1999] 3 MLJ 81; [1999] 2 CLJ 997, it was there observed by our apex court that in other common law countries, courts were slow to declare commercial contracts as void on ground of illegality, but having said that if the circumstances so warrant, the courts would not shy away, from doing what would be in accord with what the law expects to be done, as a keeper of the public conscience. The fact that the apex court had done that could be seen in the recent case of Merong Mahawangsa Sdn Bhd & Anor v Dato’ Shazryl Eskay bin Abdullah [2015] 5 MLJ 619 FC (‘Merong Mahawangsa case’), among others.” (emphasis added).