Sureshraj A/L Krishnan v 1. Pv Power Engineering Sdn. Bhd. (BA-22NCC-44-07/2018)

This is the decision of the Court in respect of the Plaintiff’s claim for 22 monies lent to the Defendant pursuant to a Project Support Agreement 23 (PSA) and the Defendant’s counterclaim alleging that the PSA is nothing 24 but a cloak for an illegal moneylending transaction between the parties. 25 26

The Plaintiff was the sole witness in this suit while the 2nd Defendant 27 gave evidence on behalf of himself and the 1st Defendant. 28 2

At the end of the trial I dismissed the Plaintiff’s claim as I was of the 1 view that indeed the PSA was couched subtly to mask an illegal money 2 lending transaction. 3 4

I allowed a part of the counterclaim pertaining to the removal of the 5 private caveat lodged upon the 2nd Defendant’s residential property along 6 with the claim for general damages for wrongful entry of the caveat. I also 7 allowed the Defendants’ prayer for a permanent injunction prohibiting the 8 Plaintiff from selling/disposing off the 2nd Defendant’s home but refused 9 the claim for restitution and unjust enrichment. The reasons thereof will 10 be revealed in the paragraphs below. 11 12 The Pleadings 13

(5)

RM500,000.00 being repayment for a loan given to the 1st 17

RM454,000.00 being the guaranteed return sum for the loan 19 with effect from June 2018;

RM35,000.00 per month on a monthly basis being the 21 Guaranteed Return Sum for the loan from July 2018 until full 22 settlement;

Interest at the rate of 8% per day for items (a), (b) and (c) from 24 date of breach of the contract until full settlement; 25 alternatively interest at the rate of 5% per annum for Items (a), 26

and (c) from date of breach of contract until full settlement;

Costs on solicitor-client basis;

Costs of this action; and 29 3

Any further relief deemed fit and proper by this Honourable 1 Court. 2 3

In their Amended Statement of Defence the 1st and 2nd Defendants 4 denied liability and categorically stated that the Plaintiff is an unlicensed 5 moneylender within the meaning of the Moneylender’s Act 1952, and that 6 the PSA dated 25.7.2016 is disguised as a contract for private funding 7 support when it is in fact a moneylending agreement in respect of money 8 lent by the Plaintiff as an unlicensed moneylender. As a result of that the 9 Defendants state that the PSA is illegal, void and unenforceable as 10 against the Defendants. The Defendants relied on Section 15 of the 11 Moneylender’s Act 1952(MLA 1952) together with sections 2(g) and 66 12 Contracts Act 1950 to defend the case. 13 14

The Defendants contended that the PSA is a contract for repayment 15 of money lent in the sum of RM430,000 and not RM500,000 as claimed. 16 This is because the balance RM70,000 was withheld for payment of 17 interest incurred on the loan. The Defendants claimed that they had 18 already repaid RM562,000 to the Plaintiffs with details of the exact amount 19 claimed to be found in Paragraph 6 of the Amended Defence. 20 21

The Defendants averred that they were initially unaware that the 22 PSA was forbidden by law, its illegality only made known to them after 23 having received legal advise from their solicitors. 24 25

In their Amended Counterclaim against the Plaintiff, the Defendants 26 claimed for : 27 4

a declaration that in relation to the PSA the Plaintiff is an 1 unlicensed moneylender within the meaning of the MLA Act 2 1951;

a declaration that the PSA is a moneylending contract in 4 respect of money lent by the Plaintiff as an unlicensed 5 moneylender and is illegal, void and unenforceable against 6 the Defendants;

the removal of the caveat lodged by the Plaintiff on 28.7.2016 8 against the 2nd Defendant’s family residence;

damages for wrongful entry of the said caveat to be assessed 10 by the Registrar;

an injunction to restrain the Plaintiff and/or his representatives 12 from dealing with the 2nd Defendant’s family residence;

the sum of RM562,000 being money received by the Plaintiff;

interests; and 15

costs. 16 17

The salient facts are set out well in the written submissions of both 19 Plaintiff and the Defendant and I shall reproduce them herewith whenever 20 and wherever necessary. 21 22

As I have stated earlier, the claim here revolves around the PSA 23 which was executed by the parties on 25.7.2016. According to the Plaintiff 24 the PSA was drawn up in order to fund the 1st Defendant to carry out 25 projects involving civil, mechanical and electrical facilities for the 26 Malaysian army (PULADA). It would appear that the Defendants do not 27 seriously dispute that reason. 28 29 5

In pursuance to that agreement the Plaintiff stated that monetary 1 consideration for the PSA had been carried out in the following manner :

RM70,000 in cash handed over personally to the 2nd 3 Defendant on the day the agreement was executed. This 4 detail is strongly disputed by the Defendants who deny 5 receiving cash of any amount on 25.7.2016.

(ii) RM300,000 on 25.7.2016 and RM130,000 on 29.7.2016 vide 7 cash deposit into the 1st Defendant’s bank account. These 8 payments are not disputed. 9 10 Plaintiff’s Case 11

It is the crux of the Plaintiff’s claim that the PSA that was entered 12 into with the Defendants on 25.7.2016 was a validly binding contract and 13 the default in payments by the Defendant had resulted in a breach of its 14 terms, thus resulting in this suit against the Defendants. 15 16

The Plaintiff (SP 1) in his evidence stated that he and the 2nd 17 Defendant had a long business relationship which had gradually evolved 18 into a close friendship. This is why he had no hesitation to offer financial 19 help and support to the Defendants when the 2nd Defendant came to him 20 and asked him whether he could provide funding support to the 21 Defendants for their PULADA Project. He agreed to lend the money to the 22 Defendants and in return the 2nd Defendant agreed to be the guarantor for 23 the funding support. 24 25

SP 1 stated that he lent the Defendants RM500,000 for a short 26 return term of 6 months. In reciprocation the Defendants agreed to pay 27 SP 1 a guaranteed return sum of RM35,000 per month for the full 6 28 months. The Defendants were also required to settle the Capital 29 6 Guaranteed Sum together with all the Guaranteed Return Sum upon the 1 expiry of the 6 month period. However, the Defendants defaulted in 2 payments, only repaying RM320,000 with the balance still remaining 3 unpaid. 4 5

When asked to comment on the validity of the PSA, SP 1 stated that 6 the Defendants entered into the PSA fully aware with full knowledge and 7 understanding of the contents and implications of its terms and conditions. 8 SP 1 claimed that he and the 2nd Defendant had discussed the terms and 9 conditions for the financial aid that he was offering before the PSA was 10 executed. He stated that the Defendants did not raise any objections to 11 the terms contained in the PSA. On the contrary the 2nd Defendant and 12 his wife voluntarily and without any prompting urged SP 1 to accept their 13 residential home to be placed as collateral in order to show their 14 commitment to the Plaintiff. SP 1 averred that the 2nd Defendant’s wife 15 voluntarily and had on her own volition executed a Power of Attorney and 16 pre-signed a Sale and Purchase Agreement together with a Memorandum 17 of Transfer (Form 14A) of the property. 18 19

On the allegation by the Defendants that they had made a number 20 of repayments totaling to the amount of RM143,000 i.e. which made up of 21 the payment of RM10,000 on 26.7.2016, RM30,000 on 10.3.2017, 22 RM50,000 on 25.8.2017 and RM53,000 on 27.12.2017, SP 1 denied this. 23 He explained that those payments were not related to the PSA but were 24 instead payments for other separate transactions between him and the 25 Defendants. 26 27

In his testimony SP 1 explained that those repayments were for 28 other friendly loans extended to the Defendants for other projects from 29 7 time to time. To prove this SP 1 relied on screenshots of WhatsApp 1 messages between him and the 2nd Defendant. Essentially the Plaintiff 2 wanted to convey to the court that the repayments allegedly made by the 3 Defendants were not repayments towards the PSA but for other sums the 4 Plaintiff had advanced to him and/or owed by him around the same time 5 the PSA had been entered into. 6 7

Under cross-examination SP 1 completely disagreed with the 8 challenge put to him that the agreement was nothing other than a money 9 lending transaction disguised as a funding support scheme. SP 1 10 steadfastly maintained that it was a project support agreement and 11 disputed defence counsel’s suggestion that the substance of the PSA was 12 really in actual fact a contract for repayment of money lent. SP 1 denied 13 that he was an unlicensed money lender and had never carried out any 14 money lending activities. When pressed to give a reason as to why he 15 claimed he was not an unlicensed moneylender, SP 1 seemed nonplus 16 and could not come up with an answer even after the court prompted him 17 to do so. All he could muster was that he was a professional accountant 18 and therefore he could not be a moneylender as well. 19 20

When given the opportunity to explain the Plaintiff seemed to search 21 for words to express himself. He repeatedly stated that he is an 22 accountant and owned a legitimate business and that the idea for the PSA 23 originated not from him but from the 2nd Defendant. 24 25

He also claimed that the Defendant had an input into the 26 calculations for the repayment of the amount owed and had voluntarily 27 offered to pay those sums in view of the viability and the huge profits he 28 anticipated he would receive from the PULADA Project. 29 8

When asked for his reasons why he thought he had the right to claim 1 for the guaranteed return sum of RM35,000 per month for an indefinite 2 period until full payment SP 1 explained that he felt he was entitled to it 3 because the Defendants were enjoying the use of his money and had not 4 bothered to repay the full sum until to date. Why then he opined could he 5 not claim for the capital guaranteed returns when the Defendants had 6 taken and used that money without paying it back to him. 7 8

However, when pressed for his answer as to which one of the 9 clauses in the PSA allowed for him to claim that amount SP 1 admitted 10 that there was nothing in the agreement to allow for that but nonetheless 11 he maintained his disagreement to the suggestion that he had no right to 12 claim for the said sum. 13 14

It was also put to the Plaintiff that he did not disburse the full sum of 15 RM500,000 to the Defendants but instead had only given RM430,000 with 16 the balance of RM70,000 withheld. In his explanation SP 1 denied this 17 and stated that he had given to the 2nd Defendant RM70,000 by way of 18 cash payment at the same time when they signed the agreement and the 19 balance RM430,000.00 was credited into the Defendants’ bank account 20 in 2 separate transactions. SP 1 was adamant that the Defendants had 21 received the full sum of RM500,000 by virtue of the act of signing the PSA. 22 When pressed to show proof that he had given the cash of RM70,000 the 23 Plaintiff maintained his reply that the fact the Defendants signed the PSA 24 was its only proof. He also could not point to any paragraph of the PSA to 25 support what he had said. 26 27

Coming back to the topic of the repayment of RM143,000 made by 28 the Defendant, the response given by SP 1 was that some or all of these 29 9 payments related to other loans the Defendants had taken from him. He 1 said that the Defendants frequently approached him to advance moneys 2 for their projects and based on the close relationship between him and the 3 2nd Defendant, SP 1 said he was willing to provide the financial aid they 4 requested. According to him the Defendant had always repaid the monies 5 borrowed and he said that this can be proven through the WhatsApp 6 messages between the two of them over that particular period of time. 7 8

In his explanation SP 1 stated that the payment of RM10,000 on 9 26.7.2016 was payment of his advanced salary for professional services 10 rendered as Finance Manager for the PULADA project. 11 12

Another payment of RM50,000 on 25.8.2017 was a soft loan to the 13 2nd Defendant to aid the 1st Defendant in obtaining a tender for a project 14 known as the Resettlement of Kg Senibong. 15 16

The payment of RM53,000 on 27.12.2017 was in actual fact a 17 repayment of an advance from the Plaintiff to Malaysian Airports Holding 18 Bhd in regard to a tender undertaken by the Defendants. 19 20

The WhatsApp messages until the end of the trial remained marked 21 as ID and never converted as exhibits as defence counsel soundly 22 objected to its inclusion. I will come to this point later on in my judgment. 23 24

Coming back now to the PULADA project for which is the reason for 25 the PSA to have come into existence, SP 1 yet again maintained that the 26 PULADA Project is not an imaginary project. He maintained that the 27 Defendants had been awarded the project and had in fact carried out jobs 28 in the PULADA site. 29 10

SP 1 stated that the Defendants claim purporting fraud and 1 misappropriation of funds by the PULADA officer was nothing short of 2 evidence with no support except for a police report lodged by the 2nd 3 Defendant as well as a Letter (pg 45-46 Bundle C) by a purported superior 4 officer from PULADA. SP 1 drew the court’s attention to the fact that the 5 letter did not carry any letterhead. Furthermore, no effort was taken to call 6 the maker of the so called author of that letter as witness at the trial. 7 8

On the issue of the sale and purchase Agreement in relation to the 9 house as well as the power of attorney and the memorandum of transfer 10 of that house, SP 1 stated that those were merely collateral to the PSA. 11 He stated that he never intended to dispossess the 2nd Defendant and his 12 wife of the property. SP 1 stated that the said documents were signed on 13 the same day as the PSA and was witnessed by a solicitor from Messrs 14 Thang & Thay. SP 1 agreed that he was the one who instructed the 15 solicitor to lodge a private caveat in his name on the property. SP 1 also 16 agreed that he engaged the solicitor but stated that it was the 2nd 17 Defendant who instructed the solicitor to draw up the transfer documents 18 for the property to be executed. 19 20

When questioned SP 1 said the RM50,000 deposit supposedly paid 21 by him stated in the form accompanying the application form for the 22 private caveat to be lodged came from the cash of RM70,000 handed over 23 to the 2nd Defendant on the same day. SP 1 repeatedly averred that he 24 was not interested in the house as a collateral and that he never intended 25 to do anything with the sale and purchase agreement for the house. 26 27 28 29 11

In re-examination SP 1 explained his reasons for claiming the sum 1 of RM35,000 mentioned in Paragraph 12(c) of his statement of claim. In 2 his words he said : 3 4 “…..well the Defendant has taken RM500,000 with the intention of 5 paying the RM35,000 guaranteed returns, which should be only done 6 for six months. He has not even paid my capital back. And he has only 7 paid some guaranteed return which has stopped at that time. So, my 8 claims are basically to me, it implies as a layman, it implies that until he 9 settles, he pays the guaranteed returns or else he is just enjoying my 10 RM500,000 cash.” 11 12 His explanation for the inclusion of the house as collateral he explained : 13 14 “For the agreement, for me it was the agreement that he volunteered his 15 house to be caveated, the S & P, this was how he enticed me to get the 16 capital. Because what he said was, with this RM500,000 modal we will 17 be able to run a project of RM2.5million and we will be able to make a 18 profit of RM1.5 to RM1.8 million in six months. So, for him to pay back, 19 the RM210,000 is not a big deal because that is why he came out with 20 the 10% profit sharing. He asked me to look after the finance matter and 21 that is how he led to…” 22 23 Later in re-examination SP 1 changed his mind about not wanting the 24 house which he said was offered to him by the 2nd Defendant. He said : 25 26 “Well if the whole PSA agreement goes down south, the only collateral 27 or the only benefit I have is the house. So, as later part in future, if 28 everything goes down, I only have the house to sell and I have to go 29 ahead with it.” 30 12 In regard to his appointment as the finance manager for the PULADA 1 project the Plaintiff said : 2 3 “The finance manager was just appointed and then, after about like what 4 I said after more than about a month or so, he didn’t give me any role 5 and then, basically, he didn’t want me to be in the office and then, 6 overlook, so, I didn’t know, from based on what you have said, after 7 many months he said the project was not taking off, and not there and 8 he cannot pay me and all that.” 9 10 The salary of RM10,000 was explained thus : 11 12 “…He just offered me a RM10,000, he just banked into my account. And 13 I was trying to help him. I was helping him all the way for the other 14 accounts, for his audit and all that.” 15 16 The Defendants’ case and Counterclaim 17

The Defendants have taken a stand that they are not liable to the 18 Plaintiff for any amounts allegedly due and payable under the PSA. 19 20

In his evidence the Defendants’ only witness, SD 1 agreed and 21 never denied that he had voluntarily and knowingly entered into the PSA 22 agreement with the Plaintiff but stated that he was unaware of the 23 implications of the agreement. He said he signed the agreement thinking 24 that it was simply an agreement whereby he was borrowing money from 25 the Plaintiff and therefore it was in his mind that he must repay the amount 26 which he borrowed. He said he did not know that the terms of the 27 agreement was illegal, void and unenforceable until much later. In his 28 evidence SD 1 stated as follows : 29 13 “ Saya hanya mengetahui yang PSA berkenaan adalah salah di sisi 1 undang-undang setelah mendapat khidmat nasihat dari pihak Peguam 2 bagi Defendan-defendan yang dilantik setelah Defendan-Defendan 3 disaman oleh Plaintiff. Saya telah menandatangani PSA berkenaan 4 tanpa menyedari pada masa itu yang ianya salah di sisi undang-undang. 5 Saya tandantanganinya sebab Defendan Pertama pinjam wang, jadi 6 pada saya adalah munasabah akan ada perjanjian untuk bayar balik. 7 Saya memang sedia tahu yang PSA berkenaan adalah suatu perjanjian 8 beri pinjaman wang, cuma saya tidak tahu yang ianya salah.” 9 10

And that was why also SD 1 said that he never raised any objections 11 to the Plaintiff as he thought he was obliged to repay the amount owed. 12 13

Explaining how the PSA came about SD 1 said that he had landed 14 a contract at Kem PULADA with an estimated value of RM2.5 million. He 15 needed financial support to carry out the project. The Plaintiff agreed to 16 provide him with the capital he needed. SD 1 stated that he signed the 17 PSA at the office of Tetuan Thang & Thay in Shah Alam. He said he was 18 not given the opportunity to read through the PSA and was only informed 19 very briefly of the contents of the agreement. He said he was told only the 20 barest of details i.e. that the loan was for the sum of RM500,000.00 and 21 what the terms of repayment were. He said he was also told that he had 22 to charge his home to the Plaintiff in order to secure the loan. 23 24

SD 1 accused the Plaintiff and the lawyer of keeping from him the 25 fact that he had to pay to the Plaintiff 10% of the profits earned before tax, 26 that he had to pay 8% interest per day for any late payment. He said he 27 was not told until later that his home was to be caveated as well as for he 28 and his wife to sign documents to transfer the property absolutely over to 29 the Plaintiff. 30 14

On top of that he said the Plaintiff also appointed himself as 1 project/finance manager of the project and he was to be paid a monthly 2 salary of RM5000.00 without so much as lifting a finger to work for the 1st 3 Defendant. 4 5

Only after receiving legal advise did he become aware that the 6 Plaintiff had no right to demand all of the above. He was made to realize 7 that the Plaintiff would be entitled to sell his house in the event he 8 defaulted in repayments. Hence he filed the counterclaim against the 9 Plaintiff seeking a declaration that the PSA was void and illegal and he 10 also sought an order for a refund of the sum of RM562,900.00 which he 11 had already been paid to the Plaintiff. He also prayed for an order to have 12 the private caveat removed and for general damages as a result of the 13 wrongful entry of the private caveat on his property. 14 15

SD 1 reiterated that he only received RM430,000 from the Plaintiff 16 and not RM500,000 as stated in the PSA. He said that the Plaintiff held 17 back the sum of RM70,000 which the Plaintiff told him was for payment 18 towards interest. 19 20

In his evidence (pg 109 Notes of Evidence) SD 1 stated : 21 22 S: What was….and daripada tarikh tersebut sehingga sekarang 23 keterangan kamu, kamu tak menerima RM70,000 tersebut. Betul? 24 SD 1: Betul 25 26 S: Kalau kamu tak terima RM70,000, En Yusof, setuju dengan saya 27 setuju dengan saya, kamu akan WhatsApp atau hantar emel or would 28 have made an issue of it dalam masa tiga tahun tersebut? 29 SD1: Oh tidak. Saya just called. 30 15 S: You just called? Dia tak bayar, you diam saja? 1 SD 1: Dia cakap interest, bayar interest, tolak interest. 2 3 S: Oh, dia kata tolak interest? 4 SD 1: Ya. 5 6 S: Ada bukti untuk itu? 7 SD 1: By call. 8 9 S: By call. Now kalau En Yusof cakap sedemikian, ok, interesting. 10 Because when I ran through the WhatsApp dengan kamu tadi, muka 11 surat 122, 122. WhatsApp bulan pertama, Ogos, dia dah tanya kamu 12 RM35,000 sebelum 25hb. If that’s what you are saying, RM70,000, 13 maksud dia, dua bulan itu dia tak payah ambil dia punya RM35,000. 14 Bulan pertama tau. Dia tanya kamu, kamu tak jawab. Kalau betul apa 15 yang kamu cakap, you agree with me, kamu akan membalas WhatsApp 16 ini? Kamu akan membantah WhatsApp ini, setuju, Setuju, En Yusof? 17 SD 1: Tak setuju 18 19

According to SD 1 he had until todate paid up to the total of 20 RM562,900.00; a sum more than what was lent to him. The details are 21 found in his statement of defence. 22 23

SD 1 testified that the Plaintiff was only in name the finance/project 24 manager but he did not at all contribute in any manner to the project, 25 having never even stepped into the Defendants’ office at any given time. 26 27

During cross-examination SD 1 agreed that he had offered his 28 property as collateral and that he had signed a Power of Attorney over to 29 the Plaintiff in relation to the property. However during re-examination he 30 explained what actually transpired. He denied that he voluntarily offered 31 16 his property to the Plaintiff as a security in his efforts to persuade the 1 Plaintiff to agree to lend him the RM500,000. 2 3

SD 1 also agreed that he considered the Plaintiff as his friend and 4 admitted he knew that he would have to pay the Plaintiff RM35,000 per 5 month mainly because the Plaintiff was put out of pocket for having lent 6 him the principal sum of RM500,000.00. 7 8

It was also put to SD 1 that the Plaintiff had contributed to the 9 PULADA project by helping him with the auditing and accounts of the 1st 10 Defendant company. Further to that the Plaintiff had helped him on IT 11 aspects in other matters and on the whole had frequently given him 12 financial help for his other projects. To this SD 1 agreed but refused to 13 accept counsel for the Plaintiff’s suggestion that all these showed that the 14 Plaintiff was not acting as a moneylender to the Defendants’ but rather 15 had genuinely offered his help to both the Defendants. 16 17

On the issue of the assertion made by the Defendants that they had 18 repaid a total of RM562,900.00, SD 1 maintained that this was the amount 19 he had repaid the Plaintiff and disagreed with counsel under cross- 20 examination that most of the repayments were made for other loans he 21 took from the Plaintiff. 22 23

On the allegations raised by the Defendants purporting to fraud and 24 misappropriation of funds by the PULADA officer, SD 1 stated that he had 25 lodged a police repot on the matter. At the same time, he had met with the 26 Camp Commandant at PULADA to amicably resolve the matter but to no 27 avail. On this score SD 1 agreed with counsel for the Plaintiff that it was 28 not true that the PULADA project did not exist. 29 17

SD 1 denied that he was the one who initiated the offer of his home 1 to the Plaintiff to be charged. According to him what really happened was 2 that he was questioned as to whether he had any property and when he 3 told the Plaintiff that he had a house, the Plaintiff decided that it should be 4 used as collateral for the loan. SD 1 claimed that he was made to sign a 5 stack of documents at the office of the solicitor engaged by the Plaintiff 6 and given no opportunity to read the documents. SD 1 said : 7 8 “…saya hadir ke pejabat peguam Plaintif untuk sain perjanjian pinjam 9 duit. Saya diberi satu bundle dokumen yang dah ditanda post-it, ditanda 10 colour semua kan dan diminta saya tandatangani. Jadi saya tak tahulah 11 dokumen apa, dia kata dokumen itu semuanya dokumen PSA, 12 perjanjian pinjam duit. Jadi saya sain ajelah.” 13 14

SD 1 denied ever being advised before hand by the solicitor on the 15 contents and scope of the PSA, the Power of Attorney as well as the 16 Memorandum of Transfer. SD 1 assumed that all the documents were 17 those only in relation to the loan agreement. 18 19

In re-examination SD 1 explained why he assumed that all the 20 repayments were instalments made towards reducing the sum he 21 borrowed. He did not agree that those were payments for salary or other 22 loans. All he knew was that he was making payments towards reducing 23 the sum of RM430,000.00 he owed to the Plaintiff. He was shocked when 24 he found out that the Plaintiff was claiming more than triple the sum initially 25 borrowed. 26 27 Issues to be Tried 28

The following issues were considered: 29 18

Whether the PSA is an illegal moneylending agreement 1 rendering it illegal, void and unenforceable;

Whether the Defendants are estopped from challenging the 3 legitimacy of the PSA;

Are the Defendants liable as principle debtor and guarantor 5 respectively;

Whether the Plaintiff’s caveat on property belonging to the 2nd 7 Defendant and his wife ought to be removed and damages for 8 wrongful entry allowed; and 9

Whether the Defendants can claim for restitution from the 10 Plaintiff. 11 12 Evaluation and Findings of this Court 13

In coming to my decision in this case, I weighed the evidence 14 adduced by the witnesses called by the parties, keeping in consideration 15 the documentary evidence that was tendered in this case. I had the 16 advantage of perusing the written submissions prepared and filed by both 17 sides. In addition, counsels addressed me orally on the salient points they 18 wished to rely on in their case. 19 20

I will start off with restating the general rule that by virtue of sections 21 91 and 92 of the Evidence Act 1950 whereby parties to a contract cannot 22 adduce extrinsic evidence to contract, vary, add to or subtract from the 23 contents of the agreement or document they rely on. (see Tindok Besar 24 Estate Sdn Bhd v Tinjar Co [1979] 1 LNS 119.) 25 26

Counsel for the Plaintiff exhorted the court to rule that the Plaintiffs 27 and the Defendants are bound by the four corners of the PSA which they 28 had willingly and voluntarily entered into. I do not agree. There are 29 19 exceptions to the general rule that I mentioned just now. One of these 1 exceptions is found in proviso (a) to section 92 EA which allows oral and 2 documentary evidence to be admitted to contradict a contract on the 3 ground of illegality. 4 5

Secondly the court is inscribed with a discretionary power to peruse, 6 consider and make a finding whether the document relied upon is genuine 7 or a sham. In order to determine that all the circumstances, before, after 8 and at the time of the execution of the document or creation of the 9 transaction must be delved into. 10 11

In my view this case boils down to the most important issue to be 12 addressed and that is whether the PSA that was drawn up was in actual 13 fact a moneylending agreement and this tied up to the issue as to whether 14 the Plaintiff is an unlicensed moneylender within the meaning of the MLA 15

If the finding is positive then the PSA dated 25.7.2016 is illegal, void 16 and cannot be enforced. All the other issues raised by the Plaintiff and the 17 Defendants in their respective lists of issues to be tried pale into 18 insignificance once the main issue as addressed above is considered and 19 evaluated. 20 21 Whether the PSA dated 25.7.2016 is illegal for being a moneylending 22 agreement and thus contravening the Moneylenders Act 1951.

While the Plaintiff maintained that the PSA was a valid and binding 24 contract between the parties, the Defendants have in no uncertain terms 25 out rightly called the Plaintiff a “loan shark”, who is “in the business of 26 illegal moneylending.” According to the Defendants, the PSA is “ex facie 27 a moneylending contract” and is therefore tainted with illegality for being 28 in contravention of the MLA 1951. 29 20

The Act has been extensively amended and it would be useful to 1 reproduce some of the sections here. The long title of the Act is quite 2 profound because it states – 3 4 "An Act for the regulation and control of the business of moneylending, 5 the protection of borrowers of the monies lent in the course of such 6 business, and matters connected therewith. " 7 8 Section 2 MLA - 9 "moneylender" means any person who carries on or advertises or 10 announces himself or holds himself out in any way as carrying on 11 the business of moneylending, whether or not he carries on any 12 other business; " 13 "5. Licences to be taken out by moneylender 14

No person shall carry on or advertise or announce himself or 15 hold himself out in any way as carrying on the business of 16 moneylending unless he is licensed under this Act.

Any person who carry on or advertise or announce himself or 18 hold himself out in any way as carrying on the business of 19 moneylending without a valid licence, or who continues to carry on 20 such business after his licence has expired or been suspended or 21 revoked shall be guilty of an offence under this Act and shall be 22 liable to a fine of not less than two hundred and fifty thousand 23 ringgit but not more than one million ringgit or to imprisonment for 24 a term not exceeding five years or to both, and in the case of a 25 second or subsequent offence shall also be liable to whipping in 26 addition to such punishment.

No moneylending agreement in respect of money lent after the 28 coming into force of [MA] by an unlicensed moneylender shall be 29 enforceable. " 30 31 21

It is observed that Section 15 MLA specifically applies to a 1 moneylending agreement by an unlicensed moneylender who is carrying 2 on the business of moneylending. 3 4

One need only refer to section 2 of the Act to seek the definition of 5 the term “moneylender”. 6 7

A close scrutiny of the terms of the PSA would be necessary in order 8 to decide on the matter. 9 10

In the case of Barisan Tenaga Perancang (M) Sdn Bhd v Dr 11 Mansur b Hussain [2016]1 LNS 1723, the learned High Court Judge 12 observed that “the title to MA and the above provisions in MA show 13 Parliament’s intention for MA to regulate the business of moneylending 14 and not to regulate all kinds of moneylending transactions.” 15 16

Therefore, it is patently true that section 5(1) and (2) of the MLA 17 prohibited unlicensed moneylending business and certain acts related to 18 it. The Act does not prohibit any moneylending transaction with interest 19 unless the lender has carried on an unlicensed moneylending business. 20 21 Whether the presumption pursuant to s.10OA MLA, 1951 has been 22 invoked 23

It is trite that the party who desires the court to give judgment as to 24 any right bears the burden of proof. The Plaintiff has the legal burden of 25 proof as prescribed by Section 101 of the Evidence Act 1950. The 26 standard of proof on the Plaintiff to prove his claim is on a balance of 27 probabilities. In Selvaduray v Chinniah [1939] 1 LNS 107 it was held as 28 follows : 29 22 “It is trite that the party who desires the court to give judgment as to any 1 legal right or liability bears the burden of proof (s. 101 EA 1950). The 2 burden of proof on that party is twofold: (1) the burden of establishing a 3 case; and (2) the burden of introducing evidence. The burden of proof 4 lies on the party throughout the trial. The evidential burden of proof is 5 only shifted to the other party once that party has discharged its burden 6 of proof. If that party fails to discharge the original burden of proof, then 7 the other party need not adduce any evidence, in this respect it is the 8 Plaintiff who must establish their case. If they fail to do so, it will not do 9 for the Plaintiff to say that the defendants have not established their 10 defence.” 11 12

However, in this particular case the Defendants have alleged that 13 the PSA agreement is essentially a moneylending transaction. 14 15

The Defendant has invoked the rebuttable presumption pursuant to 16 Section 10OA of the MLA 1951. 17 18 Presumption as to the business of moneylending 19 10OA Where in any proceedings against any person, it is alleged 20 that such person is a moneylender, the proof of a single loan at 21 interest made by such person shall raise a presumption that such 22 person is carrying on the business of moneylending, until the 23 contrary is proved. 24 25

On the facts of this case I have no hesitation in concluding that the 26 rebuttable presumption under section 10OA MLA, 1951 has arisen simply 27 because the PSA in itself being a contemporaneous document contains 28 elements of moneylending ingredients. The money lent to the Defendants 29 carried interest and returns in massive proportions. In regard to interest 30 the MLA 1951 interprets “interest” thus : 31 23 “interest does not include any sum lawfully charged in accordance with 1 this Act by a moneylender for or on account of stamp duties, fees 2 payable by law and legal costs but, save as aforesaid, includes any 3 amount by whatsoever name called in excess of the principal paid or 4 payable to a moneylender in consideration of or otherwise in respect of 5 a loan.” 6 7

As with all rebuttable presumptions, a party against whom that 8 presumption applies may adduce evidence to rebut the presumption that 9 it is not carrying on a moneylending business. The standard of proof 10 required for that is only on a balance of probabilities. 11 12

In Barisan Tenaga Perancang (M) Sdn Bhd v Dr Mansur b 13 Hussain & Ors [2016]1 LNS 1723 the High Court held as follows : 14 15 “(1) the title to MA and the above provisions in MA show Parliament’s 16 intention to regulate the business of moneylending and not to regulate 17 all kinds of moneylending transactions. Section 5(1) and (2) MA prohibit 18 any moneylending transaction with interest unless the lender has carried 19 on an unlicensed moneylending business.

s.10OA MA provides that in any proceedings against any person 21 where it is alleged that such person is a moneylender, proof of a single 22 loan at interest made by such person shall raise a rebuttable 23 presumption that such person is carrying on the business of 24 moneylending. Even if a presumption arises under s.10OA MA against 25 a certain party, that party may adduce evidence to rebut this 26 presumption by providing that the party is not carrying on moneylending 27 business. A party is only required to adduce evidence on a balance of 28 probabilities to rebut a statutory presumption – please see the Supreme 29 Court’s judgment delivered by Wan Suleiman SCJ in Akin Khan b Abdul 30 Rahman v Public Prosecutor [1987] CLJ Rep 40 and 31 24

s. 15 MA applies only to a moneylending agreement by an unlicensed 1 moneylender who is carrying on business of money lending. This is 2 because of the definition of “moneylender” in s.2 MA.” 3 4 Whether the Plaintiff has rebutted the presumption 5

Since the presumption has been invoked against the Plaintiff he now 6 has the evidential burden to rebut the rebuttable presumption on a 7 balance of probabilities. 8 9

It cannot be disputed that the reason for the drawing up of the PSA 10 was to put into writing the fact that the Plaintiff lent money to the 1st 11 Defendant which was to be repaid within 6 months i.e. from 25.7.2016 12 until 24.1.2017. 13 14

The salient terms of the PSA is laid out here for easy reference : 15 16 Clause 1: SRK is desirous to invest the sum of RINGGIT MALAYSIA 17 FIVE HUNDRED THOUSAND (RM500,000.00) into the Company 18 (hereinafter referred to as the “Project Support Sum”) for a term of six 19

months from the date of this Agreement (hereinafter referred to as 20 the “Term”)

In consideration of the said Project Support Sum, the Company further 22 and unequivocally undertakes to pay SRK a Guaranteed Return of 23 RINGGIT MALAYSIA THIRTY FIVE THOUSAND (35,000.00) per month 24 on the said Project Support Sum (hereinafter referred to as “the 25 Guaranteed Return”) for the duration of the said Term. In addition for the 26 security of repayment of the Project Support Sum and all the 27 Guaranteed Return for the said Term to SRK, the Guarantor shall also 28 allow SRK to enter a private caveat on the said Property (as defined 29 herein). 30 25

The Guaranteed Return shall be paid to SRK not later than the first 1 twenty five days (25th) day of each month (hereinafter referred to as the 2

The said Project Support Sum is a Capital Guarantee Sum wherein 4 upon maturity of the Term the Company SHALL return and pay the full 5 Project Support Sum to SRK, irrespective of whether the Company or 6 the said Project is making a profit or loss during the said Term. The 7 Guarantor agreed and hereby guarantee SRK for the repayment of all 8 outstanding sum which later become due and payable by the Company 9 in accordance to this agreement in any event the Company refuse, fail 10 and/or neglect to make any repayment of the Guaranteed Return and/or 11 the Project Support Sum and/or any part or balance of the same; AND 12 the Guarantor hereby agree and acknowledge that he himself shall 13 always be made jointly responsible of all payment due and payable to 14 SRK in accordance to the terms set forth herein. 15 … 16

In accordance with the relevant prevailing provisions hereinabove on 17 repayment, the Company and the Guarantor agree that in the event of 18 non-fulfillment of the full settlement of any of the said Project Support 19 Sum or the payment of the Guaranteed Return upon any of the same 20 fall due or the balance of the same, this shall be construed as a breach 21 of contract, thereby entitling SRK to exhaust all his legal rights vesting 22 in him, to carry out, inter-alia, the following remedial measures against 23 the Company and/or Guarantor:- 24

commencing legal proceedings for the recovery of the said Project 25 Support Sum, or the payment of the Guaranteed Return upon any 26 of the same fall due or balance of the same (as applicable);

foreclose, sell and/or auction a residential property belonging to the 28 Guarantor and one Norsiati bt Mohamad Noor (NRIC 720522-01- 29 5476) (hereinafter referred to the “Co-Owner”) with the following 30 description : 31 All that piece of (freehold) land held under GERAN 63493, Lot 32 29773, Mukim Senai-Kulai, Daerah Johor Bahru, Negeri Johor 33 together with a double storey terrace house erected thereon and 34 26 bearing postal address No. 7065, Jalan Sri Putri 14, Taman Putri 1 Kulai, 81000 Kulai Johor (hereinafter referred to as “the said 2 Property”); (a copy of the said Property issue document of title is 3 annexed with this Agreement as Appendix Two, and shall be read 4 as part and parcel of this Agreement). All proceed of foreclosure, 5 sale and/or auction shall belong to SRK and neither the Guarantor 6 nor the Co-Owner could claim any part or portion of the said 7 proceeds.

confiscate and/or demand for the handover and/or gain possession 9 of the said Property and/or all other assets belonging to the 10 company in order to recover the said Project Support or the 11 payment of the Guaranteed Return upon any of the same fall due 12 or the balance of said same Sum.

to claim an interest at the rate of 8% on the total outstanding due 14 and payable as above mentioned on daily basis until the actual full 15 payment of the same. 16 … 17

SRK shall not be held liable for any liability(ies) incurred by the 18 Company and/or answerable to any claims made against the Company 19 (whether relating or otherwise to the said Project), present and/or 20 contingent, during the said Term and his role is purely that of a project 21 administrator” 22 23

Appendix 3 contains the letter of appointment appointing the Plaintiff 24 as the 1st Defendant’s Project/finance manager with a monthly salary of 25 RM5000 for the said term. The appointment letter also provides for the 26 payment of 10% of the profits generated before tax upon completion of 27 the said Project. 28 29

First on the list of matters is the dispute in regard to the amount 30 actually lent. The Plaintiff in his evidence stated that he had handed over 31 RM500,000.00 to the Defendants. The Plaintiff claims the manner in which 32 27 the monies were disbursed to the Defendants were as follows : RM70,000 1 in cash was handed over personally to the 2nd Defendant on 25.7.2016 2 i.e. on the same day the PSA was executed. The balance was credited 3 into the Defendants’ bank account on two occasions. The Plaintiff referred 4 to the bank account statements which show that a sum of RM300,000.00 5 was credit into the Defendants’ account on 25.7.2016 and later on 6 29.7.2016 the sum of RM130,000 was credited in the same manner. In 7 his evidence the Plaintiff stated that that he had given RM70,000 in cash 8 to SD 1 at the time when the PSA was signed with the balance credited 9 into the Defendants’ bank account. 10 11

However, there is no documentary proof of payment of cash and it 12 is the view of this court that it is more probable than not that the 13 Defendants were only given the sum of RM430,000 and the balance of 14 RM70,000 was indeed held back. 15 16

According to the Plaintiff an adverse presumption must be drawn 17 against the Defendants for the failure to call Puan Norsiati bt Mohd Noor 18 (2nd Defendant’s wife) as a witness as she is the only one who could prove 19 that SD 1 had received RM430,000 and not RM500,000. I fail to see the 20 relevance of this contention when it is the Plaintiff who has the legal or 21 evidential burden to prove that he did indeed lend RM500,000.00 to the 22 Defendants. This is in line with the fundamental principles of S. 100 – 103 23 of the Evidence Act, that he who asserts must prove. Therefore, it is the 24 considered view of this court that it is for the Plaintiff to prove that he had 25 in fact lent RM500,000.00 and not merely RM430,000.00. 26 27

In this case the onus of calling the wife of the 2nd Defendant should 28 fall upon the shoulders of the Plaintiff. It was he who claimed that he paid 29 28 RM70,000.00 in cash. For this very reason the adverse inference under 1 s. 114(g) of the EA relied upon by the Plaintiff cannot be accepted as 2 establishing that if the witness had been produced, her evidence would 3 work against the Defendants. Here, that adverse inference would be 4 applied against the Plaintiff for having failed to prove his assertion. 5 6

Coming back to the terms found in the PSA, it would be more than 7 apparent that the Defendants must repay the loan in full as a capital 8 guaranteed sum. Furthermore, the Defendants must pay RM210,000 as 9 the guaranteed return sum regardless whether the PULADA project 10 makes a profit or not. 11 12

In addition, the Defendants are required to pay the Plaintiff a salary 13 of RM5000 a month making it a total of RM30,000 in 6 months. This salary 14 is in pursuance to the appointment of the Plaintiff as the 1st Defendant’s 15 project administrator/manager or finance manager. 16 17

What makes it dubious is the Plaintiff entitlement to 10% of the 1st 18 Defendant’s profit before tax generated from the PULADA project. 19 20

It becomes more interesting in the event of a default or breach of 21 the PSA. This is because upon a breach of the PSA, the Plaintiff shall be 22 entitled to all the proceeds of the sale of the 2nd Defendant’s home upon 23 foreclosure. The house is registered in the name of the 2nd Defendant and 24 his wife and both parties signed documents such as the PA and transfer 25 documents in favour of the Plaintiff upon execution of the PSA by the 26 Defendant. 27 28 29

I take the view that the above acts carried out are more than 1 sufficient to trigger the rebuttable presumption found in Section 15 of the 2 MLA 1951. The Plaintiff only lent RM430,000 but is entitled to receive in 3 return the sum of RM710,000. By the PSA he is also entitled to receive 4 RM5000 a month for 6 months, 10% of the profits of the PULADA project. 5 The repayment for borrowing the sum of RM430,000 far exceeds the 6 amount lent. 7 8

In the Privy Council case of Chow Yoong Hong v Choong Yah 9 Rubeer Manufactory [1962] 1 MLJ 74, their Lordships were of the view 10 as follows : 11 12 “Section 3 (now Section 10OA) provides that “any person who lends a 13 sum of money in consideration of a larger sum being repaid shall be 14 presumed until the contrary be proved to be a money-lender.” The effect 15 of this section has been considered by Thompson J (as he then was) in 16 Sadhu Singh v Sellathurai [1955] MLJ 117 in a judgment which their 17 Lordships respectfully approve and adopt. To lend money is not the 18 same thing as to carry on the business of money-lending….If he were 19 left to discharge this burden without the aid of any presumption, a 20 defendant might frequently be in a difficulty…..(Section 10OA) enables 21 a defendant to found his claim on proof of a single loan made to him at 22 interest, it being presumed, in the absence of rebutting evidence, that 23 there were sufficient other transactions of a similar sort to amount to a 24 carrying on of business.” 25 26

It was held in T Chellapah v Official Assignee [1971] 1 MLJ 24 27 that proof of a single loan made to a party at interest raised a presumption 28 that there were sufficient to amount to a presumption that there was a 29 carrying on of the business of moneylending. 30 31 30

In the case presently before this court there is ample evidence on a 1 balance of probabilities that the amount lent was RM430,000 but what has 2 to be repaid back is many times more than what was lent. 3 4 Onus on the Plaintiff 5

The onus is thus on the Plaintiff to rebut the presumption raised 6 against him pursuant to Section 15 ML 1950. How did the Plaintiff defend 7 himself at the trial when challenged? 8 9

The Plaintiff denied he was a moneylender. From his evidence he 10 referred to the money he lent to the Defendants as “funding support” and 11 “investment”. He readily agreed that his investment with the Defendants 12 were risk free and that he would be guaranteed a profit whether or not the 13 Defendants made their profits. Yet he still staunchly that it was a 14 moneylending transaction. When pressed all the Plaintiff could muster 15 was that it was a project support and not moneylending. 16 17

It was observed that the Plaintiff was evasive in evidence. When 18 cross examined by counsel for the Defendants, he avoided answering 19 straight-out the questions put to him. He frequently claimed that it was the 20 Defendant who offered him the terms for borrowing the money. The 21 Plaintiff claimed that it was SD 1 who decided what was to be included in 22 the PSA. As an example, the Plaintiff claimed that SD 1 offered the house 23 as collateral and it was SD 1 who directed the lawyer to lodge the private 24 caveat and to put the reason for lodging the caveat being the sale and 25 purchase of the 2nd Defendant’s house which was not true at all. The 26 Plaintiff also maintained that SD 1 appointed him as finance manager and 27 gave him advanced salary to boot. 28 29 31

His denial that he was a moneylender was uninspiring and did not 1 convince the court that he was speaking the truth. In the notes of 2 evidence, the Plaintiff could not answer the questions put to him by 3 counsel. This is what happened under cross-examination : 4 5 “Q: …….You’ve testified just now that you are an accountant. How does 6 being an accountant disqualify you form being an unlicensed 7 moneylender? 8 A: Sorry, I don’t quite understand the question. 9 10 Q: You deny being an unlicensed moneylender. 11 A: Yes. 12 13 Q: You deny it because you say you’re an accountant. 14 A: Ok. 15 16 Q: So how does an accountant disqualify you from being an unlicensed 17 moneylender? 18 A: Well I’m not a licensed moneylender. 19 20 Q: Unlicensed, I said unlicensed. 21 A: Yes, ok. 22 23 Q: How is it that just because you are an accountant, you cannot be an 24 unlicensed moneylender? 25 A: I don’t quite understand. 26 27 Q: Someone can be an accountant and can also be an unlicensed 28 money lender, would you agree? 29 A: How can it be unlicensed moneylender, I don’t quite understand. 30 31 Q: By lending money to people without a license. 32 A: Yes, ok so – 33 32 Q: So you can or someone can be an accountant as well an unlicensed 1 moneylender. 2 3 Plaintiff’s counsel: My Lady, I think this question is not fair. You’re asking 4 the question to, asking the witness to assume a lot of things. Whether 5 someone can be an accountant or a moneylender, an accountant and a 6 moneylender is something that this witness is not in a position to testify. 7 8 Judge: Why don’t you answer, Mr Sureshraj, in your own words? You 9 say that you’re not an unlicensed moneylender because you are an 10 accountant? 11 A:Exactly. 12 13 Judge: So can you explain? 14 A: Yes, I’m not a moneylender licensed – 15 16 Judge: Unlicensed 17 A: Unlicensed but I’m an accountant. So, yes.” 18 19

The Plaintiff had the perfect opportunity to rebut the presumption 20 and to explain in his own words why he thought he is not an unlicensed 21 moneylender but as can be seen above the Plaintiff could not explain 22 adequately except to repeatedly say that by virtue of being an accountant 23 he could not be a moneylender. I therefore found the Plaintiff to be an 24 uninspiring witness. He was not convincing and his answers were 25 unsatisfactory. It is my view that the Plaintiff failed to give a reasonable 26 explanation for all the discrepancies that were put to him by the defence 27 counsel. His inability to explain why he thought he was not an unlicensed 28 moneylender was unconvincing and it undermined his credibility. I do not 29 agree with his counsel’s analysis that the Plaintiff did not reply 30 satisfactorily to the question put to him primarily because he could not 31 33 understand counsel. It is untenable as well as unacceptable and I do not 1 see how difficult it could be for the Plaintiff to give a plausible answer as 2 to his reasons why he did not think he should be labelled an unlicensed 3 moneylender. I would say that he should have welcomed the question for 4 it gave him the opportunity to dispel the notion that his claim was not 5 genuine or the truthfulness of his claim. In my view I found that the 6 defence had successfully elicited evidence directly from the Plaintiff that 7 the transaction between the Plaintiff and the Defendant veered to it having 8 all the features and characteristics of a moneylending transaction even if 9 it came under a different name as a support agreement. 10 11

This court made reference to the case of Yeep Mooi v Chu Chin 12 Chua & Ors [1960] 1 LNS 169 where the Federal Court held as follows : 13 14 “We have on another occasion observed that the [MA] does not strike at 15 moneylending but at moneylenders and at the loans lent by them. [MA] 16 is never intended to apply to an individual, or any member of the public 17 who lends money even at interest, unless he does so as a business. 18 (Ngui Mui Khin & Anor v Gillespie Bros & Company Ltd [1979] 1 19 LNS 60.)” 20 21

It was observed that the Plaintiff attempted to charge interest at 8% 22 per day on the outstanding sum. This is in Clause 7 of the PSA. Although 23 he told the court that he was dropping that claim when cross-examined it 24 still did not do his credibility any favour. It would have given a better 25 impression if the Plaintiff had entirely excluded this prayer from his claim 26 in the Statement of claim in the first place. By maintaining that exorbitant 27 claim in the SOC only sealed the court’s conviction that he was charging 28 illegal interest. 29 30 34

More importantly the Plaintiff failed dismally in explaining as to why 1 SD 1 and his wife were made to sign the SPA on 25.7.2016 at the same 2 time as when the PSA was signed. His explanation of his reluctance to 3 accept the house as collateral is unacceptable because Clause 7(b) of the 4 PSA clearly gave the Plaintiff the right to foreclosure on the property in the 5 event of a default. In his testimony the Plaintiff maintained that the 6 agreement would count for nothing if the collateral was not included. 7 Therefore, the Plaintiff was not exactly being truthful when he stated that 8 he had no intention of exercising his right to foreclose the property. 9 10

It is for all the above reasons that I found that the Plaintiff had failed 11 to rebut the rebuttable presumption on a balance of probabilities. I find as 12 a fact that the Plaintiff had used the PSA as cover to cloak the 13 moneylending activity it intended to indulge in. The terms in the PSA were 14 tainted with moneylending elements. Even if it was named as a project 15 fund support it cannot hide the obvious fact that it hosts an illegal 16 moneylending contract. The clear and definite terms of its clauses has 17 made it quite insurmountable for the Plaintiff to rebut the statutory 18 presumption. 19 20

Even if the Plaintiff denied that he was not in any way carrying on or 21 holding himself out as carrying on the business of moneylending, the PSA 22 is proof of the clear truth. To borrow the words of Lord Goddard in Polsky 23 v S. and A Services [1953] 1 All ER 185 : 24 25 “It seems to me that one of the most satisfactory ways of deciding what 26 the true nature of the transaction was is to see whether the documents 27 accurately set out the deal between the parties as it took place and at 28 the tie when it took place or whether the facts, or some of them, therein 29 35 recorded do not truly represent that which happened, but give the 1 transaction what I may call an innocent appearance.” 2 3

With respect I am of the view that the terms of the PSA did carry an 4 air of innocence but held behind it ominous dark clouds of looming 5 retributive financial repercussion should default occur. 6 7

With respect the Plaintiff cannot rely on the case of Wong Thian 8 Choy & Anor v Goodnite Sdn Bhd [2019] 1 LNS 139 to further his 9 cause. Even upon a cursorial glance would show the distinguishable 10 factors between it and this case. In Wong Thian Choy’s case the 11 Plaintiffs who lent the money to the Defendant were proven to be genuine 12 business persons who own furniture companies besides being office- 13 bearers in their industry associations. Before me, the Plaintiff was 14 hardpressed to even answer to the question why he thought being an 15 accountant did not make him a moneylender. 16 17

What is most appalling is that the PSA provided for payment of 18 unconscionable interest. Clause 2 of the PSA dated 25.7.2016 provided 19 for interest of 84% per annum on the principal loan. 20 21

Additionally, dealing a death knell is the admission by the Plaintiff 22 that the Power of Attorney and the Memorandum of Transfer contained 23 statements that were untrue and thus were sham documents merely to 24 provide security for the money lent to the Defendants pursuant to the PSA. 25 26

Counsel for the Plaintiff contended that an adverse inference should 27 be drawn against the Defendants for failing to call the 2nd Defendant’s wife 28 as a witness as she was privy and party to the transaction on 25.7.2016. 29 36 The Plaintiff further contended that she was the only one who could prove 1 the allegation that SD 1 only received RM430,000 and not RM500,000 as 2 alleged. 3 4

This is a fact asserted by the Plaintiff in Paragraph 7 of the SOC. In 5 line with the underlying principles in sections 101 – 103 Evidence Act i.e. 6 that he who asserts must prove it is thus for the Plaintiff to prove that he 7 lent RM500,000 to the Defendants and not merely RM430,000. In my view 8 the onus of calling the wife of SD 1 lay squarely on the Plaintiff’s shoulders 9 as it was he who alleged having paid RM70,000 in cash. In my view he 10 has failed to show any semblance of proof of this. The alleged payment 11 of RM70,000 in cash on 25.7.2016 was never pleaded by the Plaintiff 12 anywhere in his pleadings. On a balance of probabilities this court finds 13 that there is no proof that a total sum of RM500,000.00 was lent to the 14 Defendants. 15 16

Another unusual feature is the fact that there was nothing contained 17 in the terms and conditions of the PSA that allowed the Plaintiff to demand 18 that the Defendants repay the monthly guaranteed return sum of 19 RM35,000 as long as the principal sum remained unsatisfied. I agreed 20 with the contention of the Defendants’ counsel on this score. 21 22

Whatever doubt remained evaporated as mist always does when 23 the PSA was found to have provided for interest at the rate of 8% on a 24 daily basis. Even though the Plaintiff and his counsel told the court that 25 they wished to drop that claim, respectfully it did little to redeem the 26 Plaintiff. 27 28 37

The Plaintiff’s assertion that the repayments of RM133,000.00 made 1 by the Defendants were unconnected to the PSA has not been proven. 2 3

Counsel for the Defendants in his submissions contended that the 4 separate payments of RM30,000 on 10.3.2017, RM50,000 on 25.8.2017 5 and RM53,000 on 27.12.2017 were all payments pursuant to the PSA. In 6 considering the sum of RM30,000 which the Plaintiff claimed was given 7 as a soft loan long before the PSA came into being, it is found that there 8 was no proof furnished to support that claim or even the giving of the loan. 9 10

I accept the contention of counsel for the Defendants that since the 11 money was paid by the 1st Defendant, the Plaintiff had no authority to set 12 off that payment to pay the 2nd Defendant’s personal debt. 13 14

Similarly, the Plaintiff has failed to disclose any documentary proof 15 that he disbursed that amount to the 2nd Defendant. There were 16 contradictory statements in regard to the purpose of the loan, whether it 17 was for the Kg Senibong project or for the MAHB project. In any event the 18 Plaintiff has admitted receiving the sum of RM50,000 as repayment of a 19 loan. Therefore, the burden was on him to prove that it was for a loan 20 other than the PSA. In my view the Plaintiff has not sufficiently discharged 21 that burden on a balance of probabilities. There is no documentary 22 evidence of it being a loan for anything other than in pursuance to the PSA 23 project. These are merely bare assertions without any credible evidence 24 in support thereof. 25 26

In regard to the payment of RM53,000, the Plaintiff initially stated 27 that he lent this sum to the 2nd Defendant for a MAHB project. Then later 28 in his testimony he changed his statement and stated that the lender was 29 38 a company called Primainfo. He could not provide the invoice for receipt 1 of RM53,000 which would support his assertion that the extra RM3000 2 was for payment of GST. I have difficulty in believing the Plaintiff’s 3 testimony on this. 4 5

To sum it up all the evidence including the oral and documentary 6 evidence combined suggested strongly that the PSA was not a loan 7 agreement simpliciter but in reality, a moneylending agreement having all 8 the ingredients of a moneylending transaction often practiced by those 9 who do not wish to obtain a license for moneylending nor wish to be known 10 as unlicensed moneylenders. 11 12

I disagree with counsel’s submission that this was merely a method 13 of financial assistance to a friend for a specific project. In my view the 14 terms of the PSA were very unfriendly indeed with the Plaintiff having a 15 risk free investment and guaranteed repayment. 16 17

I find as a fact that the Plaintiff has failed to rebut the presumption 18 placed on him via s. 10OA MLA on a balance of probabilities. Pursuant to 19 s. 10OA MLA, proof of a single loan at interest made by a party shall raises 20 the presumption that he is in the business of moneylending. Contrary to 21 the contention put forth, the need to show that the person carries on or 22 advertises or announces himself or holds himself out in any way as 23 carrying on the business of moneylending does not apply to this situation 24 and is thus inconsequential. Accordingly, I hold that the Plaintiff has failed 25 to discharge the legal and evidential burden to prove on a balance of 26 probabilities against the Defendants. I find that the PSA was a disguise. 27 What it concealed was a moneylending transaction couched in terms of a 28 seemingly innocuous funding support agreement. 29 39

I follow and accept as I am bound to by the recent Court of Appeal 1 decision of Global Globe Property v Jangka Prestasi [2020] 6 MLJ 333 2 where it was held as follows : 3 4 “[131] The Moneylenders Act 1951 is very strict with respect to illegal 5 moneylending because of the special vulnerability of borrowers in need 6 who are at the mercy of the ‘alongs’ or loan sharks as these illegal 7 moneylenders are referred to who would resort to even harassment and 8 criminal intimidation to recover their exorbitant interest upon interest. 9 [132] It is a social ill that is difficult to be stamped out. In the light of the 10 nebulous problem faced Parliament made some major amendments tot 11 eh Moneylenders Act 1951 via the Moneylenders (Amendment) Act 12 2003 which came into force on 1 November 2003. 13 … 14 [136] There was also another amendment effected by the Moneylenders 15 Act 1951 which came into force on 15 April 2011. It introduced s 10OA 16 which according to the Explanatory Statement to the Bill, it seeks to 17 facilitate the proof of business of moneylending, Section 10OA makes 18 even more difficult for lender who had charged interest on the loan 19 given to say it was a one off transaction….. 20 … 21 [138] Therefore, even though this appears to be a once-off or one- 22 off transaction, the burden has now shifted to the lender to show 23 that (he) is not in the business of moneylending…. 24 [139] We had held that the interest element is in the RM400,000.00 25 reflected on the first PSA which we had held was never cancelled, the 26 question is whether a single transaction shown can make the 27 plaintiff a moneylender. It is not in dispute that the plaintiff does not 28 have a moneylending license. In the light of the presumption in 29 s10OA of the Moneylenders Act, a presumption is drawn that it is a 30 moneylending transaction. (emphasis added) 31 32 40

Likewise in the case presently before this court it is the view of this 1 court that the Plaintiff has not been able to adduced any evidence to rebut 2 the presumption. 3 4 ID 1 - the WhatsApp Messages 5

I now come to the WhatsApp messages marked as ID 1 and address 6 the issue as to whether those messages are admissible and can be 7 admitted as evidence. Counsel for the Plaintiff has contended that ID 1 8 ought to be admitted as evidence for a number of reasons.

The Plaintiff point to the Defendants’ themselves relying on 10 WhatsApp messages as part of their evidence;

(ii) The Plaintiff had produced the mobile phone which was used 12 to take the snapshots when he took the stand. The Plaintiff 13 contended that the Defendants did not take the time to 14 examine the said mobile phone;

(iii) The Plaintiff confirmed that he was the maker of those 16 screenshots; and 17

(iv) The 2nd Defendant in cross-examination confirmed the 18 contents of the WhatsApp messages. 19 20

It was the contention of counsel for the Plaintiff that the certification 21 under Section 90A Evidence Act 1950 was permissive and not mandatory 22 and that the court could accept the vive voce evidence of the witness in 23 the witness box. Counsel referred to the cases of Ahmad Najib Aris v PP 24 [2009] 2 CLJ 800, Gnansegaran a/l Pararajasingam v PP [1997] 4 CLJ 25 6 and Mohd Khayry Ismail v PP [2014] 1 LNS 412 to support that 26 contention. 27 28 41

Counsel for the Defendants on the other hand contended that 1 WhatsApp messages that are impugned may be admitted as evidence 2 only when 2 preconditions set out in section 5 EA are met i.e. that those 3 impugned WhatsApp messages concern the existence or non-existence 4 of “facts in issue” and whether they were relevant under sections 6 – 55 5 of the Evidence Act, 1950. (see Mok Yii Chek v Sovo Sdn Bhd [2015] 1 6 LNS 448.) 7 8

In this matter I note that the impugned WhatsApp messages relied 9 upon by the Plaintiff were all along contained in Part C of the Bundles of 10 Documents. Although the WhatsApp messages are contained in Part C 11 the Bundles of Documents they may yet be admitted as evidence if the 12 criteria for it is fulfilled. 13 14

In the case of Mok Yii Chek (supra), the learned Judge listed out 15 the following criteria that must be met : 16 17 “(a) the party adducing the Disputed Print-out has the onus to prove that 18 the Disputed Print-out fulfils either one of the 2 requirements in s. 5 EA, 19 namely :

the Disputed Print-out concerns the existence or nonexistence of “fact 21 in issue”. Section 3 EA defines a “fact in issue” as “any fact from which, 22 either by itself or in connection with other facts, the existence, non- 23 existence, nature or extent of any right, liability or disability asserted or 24 denied in any suit or proceeding necessarily follows”. The phrase of “fact 25 in issue” has been explained by Ong Hock Thye FJ (as his Lordship then 26 was) in the Federal Court case of How Paik Too v Mohideen [1968] 1 27 MLJ 51, at 52; or 28

(ii) the Disputed Print-out is relevant under ss 6 to 55 (contained in 29

the Disputed Print –out is a document produced by a “computer” 4 (defined widely in s 3 EA). Explanation 3 to s 62 EA provides that a 5 document produced by a computer is primary evidence and such 6 primary evidence may be adduced pursuant to s 64 EA. As the Disputed 7 Print-out is a document produced by a computer the party adducing such 8 a document must fulfil one of these 3 alternative conditions – 9

there is oral evidence that the Disputed Print-out is produced by the 10 computer in the course of the ordinary use of the computer – please see 11 the judgment of Shaik Daud JCA in the Court of Appeal case of 12 Gnanasegaran a/l Perarajasingam v PP [1997] 3 AMR 2841 at 2852 – 13 2853, which has been affirmed by the Federal Court’s judgment given 14 by Zulkifli Makinudin FCJ (as his Lordship then was) in Ahmad Najib v 15 PP [2009] 2 CLJ 800, at 823-826 and 830;

(ii) there is a certificate given under s 90A(2) EA (Section 90A 17 Certificate) by a person responsible for – 18

the management of the operation of the computer; or 19 20

the conduct of the activities for which the computer is used 21 22 - that the Disputed Print-out is produced by the computer in the 23 course of the ordinary use of the computer. 24 According to s 90A(3)(a) EA, the Section 90A Certificate may state a 25 matter to the best of the knowledge and belief of the person stating it. 26 Where a Section 90A Certificate is given, s 90A (4) EA presumes that 27 the computer in question “was in good working order and was operating 28 property in all respects throughout the material part of the period during 29 which the document was produced; or 30

if the Disputed Print-out is not produced by a computer in the course 31 of its ordinary use, s.90A (6) EA deems such a document “to be 32 produced by the computer in the course of tis ordinary use” if a party 33 43 adducing the Disputed Print-out can prove the following 2 cumulative 1 conditions – 2

the computer in question was in good working order; and 3

(ii) the computer was operating properly in all respects throughout the 4 material part of the period during which the document was produced 5 - please see the Federal Court case of Ahmad Najib, at 826-830, 6 which has approved Augustine Paul JCA’s (as his Lordship then was) 7 judgment in the Court of Appeal case of Hanafi Mat Hassan, at pg. 306. 8 It is to be noted that according to s 90C EA, s90A EA “shall prevail and 9 have full force and effect notwithstanding anything inconsistent 10 therewith, or contrary thereto, contained in any other provision of [EA]. 11 Or in the Bankers’ Books (Evidence) Act 1949, or in any provision of any 12 written law relating to certification, production or extraction of documents 13 or in any rule of law or practice relating to production, admission, or 14 proof, of evidence in any criminal or civil proceeding”. 15 16

This court referred to the case of PP v Lee Chor Hean [2019] 8 17 MLJ 427 where the court there had to adjudicate on the evidentiary issue 18 of whether the evidence form the CCTV recordings is admissible. The 19 learned High Court Judge held that it was “incumbent on the prosecution 20 to mandatorily either tender the certificate of the person(s) who managed 21 and maintained the decoder” or “otherwise procure their attendance in 22 court to testify that the respective decoders were in good working 23 condition and properly functioning in its ordinary use at the item when the 24 video recording was recorded.” 25 26

The question for the court now to decide is whether the Plaintiff had 27 complied with any of those alternative requirements imposed by the EA. 28 29 30 44

Regrettably there is no evidence of such a thing. It is noted that the 1 Plaintiff did not tender a certificate under s 90A (2) EA here in this case 2 and neither did the Plaintiff give evidence orally as to either the fact that 3 those impugned WhatsApp texts were produced in the course of ordinary 4 use of his mobile handphone or that it was in good working order and 5 operating properly throughout the time they were produced. The failure to 6 do so is in my view fatal to the Plaintiff’s intention to convert the impugned 7 messages into Exhibit marked as “P”. 8 9

The objection of the Defendants are upheld. The court 10 fundamentally agreed with the submission that the integrity of those 11 impugned WhatsApp messages were compromised by its incomplete and 12 unfaithful reproduction. The Plaintiff did not volunteer any information of 13 the lapses in communication. Counsel for the Defendants also called upon 14 the court to note that he did not touch on those impugned WhatsApp 15 messages and did not cross-examine the Plaintiff as to them during cross- 16 examination. 17 18

In the circumstances this court is of the view that the WhatsApp 19 messages do not qualify to be admitted into evidence as “P” as it did not 20 fully comply with the requirements of s. 90A EA. The court could not place 21 much weight on them because of their unverified reproduction. There is 22 the doubt that the Plaintiff in order to follow through with his claim might 23 have had “incentive to conceal or misrepresent all or any of the facts 24 stated” in them. 25 26

It was not enough for the Plaintiff to produce his mobile handphone 27 in court and offer to the Defendants and the court to view it. It certainly did 28 not do anything to relieve the Plaintiff of his burden as provided for in s 29 45 90A EA. It is incumbent on the Plaintiff to testify positively that his mobile 1 phone was “in good working condition and properly functioning in its 2 ordinary use” at the time when the impugned WhatsApp messages were 3 made. This is crucial especially because those impugned WhatsApp 4 messages were made in a span of 2 years on numerous occasions. 5 6 Estoppel 7

Counsel for the Plaintiff submitted that the Defendants were 8 estopped from contending that the PSA is illegal, void and unenforceable 9 because they had received and utilized the moneys lent to him and had 10 even made attempts to repay the sums claimed. The Plaintiff relied on the 11 Federal Court case of Boustead Trading (1985) Sdn Bhd v Arab- 12 Malaysian Merchant Bank Bhd [1995] 4 CLJ 283. 13 14

This court in applying the guidelines established in the Boustead 15 case above would have to consider the following :

that both the Defendants had represented to the Plaintiff that 17 the PSA is enforceable; and 18

(ii) that the Plaintiff had relied on the representations made by 19 both Defendants and had proceeded to alter his position 20 based on such reliance. 21 22

Having perused the Plaintiff’s SOC, there is nothing there to show 23 there was an active or even a passive representation by the Defendants 24 that the PSA is valid and enforceable. More importantly it was never 25 pleaded that the Plaintiff had relied on the Defendants’ representations 26 and because of those representations had altered his position as a result. 27 28 46

Most significantly it has been decided by numerous case authorities 1 over the years that estoppel can never be raised to counter an illegality 2 plea (see Mayban Securities v National Union of Bank Employees 3 [2015] 3 MLJ 240). 4 5

Additionally, the doctrine of estoppel cannot be utilized to create any 6 contractual right or to give rise to any cause of action. As explained in 7 Boustead Trading Sdn Bhd (supra) : 8 9 “Estoppel is not a cause of action. It may (if established) assist a plaintiff 10 in enforcing a cause of action by preventing a defendant from denying 11 the existence of some fact essential to establish the cause of action, or 12 (to put it in another way) by preventing a defendant from asserting the 13 existence of some fact the existence of which would destroy the cause 14 of action.” 15 16

Therefore, the Plaintiff’s attempt to use estoppel as a sword instead 17 of as a shield cannot be allowed. 18 19 Unjust Enrichment and Unfair Advantage 20

The Plaintiff contended that the Defendants have gained an unjust 21 enrichment at the expense of the Plaintiff as the Defendants had utilized 22 the funds given by the Plaintiff. 23 24

It would have been an issue worth exploring had it been pleaded by 25 the Plaintiff. In this case the Plaintiff did not plead this point in his SOC 26 and furthermore it was not part of the list of issues to be decided in this 27 trial. Therefore, the Plaintiff cannot avail himself of the protection of unjust 28 enrichment or unfair advantage to pursue its claim against the 29 Defendants. 30 47

Conversely can the Defendants rely on unjust enrichment to support 1 their counterclaim against the Plaintiff? 2 3

In his evidence SD 1 stated that he was only aware of the illegality 4 of the PSA after he consulted a lawyer. It was contended that it is not 5 uncommon for layman such as SD 1 to believe that the PSA was a 6 legitimate document as it was prepared by a solicitor. 7 8

Having heard the evidence given by SD 1, it is the considered view 9 of this court that SD 1 is not ‘the victim’ or a common layman. It is 10 improbable for SD 1 to be unaware of the illegality of the PSA. I formed 11 the opinion that he is a shrewd businessman who knew what he had 12 gotten himself into. Probably the lure of the large profits to be made from 13 the PULADA project had spurred him to throw caution to the wind and 14 accept the terms spelt out in the PSA even though the terms were terribly 15 one sided. 16 17

However, I must add that I accepted the evidence that SD 1 signed 18 the stack of documents in the solicitor’s office without realizing that there 19 were other documents such as the PA and the MOT attached. In my view 20 he was not wrong for being convinced that it was just a straightforward 21 loan agreement and I accept his explanation as being reasonable on this 22 issue. SD 1 had gone to meet the Plaintiff at the solicitor’s office to borrow 23 money from the Defendant and as he explained his understanding was 24 that he had to repay money he borrowed. 25 26

I accepted also that SD 1 was not in a position to bargain when he 27 needed the cash. He was in no position to have his own solicitors hammer 28 out a deal for him. In all probability Messrs Thang & Thay was the solicitor 29 48 acting exclusively and on behalf of the Plaintiff and the Defendants had 1 no say in the matter other than to comply and use the services of the same 2 solicitor. 3 4

In addition to that the Defendants have not proven satisfactorily that 5 the conditions and the doctrine of unjust enrichment applied to them. 6 Purely for these reason this court will not avail the Defendants of any relief 7 for restitution. 8 9 Removal of Caveat 10

The Plaintiff did not offer much resistance to the Defendants’ 11 counterclaim for the removal of the caveat. In my view the private caveat 12 was wrongly entered against the property because there was no genuine 13 transaction of an ordinary sale and purchase agreement. It was more of a 14 charade. The Plaintiff has not proven that he had a “caveatable interest” 15 on the property within the meaning of section 323(1)(a) of the National 16 Land Code so as to be entitled to enter the caveat. 17 18

In my view the foundation for the lodgment of the caveat was 19 demolished during cross-examination when it was elicited from the 20 Plaintiff that no consideration of RM50,000 had passed from him to the 21 Defendants as stated in the Form 19B for entry of the private caveat. The 22 reason for the entry of the caveat was untruthful hence the counterclaim 23 for the removal of the private caveat is allowed. 24 25 Conclusion 26

In conclusion it is the firm finding of this court that the PSA dated 27 25.7.2016 is illegal and void for contravening section 15 MLA 1951. I am 28 more than satisfied on a balance of probabilities that the PSA is an illegal 29 49 moneylending transaction dressed up as a funding support agreement. It 1 bore all the characteristics of an illegal moneylending transaction 2 whatever nice name was given to it. 3 4

The Plaintiff’s claim is based squarely on this document and thus it 5 is rendered unlawful and the Plaintiff is precluded from claiming the reliefs 6 prayed for in the SOC. 7 8

On that score the Plaintiff’s claim against the Defendants is 9 dismissed with costs. 10 11

The Defendants’ counterclaim is allowed in part i.e. in Prayers 11(a), 12

(b), (c), (d), (e), (h) and (i). 13 14 Dated 1 March 2021. 15 16 17 18 19 (DATO’ JULIE LACK) 20 Judicial Commissioner 21 High Court of Malaya 22 Shah Alam, Selangor Darul Ehsan 23 24 25 26 27 28 29 50 Counsel 1 For the Plaintiff : 2 Mahendra Mahason with Enoveetha Bhaskaran 3 (MESSRS. SREE HARRY & CO.) 4 5 For the Defendant : 6 Adi Radlan Bin Abdul Rahman 7 (MESSRS. ADI RADLAN & CO.) 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29