Back
2025 MarsdenLR 1085
HIGH COURT MALAYA KUALA LUMPUR
MOHD FARID MOHAMED SANGIDO – Appellant
Versus
ACE CREDIT (M) SDN BHD & ORS – Respondent
[Civil Suit No: WA-22NCC-547-08/2023]
The court affirmed that the Investment Agreement was valid and enforceable, rejecting claims of it being an unlawful money lending transaction, and held guarantors liable for the principal's defaults.
Headnote:(A) Contracts Act, 1950 - Section 79 - Investment Agreements - The Plaintiff entered into Investment Agreements with the First Defendant, guaranteed by the Second and Third Defendants - The First Defendant failed to pay the agreed investment returns or principal sum - The Defendants contended the transaction was an unlawful money lending agreement and refused liability - The Court held that the Investment Agreement was valid, not a money lending transaction, and the Defendants were liable under their guarantees. (Paras 5, 41, 59, 77)
(B) Interpretation of Contracts - The court emphasized that it must interpret contracts based on agreed terms without rewriting them - The obligations of the First Defendant were clear and not contingent on profitability, as stated in the Investment Agreement. (Paras 17, 22, 30)
(C) Liability of Guarantors - The Second and Third Defendants were found to have provided guarantees for the First Defendant's obligations and could not evade liability based on the argument that the First Defendant's debts were unproven. (Paras 58, 66)
Facts of the case:
The Plaintiff claimed against the Defendants for failure to pay amounts due under Investment Agreements, while the Defendants argued the agreements were unlawful money lending transactions and denied liability. The First Defendant had been wound up. (Paras 5, 7, 77)
Findings of Court:
The Court found the Investment Agreement valid and enforceable, rejecting the Defendants' claims of it being an unlawful transaction. The Defendants were liable for the amounts due under their guarantees. (Paras 41, 77)
Issues: The main issues included whether the Investment Agreement was unlawful, whether the Defendants were liable as guarantors, and if the obligation of the First Defendant needed to be established before pursuing the guarantors. (Paras 15, 58)
Ratio Decidendi: The court ruled that the Investment Agreement was not a money lending transaction and that the guarantees provided by the Second and Third Defendants were valid, holding them liable for the First Defendant's defaults. The court emphasized the need to interpret contracts based on agreed terms without rewriting them. (Paras 41, 77)
Result: Judgment entered in favor of the Plaintiff with costs to be paid by the Defendants. (Para 87)
A. Introduction
[1] This is one of many cases where the Defendants have been sued concerning the Investment Agreements entered between various individuals, the First Defendant and in some cases allegedly guaranteed by the Second and Third Defendants.
B. Background Facts
[2] The Plaintiff and the First Defendant did enter into the following agreements:
[3] Material terms of the said Investment Agreements are as follows:
Section 2 .01 The Investment and No Solicitation
A. In consideration of and subject always to the Investor paving the Investment Sum to the Company in the manner as stipulated in s 2.02 below, the Company agrees to pay the Investor the Investment Target Return within fourteen (14) Business Days from December 31 during the Tenure of the Investment, subject to the terms and conditions herein contained in this Agreement.
B. For the avoidance of doubt, the Investor acknowledges and agrees that at no time did the Company solicit the Investment from the Investor and the Investor is entering into this Agreement by its own accord and willingness without any promotion or solicitation by the Company.
Section 2 .03 Returns of the Investment
A. In consideration of the Investor paying the Investment Sum, the Company hereby agreeste to pay to the Investor the Investment Redemption Sum aturity Date.
B. Where payment is due to be made pursuant to the provisions of this Agreement hereof on a day which is not Business Day, the due date for such payment shall be extended to the next following Business Day provided that if the ne)t following Business Day falls in another calendar month such payment should be effected bn the Business Day preceding the due date of such payment.
Section 4.03
The Investor further agrees, represents and warrants to, apd agrees with, the Company, as follows:
A. It is fully aware the Investment involves a substantial degree risk as the return of the Investor is very much dependent on the performance of the Company's investment;
B. It is fully aware that any projections or predictions that may have been made available to Investor are based on estimates, assumptions and forecasts which may prove to be incorrect; and no assurance is given that actual results will correspond with the results contemplated by the various projections;
C. That the Investorfinancially responsible, able to rpeet acknowledges that this Investment will be long-term and is by nature, speculative;
D. That the Investor has received and carefully read and is familiar with the terms of this Agreement, and all other documents in connection therewith, and the Investor confirms that all documents, and books pertaining to e information cohtained in this Agreement and that no written or oral representation or information that is in any way inconsistent with this Agreement and has been made or furnished to the Investor in connection with the Investment, and if so made, has not been relied upon;'
F. That the Investor is capable of bearing the high degrees of economic risks and burdens of this venture including, but not limited to, the possibility of complete loss of investment and the lack of a pubThat the Investor is financially responsible, able to rpeetThat the Investor is financially responsible, able to rpeetThat the Investor is financially responsible, able to rpeetThat the Investor is financially responsible, able to rpeetThat the Investor is financially responsible, able to rpeetlic market which may make it impossible to (readily liquidate the investment whenever desired;
G. That the Investor has knowledge and experience in financial and business matters and is capable of evaluating the merits and risks of an investment in the Company and its proposed activities and has carefully considered the suitability of the Investment in the Company.
Section 5 .01
In consideration of the Investor having made the Investment subject to the terms and conditions contained in this Agreement, and upon request by the Investor, the Company
