The Moneylenders Act 1951 does not prohibit personal loans between individuals; it regulates the business of moneylending, requiring a license for such activities.

JUDGMENT

Leong Wai Hong JC:

Jurisprudence On Moneylending As An Offence

[1] The issue before me is about the illegality of a moneylending agreement under the Moneylenders Act 1951 (Act 400) [" MA 1951"] that has been the subject of many decisions from the courts of late in the search for a consistent approach that would balance the competing rights of a lender and a borrower in the wider context of what the public interest is that is intended to be protected by the 1951.

[2] What is the public interest that is protected by the MA 1951? In the recent decision of the Federal Court in Triple Zest Trading & Suppliers & Ors v. Applied Business Technologies Sdn Bhd; 2023 MarsdenLR 1313 ; ["Triple Zest"] Abdul Rahman Sebli CJ (Sabah and Sarawak) when declaring a loan agreement to lend RM800,000.00 to be repaid within one month together with a further RM800,000.00 as 'agreed profit' an illegal agreement in breach of the 1951 stated that the 1951 is to protect the public from the menace of illegal moneylenders aka 'Ah Long'. [See Held (1) and [23]].

[3] Salleh Abas FJ in Yeep Mooi v. Chu Chin Chua & Ors; [1981] 1 MLJ 14 FC also observed:

"We have on another occasion observed that the Moneylenders Ordinance, 1951 does not strike at money lending but at moneylenders and at the loans lent by them. The Ordinance is never intended to apply to an individual, or any member of the public who lends money even at interest, unless he does so as a business. (Ngui Mui Khin & Anor v. Gillespie Bros & Co Ltd; [1980] 2 MLJ 9)."

[Emphasis Added]

[4] This tension is aptly summarised in Litchfield v. Dreyfus [1906] KB 584 by Farwell J construing an English statute, The Money-lenders Act, 1900, s 6, which defines a money-lender to be "every person whose business is that of money-lending, or who.... holds himself out in any way as carrying on that business," but excepts sub-section (d), "any person bona fide carrying on any business not having for its primary object the lending of money, in the course of which and for the purposes whereof he lends money." [Emphasis Added]

[5] Farwell J said (at pp 589-590) as follows:

But it appears that the plaintiff has also since June, 1903, assisted two art businesses in which he is largely interested, and which he finances by taking and discounting the bills of the customers of those businesses and by taking bills for the interest due to him on the debentures which he holds in one of those businesses. There is nothing in that which can be called the business of money-lending. Further, he has also, ..... assisted old friends with whom he had been connected in business, amounting in all to about ten persons. They come to him and ask him for assistance from time to time, and he gives them money on easier terms apparently than they could get elsewhere, and takes their bills or the bills of their customers. But not every man who lends money at interest carries on the business of money-lending. Speaking generally, a man who carries on a money-lending business is one who is ready and willing to lend to all and sundry, provided that they are from his point of view eligible. I do not of course mean that a moneylender can evade the Act by limiting his clientele to those whom he chooses to designate as "friends" or otherwise: it is a question of fact in each case.

..... it would be a straining of the language of the Act to hold that a man who so obliges friends is carrying on the business of a moneylender. The Act was intended to apply only to persons who are really carrying on the business of moneylending as a business, not to persons who lend money as an incident of another business or to a few old friends by way of friendship. The particular Act was supposed to be required to save the foolish from the extortion of a certain class of the community who are called moneylenders as an offensive term. Moneylending is a perfectly respectable form of business. Nobody says that bankers are rascals because they lend money. It is part o