A licensed moneylender cannot recover amounts from illegal agreements, as enforcing such claims undermines public policy, even when framed as unjust enrichment.

Ong Chee Kwan JC:

Introduction

[1] Can a licensed moneylender recover the outstanding principal sum under an illegal moneylending transaction based on a cause of action for money had and received and or unjust enrichment? How does the issue of illegality to be dealt with in such a claim? These are the issues at play in this judgment.

Background Facts

[2] The Plaintiff is a licensed moneylender under the Moneylending Act 1951 ('the MLA') and has its registered address at D3A-M (Suite B), Jalan Selaman 1, Dataran Palma, Off Jalan Ampang, 68000 Ampang, Selangor Darul Ehsan and its business address at Suite 8.02, 8th Floor (North Block), The Ampwalk 218, Jalan Ampang, 50460 Kuala Lumpur, Wilayah Persekutuan.

[3] At all material times, the Defendant is and was a director and a shareholder of one Instant Bonus Development Sdn Bhd (Company no 988847-P) ('Instant Bonus').

[4] Sometime on 9 July 2018 and 24 August 2018, the Plaintiff and the Defendant entered into 2 moneylending agreements wherein the Plaintiff agreed to provide loans of RM 2,000,000.00 and RM 1,500,000.00 respectively ('the Moneylending Agreements') to Instant Bonus for the purpose of its capital expenditure. The Moneylending Agreements, however, were executed with the Defendant instead of with Instant Bonus.

[5] Contemporaneously with the Moneylending Agreements, the Defendant also executed 2 letters of undertaking on 9 July 2018 and 24 August 2018 respectively relating to the aforesaid loans thereunder ('the Letters of Undertaking'). The terms of the Letters of Undertaking include and state as follow:

(a) The Defendant directing the Plaintiff to disburse the loan sums under the Moneylending Agreements to Instant Bonus;

(b) The Defendant's guarantee and undertaking that the loan sums are deemed as received by the Defendant and that the Defendant is bound by the loan sums once the same are disbursed to Instant Bonus as instructed by the Defendant;

(c) The Defendant further guarantees and undertakes to be liable for all demands, loss and or damages arising from the Defendant's instruction.

[6] Both the Plaintiff and the Defendant had agreed that a sum of RM 76,500.0 would be deducted from the loan sums towards payment of the transaction costs which was to be borne by the Defendant.

[7] Accordingly and as agreed aforesaid, it is not in dispute that the Plaintiff had disbursed a total sum of RM 3,423,500.00 to Instant Bonus's Maybank account in the following tranches:

i. 11 July 2018 RM 482,000.00

ii. 24 July 2018 RM 1,470,000.00

iii. 27 August 2018 RM 1,471,500.00

[8] It is also not in dispute that the Defendant had paid to the Plaintiff a total sum of RM 40,000.00 as repayment for the loan sums, leaving a balance outstanding of RM 3,383,500.00.

[9] In this action, the Plaintiff is seeking for the sum of RM 3,383,500.0 from the Defendant. However, the Plaintiff's cause of action as pleaded is not based on the Moneylending Agreements but for money had and received and or unjust enrichment.

[10] It is the Plaintiff's pleaded case that the Defendant has been unjustly enriched by the loan sums which the Defendant had received from the Plaintiff. The Plaintiff contended that it was never the intention for the Defendant to retain the loan sums without the obligation to repay the same and that it is unjust and or unconscionable for the Defendant to continue to keep the loan sums without repaying the Plaintiff.

[11] The reason for the Plaintiff's reliance on money had and received or unjust enrichment as its cause of action instead of its contractual rights under the Moneylending Agreements is understandable given that the Plaintiff had acknowledged in para 11 of the Statement of Claim that the said Moneylending Agreements had not complied with many of the mandatory provisions of the MLA including ss 10P and 17(1) thereto which rendered the agreements void and unenforceable. More specifically, ss 10P(1) and (3) and s 17(3) of the MLA stipulates:

'10P (1) A moneylender who intends to lend m