Friendly loans are not classified as moneylending under the Act, and unqualified allegations against the lender do not establish triable issues.

JUDGEMENT

Quay Chew Soon JC:

Introduction

[1] This is an appeal against the decision of the learned Sessions Court Judge ("SCJ"). The SCJ had allowed the Respondent's application for summary judgment under O 14 of the Rules of 2012 against the Appellants.

[2] I dismissed the appeal. Here are the grounds of my decision. The parties shall be referred to as they were in the Court below. Where the Respondent was the Plaintiff ("P") and the Appellants were the Defendants. The Defendants are individually referred to as the 1st Defendant ("D1") and 2nd Defendant ("D2") respectively.

Background Facts

[3] P's suit in the Sessions Court was for the sum of RM500,000 due and owing by the Defendants to P under a letter agreement dated 20 December 2019 ("Letter Agreement"). Pursuant to the Letter Agreement, P agreed to lend to D1 a friendly loan in the sum of RM500,000 in cash ("Loan").

[4] The Letter Agreement was issued to P by D1 on its letterhead. It was signed by D1 and guaranteed by D2. D2 is a director of D1.

[5] Under the first paragraph of the Letter Agreement, D1 confirmed that it had received the Loan from P. It reads:

"We hereby confirm that accepted friendly loan amount from Mr Ng Chee Meng I/C No: 690122-10-5013 to Kwang Shen Steel Industries Sdn Bhd for the sum of RM500,000.00 (Ringgit Malaysia: Five Hundred Thousand Only)."

[6] Under the second paragraph of the Letter Agreement, D1 agreed to repay the Loan in the manner and at the time described below:

"We refund payment is as per the following Schedule of Payment as follow:

[7] When the Loan became payable, P tried to deposit the post-dated cheques. But D1 requested P not to do so as there were insufficient funds in D1's bank account. Consequently, P did not bank in the two post-dated cheques and eventually the cheques expired.

[8] P demanded from D1 for the repayment of the Loan. However, D1 failed to repay the Loan to P.

Triable Issues Sought To Be Raised By The Defendants

[9] From the single affidavit of the Defendants affirmed on 4 April 2021 and filed herein, it appears that there are 3 issues sought to be raised by them, namely:

(a) P is not a qualified person to provide loan to any person or company;

(see paragraph 5 thereof).

(b) P is not licensed to carry on the business of moneylending under s 5(1) of the Moneylenders Act 1951 ;

(see paragraph 6 thereof).

(c) the amount claimed by P is huge;

(see paragraph 10 thereof).

Law On The Moneylenders Act 1951

[10] Under s 2 of the Moneylenders Act 1951 ("Moneylenders Act"), 'moneylending' is defined to mean "the lending of money at interest, with or without security, by a moneylender to a borrower". And 'moneylender' is defined to mean "any person who carries on or advertises or announces himself or holds himself out in any way as carrying on the business of moneylending, whether or not he carries on any other business;".

[11] In Tan Aik Teck v. Tang Soon Chye , at 103; [2007] 5 CLJ 441, the Court of Appeal said:

"[77]... A friendly loan is opposed to the normal borrowing from a moneylender or financial institution. A friendly loan is a loan between two persons based on trust. There may be an agreement such as an IOU. or security pledged to repayment but most important there will be no interest imposed. "

[12] In Edgelow v. MacElwee [1918] 1 KB 205, pertaining to the English Money-lenders Act 1900, the Court said:

"A man does not become a money-lender by reason of occasional loans to relations, friends, or acquaintances, whether interest be charged or not. Charity and kindliness are not the bases of usury. Nor does a man become a money-lender merely because he may upon one or several isolated occasions lend money to a stranger. There must be more than occasional and disconnected loans. There must be a business of money-lending, and the word "business" imports the notion of system, repetition, and continuity:"

[13] In Ngui Mui Khin & Anor v. Gillespie Bros & Co Ltd, at 12, the Federal Court said:

"At the outset we wish to observe that the Mon