The court upheld that contracts related to illegal moneylending are void, confirming the presumption of unlicensed moneylending under the Moneylenders Act 1951.

Gunalan Muniandy JCA:

Introduction

[1] This is an appeal by the appellants/defendants ('D1 - D4') in the Court below against the decision of the Learned High Court Judge ('LHCJ') wherein the respondent/plaintiff's claim against D1 - D4 was allowed with no order as to costs.

[2] The plaintiff's pleaded claim was premised on the appellants having carried on an illegal moneylending business in regard to the purported Sale and Purchase Agreement ('SPA') with the respondent which was allegedly an unlawful loan agreement.

Background Facts

Plaintiff/Respondent's Case

[3] On or about 15 August 2015, the plaintiff borrowed RM600,000.00 ("1st Loan") from CML Realty Sdn Bhd ("CML"). Regarding the 1st Loan, the 1st Loan was an unlicensed moneylending business for which the plaintiff handed the Issue Document of Title ("IDT") to CML's solicitors, Messrs Khor & Rafidah ("Messrs KR"), as collateral for the 1st Loan.

[4] The plaintiff and CML signed a Sale and Purchase Agreement dated 21 July 2015 ("SPA (CML)") which was prepared by Messrs KR According to the SPA (CML), the plaintiff purportedly sold the Property to CML for RM600,000.00 and the plaintiff paid monthly interest for the 1st Loan to CML.

[5] The plaintiff could not subsequently pay the Monthly Interest to CML. At the material time, the plaintiff owed a total sum of RM780,000.00 to CML. Hence, to avoid the Land from being transferred to CML, the plaintiff had to find another unlicensed moneylender to repay the plaintiff's Debt.

[6] The 1st to 4th defendants were unlicensed moneylenders who offered a loan to the plaintiff on the following terms and conditions ("2nd Loan"):

(a) the 2nd Loan was for a sum of RM900,000.00;

(b) the 1st to 4th defendants would pay the plaintiff's Debt to CML and the balance of RM120,000.00 would then be given by the 1st to 4th defendants to the plaintiff;

(c) the plaintiff would pay interest for the 2nd Loan to the 1st to 4th defendants at the rate of 12.5% per month; and

(d) the plaintiff was required to execute the Sale and Purchase Agreement ("SPA"), Form 14A and Power of Attorney ("PA") as a form of "security' for the 2nd Loan. The SPA, Form 14A and PA were prepared by the 5th defendant, a partner in Messrs SR Tan, Cheng, Lim & Tee ("Messrs SRT").

[7] The plaintiff accepted the 2nd Loan on the above terms and conditions. The plaintiff signed the SPA, Form 14A and PA. Thereafter, the 1st to 4th defendants handed RM120,000.00 in cash to the plaintiff.

[8] From March to September 2016, the plaintiff had paid to the 1st to 4th defendants a total of RM328,400.00 as Monthly Interest (2nd Loan).

[9] Subsequently, the plaintiff was unable to pay Monthly Interest (2nd Loan). The 4th defendant sent "WeChat' messages and voice mails which threatened the plaintiff that if he failed to pay Monthly Interest (2nd Loan), the Land would be transferred to the 1st to 4th defendants.

[10] The Transfer was registered without the plaintiff's knowledge. The plaintiff only knew about the Transfer when he did a land search in April, 2017.

[11] The plaintiff's then solicitors, Messrs Veera & Co ("Messrs VC"), sent a demand dated 21 April 2017 to the 5th defendant and Messrs SRT which stated that the SPA was a sham to conceal the unlicensed moneylending business between the 1st to 4th defendants on the one part and the plaintiff on the other part.

[12] Messrs VC sent a letter dated 22 May 2017 to Messrs SRT which requested from Messrs SRT on an urgent basis for all documents, letters, correspondence and receipts of payments.

[13] The 1st to 4th defendants prevented the plaintiff from having access to the Property. Consequently, the plaintiff suffered loss as follows:

(a) the plaintiff had to stop his bird's nest business which was carried on in the upper floors of the Property; and

(b) the plaintiff could not rent out rooms in the first floor of the Property to his tenants.

Defendants/Appellant's Case

[14] The 1st, 3rd and 4th defendants gave evidence as follows:

(1) the 1st, 3rd and 4th defe