Abdul Rahman Sebli JC:

[1] There are several issues raised in this trial but the dominant issue is whether the term loan facility of RM2.8 million granted by Mayban Finance Berhad (as the plaintiff was then known as) to the 4th defendant was an illegal agreement by virtue of s. 17(1) of the Sabah Land Ordinance (the Land Ordinance) read with s. 24 of the Contracts Act 1950 (the Contracts Act). If it was then the agreement is void and unenforceable and the defendants are consequently not liable to the plaintiff for monies owing pursuant to the agreement. It is settled principle that he who comes to court for relief must come with clean hands.

[2] The facts material to the issue are as follows. Sometime in 1996 the 4th defendant, a property development company wanted to carry out a project known as "Mixed Use Development Project" (the project) on lands held under native titles NT213109490, NT213164928, NT213139630 and NT213013480 all located in the District of Penampang at Donggongon Township, Sabah. Being a non-native the 4th defendant was prohibited by law from purchasing them directly from the owners. In order to purchase the lands the 4th defendant used a native nominee in the person of Chin Nyuk Fong to hold the lands in her name in trust for and on its behalf. She was a staff of the 4th defendant. Pursuant to this arrangement Chin Nyuk Fong entered into four separate sale and purchase agreements with the following land owners:

(1) NT213139630 was purchased from one Chong Nyuk Fung @ Chong Nyuk Kiong on 14 March 1997.

(2) NT213164928 was purchased from one Wita bte Jipanis on 15 April 1997.

(3) NT213109490 was purchased from one Anthony Lajuta on 1 April 1997.

(4) NT213013480 was purchased from one Tan Haw Bin on 29 October 1996.

[3] The total cost of the four parcels of land was RM5.2 million. After the lands were registered in her name Chin Nyuk Fong executed and granted several trust deeds and powers of attorney in favour of the 1st defendant except the trust deed for NT213013480 which was executed in favour of the 4th defendant. Part of the purchase price for the lands was paid by the 4th and 1st defendants while the balance was to be financed using facilities to be procured from the plaintiff and Mayban Finance Berhad (Mayban Finance).

[4] The term loan facility agreement of RM2.8 million was executed by Mayban Finance and the 4th defendant on 30 January 1997. The expressed purpose of the loan was:

To part finance the purchase of a piece of land held under NT213013480, District of Penampang, Sabah.

[5] In addition to the term loan facility of RM2.8 million Mayban Finance also granted a bridging loan facility of RM3.5 million to finance the development of the 4th defendant's project on NT213013480. By a deed of assignment dated 8.9.1997 the term loan facility of RM2.8 million was absolutely assigned to the 1st defendant by the 4th defendant who stood as corporate guarrantor to the 1st defendant. This assignment was with the full knowledge and consent of Mayban Finance.

[6] Two letters of guarantee dated 30 January 1997 and 8 July 1997 respectively were further executed by the 2nd and 3rd defendants in favour of Mayban Finance as security for the loan sums of RM2.8 million and RM3.5 million.

[7] The plaintiff (Malayan Banking Berhad) had also granted to the 1st defendant an additional term loan facility of RM2.2 million and a bridging loan facility of RM6 million to finance the purchase of the other three parcels of native lands, namely NT213109490, NT213164928 and NT213139630 and the development of 33 units of 3 storey shophouses under phase two of the mixed commercial development undertaken by the 1st defendant.

[8] The project however failed to take off the ground as sometime in October 1998, the plaintiff cancelled the RM6.0 million bridging loan allegedly on the ground that the 1st defendant failed to submit its application for drawdown within the availability period. Only the term loan of RM2.2 million was