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2022 MarsdenLR 2002
COURT OF APPEAL PUTRAJAYA
SURESHRAJ KRISHNAN – Appellant
Versus
PV POWER ENGINEERING SDN BHD & ANOR – Respondent
[Civil Appeal No: B-02(NCC)(W)-138-01/2021]
The Project Support Agreement was found to be an illegal moneylending contract under the Moneylenders Act due to excessive interest, and the appellant failed to rebut the legal presumption.
Headnote:(A) Moneylenders Act 1951 – Application of provisions concerning moneylending and presumption against unlicensed lenders – Project Support Agreement ruled as a moneylending transaction due to excessive interest charge – Court held appellant failed to rebut presumption and agreement was a disguise for lending. (Paras 27, 28, 34, 43)
(B) Evidence Act 1950 – Admissibility of Whatsapp messages contested – Court ruled messages deemed inadmissible for failure to meet evidential requirements. (Paras 35, 50)
Facts of the case: The appellant lent RM500,000 to respondents under a Project Support Agreement; respondents defaulted, claiming an illegal moneylending transaction under the Moneylenders Act. High Court initially dismissed appellant’s claims and allowed respondents' counter-claims. (Paras 2-4, 9, 13)
Findings of Court: Court found the presumption under s 10OA of the Moneylenders Act was not rebutted; agreements were deemed illegal and unenforceable. (Paras 4, 34, 43)
Issues: The main issues included the nature of the Project Support Agreement, its compliance with the Moneylenders Act, and the admissibility of certain evidence. (Paras 8, 26)
Ratio Decidendi: The court determined the agreement was a facade for a moneylending contract, reinforcing that a simple personal loan does not constitute moneylending unless proven otherwise. (Paras 39, 40)
Result: Appellant's appeal allowed, original High Court decision set aside; judgment awarded for RM110,000.00 plus interest. (Paras 51)
Introduction
[1] The appellant who is the plaintiff in the original suit is the lender in a loan transaction. The respondents (defendants) are the borrowers. The loan transaction was put into writing entitled "Project Support Agreement".
[2] The respondents (defendants) defaulted in their repayment of the sum loaned by the appellant. The appellant brought this action against the respondents to enforce the Project Support Agreement.
[3] In their re-amended statement of defence, the respondents alleged: (i) the appellant is an unlicensed moneylender within the meaning of the Moneylenders Act 1951 ; (ii) that the Project Support Agreement dated 25 July 2016 is disguised as a contract for private funding support when it is in fact a moneylending agreement; and (iii) the Project Support Agreement dated 25 July 2016 is illegal, void and unenforceable. The respondents counter-claims for inter alia declaratory reliefs to these effects.
[4] After a full trial, the High Court held that the Project Support Agreement dated 25 July 2016 is an illegal moneylending transaction. The Court dismissed the appellant's claims and allowed in part the respondents' counter-claim.
[5] Both the appellant and the respondents appealed against the decision of the High Court. The respondents' appeal registered as No B-02(NCC)-182-01/2021 is against the dismissal of the respondents' counter-claim in prayer 13 (f) & (g), ie their claim for the refund of the sum of RM562,900.00 allegedly repaid by the respondents to the appellant together with interest.
[6] Both appeals came up for hearing before us on 19 July 2022. On the same date, we unanimously allowed the appellant's appeal and dismiss the respondents' appeal.
[7] This judgment is confined to the appellant's claim only as the respondents did not apply for leave to appeal to the Federal Court against our decision to dismiss their appeal on the counter-claim.
[8] The issues raised in this appeal are: (i) Whether or not the Project Support Agreement dated 25 July 2016 is a moneylending transaction that contravenes the Moneylenders Act 1951 ; (ii) Even if the Project Support Agreement is a moneylending transaction, what is the just and fair and appropriate order that the learned High Court Judge ought to have made in this case; and (iii) Whether the learned High Court Judge had erred when she wrongfully excluded material evidence namely the Whatsapp Messages (ID1).
Background Facts
[9] On 25 July 2016, the appellant and the respondents entered into a Project Support Agreement (PSA) for the funding of a project involving civil, mechanical and electrical facilities for PULADA (Pusat Latihan Tempur Tentera Darat) purportedly awarded to the first respondent (Pulada Project). The second respondent who is a director of the first respondent was the guarantor under the PSA.
[10] The salient terms of the PSA are as follows:
i) The appellant lent RM500,000.00 to the first and second respondent as project support sum and the loan is for a period of six (6) months from 25 July 2016 to 24 January 2017.
ii) The first respondent must pay Guaranteed Return Sum of RM35,000 per month throughout the 6 months loan term.
iii) The first and second respondent must repay the project support sum no matter what happen to the PULADA project.
iv) The first respondent shall issue letter of appointment to the appellant appointing him as project administrator to manage the first and second respondent's accounts for the PULADA project from 25 July 2016 to 24 January 2017.
v) As security for the repayment of RM500,000 and the guaranteed return sum, the second respondent shall also allow the appellant to enter a private caveat on the property belonging to the second respondent and one Norsiati binti Mohamad Noor (the second respondent's wife). The property being a double storey terrace house bearing postal address No 7065, Jalan Sri Putri 14, Taman Putri Kulai, 81000 Kulai Johor (the property).
vi) In the event the responden
