The court determined that the transactions were illegal moneylending dressed as sale agreements, thus void and unenforceable under the Moneylenders Act 1951.

Headnote:(A) Moneylenders Act 1951 – Section 15 – Sale and Purchase Agreement (SPA) – The court found that the transactions in the appeals were illegal moneylending transactions disguised as SPAs, which were thus null and void and unenforceable. The evidence showed the lenders involved were unlicensed moneylenders, and the agreements violated public policy and the protections afforded to vulnerable borrowers under the Act. (Paras 15, 227, 235)

(B) Sham Agreement – The court emphasized that it is permissible to examine evidence beyond the written agreements to determine if they are shams. The unusual features and suspicious circumstances of the transaction warranted such scrutiny, leading to a conclusion that the SPAs were designed to camouflage illegal moneylending activities. (Paras 210, 215)

(C) Public Policy – Allowing unlicensed moneylenders to enforce such transactions would contradict the legislative intent behind the Moneylenders Act, thus undermining measures aimed at protecting borrowers. (Paras 263, 270)

Facts of the case: The appellants alleged that agreements they had entered into were a façade to obscure illegal moneylending practices. Three distinct appeals involved various parties, each claiming the SPAs were shams meant to disguise unlawful transactions. (Paras 1, 5)

Findings of Court: The court concluded that all three transactions involved elements indicative of illegal moneylending, leading to the judgment that the SPAs were void. Judgments from the lower court were set aside. (Paras 271, 273)

Issues: The primary issue was whether the agreements constituted shams intended to obscure illegal moneylending practices. Further, whether the enforcement of these agreements would contravene public policy. (Paras 227, 270)

Ratio Decidendi: The court highlighted the importance of recognizing a sham in contracts and stated that the totality of the evidence, including non-compliance with legal requirements and unlicensed status of the lenders, justified the conclusion that the SPA transactions were illegal moneylending operations. (Paras 227, 240)

Result: All appeals were allowed, with SPAs declared null and void and provisions made for the return of titles to respective original owners. (Paras 272, 274)

JUDGMENT

Lee Swee Seng JCA:

[1] It is not always easy to discern and distinguish the real from the fake, the genuine from the sham. It is often a world of genuine imitation that we find ourselves to be in. It is no different in the seedy world of illegal moneylending or "along" as is our local parlance for it. Human nature being what it is, we are not far from the days of The Merchant of Venice, where Shylock demanded his pound of flesh. If at all, the subterfuge and chicanery have become more sophisticated.

[2] Granted there would be those cases where the transactions are genuine as reflected in the documents and then one party tries to resile from it and alleges it is illegal moneylending. Then on the opposite side would be cases where the moneylending transaction is dressed like an innocuous sale and purchase transaction where it is argued that the court should not go beyond its four walls for otherwise no transaction would be certain.

[3] The court would always, in cases of this nature, have to tread cautiously where one side alleges a clandestine operation camouflaged as a conveyance of property and the other cries foul. The court would look for suspicious circumstances or unusual features that tend to lend support to the colourable actions. The task is made more difficult because more often than not, the one perpetrating the pernicious act would have covered his tracks leaving no trace of illegal moneylending.

[4] We had earlier allowed the request of all the appellants to have the three appeals heard together and with that the court was able to see the whole big picture and to detect the uncanny similarities in the modus operandi deployed. It is a case where the differences lie in their similarities to each other as we shall explore, not to mention also where the similarities lie in their differences.

Proceedings In The High court

[5] The first appeal involved the "purchaser" claiming for specific performance of the relevant sale and purchase agreement ("SPA"), the removal of the caveat lodged and damages arising there from. The "vendor" counterclaimed for the transaction is a sham and an illegal moneylending transaction that is null and void and unenforceable and a return of the title.

[6] In the other two appeals the "vendor(s)" prayed for a declaration that the transaction is a sham and an illegal moneylending transaction that is null and void and unenforceable and a return of the title and further a cancellation or entry in the title of the "purchaser" as the registered owner with respect to their respective properties.

[7] The "purchaser" in turn claimed for vacant possession because the same "purchaser" is already the registered owner of the property in question as in the second appeal or damages from loss of use of the property as in the third appeal and in both for the removal of the caveat lodged by the plaintiff(s) and damages to be assessed.

[8] The High court in all the three cases had found for the "purchaser", having being convinced that the documents are consistent with a straight forward sale and purchase transaction and that the "vendor(s)" had not proved the illegal moneylending transaction.

[9] The "vendors" have all appealed to this court from the respective decisions of the High court and the parties shall be referred to as they were in the High court as plaintiff(s) and defendant(s) or sometimes for clarity and to avoid confusion, by their names.

Civil Appeal J-02(NCVC)(W)-463-03-2018 ("Appeal 463") Mahmood Ooyub v. Li Chee Loong ("Mahmoods Appeal")

[10] The defendant Mahmood, a retiree, was already 69 years old, when he was persuaded by an acquaintance one Luqmannur Hakim ("Luqman") to enter into a business venture. They started a partnership duly registered as Syarikat Kristal Biru Enterprise. What happened subsequently was anything but crystal blue.

[11] Like all businesses, some funds were needed of about RM250,000.00 and Luqman introduced him to one Ponytail Lee as the man was so introduced. He could lend

Click Here to Read the rest of this document

2020 MarsdenLR 96

COURT OF APPEAL PUTRAJAYAMAHMOOD OOYUB – AppellantVersusLI CHEE LOONG & OTHER APPEALS – Respondent[Civil Appeal Nos: J-02(NCVC)(W)-463-03-2018 J-02(NCVC)(W)-1603-08-2018 & J-02(NCVC)(W)-2049-10-2018]

The court determined that the transactions were illegal moneylending dressed as sale agreements, thus void and unenforceable under the Moneylenders Act 1951.

COURT OF APPEAL PUTRAJAYA
MAHMOOD OOYUB – Appellant
Versus
LI CHEE LOONG & OTHER APPEALS – Respondent
[Civil Appeal Nos: J-02(NCVC)(W)-463-03-2018 J-02(NCVC)(W)-1603-08-2018 & J-02(NCVC)(W)-2049-10-2018]