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2020 MarsdenLR 669
HIGH COURT MALAYA JOHOR BAHRU
CHEW YEE HUI – Appellant
Versus
TAN SIEW NEE & COUNTERCLAIM – Respondent
[Case No: JA-22NCVC-193-09-2018]
All loan agreements were deemed illegal, characterized by exorbitant interest rates, and the sale and tenancy agreements were found to be sham contracts aimed at concealing the true nature of the transactions.
Headnote:(A) Contracts Act 1950 – Section 24 – Moneylenders Act 1951 – Loan agreements declared illegal due to exorbitant interest and unconscionable terms – Sale and purchase agreements and tenancy agreements deemed sham documents and unenforceable, falling within public policy concerns – Court's dismissal of claims due to plaintiff's complicity in illegal activities – Vacant possession of properties awarded to second defendant. (Paras 44, 46, 47, 56, 161)
(B) Plaintiff's claims against all defendants dismissed despite finding the transactions illegal, as they were integral to a convoluted scheme orchestrated by the first defendant. (Paras 160, 165)
Facts of the case: The plaintiff alleged illegal moneylending and coercion in entering loan agreements with the first defendant while the transactions were interrelated through various agreements, demonstrating complicity in the arrangement. (Paras 16-19, 21, 160)
Findings of Court: The plaintiff's narrative was disbelieved, with the court determining all agreements as illegal due to high interest, and no evidence supporting undue influence or coercion was demonstrated. (Paras 160, 162)
Issues: Main concerns included the validity of loan and sale agreements and the presence of coercion, undue influence, or duress in entering said agreements. (Paras 88-95, 97-100, 129)
Ratio Decidendi: The court asserted that the agreements were contrived to disguise illegality, and found the plaintiff complicit in executing unlawful transactions, which barred her from reparations in law. (Paras 161, 164)
Result: All claims by the plaintiff and counterclaims by the first defendant were dismissed; the second defendant was granted vacant possession of the properties. (Para 166)
The Brief Facts
[1] In the interest of convenience, it was agreed amongst the parties and by the court that the counterclaim would be dealt with first as it involved points of law that would have a bearing on the original action. In these Grounds of Judgment, therefore, reference will be made to the parties as they appear in the counterclaim.
[2] The plaintiff in the counterclaim ("the plaintiff ") who was the defendant in the original action, is a retired school teacher, who had obtained the following loans from the 1st defendant in the counterclaim ("the 1st defendant"), a self-proclaimed funder and property investor:
(a) RM435,000 on 28 July 2016;
(b) RM242,000 on 6 September 2016;
(c) RM472,000 on 14 September 2016;
(d) RM260,000 on 1 November 2016; and
(e) RM513,000 on 15 August 2017.
(exhibited collectively at pp 1-33 of Part B of the plaintiff's CommonBundles of Documents in the Counterclaim ("CBD"))
[3] As collateral for these loans, the plaintiff entered into three sale and purchase agreements ("the initial SPAs") dated 28 July 2016, 14 September 2016 and 22 December 2016 respectively, with the 1st defendant (exhibited collectively at pp 34-81 of Part B of the CBD). The initial SPAs were in relation to the plaintiff's properties at No 17, Jalan Cermat 6 Taman Pelangi 80400 Johor Bahru, Johor ("No 17"); No 19, Jalan Cermat 6 Taman Pelangi 80400 Johor Bahru, Johor ("No 19"); and No 21, Jalan Cermat 6 Taman Pelangi 80400 Johor Bahru, Johor ("No 21") (collectively, "the Properties").
[4] On 14 March 2017, due to the inability of the plaintiff to repay the loans, a mode of repayment, referred to as 'Plan B', was discussed, and the 2nd defendant (the then girlfriend of the 1st defendant) in the Counterclaim ("the 2nd defendant") who was the plaintiff in the original action, was nominated by the 1st defendant to replace him as purchaser of the Properties.
[5] On 23 March 2017, in order to facilitate Plan B, several documents were executed, namely:
a. Three deeds of revocation all dated 23 March 2017, signed by both the 1st defendant and the plaintiff to revoke the initial SPAs (exhibited collectively at pp 82-96 of Part B of the CBD);
b. Three new SPAs (collectively, "the new SPAs") all dated 23 March 2017, signed by the plaintiff and 2nd defendant, whereby the plaintiff would sell the Properties to the 2nd defendant at the purchase price of RM850,000 each ("the Purchase Price") (exhibited collectively at pp 420-467 of Part B of the CBD).
c. Three guarantee agreements all dated 23 March 2017 (collectively, "the Guarantee Agreements"), signed by the 2nd defendant and the plaintiff, whereby the plaintiff would buy back the Properties within two years (exhibited collectively at pp 97-126 of Part B of the CBD);
d. Three tenancy agreements (collectively, "the Tenancy Agreements") dated 13 July 2017, 30 July 2017 and 17 September 2017 respectively, executed by the 2nd defendant, purporting to rent the Properties to the plaintiff for a monthly rental of RM5,000 for each property (exhibited collectively at pp 127-189 of Part B of the CBD);
e. Three Declarations signed by the plaintiff, dated 28 July 2016, 14 September 2016 and 22 October 2016 respectively, of the intention not to be represented by solicitors (exhibited collectively at pp 584-586 of Part B ofthe CBD);
f. Three Acknowledgements of Receipt of the deposits pursuant to the new SPAs, purportedly signed by the plaintiff (exhibited collectively at pp 1005-1007 of Part B of the CBD);
g. Three Irrevocable Letters of Instruction (collectively, "the Letters of Instruction") signed by the plaintiff in favour of the 3rd defendant, a firm of Advocates and Solicitors, to release the balance loan sum under the new SPAs to the 1st defendant (exhibited collectively at pp 252-254 of Part B of the CBD).
[6] Diagram A below is produced to provide a macroscopic view of the elaborate and convoluted Plan B devised by the 1st defendant:
Legend:
a. Loan agreements.
b. Initial SPAs
