JUDGMENT

Ong Chee Kwan J:

Introduction

[1] This case presents a familiar yet troubling scenario in the realm of moneylending. It is a claim for recovery of an outstanding loan that on closer scrutiny unravels under the weight of statutory non-compliance and accounting artifice. The Plaintiff, a registered moneylender seeks judgment for the balance due under a loan advanced to the Defendant. However, what initially appears to be a straightforward claim for debt recovery is complicated by the Plaintiff's oral agreement with the Defendant and the Plaintiff's conduct imposing interest far exceeding the statutory limits prescribed under the Moneylenders Act 1951 ("MLA") and the manner in which the loan was documented and accounted for was designed to conceal the true cost of borrowing.

[2] The claim was for the non-payment of a RM3,500,000.00 loan advanced by the Plaintiff. The Plaintiff claims that the Defendant had repaid only RM287,000.00 towards principal and RM577,500.00 as interest. The Plaintiff now seeks recovery of the remaining RM3,213,000.00 principal, plus RM292,100.67 in late payment interest at 8% per annum from 15 March 2023 to 22 October 2023.

[3] The Defendant challenges the enforceability of the moneylending agreement on grounds of statutory illegality under the MLA notwithstanding that the Plaintiff is a licensed moneylender. The Defendant contends that the loan carried excessive and unlawful interest rates, and that the Plaintiff employed an agent who had received valuable consideration for procuring the loan agreement in contravention of the provisions in the MLA. The aforesaid renders the loan agreement void and unenforceable.

[4] The Defendant also seeks compensation for losses and hardship suffered due to the Plaintiff's Writ action premised on an illegal money-lending transaction.

[5] As will be seen, the law does not assist a party who, in seeking to enforce a contract, relies on a structure that masks illegality under the guise of compliance.

Background Facts

[6] The Defendant was introduced to the Plaintiff by one Gallen Lee of FG Capital Sdn Bhd ("FG Capital"). It is not disputed that at the material time, the Defendant was actively seeking for loans from various financial institutions for purposes of a working capital for its dialysis centers. Gallen Lee then arranged a meeting between DW1 and PW1 for purposes of obtaining credit facility from the Plaintiff.

[7] Prior to that meeting, on 28 April 2022, Gallen Lee informed DW-1 via WhatsApp that the Plaintiff was agreeable to provide a loan of RM3,500,000.00 with a 3% processing fee and a monthly interest of 3.5% for a tenure of six months, with an option to settle the loan earlier after three months.

[8] On 6 May 2022, Gallen Lee facilitated a meeting between PW-1 and DW-1 at the Plaintiff's office at OUG Parklane Biz Park, during which time the Defendant signed the moneylending agreement ("the Loan Agreement dated 6 May 2022").

[9] In the Loan Agreement dated 6 May 2022, the terms that were purportedly agreed upon were as follows:

a) Loan amount: RM3,500,000.00

b) Interest rate: 18% per annum

c) Repayment date and duration of the loan repayment:

First payment to be made on 15 May 2022 and thereafter 15th day of each and every month for 6 months.

d) Installment amount: RM 635,833.33.

[10] However, at the T rial, PW-1 admitted that there was a separate oral agreement between Plaintiff and Defendant with totally different terms, namely, the Defendant would pay only the interest on the loan for 6 months and there would be a bullet repayment of the loan sum thereafter ("the 1st Oral Agreement"). The aforesaid is borne out by PW1's testimony:

R.SINGH Now, my question to you. Did the Plaintiff collect from the Defendant the installment payment of RM635,833.33 as reflected in the agreement?

PW1 No.

R.SINGH Why not?

PW1 There was an agreement okay, that they will pay the six months interest installment. And a bullet repayment on the last final month.

R.SINGH So, that is the separate