Yew Huoi, How & Associates | Leading Malaysia Law Firm

Menu

MONEYLENDING – ILLEGALITY– COURT OF APPEAL: LICENSED MONEYLENDERS CAN RECOVER VOID LOANS UNDER RESTITUTION

1. Summary and Facts

In Golden Wheel Credit Sdn Bhd v Dato’ Siah Teong Din [2025] MLJU 2245, the Court of Appeal examined whether a licensed moneylender can recover loan monies under restitution (Section 66 Contracts Act 1950) when its moneylending agreements are void for non-compliance with the Moneylenders Act 1951 (“MLA 1951”).

Golden Wheel Credit, a licensed moneylender, entered two moneylending agreements with Dato’ Siah Teong Din in July and August 2018, totaling RM3.5 million at an interest rate of 18% per annum.

The borrower instructed the lender to disburse the funds to a property company, Instant Bonus Sdn Bhd, of which he was a director. Instant Bonus later went into liquidation, and only RM40,000 was repaid.

Hence, the lender claims for restitution rather than enforcement of the loan agreements, which it admitted were void due to non-compliance with MLA 1951.

2. Legal Issues

• Whether the Moneylending Agreements which are void and unenforceable under the MLA 1951 are also illegal.
• Whether the appellant is entitled to recover restitution of the unpaid principal under Section 66 of the Contracts Act 1950.

3. Court’s Findings

• The Court clarified that not all void agreements are illegal.
• Court applied the “Detik Ria Guidelines”, which require assessing the centrality of illegality and the proportionality of denying remedy.
• The Court of Appeal held that Golden Wheel’s agreements were void but not illegal.
• Section 66 allows restitution for benefits received under void agreements.
• The court ordered the respondent to repay the appellant the sum of RM3,383,500 with interest at 5% per annum from the date of judgment, and cost of RM50,000.
• The court held that denying restitution would result in unjust enrichment.

4. Practical Implications

This judgment established an important legal precedent clarifying that non-compliance with the MLA 1951 does not necessarily render a loan agreement illegal:
• Particularly when the moneylender is licensed and the breach is technical in nature.
• The purpose of MLA 1951 was to curb unlicensed and exploitative moneylending, not to penalize licensed moneylenders for procedural errors.
• It also affirmed that restitution under Section 66 CA 1950 is available even in cases of void contracts, provided that granting such relief is consistent with proportionality and public policy.

Back to Latest Legal Updates

Sorotan Terkini

CIVIL PROCEDURE – STRIKE OUT UNDER ORDER 18 RULE 19(1)(A),(B) RULES OF COURT 2012 – EXTENSION OF TIME APPLICATION

In Badan Pengurusan Subang Parkhomes v Zen Estates Sdn Bhd [2025] MLJU 3591, the High Court reaffirmed that non-compliance with Order 37 Rule 1(5) of the Rules of Court 2012 does not automatically invalidate assessment of damages proceedings. The Court held that procedural rules must be read with the overriding objective of ensuring justice, and that the six-month time limit to file a Notice of Appointment is directory, not mandatory. Finding no prejudice to the defendant and noting active case management by the plaintiff, the Court dismissed the developer’s strike-out bid and allowed an extension of time for assessment to proceed. The decision underscores the judiciary’s commitment to substantive fairness over procedural rigidity in post-judgment proceedings.

Read More »
16 November ,2025 Tiada Ulasan

TORT – PURE ECONOMIC LOSS BAR REAFFIRMED: MMC LIABLE FOR NEGLIGENCE BUT PROTECTED FROM LOST PROFIT CLAIMS

In Asia Pacific Higher Learning Sdn Bhd v Majlis Perubatan Malaysia & Anor [2025] MLJU 3144, the High Court awarded over RM2 million in damages against the Malaysian Medical Council (MMC) for negligence, breach of statutory duty, and misfeasance during its accreditation of Lincoln University College’s medical programmes. While the court allowed direct financial losses such as survey costs, it barred claims exceeding RM550 million for lost profits, reaffirming the Federal Court’s rulings in Steven Phoa and UDA Holdings that pure economic loss is not recoverable from public or statutory bodies. The second defendant was further ordered to pay RM100,000 in exemplary damages for acting with targeted malice, marking a rare personal liability finding against a regulatory officer.

Read More »
16 November ,2025 Tiada Ulasan

ERINFORD INJUNCTION – COURT OF APPEAL CLARIFIES: EX-PARTE ERINFORD INJUNCTIONS ARE THE EXCEPTION, NOT THE RULE

In Edisijuta Parking Sdn Bhd v TH Universal Builders Sdn Bhd & Anor [2025] 5 MLJ 524, the Court of Appeal clarified that ex parte Erinford injunctions at the appellate stage should only be granted in truly exceptional circumstances where giving notice would defeat the purpose of the order. Wong Kian Kheong JCA held that, under rule 50 of the Rules of the Court of Appeal 1994, such applications should generally be heard inter partes to ensure fairness and prevent abuse. Exercising powers under section 44(1) of the Courts of Judicature Act 1964, the Court granted a conditional interim Erinford injunction pending appeal, fortified by a RM200,000 deposit and an undertaking to pay damages. The ruling provides clear guidance on balancing urgency, procedural fairness, and judicial efficiency in appellate injunctions.

Read More »
16 November ,2025 Tiada Ulasan

TOTAL FAILURE CONSIDERATION – FEDERAL COURT OVERRULES BERJAYA TIMES SQUARE: TOTAL FAILURE OF CONSIDERATION REDEFINED

In Lim Swee Choo & Anor v Ong Koh Hou @ Won Kok Fong [2025] 6 MLJ 327, the Federal Court unanimously overruled Berjaya Times Square Sdn Bhd v M Concept Sdn Bhd and clarified that the doctrine of total failure of consideration applies only to restitutionary relief, not to contractual termination. The Court held that the correct test is whether the promisor has performed any part of the contractual duties in respect of which payment is due, adopting Stocznia Gdanska SA v Latvian Shipping Co [1998] 1 WLR 574. Finding that the appellants had partly performed their obligations and the respondent had derived benefits, the Court rejected the respondent’s claim for restitution and restored the appellants’ contractual claim. The landmark decision restores clarity between contract and restitution, reinforcing commercial certainty in Malaysian law.

Read More »
16 November ,2025 Tiada Ulasan

CONTRACT (BILL OF LADING) – NO DUTY TO DETECT FRAUD: COURT CLEARS MAERSK OF LIABILITY FOR FALSE CONTAINER WEIGHTS

In Stournaras Stylianos Monoprosopi EPE v Maersk A/S [2025] 2 Lloyd’s Rep 323, the English Commercial Court held that carriers are not liable for fraudulent misdeclarations by shippers where bills of lading are issued for sealed containers. The Court ruled that Maersk had no duty to verify or cross-check declared weights against Verified Gross Mass (VGM) data under the SOLAS Convention, as its obligation under the Hague Rules extended only to the apparent external condition of cargo. However, the judgment signals that a limited duty of care could arise in future where a carrier is put on notice of fraud. For now, carriers may rely on shipper declarations, but consignees must exercise commercial vigilance and due diligence when relying on bills for payment.

Read More »
16 November ,2025 Tiada Ulasan

EXEMPLARY DAMAGES – STATUTORY BODY DUTY – DAMAGES – OBTAINING APPROVAL

In Big Man Management Sdn Bhd v Tenaga Nasional Bhd [2025] 5 MLJ 290, the Federal Court reinstated nearly RM3.56 million in special damages and awarded RM100,000 in exemplary damages against TNB for wrongfully disconnecting electricity to an ice factory. The Court ruled that “strict proof” of special damages does not mean a higher burden beyond the civil standard of proof and affirmed that TNB, as a statutory monopoly, breached its statutory duty by using disconnection as leverage to collect payment. The judgment underscores that public utilities cannot misuse statutory powers, and consumers wrongfully deprived of essential services may be entitled to punitive remedies in exceptional cases.

Read More »
16 November ,2025 Tiada Ulasan
ms_MYMY
en_USEN zh_TWZH ms_MYMY
× Hubungi Kami