Yew Huoi, How & Associates | Leading Malaysia Law Firm

Menu
  • Legal Updates from YHA Law Firm

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

Recent Post

ADMIRALTY IN REM – WRONGFUL ARREST – POSSESORY RIGHT – ARREST GONE WRONG: WHEN A SHIP ARREST BACKFIRES WITH DAMAGES

In Eletson Holdings Inc & Ors v The Vessel “Paros” [2026] 8 MLJ 80, the High Court set aside an arrest after finding that the plaintiffs had no proprietary or possessory right to the vessel at the time of the writ, as the bareboat charter had already been terminated. The Court held that the claim was in substance a corporate control dispute dressed up as an admiralty action, and emphasised that such disputes do not fall within admiralty jurisdiction. Critically, the plaintiffs’ failure to disclose the termination of the charter when obtaining the arrest warrant amounted to a serious breach, leading the Court to find mala fides or gross negligence and order damages for wrongful arrest. The decision reinforces that ship arrest is a powerful remedy that must be exercised with full disclosure and a proper maritime foundation.

Read More »
14 July ,2026 尚無留言

GUARANTEE – PERSONAL GUARANTEE ≠ PAY ON DEMAND: COURT DRAWS THE LINE BETWEEN SURETYSHIP AND DEMAND GUARANTEES

In CE Energy DMCC v Bashar [2026] Lloyds’s Rep 267, the Commercial Court clarified that not all guarantees labelled “on demand” will be treated as demand guarantees. On a proper construction, the court held that the personal guarantee in question was a contract of suretyship, requiring proof of the principal debtor’s liability rather than automatic payment upon demand. Crucially, the court found that the debtor’s “irrevocable” admissions of debt in a payment agreement created a binding contractual estoppel, which the guarantor could not challenge. The decision also confirms that, where payment is due on a “day certain”, a seller may still claim the price notwithstanding retention of title. The case underscores the importance of precise drafting and the risks of entering into settlement agreements that conclusively fix liability.

Read More »
14 July ,2026 尚無留言

MARITIME NEGLIGENCE – PLAINTIFF CLAIMED FOR DAMAGES CAUSED DURING ANCHOR DEPLOYMENT OPERATION – CALDERBANK OFFERS

In Tom Eastwind 365 Sdn Bhd v The Owners of the Vessel “Icon Sophia” [2025] 9 MLJ 397, the High Court held that the doctrine of res ipsa loquitur applied in a maritime collision during an anchor deployment operation, allowing an inference of negligence against the tug owner. The Court clarified that the doctrine is not defeated merely because the defendant adduces evidence explaining the accident – such evidence goes to rebutting the inference, not preventing it. While liability was established due to the tug master’s error of judgment in manoeuvring too close to a stationary barge, the plaintiff failed to properly prove its damages and was awarded only RM50,000. Notably, despite succeeding on liability, the plaintiff was ordered to pay costs after rejecting reasonable Calderbank offers, underscoring the risks of pursuing litigation without properly substantiated claims.

Read More »
14 July ,2026 尚無留言

JURISDICTION – BILLS OF LADING – BREACH OF HIMALAYA CLAUSE – BREACH OF EXCLUSIVE JURISDICTION CLAUSE – ONEROUS OR UNUSUAL TERMS

In Maersk Guinéa-Bissau SARL v Almar-Hum Bubacar Baldé SARL [2026] 1 Lloyd’s Rep 215, the English Commercial Court held that a shipper was liable for breach of an exclusive jurisdiction clause and a Himalaya clause after commencing proceedings in Guinea-Bissau instead of England. The Court confirmed that such clauses are standard and enforceable, and that commencing foreign proceedings in breach of them can give rise to a claim for damages. Notably, the Court also recognised that Himalaya clauses may be used offensively, allowing subcontractors to recover losses caused by wrongful litigation. The foreign judgment was not recognised due to lack of jurisdiction and denial of natural justice.

Read More »
14 July ,2026 尚無留言

DELIVERY WITHOUT PRESENTATION OF BILL OF LADING – LOI WON’T SAVE YOU: SHIPOWNER LIABLE FOR MISDELIVERY DESPITE INDEMNITY

In United Overseas Bank Ltd v The “Maersk Katalin” [2026] 1 Lloyd’s Rep 18, the Singapore High Court reaffirmed that delivery of cargo without presentation of original bills of lading remains a fundamental breach, even where carried out against letters of indemnity. The Court held that LOIs merely shift commercial risk but do not authorise misdelivery, and rejected arguments of consent, ratification and causation. Significantly, the Court emphasised that the burden lies on the carrier to prove that the loss would have occurred in any event – a burden not easily discharged. The decision underscores the continued strict liability regime in misdelivery cases, particularly where banks as bill holders are involved.

Read More »
14 July ,2026 尚無留言

CONTRACT LAW – ‘UK COURTS’ MEANS ENGLAND: COURT UPHOLDS JURISDICTION DESPITE VAGUE CLAUSE

In SMT Global Logistics Ltd v Georgian Airlines LLC [2025] Lloyd’s Rep. Plus 89, the Commercial Court held that a clause referring disputes to “the court in accordance with current legislation of the United Kingdom” was a valid jurisdiction clause in favour of the High Court of England and Wales. The Court also confirmed that the Montreal Convention does not apply to pure contractual claims for non-performance, such as repayment and loss of profits. Emphasising a broad and commercially sensible interpretation, the Court enforced the parties’ choice of forum and refused to stay proceedings, reaffirming that jurisdiction clauses will be upheld unless there are overwhelming reasons to depart.

Read More »
14 July ,2026 尚無留言
zh_TWZH
en_USEN ms_MYMY zh_TWZH