1. ) DETIK RIA SDN. BHD. 2. ) TAN SRI DATUK ABDUL RAHIM BIN HAJI DIN v 1. ) PRUDENTIAL CORPORATION HOLDING LIMITED 2. ) THE PRUDENTIAL ASSURANCE COMPANY LIMITED

Case Significance

Distinguishes a contract void ab initio from one that becomes unenforceable for want of a required ministerial consent under section 67 of the Insurance Act 1996, holding the latter attracts restitution under section 66 of the Contracts Act 1950 to restore the parties to the status quo ante.

This Federal Court decision concerns the effect of a statutory requirement for ministerial consent on a commercial agreement, and the availability of restitution where the agreement becomes unenforceable for want of that consent. The dispute arose from share-related agreements — a call-and-put option arrangement — between the appellants, a company and an individual who were the defendants below, and the respondents, members of an international insurance group. A central question was whether the failure to obtain the consent of the Minister of Finance under section 67 of the Insurance Act 1996 rendered the agreements illegal and void ab initio, and how the position was affected by the later repeal of the Insurance Act 1996 by the Financial Services Act 2013, including whether the relevant legislation was that in force when the agreements were entered into or when they were to be performed, and whether the approval of Bank Negara equated to the Minister's approval. The Federal Court held that the agreements were not void ab initio; rather, they were valid conditional contracts when entered into and became void and unenforceable only when the required approval of the Minister was not obtained and they could not be carried into effect. Because the agreements were void for that reason, section 66 of the Contracts Act 1950 applied so as to require restoration of the parties to their original position, the status quo ante. The Court left the factual dispute over whether dividends had been paid and had to be restored to be determined by the High Court, that being the proper forum, and gave the parties liberty to apply there. It allowed the appeal, set aside the orders of the courts below, and awarded costs of RM200,000 here and below. The decision illustrates the distinction between a contract void ab initio and one that becomes unenforceable for want of a required approval, and the reach of restitution under section 66.