1. ) Norrisah Binti Abu Bakar 2. ) MANSOR BIN ABU BAKAR 3. ) ZAHARAH BINTI ABDULLAH @ WOON SEE MOI 4. ) ZALIHA BINTI ABU BAKAR 5. ) HAMIDAH BINTI ABU BAKAR 6. ) NORIAH BINTI ABU BAKAR 7. ) ROGIAH BINTI ABU BAKAR 8. ) SANI BIN ABU BAKAR 9. ) NORHASINAH BINTI ABU BAKAR 10. ) AZIZ SHAH BIN ABU BAKAR 11. ) AMIR SHAH BIN ABU BAKAR v 1. ) Thunder Heights Sdn. Bhd. 2. ) F.K. Capital Berhad 3. ) TAI FOOK HOY 4. ) Foong Chen Ban 5. ) Fong Chee Kang

Case Significance

Confirms that an allegation of a sham SPA masking illegal moneylending requires cogent proof and is not made out where a transaction failed through a third party's fraud (here the purchasers' own lawyer and a fugitive clerk), and that an undischarged bankrupt's appeal is incompetent.

This Court of Appeal decision concerns an allegation that a sale and purchase agreement and a tenancy agreement were sham transactions masking an illegal moneylending arrangement. The appellants are the beneficiaries and administrators of a deceased's estate — natural persons referred to here by their procedural roles — and the respondents include the corporate parties Thunder Heights Sdn Bhd and F.K. Capital Berhad, together with several individuals. The dispute concerned a parcel of land that the beneficiaries had sought to have restored to the estate, their action having been dismissed by the High Court with substantial costs after a protracted trial.

The appellants' central contention was that the SPA they had executed with the first respondent was "a sham agreement camouflaging an illegal moneylending transaction" contrary to the Moneylenders Act 1951 and the Contracts Act 1950. The court also had to consider whether an earlier 2010 suit rendered the appellants' claim barred by res judicata, and whether the fifth appellant's appeal was competent given her status as an undischarged bankrupt.

On the merits, the court found no basis to disturb the trial judge's conclusion. It accepted that the appellants had in truth been "victims of their lawyer" and a "fugitive law clerk" who had controlled the firm's accounts, rather than victims of an unlawful moneylending scheme by the respondents. On the evidence — including remittance records showing funds paid to the solicitors' firm to convert the land's use — the trial judge "cannot be said to be plainly wrong in concluding that the SPA was a genuine transaction." The court distinguished authorities involving a "guaranteed profit" provision, which were materially different. It further held that "the appeal by the 5th Appellant who is an undischarged bankrupt is incompetent", a bankrupt lacking capacity to maintain the appeal without sanction. The appeals of the other appellants were dismissed with costs of RM80,000, and the High Court's decision affirmed.

The judgment is significant for its treatment of the sham/illegal-moneylending allegation — which requires cogent proof and is not made out merely because a transaction went wrong through a third party's fraud — and for confirming that an undischarged bankrupt's appeal is incompetent.