Lew Wan Nee v Lim Ah Hock

Case Significance

Illustrates the court looking through the form of a sale and purchase agreement and power of attorney to the substance of a loan secured on land, declaring the instruments void and ordering removal of the caveat and return of the title.

This decision of the High Court of Malaya at Alor Setar concerns a plaintiff's claim for a declaration that a sale and purchase agreement and an accompanying power of attorney (Perjanjian Jual Beli dan Surat Kuasa Wakil), both dated 18 March 2016, were void, and for consequential relief — removal of a private caveat the defendant had lodged against the property, return of the original document of title, and damages for breach of the agreement. The court's finding, delivered on 7 May 2025, was that the transaction between the parties had never been a genuine sale at all. On the plaintiff's case, she had been introduced to the defendant as a moneylender, had borrowed RM100,000 from him repayable over six months, and had handed over the original title to her land as security for the loan; the sale and purchase agreement and power of attorney were merely the instruments dressed around that money-lending arrangement, with the stated 'purchase price' matching the loan sum.

The court held that, because there was in truth no sale and purchase but a loan secured on the land, the defendant could not hold the original title on the footing that the plaintiff had failed to 'buy back' the property. Treating the sale and purchase agreement and power of attorney as void from the outset, the court confined itself to granting the declaration to that effect, taking the view that it should not adjudicate the other issues the parties raised about the underlying dealings — including the defendant's entitlement to recover the loan monies — which would fall to be pursued separately. It accordingly allowed the plaintiff's application, declaring the agreement and power of attorney void, ordering the caveat removed and the title returned, with the consequences of the declaration to follow. The defendant, dissatisfied, filed a notice of appeal. The judgment illustrates the court's willingness to look through the form of a sale to the substance of a secured loan.