GOLDEN WHEEL CREDIT SDN BHD v DATO' SIAH TEONG DIN

Case Significance

Illustrates the difference between a void and an illegal moneylending agreement, and the availability of restitution under section 66 of the Contracts Act 1950 — guided by proportionality — to a licensed moneylender whose agreement is void but not tainted by concealment or illegality.

This Court of Appeal decision, in which Faizah Jamaludin JCA delivered the grounds, concerns the recovery of moneys advanced under moneylending agreements. The appellant is a moneylender licensed under the Akta Pemberi Pinjam Wang 1951 (the Moneylenders Act 1951); the respondent was a shareholder and director of a property-development company that was developing a residential project. When the appellant sued to recover the sums advanced, the High Court held that the moneylending agreements were illegal under section 24 of the Contracts Act 1950 and, on that basis, denied the appellant any remedy, including restitution under section 66 of the Contracts Act 1950.

The appeal turned on the distinction between an agreement that is merely void and one that is illegal, and on the availability of a section 66 remedy — under which a person who has received an advantage under an agreement that is discovered to be void must restore it — where a moneylending agreement is void for non-compliance with the Moneylenders Act 1951. The Court of Appeal examined the agreements and found no attempt to conceal the nature or object of the transactions, contrasting them with authorities such as Mahmood bin Ooyub and Triple Zest where concealment or a tainting illegality defeated recovery. Applying a proportionality analysis, the Court held that although the moneylending agreements were void, they were not illegal, so that refusing a section 66 remedy would be a disproportionate response.

The Court of Appeal held that the High Court had erred in treating the agreements as illegal and in denying restitution. It allowed the appeal and granted the appellant a restitutionary remedy under section 66 in the sum of RM3,383,500, with interest at 5% per annum on the judgment sum from the date of judgment until full settlement, and costs of RM50,000 here and below, subject to allocatur. The judgment is a useful illustration of the difference between a void and an illegal moneylending agreement, and of the availability of restitution under section 66 of the Contracts Act 1950 — guided by proportionality — to a licensed moneylender whose agreement is void but not tainted by concealment or illegality.