DATIN SRI AIDARAHMI BINTI ISMAIL v 1. ) ACE CREDIT (M) SDN. BHD. 2. ) CHOONG CHEE MENG 3. ) CHANG AI NEE

Case Significance

Illustrates enforcement of investment agreements and personal guarantees against defences of illegality and non-profitability in a scheme that had drawn in a large body of investors.

This High Court decision at Kuala Lumpur, in the Commercial Division, is one of a series of suits by investors against the same credit company and two individual guarantors over a large investment scheme. Here the investor had entered into three investment agreements with the first defendant, involving very substantial sums placed for fixed periods at an eighteen per cent return, with the individual second and third defendants said to guarantee the first defendant’s obligations. As in the related suits, the defendants argued that the documents should be read so that no profits or principal were payable unless the first defendant was profitable, that the agreements were in truth loans that offended the Moneylenders Act 1951, and that the guarantors had not agreed to guarantee performance. The Court construed the agreements by reference to the intention of the parties as expressed in their written terms, noting that the material terms were common to all three agreements. It preferred the investor’s evidence as consistent with the documentary record and rejected the defendants’ account as an afterthought created to resist the claim. The Court noted that the timeline for payments was specified in the third agreement and that the material terms were otherwise common to all three. It was unwilling to accept that the defendants, having attracted a very large body of investors — some six hundred — to place their hard-earned monies on similar terms, could then deny liability to those investors by these defences. Concluding that the defendants had not been honest, the Court, per Dato’ Indera Mohd Arief Emran bin Arifin J, entered judgment for the investor as claimed with costs of RM50,000 payable jointly and severally, and dismissed the defendants’ counterclaim for declarations that the agreements were void and illegal with costs. The judgment illustrates the enforcement of investment agreements and guarantees against defences of illegality and non-profitability in a scheme affecting many investors.