[2019] 1 LNS 1593 Legal Network Series

IN THE HIGH COURT OF MALAYA AT KUALA LUMPUR

(COMMERCIAL DIVISION)
[SUIT NO.: WA-22NCC-490-11/2018]

ANTARA

1. TAN SRI LOO CHONG SING

(NO. K/P: 671208-71-5011)

2. DATO’ SRI LOO CHONG PENG

(NO. K/P: 570907-07-5911) … PLAINTIF-
PLAINTIF

DAN

DATO’ SRI CHIN SEAK HUAT

(NO. K/P: 660224-08-5095) … DEFENDAN

GROUNDS OF JUDGMENT

Introduction

[1] This is an application for a summary judgment by the Plaintiffs

against the Defendant pursuant to Order 14 of the Rules of Court 2012. At
the conclusion of the hearing, this Court allowed the application. The
following are the Grounds of Judgment of this Court.

Background of the case

[2] The present Suit before this Court involves recovery of friendly loan
of RM3,000,000.00 advanced by the Plaintiffs to the Defendant. The
Defendant has made partial payment of RM300,000.00. The Plaintiffs are
now claiming for the balance which remains unpaid by the Defendant
amounting to RM2,700,000.00; RM2,200,000.00 is indeb ted to the First
Plaintiff and RM500,000.00 is indebted to the Second Plaintiff.

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[3] As the demands made by the Plaintiffs went unheeded, the Plaintiffs
on 5.11.2018 commenced the instant writ action against the Defendant.

[4] Subsequently, the Plaintiffs filed summary judgment application

against the Defendant as documented in Enclosure 5.

The applicable principles of summary judgment

[5] In an application for summary judgment, this Court is guided by the

principles laid down in National Company for Foreign Trade v. Kayu Raya
Sdn Bhd [1984] 2 CLJ 220, where it was stated by the Federal Court as
follows:

“…We think it appropriate to remind ourselves once again that in

every application under O. 14, the first considerations are (a)
whether the case comes within the order and (b) whether the plaintiff
has satisfied the preliminary requirements for proceeding under O.
14. For the purposes of an application under O. 14, the preliminary
requirements:-

i. The statement of claim must have been served on the

defendant;

ii. The defendant must have entered an appearance;

iii. The affidavit in support of the application must comply

with the requirements of r. 2 of the O. 14.

… If the plaintiff fails to satisfy either of these considerations, the

summary may be dismissed. If however, these considerations are
satisfied, the plaintiff will have established a prima facie case and
he becomes entitled to judgment. This burden then shifts to the
defendant to satisfy the court why the judgment should not be given
against him…”

[6] In the present case, the Plaintiffs had satisfied the preliminary

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requirements laid down in the Kayu Raya’s case that is:

i. The statement of claim has been served on the Defendant;

ii. The Defendant have entered appearance; and

iii. The affidavit in support is in compliance with O. 14 r. 2 of the

Rules of Court 2012.

[7] Therefore, the burden is then shifted to the Defendant to satisfy the
Court why judgment should not be entered against them.

[8] In Bank Negara Malaysia v. Mohd Ismail [1992] 1 CLJ 627, the
Supreme Court held that the duty of a judge does not end as soon as the
fact is asserted by one party, or denied or disputed by the other on affidavit.
The judge has a duty to reject if such assertion or denial is equivocal or
lacking in precision or is inconsistent with undisputed contemporary
documents or is inherently improbable. The Court will have to identify the
issues of fact or law and to determine whether they are triable.

Analysis and findings of this Court

[9] Two issues were put forward by the Defendant in contesting the
summary judgment application. The triable issues raised by the Defendant
are as follows:

First Issue - Whether the purported Friendly Loan Agreements dated

13.6.2016 and 21.6.2016 are in fact money lending transactions by the
Plaintiffs

[10] The Defendant contended that the actual agreement between the
parties is one where the Plaintiffs gave a loan the Defendant for him to
carry out an investment on their behalf. The Defendant went on to argue
that the sum of RM300,000.00 paid by him after the Second Plaintiff was
interest for the said loan of RM3,000,000.00. He contended that a friendly
loan is a loan that does not charge any interest. The fact that he had to paid

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RM300,000.00 as interest showed that the loan was not a friendly loan and
that by virtue of the Money Lending Act 1951 (the “Act”), there is a breach
of the law and the claim by the Plaintiffs cannot sustain.

[11] It is pertinent to note that the said loans were given by the Plaintiffs
on three occasions. This can be seen in the table below.

Exhibit Amount Date Total

First “LCS-1” RM 1, 200, 000. 00 13.6.2016 RM 2, 200, 000. 00

Plaintiff
“LCS-1” RM 1, 000, 000.00 21.6.2016

Second “LCP-1” RM 800, 000. 00 13.6.2016 RM 800, 000. 00

Plaintiff

TOTAL RM 3, 000, 000. 00

[12] It can be clearly seen in each of the loans as found in LCS-1, LCS-2
and LCP-3, that the heading of each agreement has an explicit reference to
“Friendly Loan”. From the three (3) Friendly Loan Agreements, the total
amount that the Defendant had received from the two Plaintiffs were
RM3,000,000.00.

[13] It is to be emphasized that the total amount being demanded by both

the Plaintiffs in the current suit is RM2,700,000.00. Clearly the amount is
RM300,000.00 lesser than the actual amount loaned by the Plaintiffs to the
Defendant.

[14] From the affidavit of the Second Plaintiff, it was explained that the
shortfall of RM300,000.00 was due to the fact that the Defendant repaid
the Second Plaintiff RM200,000.00 on 12.5.2017. The payment was
evidenced by Exhibit “LCP-2” of the Second Plaintiff’s Affidavit in
Support. It was explained that sometime in early September 2017,
RM100,000.00 was also received by the Second Plaintiff from the

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Defendant. This makes up the total amount of repayment by the Defendant

to the Second Plaintiff to be RM300,000.00.

[15] The acknowledgement by the Defendant himself that the

RM200,000.00 was for partial settlement of the friendly loan can be seen
at Exhibit “LCP-2”. Both the Defendant and Plaintiff signed
acknowledging “This is to acknowledge I, Dato’ Sri Loo Chong Peng,
has received RM200,000 from Dato’ Sri Chin Seak Huat, for the partial
settlement of the loan”. This puts to rest any argument that such payment
was for interest.

[16] Despite this, the Defendant argued that RM300,000.00 was paid to
the Second Plaintiff as interest due on the said loan. This Court is unable
to accept this argument as if the said RM300,000.00 was indeed interest
due on the said loan, the Statement of Claim would certainly be for the
sum of RM3,000,000.00. Instead it was only for the sum of
RM2,7000,000.00.

[17] This amount was consistently demanded by the Plaintiffs against

the Defendant as evidenced by the Letter of Demand issued by both
Plaintiffs which were exhibited by the First Plaintiff as Exhibit “LCS-4”
and by the Second Plaintiff as Exhibit “LCP-4” in their respective
affidavits.

[18] This Court is of the view that Section 91 and Section 92 of the
Evidence Act 1950 comes to the aid of the Plaintiffs. This is because it is
trite that under the said provisions of the Evidence Act a party cannot
amend, vary, contradict or insert terms that were never in the respective
Friendly Loans. The terms of the three loans carried the exact clause which
reads as follows:

“As mutually agreed, the above mentioned Friendly Loan is an

unsecured and an interest-free loan, for purpose of short term
investment funding, upon the terms and subject to the conditions

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herein contained”

[19] Hence, it is obvious that the argument that there was interest being
charged by the Plaintiffs is not supported by the clear wordings of the
agreements themselves.

[20] Without overstating the issue, it can be summed up that this line of
argument is simply a desperate attempt by the Defendant to force this
Court to entertain the argument that the Plaintiffs were involved in a
money lending scheme and thus raising a triable issue. This was ultimately
intended to frustrate and defeat the suit brought in by the two Plaintiffs to
recover the loan they extended to the Defendant. It was certainly baseless
and is devoid of merit.

[21] It is perhaps useful to revisit the settled law on what is a money

lending activity under the Act. To begin with, money lender is defined in
section 2 of the Act as follows :

“moneylender” means any person who carries on or advertises or

announces himself or holds himself out in any way as carrying on
the business of moneylending, whether or not he carries on any other
business”.

[22] It crucial to note that there is a requirement of a party to hold out

as a person carrying on a business of money lending. In the case of
Sundaram Subramaniam v. Alamrio Properties Sdn Bhd & Ors [2016] 10
CLJ 645, Noorin Badaruddin J in commenting the dicta of Gopal Sri Ram
in Pan Global Equities Sdn Bhd & Anor v. Taisho Company Sdn Bhd
[2005] 3 CLJ 734 said as follows:

“[16] As to the legal issue it is important for this court to take

cognisance to the purpose of the Act being promulgated. On this
point, Gopal Sri Ram JCA (as he then was) succinctly stated in Pan
Global Equities Sdn Bhd & Anor v. Taisho Company Sdn Bhd [2005]
3 CLJ 734 that the spirit and intendment of the Act is to protect

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individuals from the jaws of unlicensed lenders. Whether a

transaction is designed within the perimeters of the Act depends on
the facts of each case. The test is what is the true nature of the
relationship of the parties? That is what the court should examine ”.

[23] This Court examined the averments before this Court and was not
able to obtain any sense of the Plaintiffs holding out as a money lender.
What was clear on the other hand, was the Defendant who approached the
Plaintiffs for a friendly loan. Therefore, this Court was unable to conclude
that the Plaintiffs were in the business of money lending as required by the
Act.

[24] It is the finding of this Court that the Plaintiff did from the
agreements displayed in Exhibits LCS-1, LCs-2 and LCP-1, provide the
RM3,000,000.00 as a friendly loan. However, it does not make the said
money lending exercise by the Plaintiffs to be one that is illegal and
unenforceable. In Ngui Mui Khin & Anor v. Gillespie Bros & Co Ltd [1980]
2 MLJ 9, Salleh Abas LP has the following made the following remarks:

“At the outset we wish to observe that the Moneylenders Ordinance,

1951 does not apply to moneylending but only to moneylenders. It
does not make every moneylending transaction illegal and
unenforceable. It is only a moneylending transaction of a
moneylender which is the subject-matter of the Ordinance and must
comply with its provisions on pain of being declared illegal and
unenforceable by the court. We make this simple and obvious
observation because it was canvassed very strongly before us by
counsel for the appellants that since the transactions between the
respondents and the client are moneylending transactions, the
respondents must be a moneylender and the guarantee which the
appellants signed is therefore unenforceable. This submission
overlooks the fact that the party to a transaction who thereby
becomes the creditor may or may not be a moneylender. He is a
moneylender if within the meaning of section 2 of the Ordinance he

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can be said to be a person “whose business is that of moneylending”.

To prove business requires some sort of continuity or system or
repetition of similar transactions. ( Chow Yoong Hong v. Choong
Fah Rubber Manufactory [1962] AC 209 218 [1962] MLJ 74)”.

[25] The Defendant cannot insist that the loan was caught under the Act
when he has failed to demonstrate that the Plaintiffs were firstly in the
business of money lending.

[26] The Defendant too, has failed to demonstrate why he claims the
RM300,000.00 paid to the Second Plaintiff was interest when the total
amount claimed had factored in the said “interest”. The facts and evidence
before this Court just do not show that such an interest was charged by the
Plaintiffs. The Defendant has plainly failed to show that the loan was
caught by the Act. It was a bare assertion that did not hold water.

[27] In Teoh Ean Hooi & Anor v. Teoh Hock Kooi & Anor [2003] 5 CLJ
145, RK Nathan J held that a bare allegation that a loan was couched as a
money-lending transaction was insufficient.

[28] It is the finding of this Court that the loans given by the Plaintiffs
were friendly loans which is recognized under the law. It was not caught
by the Money Lenders Acts 1951 as discussed above. The ar gument of the
Defendant to defeat the claim on this point is therefore without merit.

Second Issue - Whether the purported Friendly Loan Agreements are void
given the fact that the Defendant is illiterate in Malay and English
language

[29] The Defendant averred that even if this Court is of the opinion that
the transactions were indeed a friendly loan, the agreements were void as
the pre-conditions of an agreement and/or contract are not met with.

[30] It was highlighted by the Defendant that the friendly loan

agreements were drafted in English and never translated to the Defendant

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who is illiterate in English and Malay language. They were never read out
to the Defendant for his understanding. Therefore, the Defendant
submitted that the pre-conditions of a valid agreement and/or contract is
not complied with.

[31] This issue is clearly an afterthought and without substance. The

contents of the agreements were simple and straight forward. It did not
involve any complicated terms.

[32] This line of argument has been dealt with by courts on many
previous occasions. Richard Malanjum JCA (as he then was) in Abdul
Mulok Awang Damit v. Perdana Industri Holdings Bhd [2003] 3 CLJ 497
remarked negatively to the appellant who claimed that he did not
understand the terms of the guarantee that he entered into. His Lordship
rejected the argument of not being able to understand what he signed based
upon the fact that he was a Chief Executive of a listed company and that
he was not a “ country yokel ” .

[33] In Subramanian v. Retnam [1966] 1 MLJ 172 it was held as follows:

“For my saying so I find support in the following statement of the

law, with which I respectfully agree, in the judgment of Wood
Ag.C.J., in Ismail bin Savoosah & Ors Hajee Ismail (1889) 4 Ky 453
458:

“It was argued that the defendant being ignorant of the English
language he is to be excused on that account from the performance
of his contract, but it is to my mind clear that in the common
principles which govern the law of contract, the person who
contracts by a written document, whether or not he understands the
language in which it is written, is bound, in the absence of fraud or
misrepresentation, by the terms of that contract, as to which
proposition no objection was authoritatively sustained .”
(emphasis added)

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[34] Similarly in Polygram Records Sdn Bhd v. The Search & Anor [1994]
3 MLJ 127 it was held as follows :

“There is no principle of law which states that where a party does

not fully understand certain terms of a contract, the contract may be
vitiated. The general principle of law, of course, is that a party who
signs a written contract is bound by the terms of the contract, except
in the limited cases where fraud, undue influence, or
misrepresentation may be established. This rule is so strict that even
if a party to a contract has not read the contents of a contract, he is
held to be bound by its terms.

In the leading case of L'Estrange v. F. Graucob [1934] 2 KB

394, Scrutton LJ pronounced (at page 403):

When a document containing contractual terms is signed,

then, in the absence of fraud, or, I may add, misrepresentation,
the party signing it is bound, and it is wholly immaterial
whether he has read the document or not”.

[35] This Court is in total agreement with the argument made by counsel
of the Plaintiffs that a man who is a Managing Director of a listed company
must at least possess the ability to comprehend basic and simple language.
This Court observes that the Defendant was a person who was born in
1966. At the time he signed the agreements he was 51 years old. A man of
his generation would certainly have gone through an education system that
would have provided basic literacy skills. Having done well for himself as
an entrepreneur and rising through the corporate ladder, the contention of
the Defendant that he is illiterate is once again a desperate attempt by the
Defendant to feign ignorance of the obligations under the Friendly Loans.
This Court is of the view that this argument is totally without merit and
must be rejected.

Conclusion

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[36] Premised on the foregoing reasons, having considered the

submission of the parties, this Court is of the view that the Defendant has
failed to raise any triable issues and the Plaintiffs’ application for summary
judgment is therefore allowed with cost of RM5,000.00.

Dated: 4 JULY 2019

(AHMAD FAIRUZ ZAINOL ABIDIN)

Judicial Commissioner
High Court of Malaya Kuala Lumpur

Counsels :

For the plaintiffs - Richard Kok Chi Wei & Erin Lim; M/s Rhiza & Richard
M-2-7 & M-3-7, Plaza Damas
60, Jalan Sri Hartamas 1
50480 Kuala Lumpur

For the defendant - S. Muhillan Dennis Nik & Wong

68-1, Jalan Telawi, Bangsar Baru
59100 Kuala Lumpur

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