Contract Law Cases

Topics: Contract, Debt, Loan Pages: 102 (45181 words) Published: March 1, 2013
[1973] 2 MLJ 154NG SIEW SAN v MENAKAFC KUALA LUMPURAZMI LP, SUFFIAN AND ONG HOCK SIM FJJFEDERAL COURT CIVIL APPEAL NO 90 OF 19726 October 1973Contract — Loan made by moneylender in name other than registered name — Agreement forbidden by law — Contract void — Whether moneylender entitled to get recovery of money lent — Parties unaware of illegality until after execution of the contract — Contracts (Malay States) Ordinance, 1950, ss. 24 and 66Moneylenders — Money lent by moneylender in name other than registered name — Loan illegal and void — Moneylenders Ordinance, 1951, ss 8(b) & (c) and 16In this case the respondent by her attorney had lent money to the appellant on the security of a charge of certain lands belonging to the appellant. The respondent was a registered moneylender carrying on business under the name of AR.PR.M. Firm but the loan in this case was made by the attorney on behalf of the respondent personally. The respondent applied for an order for sale of the lands to satisfy the principal sum and interest. The appellant objected to the application on the ground, inter alia, that as the loan was not made in the registered name of the moneylender the moneylender had contravened section 8(b) and (c) of the Moneylenders Ordinance. The learned trial judge held that the provisions of section 8(b) and (c) of the Moneylenders Ordinance had been contravened and therefore the loan was illegal and void ( [1973] 1 MLJ 50). He held however that section 66 of the Contracts (Malay States) Ordinance applied and he made an order that the application for the order of sale be dismissed upon payment of the sum of $19,400, the balance of the principal sum. The appellant appealed on the ground that the learned trial judge was wrong in directing him to pay to the respondent the sum of $19,400 as a condition of obtaining the relief he sought. The respondent cross appealed and contended that the learned trial judge was wrong in holding that section 8(b) and (c) of the Moneylenders Ordinance had been contravened and that the loan transaction was therefore illegal and void.Held: (Azmi L.P. and Suffian F.J., Ong Hock Sim F.J. dissenting): * (1) the agreement in this case was forbidden by section 8(b) and (c) of the Moneylenders Ordinance and therefore the agreement was void; * (2) the learned trial judge was correct in the circumstances of this case in finding that neither the respondent nor her attorney was aware of the illegality of the transaction at the time of the execution of the documents and therefore section 66 of the Contracts (Malay States) Ordinance was applicable and the learned trial judge was right in ordering the return of the sum of $19,400 to the respondent; * (3) the respondent was entitled to interest at the rate of 60% on such sum from the date of the institution of the suit.Cases referred to ………..FEDERAL COURTM Segaram for the appellant.VK Palasuntharam for the respondent.AZMI LPMenaka wife of M. Deivarayan (hereinafter referred to as Menaka) applied by way of originating summons to the High Court at Kuala Lumpur for an order of sale by public auction of certain pieces of land (hereinafter referred to as the said lands) to satisfy a principal sum of $20,000 and interest thereon, lent by her to Ng Siew San (hereinafter referred to as Ng). The said lands were charged to Menaka and a charge was registered at the Land Office as security for the said loan. The application was made by one Nachiappa Chettiar acting as the attorney of Menaka. In my view it is important to note that nowhere in his affidavit in support of the application for the sale of the land did Nachiappa state that the moneylender was the AR. PR. M. Firm and that Menaka was merely the managing director.Ng objected to the application upon several grounds and set out the facts and his grounds of objections which I summarise as follows:– * 1. Menaka was licensed to carry on the business of moneylending under the authorised name of AR. PR.M. Firm at...
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