IN THE COURT OF APPEAL OF MALAYSIA
CIVIL APPEAL NO.: Q-02-2816-11/2011
LO GA LUNG
DIONG CHING DIUNG
[In the matter of Sibu High Court Originating Summons No.: SB-24-4 of 2011]
DIONG CHING DIUNG
LO GA LUNG
AZAHAR BIN MOHAMED, JCA DAVID WONG DAK WAH, JCA ABANG ISKANDAR BIN ABANG HASHIM, JCA
JUDGMENT OF THE COURT
This has been an appeal emanating from the High Court sitting in Sibu, Sarawak. It concerned an originating summons [‘the O.S’] filed by the respondent [borrower] who had sought a declaration from the High Court that the debt documents that were generated with regard to the money-lending transactions between him and the appellant [lender] be declared as null and void and that the land titles belonging to him, that were used to secure the borrowings be returned back to him. Suffice to state here that certain specific provisions as contained in the Moneylenders Ordinance [Cap 114] were cited in support of the borrower’s O.S.
2. The learned trial judge, having heard and considered the O.S had granted the prayers in terms as prayed for by the respondent. The aggrieved lender had since filed an appeal against that order by the
learned trial judge. Hence that had accounted for the hearing of this appeal before us. We had occasion to hear the appeal and had considered the submissions put forth by both learned counsels. Having done that, we had allowed the appeal by the money-lender appellant. We now proffer our reasons for so deciding in his favour.
3. To begin, a brief look at the facts would be useful. It would appear that the impugned transactions had taken place many years ago. In fact they were affected in last century, back in 1990/1991 to be exact. The transactions, as were shown in the debt documents, were attested by one Teo Chong Lee esquire, advocate and solicitor, having his legal practice in Sibu, Sarawak at the material time. Nothing seemed to be amiss during that time. The sum of money concerned in the transactions to which the documents of debts related, had indeed changed hands from the appellant to the respondent. This factual circumstance was not disputed between the parties. Everything went on fine, until one day after 20 years down the road, the respondent borrower had run to the Sibu High Court with his O.S seeking for the above-stated prayers. A look at the O.S had shown that the respondent was now challenging the propriety of the debt documents on the ground that the said documents had run afoul of sections 3 and 4 of the Moneylenders Ordinance [‘Cap
114’]. Sections 3 and 4 of the Moneylenders Ordinance are now reproduced as below:
 Every document of debt of whatsoever nature entered into with a registered Moneylender shall be made out and registered in court, and any such document not complying with this Ordinance shall not be accepted as evidence in court.
 No unregistered moneylender shall make out a document of debt in court.”
At the time a document of debt, is signed by the borrower, the officer attesting such document shall, if a cash loan, see that the full amount set forth therein is paid over in his presence by the lender to the borrower or, if the consideration be other than cash, satisfy himself that the borrower has received full value for the amount set forth in the document.”
4. The ambit of section 3 of the Moneylenders Ordinance had been discussed in the case of Phunam Singh v. Kho Kwang Choon  2 MLJ 189 [‘the Phunam Singh case’] and it was there held by Wylie CJ [Borneo] that it would appear that the preparation of the debt documents in the context of it being ‘made out’ must refer to the actual preparation of the said documents and not merely its execution. The learned Chief Justice then went on to state that the Ordinance “does require the actual document to be prepared before the appropriate officer of the court.” As such, the preparation of the documents must be done or ‘made out’ in court by the appropriate ‘officer of the court’.
5. On the facts of this immediate case before us, the fact that the debt documents now under scrutiny was not made out in court was not disputed.
6. The other alleged breach against section 3 was because the said Teo Chong Lee, though a lawyer, was not an ‘officer of the court.’ The alleged breach against section 4 was because the transfer of the physical money from the lender to the respondent was not witnessed by a court official as stipulated therein.
7. We had heard and considered the submissions placed before us in the course of the appeal and having considered the same, we noted that both learned counsel had appropriately referred us to the case Phunam Singh v. Kho Kwang Choon  2 MLJ 189 [the Phunam Singh case’]. At the outset, from the consideration of the materials placed before the trial judge, we were of the view that she had not erred when she found that there had been non-compliances of sections 3 and 4 of the Moneylenders Ordinance in the sense that the debt documents were not attested by an ‘officer of the court’ and that the handing over of the money from the lender to the borrower was not witnessed by an ‘officer of the court’ as well, as was contemplated under section 4 therein. With regard to the ‘officer of the court’ issue, there was an attempt by Mr. George Lim, the learned counsel for the appellant lender, who contended that a practising advocate and solicitor could qualify as an ‘officer of the court’ for the purpose of fulfilling the dictates of relevant provisions of the sections under review. We are of the view that the case of Raja Sekaran Krishnan v. Bar Council & Ors  1 MLJ 1 could not be used as an authority for the proposition that was being advanced before her by the learned counsel for the lender. In the Raja Sekaran case [supra] the phrase that was being scrutinised by the Court there had been “officer of the Court” as was the case in the Supreme Court
case of Karpal Singh v. Atip Bin Ali  1 MLJ 291 where the counsel’s conduct in court was under the supervision of the court before whom he was appearing when conducting a court proceeding. In the scheme of things, the learned trial judge was correct when she had ruled that the phrase ‘officer of the court’ referred to by Chief Justice Wylie [Borneo] in the Phunam Singh case [supra] would not include a practising advocate and solicitor such as Mr. Teo Chong Lee. The phrase refers to the functionaries or officers in the employment of the Court registry and the like. Mr Teo Chong Lee, being a practising advocate at the material times, was not one such person who could, by any stretch of imagination, be considered as such ‘officer of the court’ for the purpose of fulfilling the dictates of the Moneylenders Ordinance relating to the making out and preparation of the debt documents. He may well fall within the phase ‘officer of the court’ in other legislations, but he was never an officer of the court within the specific purview of the Moneylenders Ordinance [Cap 114]. On the facts as well, the transfer of the money involved in the transaction to which the debt documents related was not witnessed by the officer of the court upon its execution. Based on that premise, there had been instances of non-compliance by the appellant lender and the learned trial judge was correct in concluding as she did on those issues as raised before her.
8. But having said that, the next question that begged an answer was whether such non-compliances by the lender with regard to the 3 debt documents would render them null and void by virtue of sections 3 and 4 of the Moneylenders Ordinance [Cap 114].
9. To our mind, this Phunam Singh case [supra] had stated the position of the law on the meaning and intent of section 3 and 4 of the Moneylenders Ordinance, quite clearly. From a perusal of the decision in the Phunam Singh case [supra] in particular, the speech of Wylie CJ [Borneo], 2 things had been clear in relation to the licensed moneylending activities. One has been that the respective positions of the Land Code and the Moneylenders Ordinance, seen in their in proper context. We reproduce below the relevant excerpt of His Lordship Wylie’s speech that is found at page 194B to E of the report below, for ease of convenience:
“The relevant part of the Land Code provides for a system of registration of land based on the Torrens system and the object is to establish and maintain an up-to-date register of land ownership and dealings with special emphasis on the fact that the register is paramount in regard to interests in
land. Consequently, once a person is registered as proprietor of an interest in land (be he a registered moneylender or not) he is in a very strong position in regard to that interest.
The object of the Moneylenders Ordinance is to control the dealings of moneylenders with special emphasis on protection of the borrower in regard to transactions that may be considered harsh or unconscionable. There is no conflict between the objects of the two sets of legislation, but there is nothing in the Land Code, which would tend to control the activities of moneylenders, especially in the manner envisaged in ss.3 and 4 of the Ordinance.
10. On the facts of the present case, there was no evidence that the appellant had applied for foreclosure proceedings. It was the respondent who had run to the High Court, twenty years after the debts documents [comprising the 3 relevant charge documents as security for the loan amounts] were registered with the Lands and Surveys Office in Sibu, alleging that the same debt documents were not ‘made out in court’. That had accounted for his O.S that had sought the High Court in Sibu to
declare the said documents to be void because they were not made out in court, relying on sections 3 and 4 of the Moneylenders Ordinance [Sarawak]. Part of the admitted facts had shown that the respondent had received the monies from the appellant under the now impugned documents to the fullest and had not repaid to the appellant lender, a single cent.
11. To recap, the learned trial judge had agreed with Mr. Augustine Liom, learned counsel for the respondent on the ground that as the debt documents were not made in compliance with the said sections 3 and 4 of the Moneylenders Ordinance. As such, in her penultimate order, they were thus invalid and could not be relied upon to foreclose the land and that as such, “there was nothing to hold on to the land which was registered in the Land Office. The defective documents of debts were void ab initio. Hence void ab initio.” She then had gone on to declare the debt documents as void and ordered the appellant to return the document of titles respecting the said land to the respondent, as can be seen at page 21 of the Record of Appeal (Part A, Part B and Part C).
12. At this juncture, it would be pertinent to refer to the other portion of Wylie CJ’s speech in the Phunam Singh case [supra] at page 194 A-E in the report and which reads like so:
“In the present instance there was no compliance with S.3 and 4 of the Ordinance. Section 3 could not be complied with by means of the late registration that was affected, because by that time it was impossible to have the document of debt prepared before an officer of the Court.
In consequence, these charges may not be “accepted as evidence in Court”, to quote the language of s.3 of the Ordinance.
To determine the effect of this prohibition, some consideration must be given to its precise meaning. The Ordinance nowhere declares a money lending contract to be unenforceable as provided for in some sections of the Moneylenders Ordinance, 1951, of Malaya, although s. 5 does provide for relief and taking of account, if a transaction is considered by a Court to be harsh and unconscionable. As already observed, much comment could be passed on the unusual language of the
Ordinance, and, in consequence of this unusual language, little assistance in interpreting it can be obtained from any authorities. I have already referred to the objects of this legislation. These would justify an interpretation wide enough to secure these objects, but I find difficulty in giving any extended meaning to this language, because I cannot find in the Ordinance itself anything which would assist me in determining the limits to give to an extended meaning. Consequently, the only principle I feel justified in applying is the basic principle that language used in an enactment should be given its ordinary meaning in the absence of any ambiguity or difficulty in following that course. I see nothing ambiguous in this expression and no difficulty in applying it in the present proceedings, although the provision may be unusual when compared with similar legislation elsewhere. In my judgment, the only effect is that the document of debt is not to be admitted as evidence, and the section has no other direct effect on the transaction. Consequently, the contract remains enforceable, if this can be affected without having to produce the document of debt.” [Italics added by us for emphasis].
13. On the facts of the case before their Lordships in the Phunam Singh case [supra], Wylie CJ [Borneo], with whom learned justice Tan Ah Tah FJ had also agreed, had concluded as follows: “Consequently, the prohibition on the acceptance of the charges as evidence in court effectively prevents this application [by the lender] from succeeding in the state of the evidence in these proceedings.” [Italics provided by us for emphasis] It is clearly to be noted that the prohibitory effect only relates to the admissibility of the impugned documents themselves as evidence and it does not extend to justifying the court to proceed to declare the said documents as being void for any other purpose. Indeed, the contract remains enforceable, if this can be affected without having to produce the documents of debt.
14. As such, we were in agreement with the learned counsel for the appellant that the learned trial judge had misconstrued section 3 of the Moneylenders Ordinance to the extent that it had the effect of rendering the documents of debt as void when in fact, that section 3 only had the limited effect of prohibiting admissibility of the impugned debt documents as evidence in court. By so doing she had exceeded the boundary which section 3 had in fact and in law conferred upon her. We agreed with Mr.
George Lim, that on that score alone, this appeal ought to succeed and we had so held.
15. There was the other issue that had pertained to section 66 of the Contracts Act 1950. The lender appellant had, via his affidavit-inopposition to the borrower respondent’s O.S for the declaratory orders, applied to the High Court to invoke its discretion to make an order of restitution under section 66 Contracts Act in favour of the lender because to the respondent had been unjustly enriched at the lender’s expense, in the circumstances of this case. The learned trial judge had dealt with the matter in this manner, under the miscellaneous issues, as follows:
13. Mr. Lim contended that the Plaintiff had for the past twenty years enjoyed the full use of the money and does not even pay the interest promised. It was submitted that if the document of debts are declared void, the court can order the Plaintiff to refund the loan money with interest under section 66 of the Contract Act 1950 since the Plaintiff has received the full advantage under the void document.
14. Suffice it to say that there was no application by the Defendant for recovery of the loan money. The issue on application of section 66 is not within the purview and ambit of this application. Thus, not much need be said on the applicability of this section to the present action.”
16. It is clear to our mind that the issue on section 66 was one that was predicated on the supposition that it ought to be addressed by the trial judge only if the debt documents were declared as void. But she had not made that the order that was sought by the appellant lender because ‘the application of section 66 is not within the purview and ambit of this application [being the O.S]’.
17. Be that as it may, since we had allowed the appellant’s appeal against the learned trial judge’s order that had declared the documents of debt as being null and void, we therefore are of the considered and respectful view that there does not exist now the fundamental substratum for the application of section 66 of the Contracts Act, namely there is no ‘void documents’ within the contemplation of that provision, in relation to the debt documents. As such, the issue of section 66 Contracts Act did not feature as a live issue before us for our due
consideration, one way or another. The way we saw it, as we had earlier indicated, this ground on restitution under section 66 of the Contracts Act could only be pursued by the appellant in the alternative in the circumstances. With respect, the appellant cannot have it both ways. In the circumstances, having made the above observation, we made no order on the issue of restitution under section 66 of the Contracts Act, 1950.
18. In the upshot, this appeal was allowed by us and the orders made by the learned trial judge allowing the prayers in the respondent’s O.S were set aside. We had awarded costs to the appellant here and below in the sum of RM 20, 000. We had further ordered the deposit to be refunded to the appellant.
[ABANG ISKANDAR BIN ABANG HASHIM] JUDGE
COURT OF APPEAL MALAYSIA
DATED: 25 April 2014
DATE OF DECISION: 3 DECEMBER 2013
For the Appellant: Mr. George Lim (Messrs Battenberg & Talma
For The Respondent: Mr. Augustine Liom (Messrs. Tang & Co
CASES REFERRED TO:
1. Karpal Singh v. Atip Bin Ali  1 MLJ 291
2. Phunam Singh v. Kho Kwang Choon  2 MLJ 189
3. Raja Sekaran Krishnan v. Bar Council & Ors.  1 MLJ 1