DECISION OF THE HIGH COURT (“HC”)

• Golden Wheel acknowledged that the Moneylending Agreements were void and unenforceable due to the non-compliance with the MLA 1951, including the use of the wrong form and the charging of an incorrect interest rate.
  
  
• However, Golden Wheel argued although the agreements were void, they were still entitled to be repaid the principal sum lent to Dato’ Siah.
  
  
• The HC held that the Moneylending Agreements and moneylending transactions were illegal due to non-compliance with the MLA 1951.
  
  
• The HC also held that Golden Wheel could not recover the Unpaid Principal as the Moneylenders Agreement were illegal, thus making it void ab initio [void from the start].
  
  
• Golden Wheel was unhappy with the decision and appealed to the Court of Appeal.

DECISION OF THE COURT OF APPEAL (“COA”)

• The COA overturned the HC’s decision and allowed the appeal.
  
  
• COA stated that although the Moneylender Agreements were void due to non-compliance with the MLA 1951, it does not render them illegal automatically.
  
  
• They held it was not illegal because although the Moneylenders Agreements used were the unsecured loan form instead of the secured loan form, the said agreements were nonetheless in a form prescribed under the Regulations 2003.
  
  
• The Court also held that, the charging of the wrong rate of interest constituted an offence under the MLA 1951, but did not render the agreements illegal.
  
  
• The Court went on to hold that Golden Wheel was also a registered moneylender under MLA, and not an unlicensed moneylender.
  
  
• The next question was whether the monies lent under the void but not illegal agreement should be repaid by Dato’ Siah.
  
  
• The COA evaluated the centrality of the illegality in the context of the statute breached, whether the agreement has been performed and whether granting the remedy sought will undermine the purpose of the MLA 1951.
  
  
• The COA found that the Moneylending Agreements had been performed and were not illegal. Thus, the granting of the order to repay would not undermine MLA 1951.
  
  
• The COA then held that to refuse the repayment remedy would not constitute a proportionate response, particularly given that the Moneylending Agreements, though void, are not illegal.