” Whether an agreement that grant loan or credit to be used in gambling activities is enforceable under the law?”
CASE:
BRIEF FACTS:
- One Ting Siu Hua (“Siu Hua”) is a tour promoter or a junket appointed by one Huang Yu Kiung. Siu Hua is responsible for bringing players to gamble at casinos in turn for a commission.
- In 2014, Huang Yu Kiung entered into an agreement with a casino, Naga Casino whereby Huang Yu Kiung would supply Naga Casino with players to gamble at the premises in turn for benefits.
- Huang Yu Kiung also needs to provide the players with Naga Casino’s line of credit which is casino chip. The players then would use these casino chips to gamble in Naga Casino.
- In 2015, Siu Hua arranged a trip for Dato’ Ting Ching Lee (“Dato’ Ting”) and his other friends to Naga Casino Cambodia.
- Siu Hua provided Dato’ Ting with USD1.5 million worth of line of credit and USD193,800 worth of rolling credit. Players would need to exchange these line of credit and rolling rebate to casino chips.
- Dato’ Ting gambled at Naga Casino Cambodia with the casino chips Siu Hua provided him and lost.
- Subsequently, Siu Hua posted a statement in a Mandarin-language newspaper stating that Dato’ Ting owed a debt to his company and needed to resolve this matter within one week.
- The same statement was also made in a WeChat account and it appeared in Sin Chew Daily News newspaper.
- Dato’ Ting sued Siu Hua over the statement, claiming it to be defamatory.
- Siu Hua counter-claimed, seeking the amount of line credit and rolling rebate Dato’ Ting owed to him.
THE DECISION OF THE HIGH COURT (HC)
- The HC decided that Dato’ Ting failed to prove to the HC that the statement made was defamatory.
- Further, the HC also decided that it cannot allow Siu Hua’s counter-claim since it is an attempt to recover gambling debt which is illegal in Malaysia.
- The HC held that gambling agreement is null, illegal and void under section 24 and 31 of the Contracts Act 1950. Moreover, it is also contrary to section 26 of the Civil Law Act 1956. Further, enforcement of a gambling agreement is against public policy.
- Both claims were dismissed and both parties filed an appeal to the Court of Appeal.
THE DECISION OF THE COURT OF APPEAL (COA)
- The COA agreed with the HC’s decision to dismiss Dato’ Ting’s defamation claim against Siu Hua.
- However, the COA allowed Siu Hua’s counter-claim for the recovery of monies.
- The COA’s reasoning is that the agreement between Dato’ Ting and Siu Hua is for Siu Hua to give him the line of credit and rolling rebate only. The purpose of the two is to help Dato’ Ting cash them into casino chips. This alone does not amount to the act of gambling.
- The COA further held that the contract to give the line of credit and rolling rebate were not gambling debts.
- Dato’ Ting appealed to the Federal Court.
THE DECISION OF THE FEDERAL COURT (FC)
- The FC states that it is without a doubt that in Malaysia, any gaming or wagering agreement is unlawful and gambling debts are unenforceable.
- Here, the line of credit and rolling rebate were given with the sole purpose of gambling. Based on the line of credit and rolling rebate, players can exchange it for casino chips which will be used to gamble.
- The FC disagreed with Siu Hua’s argument that the line of credit and rolling rebate are genuine loans, distinct from gaming or wagering activities.
- Instead, the reality of the transaction was indeed for gaming and wagering activities, making the transaction between Dato’ Ping and Siu Hua a gambling agreement.
- These findings are also supported by interpreting the terms of the agreement between Huang Yu Kiung and Naga Casino whereby Huang Yu Kiung or its agent would purchase the line of credit or rolling rebate from Naga Casino to be used by players to gamble at the premise.
- If the FC were to hold to the contrary, that would give a way for people to circumvent the law on enforcement of gambling agreements.
- The FC reminded the legislator’s intention in enacting such laws is to curb gambling activities in Malaysia. Despite gambling premises being allowed to operate with a license, any debt arising from such activities is a debt of honour and not a legal debt.
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