 Written by Ms Choong Shaw Mei, Advocate and Solicitor (Malaya) and part-time lecturer at the Faculty of Law, University of Malaya. Edited by Chelsea Ho Su Ven. Reviewed by Ee Jie and Celin Khoo Roong Teng. The Court of Appeal has spotlighted issues relating to the adjudication of claims based on contracts tainted by illegality in the case of Public Bank Bhd v Ria Realiti Sdn Bhd & Ors. Insightful analysis relating to contractual illegality and consequent relief afforded were discussed at length. I. INTRODUCTION
This wry statement by Gloster LJ cited in the landmark decision of Patel v Mirza[2] would equally summarise the position of the law on illegality in Malaysia after many years of problematic and conflicting judgements handed down by the courts over the years. Judges in Malaysia not only have to deal with the issues confronting the common law in this area of claims tainted by illegality, but additionally, they have to consider those issues in light of the relevant provisions in the Contracts Act 1950 (‘Contracts Act’).[3] While the interpretation of provisions in the Contracts Act is generally guided by common law principles, there are further issues involved in reconciling the various provisions within the Contracts Act itself as well as in accommodating the more recent developments in common law in the interpretation of provisions drafted in the 1890s.[4] Malaysian courts have struggled to consistently define the scope of illegality and decide on the relief afforded to parties claiming for payment or property transferred under a contract subsequently held to be void due to illegality. II. PUBLIC BANK BHD V RIA REALITI SDN BHD & ORS[5] The difficulties involved in adjudicating a claim arising from a contract allegedly tainted by illegality culminated in the Court of Appeal decision in Public Bank Bhd v Ria Realiti Sdn Bhd & Ors, where all the relevant issues were considered by the court. Briefly, this was a claim for the repayment of a loan by the plaintiff/appellant (‘the Bank’) against four guarantors/respondent which was dismissed by the High Court on the principal ground that the loan was to finance the purchase of native lands by non-natives in contravention of Section 17 of the Sabah Land Ordinance.[6] The guarantors were shareholders and directors of a corporate borrower who had obtained a loan for the purpose of financing the purchase of said native lands as well as for its working capital. The winding up of the corporate borrower was in fact initiated by the two of the said guarantors and one Koh Seng Peng on the basis of the breakdown of relationship between the shareholders and was eventually allowed on the ground of illegality due to the aforesaid sale and purchase of native lands by non-natives. This commentary will confine itself to the issue of whether any relief would be available to the Bank in the event the loan agreements themselves were held to be tainted with illegality. The issues before the Court of Appeal were as follows:
The learned judge Ravinthran JCA in delivering the Court of Appeal judgement held that even if the loan agreements and related documents were tainted by illegality upon the application of the ratio in the Malayan Banking Bhd v Neway Development Sdn Bhd & Ors case[7] from which His Lordship had earlier distinguished on the facts,[8] the Court of Appeal had no hesitation in holding that the Bank could still seek relief. His Lordship was satisfied that this case falls within the ambit of said trio of considerations as set out in the case of Patel v Mirza, which judgement he discussed extensively and on which he expressed his full agreement. The learned judge then considered the issue of restitution under Section 66 of the Contracts Act, that is, the question of whether relief can be granted when both parties have knowledge of the illegality from the beginning, and the contract in question was found to be void and unenforceable. While the learned judge was of the view that knowledge of illegality cannot be imputed to the Bank, His Lordship had made a passing yet significant observation that Section 66 of the Contracts Act, being based on a claim for restitution for an advantage received under a contract found to be void, does not require the absence of knowledge of illegality or lack of intention to contravene the law as a precondition for its invocation. III. APPLICATION OF THE TRIO OF CONSIDERATIONS IN PATEL V MIRZA In accepting the new approach taken by Patel v Mirza, Ravinthran JCA began his judgement by pointing out how the UKSC had mitigated the rigidity and harshness of the traditional illegality defence in common law which was not based on ‘a principle of justice’ but ‘a principle of policy’ and rightly noted that the UKSC decision has been cited with approval and applied by our courts.[9] The trio of considerations was formulated by Lord Toulson to judge whether allowing a claim which is in some way tainted by illegality would be contrary to public interest because it would be harmful to the integrity of the legal system are as follows:
Ravinthran JCA quoted his fellow brother judge, Harmindar Singh Dhaliwal JCA, who regarded the new approach taken by Patel v Mirza as ‘consistent with upholding the integrity and harmony of the law by achieving an equitable result based on the facts in each case,’ before His Lordship applied the trio of policy considerations to the facts of the instant case.[11] Applying the first policy consideration by looking at the underlying purpose of the prohibition that was transgressed and whether the purpose will be enhanced by denial of the claim, His Lordship opined as follows:
In discussing the second policy consideration of whether any other public policy would be affected by denial of the claim, the learned Court of Appeal judge held that if the Bank is denied relief merely because the actual buyer, seller, and nominee had participated in illegality in view of the native status of the land title, banks would be burdened with the onerous duty to investigate the purpose of loans and details of transactions involving nominees and actual purchasers. His Lordship cited the Federal Court decision of Chang Yun Tai & Ors v HSBC Bank (M) Bhd & other appeals, where one of the issues that arose was whether the loan agreement was valid regardless of the alleged illegality of the sale and purchase agreement — during which Zulkefli Makinudin FCJ cautioned that the courts should not impose onerous duties that will render banking business impractical and burdensome.[13] Accordingly, Ravinthran JCA was of the view that the second policy consideration also favours the granting of relief to the Bank in respect of the loans given out to the corporate borrower.[14] The third policy consideration deliberated by the Court of Appeal was whether denial of the claim would be a proportionate response to the illegality. Ravinthran JCA referred to Lord Toulson’s suggestion of the following non-exhaustive factors to be considered in determining whether denying relief would be disproportionate — ‘the seriousness of the conduct, its centrality to the contract, whether it was intentional and whether there was marked disparity in the parties’ respective culpability’.[15] The learned Court of Appeal judge held that:
The Court of Appeal then concluded that it is plain that the guarantors were unjustly using their own illegal actions to reap a multimillion dollar windfall from a financial institution, and were of the opinion that even if the loan agreements were tainted with illegality, to deny the Bank relief would be an unconscionable and a totally disproportionate response. Both Ravinthran JCA and Harmindar Singh Dhaliwal JCA, in their respective judgements,[17] have extensively explored the new approach taken by Patel v Mirza. The learned Court of Appeal judge in the case of Pang Mun Chung & Anor v Cheong Huey Charn, acknowledged the concern of the minority judges in Patel v Mirza that the discretionary approach advocated by the majority was ‘converting legal principle into an exercise of judicial discretion’.[18] However, His Lordship had noted that Lord Mansfield’s pronouncement on ex turpi causa non oritur actio[19] led to two centuries of the courts coming up ‘with divergent and sometimes inconsistent approaches in confronting the defence of illegality leading to criticisms of uncertainty, arbitrariness and lack of transparency.’[20] In response to the criticism that the new approach based on the ‘trio of considerations’ would leave much to the discretion of the judges and lead to uncertainty in the law, the author would like to quote Lord Kerr from Patel v Mirza as follows: ‘Certainty or predictability of outcome may be a laudable aim for those who seek the law’s resolution of genuine, honest disputes. It is not a premium to which those engaged in disreputable conduct can claim automatic entitlement’.[21] This landmark decision by the UKSC, which consisted of 9 justices, established the much needed restatement of the law on the defence of illegality, and had since been endorsed by the Federal Court in holding that ‘the test laid down by Lord Toulson in Patel that is to say, the trio of considerations, is a sensible one, which we should follow’.[22] IV. RELIEF UNDER SECTION 66 OF THE CONTRACTS ACT
It is noted with some interest that the earlier Malaysian superior court decisions citing and applying Patel v Mirza made scant reference to the relevant provisions of the Contracts Act.[24] In the case of Mahmood bin Ooyub v Li Chee Loong and another appeal, the Court of Appeal, in briefly considering the application of both Patel v Mirza and Section 66, seemed to suggest that ‘additionally any claim for restitution must also satisfy the requirement of s 66 of the Contracts Act’, but did not elaborate.[25] In the more recent decision of Dr H K Fong Brainbuilder Pte Ltd v SG-Maths Sdn Bhd & Ors, the Court of Appeal also considered the application of Patel v Mirza and Section 66, but held that both were inapplicable to the facts of that case.[26] Therefore, Ravinthran JCA, in further considering whether relief could be afforded to the Bank under Section 66 of the Contracts Act in the instant case, brought to the fore the need to reconcile the adoption of legal principles in common law with the relevant provisions of the Contracts Act. His Lordship made this significant observation in passing:
This raises the problematic issue involved in the interpretation of the phrase ‘discovered to be void’ in Section 66 of the Contracts Act. The learned Court of Appeal judge correctly summed up in his judgement that ‘our courts with rare exceptions of which the Tan Chee Hoe case is one, have generally held that in order to invoke s 66, a party must not have knowledge of the illegality.’ That, surprisingly, was not the view taken in the early days when the said provision was known as Section 65 of the Contract Enactment 1899 (‘the Contract Enactment’).[28] As shown by the case of Khem Singh v Anokh Singh, where Elphinstone CJ categorically disagreed with the then prevailing view of the Indian courts as follows:
In this case, the agreement in question was held to be a marriage brokerage agreement and was therefore void for having an object opposed to public policy within the meaning of Section 23 of the Contract Enactment. The learned Chief Justice went on to hold that ‘the agreement, having been found by me to be void, has been discovered to be void, and that section 65 applies.’[30] It is evident from his judgement that the learned Chief Justice did not accept the view that parties to the agreement need to discover the fact of the illegality which must not be known to them at the commencement of the contract in order to succeed in their recovery under Section 65 of the Contract Enactment. Specifically, the learned Chief Justice stated, with reference to the seminal Indian case of Harnath Kaur v Indar Singh,[31] that:
It is, therefore, most regrettable that the Federal Court in Ng Siew San v Menaka [33] did not choose to follow an Indian High Court case, Kanuri Sivaramakrishnaiah v Vemuri Venkata Narahari Rao,[34] rather than what Elphinstone CJ had decided in Khem Singh v Anokh Singh where he made clear that he disagreed with the Indian cases in their interpretation of the words ‘discovered to be void’.[35] Subsequently, in Menaka v Lum Kum Chum, which was the appeal to the Privy Council from the Federal Court case of Ng Siew San v Menaka,[36] the Privy Council without much elaboration agreed with the Federal Court’s interpretation of ‘discovered to be void’ to mean both parties were unaware of the illegality.[37] The Privy Council then seemed to pivot to language that is more consonant with claims for restitution based on unjust enrichment by stating as follows:
While most Malaysian cases agree that the parties must not be in pari delicto[39] and the illegality of the agreement must be discovered subsequent to its making in their interpretation of Section 66 of the Contracts Act, the judgements themselves are somewhat in disarray with no clear line of Indian and Malaysian authorities cited and relied on, and the cases are often decided without reference to each other. The Federal Court in Ng Siew San v Menaka did not refer to Ahmad bin Udoh & Anor v Ng Aik Chong, which was decided by the Federal Court only three years earlier,[40] in which Suffian FJ had allowed the claim on the basis that there was no evidence that the plaintiff was in pari delicto and the illegality of the agreement was discovered subsequent to its formation.[41] However, a different view was taken in Singma Sawmill Co Sdn Bhd v Asian Holdings (Industralised Buildings) Sdn Bhd, whereby the Federal Court held that the landlord was deemed to be aware of the illegality when they entered into the contract in allowing the use of the land for a purpose contrary to express condition on the title, and therefore Section 66 of the Contracts Act cannot assist them.[42] Raja Azlan Shah CJ (as he then was) referred to yet another Indian case, Kuju Collieries v Jharkhand Mines[43] in the interpretation of Section 66 (Section 65 of the Indian Contracts Act) and made this unusual statement:
This rather sweeping dictum would seem to fly in the face of what had been decided by the Indian Court in the decades-old case of Harnath Kaur v Indar Singh,[45] a position which has been generally accepted by Malaysian courts whereby Section 66 of the Contracts Act would apply to contracts held to be void ab initio by reason of illegality.[46] In the decision of Yeep Mooi v Chu Chin Chua & Ors[47] just a year later, the Federal Court, in a judgement delivered by Salleh Abas FJ (as he then was), appeared to have changed its mind and went back to its previous position by holding that:
In the light of these conflicting deliberations, there is much to be said for the authoritative pronouncement by Elphinstone CJ that ‘discovered to be void’ means ‘found to be void’, which is a straightforward reading of the phrase that would have avoided the requirement of having the party making a claim tainted with illegality, to be unaware of it at the execution of the contract. It would appear that the contrary interpretation by subsequent Malaysian cases following diverse Indian decisions was, in all likelihood, equally influenced by the common law’s harsh stance on the defence of ex turpi causa non oritur actio,[49] in allowing only a party not in pari delicto to claim. As discussed earlier, the dilemma posed by a strict rule-based application of the doctrine of illegality to a diverse scenario of contract law cases in an increasingly regulated environment led to a good deal of uncertainty, complexity and sometimes, inconsistencies in decisions by judges in their attempt to steer the middle course between two unacceptable positions.[50] On the one hand, the court does not want to render its assistance to a plaintiff seeking to make a claim on an agreement tainted by illegality while, on the other hand, it is also unacceptable for the court to flatly refuse all assistance to the plaintiff no matter how serious his loss nor how disproportionate his loss to the unlawfulness of his conduct. These conflicting standpoints lead judges, not just those in the United Kingdom but also in Australia, Canada as well as Malaysia, to scrutinise the ‘rigidity and of-times unfair application of the classical illegality doctrine’ and ‘the legal manoeuvring that must take place to arrive at what is considered a just result’.[51] V. RESTITUTION ON THE BASIS OF UNJUST ENRICHMENT Scholars as well as judges began to move away from the traditional consideration on the basis of moral turpitude which had led to the defence of illegality being rigidly upheld, and instead, to explore the defence of self-stultification in considering whether allowing restitution on the basis of unjust enrichment would make nonsense of the refusal to enforce the contract in the first place. Malaysian courts have frequently acknowledged the restitutionary principle in Section 66 of the Contracts Act,[52] and it is clear that a better understanding of the law of restitution based on unjust enrichment would assist in its interpretation. It has been pointed out that:
One may well posit that ‘…the very purpose of the law of unjust enrichment is to prevent losses from lying where they fall... In principle, allowing restitution should remove any unwanted link between the illicit act and payment’.[54] Another academic commentator opined that:
It is not uncommon for parties appearing before the court to have mutually transgressed some statutory provisions governing much of modern corporate dealings,[56] and it may even appear as if the party with greater culpability is getting away with the windfall from their illegal transaction. As such, it was inevitable that the Federal Court would come to reconsider the harsh stance taken against the party claiming for return of payment or property made under a contract allegedly tainted by illegality which had allowed the defence of illegality to be successfully raised by an unscrupulous party. This injustice may well have set the stage for the decision in Tan Chee Hoe & Sdn Bhd v Code Focus Sdn Bhd, where the Federal Court allowed recovery under Section 66 of the Contracts Act, although both parties had consciously and knowingly agreed to waive the requirement for shareholders’ approval under Section 132C of the Companies Act 1965 by a side letter of the same date as the sale and purchase of shares agreement.[57] Without much elaboration or reference to earlier decisions to the contrary, Ramly Ali FCJ held that:
In the subsequent Court of Appeal decision of Paragon Union Bhd v Prestamewah Development Sdn Bhd & Anor and another appeal,[59] Zabariah Yusof JCA (as she then was) agreed with the trial judge that the agreements were illegal and that the parties were in pari delicto or ‘in equal fault’. The learned Court of Appeal judge discussed the case of Tan Chee Hoe & Sdn Bhd at length and followed said Federal Court decision in holding that:
Her Ladyship expressed her concern that ‘it is unjust to let the plaintiffs gain from such illegality’ and that ‘to refuse the refund would be to condone a windfall to the plaintiffs out of the illegality’.[61] She was of the opinion that refusing the claim for refund by the plaintiffs ‘would result in a disproportionate consequence between the plaintiffs and the defendants, bearing in mind that both are equally at fault’.[62] Interestingly, the learned Court of Appeal judge did not refer to the then recent landmark UKSC decision of Patel v Mirza which was yet to be cited with approval by the Federal Court but instead, referred to the case of Saunders and another v Edwards and another.[63] This thoughtful judgement by Bingham LJ was cited by Lord Toulson in Patel v Mirza when discussing the third trio of considerations on the possibilities of overkill in refusing claims tainted by illegality, thereby leading to the disproportionate wrong against one party. IV. CONCLUSION Public Bank Bhd v Ria Realiti Sdn Bhd & Ors is, in fact, the third superior court decision to challenge the interpretation of Section 66 of the Contracts Act by requiring the party seeking restitution to not be a party to the illegality. Ravinthran JCA has perceptively pointed out that such an interpretation would be the ‘pre-Patel v Mirza position’, a legal scenario that invites clarification by the Federal Court since Patel v Mirza is now part of Malaysian jurisprudence. Instead of applying the rigid rules for or against the application of the ex turpi causa defence, the approach taken by Patel v Mirza relies on the ‘trio of considerations’ formulated by Lord Toulson in deciding whether it would be harmful to the integrity of the legal system to grant relief for claims based on contracts tainted with illegality. As this new approach has been endorsed by the highest court in Malaysia,[64] it would not be incongruous for the Federal Court to revisit the interpretation of the provisions in Section 66 of the Contracts Act. Judges and lawyers alike would welcome guidance on this in order to avoid the conundrum that confronted the learned High Court judge in the case of Dr H K Fong Brainbuilder Pte Ltd v SG-Maths Sdn Bhd, when he expressed that ‘(he was) not able to apply the cases cited (including Patel v Mirza) because we have our own Section 66 of the Contracts Act’.[65] It is the aim of this brief commentary to establish that Section 66 of the Contracts Act, given its natural interpretation as intended by Elphinstone CJ,[66] is not inconsistent with the legal principles laid out in Patel v Mirza. Section 66 of the Contracts Act is indeed a dynamic and versatile provision that encapsulates the law of restitution in many and varied case scenarios.[67] It is said to be ‘without parallel in the common law,’ but it has often been circumscribed by the narrow interpretations ascribed to its provisions and, at times, ignored altogether in its application.[68] While Malaysian courts are not bound to follow recent developments in the common law, a thorough analysis of all the relevant provisions of the Contracts Act in light of such consequential developments in common law will certainly bring about a better understanding and more consistent application of the law. In view of the many important legal issues raised by this appeal before the Federal Court, it is hoped that there will be a comprehensive and definitive ruling by the apex court taking into account the changes in the legal landscape of contract law, as well as the need to give an authoritative interpretation of the relevant provisions in the Contracts Act 1950. Disclaimer: The opinions expressed in this article are those of the author and do not necessarily reflect the views of the University of Malaya Law Review, and the institution it is affiliated with. The writer would like to thank Ung Yi Jie and Tan Ling Er, 2nd year law students of the Faculty of Law, University of Malaya, for their assistance in the research for this article.
[1] Patel v Mirza [2015] Ch 271, [47] (Gloster LJ). [2] Patel v Mirza [2016] UKSC 42, [15] (Lord Toulson). [3] Contracts Act 1950 (Act 136) (Malaysia) s 24 & 66. [4] The Contracts Act 1950 is drafted based on the Indian Contract Act, 1872 (India). [5] Public Bank Bhd v Ria Realiti Sdn Bhd & Ors [2021] 4 MLJ 537. [6] Sabah Land Ordinance (Cap. 68) (Sabah). [7] Malayan Banking Bhd v Neway Development Sdn Bhd & Ors [2017] 5 MLJ 180. [8] This issue of whether the loan agreements were tainted by illegality will not be discussed here. Whether the consideration or object of an agreement is said to be unlawful in accordance with s 24 of the Contracts Act is a complex and multi-layered issue. In all likelihood, the ambit of the Neway case will be considered by the Federal Court in the forthcoming appeal. [9] Liputan Simfoni Sdn Bhd v Pembangunan Orkid Desa Sdn Bhd [2019] 4 MLJ 141, [117]-[118]. It is unclear why the Federal Court would need to apply the test based on the trio of considerations laid down in Patel v Mirza since the Sale and Purchase Agreement of land under consideration was in fact not held to be void. [10] See footnote 2 above, [101] & [120]. [11] Pang Mun Chung & Anor v Cheong Huey Charn [2018] 4 MLJ 594, [73]. [12] See footnote 5 above, [50]. [13] Chang Yun Tai & Ors v HSBC Bank (M) Bhd & other appeals [2011] 7 CLJ 909. [14] See footnote 5 above, [51]. [15] See footnote 2 above, [107]. [16] See footnote 5 above, [56]. [17] Pang Mun Chung & Anor v Cheong Huey Charn [2018] 4 MLJ 594, [66] - [71] (Harmindar Singh Dhaliwal JCA). [18] See footnote 17 above, [73]. [19] Latin maxim meaning ‘from a dishonourable cause an action does not arise’, from which Lord Mansfield in Holman v Johnson (1775) 1 Cowp 341, 343 derived his seminal statement: ‘No court will lend its aid to a man who found his cause of action on an immoral or illegal act’. It must also be noted that Lord Mansfield had made it clear that the illegality defence operates as rule of public policy and not as a rule of justice. [20] See footnote 17 above, [4]. [21] See footnote 2 above, [137]. [22] See footnote 9 above, [118]. [23] See footnote 3 above, s 66. [24] Pang Mun Chung & Anor v Cheong Huey Charn [2018] 4 MLJ 594, Liputan Simfoni Sdn Bhd v Pembangunan Orkid Desa Sdn Bhd [2019] 4 MLJ 141, and BK Fleet Management Sdn Bhd v Stanson Marketing Sdn Bhd [2018] 9 CLJ 449 are cases that specifically deal with claims based on contracts allegedly tainted by illegality. [25] Mahmood bin Ooyub v Li Chee Loong and another appeal [2020] 6 MLJ 755, [264]. Lee Swee Seng JCA briefly considered the application of Patel v Mirza (as restitution based on unjust enrichment was not pleaded) and concluded that to allow restitution would be to allow the lenders to mock the law prohibiting illegal moneylending under the Moneylenders Act 1951. His Lordship then referred to the requirement in s 66 that the moneylender must not be aware of the illegality involved in order to recover. [26] Dr H K Fong Brainbuilder Pte Ltd v SG-Maths Sdn Bhd & Ors [2021] 1 CLJ 155, [63]. In this Court of Appeal decision Patel v Mirza was cited but held inapplicable to the facts of the case on the basis that it involved a contract that is illegal under statutes (statutory illegality). Statutory illegality is a broad term, and a distinction may be made between a contract which is strictly prohibited by statute and therefore void, and one which is in contravention of a statutory provision which does not render it void. According to the 2nd Edition of A Restatement of the English Law of Contract by Andrew Burrows, ‘it is important to note that the distinction between “statutory illegality” and “common law illegality” refers to the effect of the illegal conduct and not the source of the illegal conduct.’ [27] See footnote 5, [63]. [28] Contract Enactment 1899 (Malaya). The predecessor of the Contracts Act 1950 whereby s 23 and s 65 of the Enactment are equivalent to s 24 and s 66 of the current Contracts Act. [29] Khem Singh v Anokh Singh [1933] 2 MLJ 228, 233 (Elphinstone CJ). Elphinstone, Sir Lancelot Henry (1879-1965) was the Knight Chief Justice of Federated Malay States. [30] See footnote 29 above, 233. [31] Harnath Kaur v Indar Singh [1922] LR 50. Per Sir Lawrence Jenkins delivering the judgement of the Privy Council: ‘An agreement, therefore, discovered to be void is one discovered to be not enforceable by law, and, on the language of the section, would include an agreement that was void in that sense from its inception as distinct from a contract that becomes void.’ [32] See footnote 29 above, 233. Harnath Kaur v Indar Singh had been generally cited in a number of Malaysian cases as the premise that the parties being in pari delicto cannot recover under s 66 of the Contracts Act. However, Elphinstone CJ clearly did not think that it is an authority for that. [33] Ng Siew San v Menaka [1973] 2 MLJ 154 (Federal Court). A leading authority on s 66 of the Contracts Act after its decision was affirmed by the Privy Council. [34] Kanuri Sivaramakrishnaiah v Vemuri Venkata Narahari Rao AIR 1960 Andh Pra 186. [35] See footnote 29 above. [36] See footnote 33 above. [37] Menaka v Lum Kum Chum [1977] 1 MLJ 91 (Privy Council). Lum Kum Chum was the wife of the late Ng Siew San, the original defendant. [38] See footnote 37 above, 94. [39] Latin for ‘in equal fault’. From the Latin maxim in pari delicto potior est conditio defendentis, for ‘where both parties are equally in the wrong the position of the defendant is the stronger’. [40] Ahmad bin Udoh & Anor v Ng Aik Chong [1970] 1 MLJ 82. This case was, however, cited by Mohamad Azmi J in Menaka v Ng Siew San [1973] 1 MLJ 50 (High Court). [41] Both relied on the decision in Kanuri Sivaramakrishnaiah v Vemuri Venkata Narahari Rao and the case of Khem Singh v Indar Singh was not cited. [42] Singma Sawmill Co Sdn Bhd v Asian Holdings (Industralised Buildings) Sdn Bhd [1980] 1 MLJ 21. This case and the case of Ahmad bin Udoh & Anor v Ng Aik Chong were cited with approval in the Federal Court decision of CME Group Bhd v Bellajade Sdn Bhd & Another Appeal [2018] 10 CLJ 147. [43] Kuju Collieries v Jharkhand Mines AIR 1974 SC 1892. [44] See footnote 42 above, 24. [45] See footnote 29 and 31 above. [46] Affirmed recently in Dr H K Fong Brainbuilder Pte Ltd v SG-Maths Sdn Bhd & Ors [2021] 1 CLJ 155, [62]. On the contrary, s 66 was briefly considered in Mahmood bin Ooyub v Li Chee Loong and another appeal [2020] 6 MLJ 755, [265] where Lee Swee Seng JCA seemed to be of the view that it was not available to the illegal moneylenders since the agreements were void ab initio. See Golden Wheel Credit Sdn Bhd v Siah Teong Din [2021] 1 LNS 963, [59]. [47] Yeep Mooi v Chu Chin Chua & Ors [1981] 1 MLJ 14. Raja Azlan Shah CJ was a member of the bench. [48] See footnote 47 above, 17. [49] See footnote 19 above. [50] As clearly outlined by Lord Toulson in his detailed analysis of the development of the law on the defence of illegality in Patel v Mirza [2016] UKSC 42. [51] Hall v Herbert [1993] 2 SCR 159; Nelson v Nelson [1995] HCA 25; Mohamed v Alaga & Co [2000] WLR 1815. [52] See footnote 38 above for the Privy Council’s statement and the observation made by Ravinthran JCA in Public Bank Bhd v Ria Realiti Sdn Bhd & Ors [2021] 4 MLJ 537, [63]. [53] Connolly, N. (2013). Re-examining Illegality in Restitution: A reason to deny restitution, or to grant it? Edinburgh, Scotland: The Society of Legal Scholars, 20. Retrieved from <http://www.archive.legalscholars.ac.uk/edinburgh/restricted/paper.cfm?id=315>. Site accessed on 23 Sept 2021. [54] Dannemann, G. (2000). Illegality as Defence Against Unjust Enrichment Claims. Oxford University Comparative Law Forum 4. Retrieved from <https://ouclf.law.ox.ac.uk/illegality-as-defence-against-unjust-enrichment-claims/>. Site accessed on 23 Sept 2021. [55] Birks, P. (2000). Recovering Value Transferred Under an Illegal Contract. Theoretical Inquiries in Law, 1(1), 155, 202. Retrieved from <https://www7.tau.ac.il/ojs/index.php/til/article/view/182/159>. Site accessed on 23 Sept 2021. [56] Such as provisions under the Stamp Act 1949, Real Property Gains Tax Act 1976, the Companies Act 2016, the Malaysian Code on Take-Overs and Mergers 2016, and the Listing Requirements of Bursa Malaysia Securities Berhad. It should be noted that contravention of some statutes does not necessarily make a contract void; hence that may not strictly be a case of statutory illegality, unlike non-compliance with the Moneylenders Act 1951 or the Franchise Act 1998. See footnote 26 above. [57] Tan Chee Hoe & Sdn Bhd v Code Focus Sdn Bhd [2014] 3 MLJ 301 (Federal Court). [58] See footnote 57 above, [41]. Both Ahmad bin Udoh & Anor v Ng Aik Chong and Menaka v Lum Kum Chum were referred to in this decision to establish that S.66 of the Contracts Act applies to contracts that are void in that sense from its inception — distinct from a contract that becomes void. [59] Paragon Union Bhd v Prestamewah Development Sdn Bhd & Anor and another appeal [2018] 4 MLJ 307, [82]. This case involves a series of nine agreements, guarantees, and indemnities in respect of a take-over scheme designed to circumvent s 6(1)(a) and s 6(4) of the Malaysian Code on Take-Overs and Mergers 1998, s 132C of the Companies Act 2016, and paragraphs 10.05 and 10.06 of Chapter 10 of the Listing Requirements of Bursa Malaysia Securities Berhad. [60] See footnote 59 above, [105]. [61] See footnote 59 above, [106]. [62] See footnote 59 above, [106]. [63] Saunders and another v Edwards and another [1987] 1 WLR 1116, 1134. [64] See footnote 9 above. [65] Dr H K Fong Brainbuilder Pte Ltd v SG-Maths Sdn Bhd [2018] 11 MLJ 701, [52]. [66] See footnote 29 above. [67] Void agreements due to mistakes, illegality, frustration, and contracts that are rescinded due to vitiating factors as well as rescission for breach of contract are within the ambit of s 66 of the Contracts Act. See illustrations (a) to (d) of the provision. [68] The law of restitution for unjust enrichment received full endorsement by the Federal Court in the case of Dream Property Sdn Bhd v Atlas Housing Sdn Bhd [2015] 2 MLJ 441. The Federal Court considered s 71 of the Contracts Act and drew a distinction between ‘the provisions of s 71 of the Contracts Act 1950’ and ‘the law of unjust enrichment as we understand it today’. However, no reference was made to s 66 of the Contracts Act.
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