Chan Kwai Leong @ Chin Kwai Leong VS Chong Nye Thiam & Chong Lee Peng (MJLR 2009a8) - David Wong, 3/12/2009,SS
[K22-172-2005-I]
1
Jurisdiction: MALAYSIA
IN THE HIGH COURT IN SABAH & SARAWAK AT KOTA KINABALU
Parties:
Plaintiff : Chan Kwai Leong @ Chin Kwai Leong
1st Defendant : Chong Nye Thiam
2nd Defendant : Chong Lee Peng
File Number:
K22-172- 2005-I
Issues:
Was it a loan to the plaintiff or a sale and purchase of the shoplot by the plaintiff to the 2nd defendant
Hearing Dates: 6 July 2009, 8 – 9 July 2009
Date of Decision:
3 December 2009
Judge:
HONOURABLE JUSTICE DATUK DAVID WONG DAK WAH
Representation:
For Plaintiff : Mr. Baldev Singh Messrs. Baldev Gan & Associates Kota Kinabalu, Sabah
For Defendant: Mr. Terrence Lee Messrs. Lam & Co Kota Kinabalu, Sabah
[K22-172-2005-I]
2
JUDGMENT
3
Proceeding:
The plaintiff’s claim is substantially two folds. Firstly, it is for an order that the transfer of the plaintiff’s property to the 2nd defendant to be set aside on the ground that the dealing between the plaintiff and the 1st
6
defendant was in fact a loan of RM650,000.00 instead of sale of the property. Secondly, if the court finds that it is loan transaction, to declare the loan transaction as null
9
and void as it contravenes the Money Lenders Ordinance or alternatively for an order that the plaintiff be given the right to redeem the property by repaying the loan.
12
The defendants’ contention is simply that the dealings in respect of the property between them and the plaintiff was one of sale and purchase no more no less.
15
Background facts: The plaintiff, prior to the transfer on 1.9.2005, was the registered proprietor of a 5 storey shoplot at Kampung Air, Kota Kinabalu under Town Lease No.
18
017505645. The shoplot was purchased by plaintiff’s family in 1970 and intended by the father to be part of the family inheritance. In 2004 the [K22-172-2005-I]
3 plaintiff was indebted to one Lee Kai Kiang, which money was used to settle his gambling debts. The amount due was in the sum of RM527,400.00. which sum was secured by a pledge of the title deed to 3 the shoplot. The plaintiff also signed a blank memorandum of transfer and a Power of Attorney to Mr Lee. Those documents were deposited with Messrs Dr Yee
6
Tan & Associates as stake holders. The plaintiff wanted to redeem the loan from Mr Lee and hence approached the 1st defendant for help. What transpires between plaintiff and 1st defendant is now in dispute. The 1st
9
Defendant testified that the Plaintiff came to see him because the Plaintiff wanted to sell his property urgently to settle some gambling debts. For the plaintiff he testified that he approached the 1st defendant for a loan and not
12
to sell the property. Whatever the reason, a sale and purchase agreement of the property was executed between the plaintiff and the 2nd defendant with the consideration of RM650,000.00 together with a Power of Attorney given by the plaintiff to the 2nd 15 defendant and the relevant memorandum of transfer. The just mentioned documents were prepared by Mr. Renny Lee Tsun Yin of Messrs Lee & Lee. According to the 1st 18 defendant a sum of RM527,400.00 was paid to Messrs Dr. Yee Tan and Associates to redeem the title deed of the property whereupon the deed was released to Messrs Lee & Lee which eventually
[K22-172-2005-I]
4
transferred the title deed into the name of the 2nd defendant and according to the 1st defendant, the balance of the purchase price was paid to the plaintiff. The plaintiff appears to have a different recollection 3 of how the sum of RM650,000.00 was utilized. Be that as it may there is common ground that the 1st defendant had parted with the sum of RM650,000.00.
6
Issues:
There is only one issue in this case and it is this:
9
‘Whether the payment of the RM650,000.00 to the plaintiff is a loan from the 1st defendant or is the consideration for the purchase of the shoplot from the plaintiff by the 2nd defendant.’
12
The 1st defendant’s contention is premised on the existence of the sale and purchase agreement and the power of attorney dated 12.11.2004 entered
15
freely between parties. Further counsel submits that as there are no documents to the contrary effect, hence the sale and purchase agreement must be given to its full effect.
18
The plaintiff’s counsel however urges the court to look beyond the words employed in the sale and purchase agreement especially the circumstances in which the agreement was signed. These circumstances as alleged were
21
these:
[K22-172-2005-I]
5
1. He was deeply in debt to the ‘loan sharks’ or ‘ah longs’ who had given him loans to pay his gambling debts.
2. He could not approach the bank for a loan as it would 3 have taken three months to process and he was then constantly pestered by one Mr Lee to repay his debt.
3. The 1st 6 defendant was introduced to him by one of his ‘mai chai’ who took the plaintiff to see the 1st defendant.
4. The plaintiff informed the 1st defendant that he will need the loan for a
9
few months and offered as security his shoplot. He had also gave to the 1st defendant a valuation report which valued it at RM980,000.00 at 1998. In 2005 VPC Alliance (Sabah) Sdn Bhd valued the shoplot it
12
at RM1,420,000.00. 5. The 1st defendant then agreed to lend to the plaintiff the sum of RM650,000.00 at a interest of 6% per month to be paid in advance.
15
This amount would be utilized in the following manner:
i. The sum of RM527,000 to be paid to Mr Lee through his lawyers to redeem the title deed to the shoplot;
18
ii. The first month of interest for December 2004 of RM39,000.00;
[K22-172-2005-I]
6
iii. Ah Lun’s loan of RM80,000.00 – one of plaintiff’s loan from ah Longs;
iv. Lawyers and 3 stamp duty fees;
v. The balance of RM3,000.00 paid to the plaintiff.
6. After defaulting the interest payment for February and March 2005,
6
the plaintiff, his brother and the tenants of the shoplot were harassed by the 1st defendant ‘ma chais’. The 1st defendant also threatened to transfer the shoplot into his name.
7. As a result of being slapped and punched by the 1st
9
defendant’s ‘ma chais’ and his family member being threatened, a police report was lodged against the 1st defendant.
8. The shoplot was transferred to the 2nd 12 defendant’s name sometime in September 2005 and no notice was given to the plaintiff of this intention to do so.
9. From September 2005, the 1st
15
defendant started to harass the tenants of the shoplots resulting police reports being lodged.
10. As from November 2005 the plaintiff had not been able to collect any
18
rentals from the shoplot.
[K22-172-2005-I]
7. I have given consideration to both submissions and the evidence adduced in court and found that the dealing between the plaintiff and 1st defendant was one of a loan transaction rather a sale and purchase 3 transaction and my reasons are as follows:
1. There is no doubt in my mind that the plaintiff was in debt heavily and
6
had to deal with loan sharks or ‘ah Long’ to try to fix up his situation.
2. It is under those circumstances that the plaintiff had approached the 1st defendant.
9
3. The existence of clause 6 in the agreement gives credence the allegation of the plaintiff. Clause 6 reads as follows: “…the vendor shall execute … memorandum of Transfer…
12
and deliver the same to the said solicitors with irrevocable instructions to submit the same to the relevant authorities for adjudication… and to effect registration of the same
15
within twelve (12) months from the date of this agreement (or such extended period as the purchaser shall agree) It is not conceivable that a purchaser in a normal sale and purchase
18
agreement would allow such generosity bearing in mind that the full purchase price had been fully paid to the vendor, the plaintiff in this case. Furthermore the existence of a power of attorney confirms that
[K22-172-2005-I]
8
it was a loan as in a pure sale agreement when in this case the full purchase price had been fully paid, the signed memorandum of transfer would have sufficed to transfer the property.
3
This clause confirms that the intention of the parties was the signed memorandum of transfer and power of attorney are to be treated as security to the
6
loan.
4. The 1st defendant’s explanation for the existence of clause 6 that the plaintiff needed time to inform his family is with respect nonsensical.
9
His answer when cross examined of ‘I don’t know’ speak for itself.
5.
Even by the admission of the solicitor who prepared the agreement, clause 6 is an unusual term. By this testimony, the solicitor himself
12
could not give any plausible reason for the existence of this clause. Only when one treats the whole relationship between the plaintiff and 1st defendant as one of lender and borrower would turn clause 6 into a
15
sensible and reasonable term.
6. The huge difference between the purported consideration of the sale
18
price of RM650,000.00 and the 1998 valuation of the shoplot of RM950,000.00 and the 2004 valuation of RM1.4 million is another factor which infers that it was a loan.
[K22-172-2005-I]
9
The issue which confronts the court now is whether this is
3
a loan agreement which the court should strike down on the ground that it is against public policy and illegal. The legislation which counsel for the plaintiff refers to is the Money Lenders Ordinance Sabah and it is his submission that as the 1st
6
defendant possesses no license this loan transaction is illegal. A short answer to that submission is that there is no evidence in court which shows that the 1st
9
defendant had made more than two loan transaction in a calendar year as sec 2 of the Ordinance defines moneylender business as more than two loan transaction in a calendar year. As for the charge of excessive
12
interest in the alleged unaccounted amount of RM122,600.00, this allegation is not supported by documentary evidence. In fact the plaintiff had acknowledged this payment in a statement of account which he had not
15
disputed. As for the interest rate to be levied on the loan there appears to be a dispute what is meant in the police report. Was it 10% per month or 10% per
18
annum? In such circumstance, it becomes the duty of the court to determine a rate which is reasonable and in this case it is my judgment that a 12% per annum would be the appropriate rate taking into consideration the Money
21 Lenders Ordinance caps the interest to be levied on secured loan to 15% per
[K22-172-2005-I]
10 annum and the reasons why the plaintiff needed the money. The interest levy is to commence to run from 1.12.2004 till the full repayment of the
3
loan.
As for the right of redemption I can do no better than quote Lord Denning in Quennell v Maltby (1979) 1 ALL ER 568 at 571:
6
“So here in modern times equity can step in so far as to prevent a mortgagee, or a transferee from him, from getting possession of a house contrary to the justice of the case. A mortgagee will be restrained from getting possession except when it is
9
sought bona fide and reasonably for the purpose of enforcing the security and then only subject to such conditions as the court think fir to impose.”
12
Likewise here, the justice of case demands that the plaintiff be given a right of redemption. The last matter which needs to be attended to is what period of time should
15
the court give to the plaintiff to redeem the loan. As this loan was disbursed in 2004, a reasonable period would be 2 months from the date of this judgment.
Before I make the final order, I find no merit in the counterclaim of the 1st
18
defendant as he had not shown to the court that the plaintiff had acted with malicious intent when lodging the police report. In any event whether the 1st
21
defendant was arrested because of the plaintiff’s police report is unclear.
[K22-172-2005-I]
11 For all the reasons stated above, I make the following order:
1. A declaration that the sum of RM650,000.00 was a loan from the 1st defendant 3 to the plaintiff;
2. Interest of 12% per annum is levied on the sum of RM650,000.00 from the date of release of the aforesaid sum to Messrs Dr Yee Tan
6
& Associates till full payment of the same.
3. The plaintiff is given 2 months from the date of this judgment to redeem the loan and the interests thereon.
9
4. Upon payment of the judgment sum and the interest thereon, the 2nd defendant shall transfer the shoplot (Kota Kinabalu TL017505645) to the plaintiff by signing relevant memorandum of
12
transfer and documents.
5. Stamp duties on the transfer of the shoplot shall be paid by the plaintiff.
15
6. Each party to pay his own costs. Order accordingly.
18
(DATUK DAVID WONG DAK WAH)
21
Notice: This copy of the Court's Reasons for Judgment is subject to formal revision.
1
Jurisdiction: MALAYSIA
IN THE HIGH COURT IN SABAH & SARAWAK AT KOTA KINABALU
Parties:
Plaintiff : Chan Kwai Leong @ Chin Kwai Leong
1st Defendant : Chong Nye Thiam
2nd Defendant : Chong Lee Peng
File Number:
K22-172- 2005-I
Issues:
Was it a loan to the plaintiff or a sale and purchase of the shoplot by the plaintiff to the 2nd defendant
Hearing Dates: 6 July 2009, 8 – 9 July 2009
Date of Decision:
3 December 2009
Judge:
HONOURABLE JUSTICE DATUK DAVID WONG DAK WAH
Representation:
For Plaintiff : Mr. Baldev Singh Messrs. Baldev Gan & Associates Kota Kinabalu, Sabah
For Defendant: Mr. Terrence Lee Messrs. Lam & Co Kota Kinabalu, Sabah
[K22-172-2005-I]
2
JUDGMENT
3
Proceeding:
The plaintiff’s claim is substantially two folds. Firstly, it is for an order that the transfer of the plaintiff’s property to the 2nd defendant to be set aside on the ground that the dealing between the plaintiff and the 1st
6
defendant was in fact a loan of RM650,000.00 instead of sale of the property. Secondly, if the court finds that it is loan transaction, to declare the loan transaction as null
9
and void as it contravenes the Money Lenders Ordinance or alternatively for an order that the plaintiff be given the right to redeem the property by repaying the loan.
12
The defendants’ contention is simply that the dealings in respect of the property between them and the plaintiff was one of sale and purchase no more no less.
15
Background facts: The plaintiff, prior to the transfer on 1.9.2005, was the registered proprietor of a 5 storey shoplot at Kampung Air, Kota Kinabalu under Town Lease No.
18
017505645. The shoplot was purchased by plaintiff’s family in 1970 and intended by the father to be part of the family inheritance. In 2004 the [K22-172-2005-I]
3 plaintiff was indebted to one Lee Kai Kiang, which money was used to settle his gambling debts. The amount due was in the sum of RM527,400.00. which sum was secured by a pledge of the title deed to 3 the shoplot. The plaintiff also signed a blank memorandum of transfer and a Power of Attorney to Mr Lee. Those documents were deposited with Messrs Dr Yee
6
Tan & Associates as stake holders. The plaintiff wanted to redeem the loan from Mr Lee and hence approached the 1st defendant for help. What transpires between plaintiff and 1st defendant is now in dispute. The 1st
9
Defendant testified that the Plaintiff came to see him because the Plaintiff wanted to sell his property urgently to settle some gambling debts. For the plaintiff he testified that he approached the 1st defendant for a loan and not
12
to sell the property. Whatever the reason, a sale and purchase agreement of the property was executed between the plaintiff and the 2nd defendant with the consideration of RM650,000.00 together with a Power of Attorney given by the plaintiff to the 2nd 15 defendant and the relevant memorandum of transfer. The just mentioned documents were prepared by Mr. Renny Lee Tsun Yin of Messrs Lee & Lee. According to the 1st 18 defendant a sum of RM527,400.00 was paid to Messrs Dr. Yee Tan and Associates to redeem the title deed of the property whereupon the deed was released to Messrs Lee & Lee which eventually
[K22-172-2005-I]
4
transferred the title deed into the name of the 2nd defendant and according to the 1st defendant, the balance of the purchase price was paid to the plaintiff. The plaintiff appears to have a different recollection 3 of how the sum of RM650,000.00 was utilized. Be that as it may there is common ground that the 1st defendant had parted with the sum of RM650,000.00.
6
Issues:
There is only one issue in this case and it is this:
9
‘Whether the payment of the RM650,000.00 to the plaintiff is a loan from the 1st defendant or is the consideration for the purchase of the shoplot from the plaintiff by the 2nd defendant.’
12
The 1st defendant’s contention is premised on the existence of the sale and purchase agreement and the power of attorney dated 12.11.2004 entered
15
freely between parties. Further counsel submits that as there are no documents to the contrary effect, hence the sale and purchase agreement must be given to its full effect.
18
The plaintiff’s counsel however urges the court to look beyond the words employed in the sale and purchase agreement especially the circumstances in which the agreement was signed. These circumstances as alleged were
21
these:
[K22-172-2005-I]
5
1. He was deeply in debt to the ‘loan sharks’ or ‘ah longs’ who had given him loans to pay his gambling debts.
2. He could not approach the bank for a loan as it would 3 have taken three months to process and he was then constantly pestered by one Mr Lee to repay his debt.
3. The 1st 6 defendant was introduced to him by one of his ‘mai chai’ who took the plaintiff to see the 1st defendant.
4. The plaintiff informed the 1st defendant that he will need the loan for a
9
few months and offered as security his shoplot. He had also gave to the 1st defendant a valuation report which valued it at RM980,000.00 at 1998. In 2005 VPC Alliance (Sabah) Sdn Bhd valued the shoplot it
12
at RM1,420,000.00. 5. The 1st defendant then agreed to lend to the plaintiff the sum of RM650,000.00 at a interest of 6% per month to be paid in advance.
15
This amount would be utilized in the following manner:
i. The sum of RM527,000 to be paid to Mr Lee through his lawyers to redeem the title deed to the shoplot;
18
ii. The first month of interest for December 2004 of RM39,000.00;
[K22-172-2005-I]
6
iii. Ah Lun’s loan of RM80,000.00 – one of plaintiff’s loan from ah Longs;
iv. Lawyers and 3 stamp duty fees;
v. The balance of RM3,000.00 paid to the plaintiff.
6. After defaulting the interest payment for February and March 2005,
6
the plaintiff, his brother and the tenants of the shoplot were harassed by the 1st defendant ‘ma chais’. The 1st defendant also threatened to transfer the shoplot into his name.
7. As a result of being slapped and punched by the 1st
9
defendant’s ‘ma chais’ and his family member being threatened, a police report was lodged against the 1st defendant.
8. The shoplot was transferred to the 2nd 12 defendant’s name sometime in September 2005 and no notice was given to the plaintiff of this intention to do so.
9. From September 2005, the 1st
15
defendant started to harass the tenants of the shoplots resulting police reports being lodged.
10. As from November 2005 the plaintiff had not been able to collect any
18
rentals from the shoplot.
[K22-172-2005-I]
7. I have given consideration to both submissions and the evidence adduced in court and found that the dealing between the plaintiff and 1st defendant was one of a loan transaction rather a sale and purchase 3 transaction and my reasons are as follows:
1. There is no doubt in my mind that the plaintiff was in debt heavily and
6
had to deal with loan sharks or ‘ah Long’ to try to fix up his situation.
2. It is under those circumstances that the plaintiff had approached the 1st defendant.
9
3. The existence of clause 6 in the agreement gives credence the allegation of the plaintiff. Clause 6 reads as follows: “…the vendor shall execute … memorandum of Transfer…
12
and deliver the same to the said solicitors with irrevocable instructions to submit the same to the relevant authorities for adjudication… and to effect registration of the same
15
within twelve (12) months from the date of this agreement (or such extended period as the purchaser shall agree) It is not conceivable that a purchaser in a normal sale and purchase
18
agreement would allow such generosity bearing in mind that the full purchase price had been fully paid to the vendor, the plaintiff in this case. Furthermore the existence of a power of attorney confirms that
[K22-172-2005-I]
8
it was a loan as in a pure sale agreement when in this case the full purchase price had been fully paid, the signed memorandum of transfer would have sufficed to transfer the property.
3
This clause confirms that the intention of the parties was the signed memorandum of transfer and power of attorney are to be treated as security to the
6
loan.
4. The 1st defendant’s explanation for the existence of clause 6 that the plaintiff needed time to inform his family is with respect nonsensical.
9
His answer when cross examined of ‘I don’t know’ speak for itself.
5.
Even by the admission of the solicitor who prepared the agreement, clause 6 is an unusual term. By this testimony, the solicitor himself
12
could not give any plausible reason for the existence of this clause. Only when one treats the whole relationship between the plaintiff and 1st defendant as one of lender and borrower would turn clause 6 into a
15
sensible and reasonable term.
6. The huge difference between the purported consideration of the sale
18
price of RM650,000.00 and the 1998 valuation of the shoplot of RM950,000.00 and the 2004 valuation of RM1.4 million is another factor which infers that it was a loan.
[K22-172-2005-I]
9
The issue which confronts the court now is whether this is
3
a loan agreement which the court should strike down on the ground that it is against public policy and illegal. The legislation which counsel for the plaintiff refers to is the Money Lenders Ordinance Sabah and it is his submission that as the 1st
6
defendant possesses no license this loan transaction is illegal. A short answer to that submission is that there is no evidence in court which shows that the 1st
9
defendant had made more than two loan transaction in a calendar year as sec 2 of the Ordinance defines moneylender business as more than two loan transaction in a calendar year. As for the charge of excessive
12
interest in the alleged unaccounted amount of RM122,600.00, this allegation is not supported by documentary evidence. In fact the plaintiff had acknowledged this payment in a statement of account which he had not
15
disputed. As for the interest rate to be levied on the loan there appears to be a dispute what is meant in the police report. Was it 10% per month or 10% per
18
annum? In such circumstance, it becomes the duty of the court to determine a rate which is reasonable and in this case it is my judgment that a 12% per annum would be the appropriate rate taking into consideration the Money
21 Lenders Ordinance caps the interest to be levied on secured loan to 15% per
[K22-172-2005-I]
10 annum and the reasons why the plaintiff needed the money. The interest levy is to commence to run from 1.12.2004 till the full repayment of the
3
loan.
As for the right of redemption I can do no better than quote Lord Denning in Quennell v Maltby (1979) 1 ALL ER 568 at 571:
6
“So here in modern times equity can step in so far as to prevent a mortgagee, or a transferee from him, from getting possession of a house contrary to the justice of the case. A mortgagee will be restrained from getting possession except when it is
9
sought bona fide and reasonably for the purpose of enforcing the security and then only subject to such conditions as the court think fir to impose.”
12
Likewise here, the justice of case demands that the plaintiff be given a right of redemption. The last matter which needs to be attended to is what period of time should
15
the court give to the plaintiff to redeem the loan. As this loan was disbursed in 2004, a reasonable period would be 2 months from the date of this judgment.
Before I make the final order, I find no merit in the counterclaim of the 1st
18
defendant as he had not shown to the court that the plaintiff had acted with malicious intent when lodging the police report. In any event whether the 1st
21
defendant was arrested because of the plaintiff’s police report is unclear.
[K22-172-2005-I]
11 For all the reasons stated above, I make the following order:
1. A declaration that the sum of RM650,000.00 was a loan from the 1st defendant 3 to the plaintiff;
2. Interest of 12% per annum is levied on the sum of RM650,000.00 from the date of release of the aforesaid sum to Messrs Dr Yee Tan
6
& Associates till full payment of the same.
3. The plaintiff is given 2 months from the date of this judgment to redeem the loan and the interests thereon.
9
4. Upon payment of the judgment sum and the interest thereon, the 2nd defendant shall transfer the shoplot (Kota Kinabalu TL017505645) to the plaintiff by signing relevant memorandum of
12
transfer and documents.
5. Stamp duties on the transfer of the shoplot shall be paid by the plaintiff.
15
6. Each party to pay his own costs. Order accordingly.
18
(DATUK DAVID WONG DAK WAH)
21
Notice: This copy of the Court's Reasons for Judgment is subject to formal revision.
