PUBLIC BANK BERHAD 1. RIA REALITI SDN BHD 2. WONG KIEN CHING 3. CHEW CHING TONG 4. SEE TECK ANN 5. TAN BOO SENG 6. RASAMUTU SDN BHD

PUBLIC BANK BERHAD 1. RIA REALITI SDN BHD 2. WONG KIEN CHING 3. CHEW CHING TONG 4. SEE TECK ANN 5. TAN BOO SENG 6. RASAMUTU SDN BHD

Appeal allowed: Court held the loan agreements and related security documents were not tainted by illegality because the bank was a bona fide financier, the loans were primarily to finance sub-leases (permitted under Sabah Land Ordinance), there was no finding that the bank had knowledge of illegality, and the Neway authority was distinguishable on facts; alternatively, even if illegality attached the bank would be entitled to relief under restitution (s66) and the Patel v Mirza discretionary approach; guarantors liable and counterclaims dismissed.

Citation
S-02(IM)(NCVC)-529-03/2019 (Mahkamah Rayuan)
Parties
Appellant / Lender: Public Bank Berhad; 1st Respondent / Borrower (wound Up): Ria Realiti Sdn Bhd; 2nd Respondent / Nominee, Director and Shareholder: Wong Kien Ching; 3rd Respondent / Director and Shareholder: Chew Ching Tong; 4th Respondent / Director and Shareholder: See Teck Ann; 5th Respondent / Director and Shareholder: Tan Boo Seng; 6th Respondent / Corporate Respondent (wound Up): Rasamutu Sdn Bhd
Court
IM
Jurisdiction
Malaysia
Judgment Date
24 September 2020
Case Number
S-02(IM)(NCVC)-529-03/2019 (Mahkamah Rayuan)
Procedural Posture
Civil Appeal Concerning Recovery of Loans and Enforcement of Guarantees and Charges / Court of Appeal Judgment on Appeal From High Court Order 14 a Summary Determination
Outcome
Appeal allowed; judgment entered for appellant (Public Bank Berhad); counterclaims dismissed.
Legal Topics
Illegality of Contracts, Guarantees and Suretyship, Charges/memoranda of Charge, Sabah Land Ordinance S17 and S64, Order 14 a Summary Judgment, Restitution Under Contracts Act S66, Application of Patel V Mirza
Source Language
Malay/English
Contract Law Property Law Company Law Equity and Restitution Civil Procedure Illegality of Contracts Guarantees and Suretyship Charges/memoranda of Charge +4 more

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Parties

Public Bank Berhad

Appellant / Lender

Ria Realiti Sdn Bhd

1st Respondent / Borrower (wound Up)

Wong Kien Ching

2nd Respondent / Nominee, Director and Shareholder

Chew Ching Tong

3rd Respondent / Director and Shareholder

See Teck Ann

4th Respondent / Director and Shareholder

Tan Boo Seng

5th Respondent / Director and Shareholder

Rasamutu Sdn Bhd

6th Respondent / Corporate Respondent (wound Up)

Procedural Posture

Civil Appeal Concerning Recovery of Loans and Enforcement of Guarantees and Charges / Court of Appeal Judgment on Appeal From High Court Order 14 a Summary Determination

Legal Issues

  1. 1 Whether illegality in sale of native titles tainted the loan agreements and security documents
  2. 2 Whether the bank was in pari delicto or had knowledge of illegality
  3. 3 Whether relief is available under Contracts Act s66 or equitable/common law (Patel v Mirza) despite illegality

Ratio Decidendi

Appeal allowed: Court held the loan agreements and related security documents were not tainted by illegality because the bank was a bona fide financier, the loans were primarily to finance sub-leases (permitted under Sabah Land Ordinance), there was no finding that the bank had knowledge of illegality, and the Neway authority was distinguishable on facts; alternatively, even if illegality attached the bank would be entitled to relief under restitution (s66) and the Patel v Mirza discretionary approach; guarantors liable and counterclaims dismissed.

Court Disposition

Appeal allowed; judgment entered for appellant (Public Bank Berhad); counterclaims dismissed.

Orders

  • Judgment entered for appellant as prayed in statement of claim
  • Counterclaims of 2nd to 5th respondents dismissed