Moneylender gets to regain unpaid loan principal despite breach
The Malaysian Court of Appeal ruled that licensed moneylenders can recover outstanding loan principals even if they failed to provide stamped loan agreements. The court determined that while the agreements are unenforceable, the lender is entitled to restitution under the doctrine of unjust enrichment.
Why it matters
This ruling clarifies the legal standing of moneylenders in Malaysia and balances consumer protection with the recovery of debt.
The Court of Appeal unanimously allowed all three of Million Cash Mortgage Sdn Bhd's appeals, setting aside the High Court's decisions.
PUTRAJAYA: The Court of Appeal has ruled that a licensed moneylender can recover outstanding loan principals from borrowers despite failing to comply with a statutory requirement to provide duly stamped loan agreements before disbursing the money.
The court said the lender could not enforce the defective agreements, but could seek restitution under the equitable doctrine of unjust enrichment.
Justice Wong Kian Kheong, who chaired a three-member bench also comprising Justices Alwi Abdul Wahab and Evrol Mariette Peters, said a breach of Section 16(1) of the Moneylenders Act 1951 does not render a moneylending agreement void.
He said the provision merely makes the agreement unenforceable.
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