KBH Marine Industry Sdn Bhd & Anor v Ace Credit (M) Sdn Bhd

Appellant(s):

• Kbh Marine Industry Sdn. Bhd.
• Sin Soon Hock Sdn. Bhd.

Respondent(s): Ace Credit (M) Sdn Bhd

• YA Dato' Che Mohd Ruzima Bin Ghazali
• YA Dato' Lim Chong Fong
• YA Dato Alwi Bin Abdul Wahab

• A licensed moneylender disbursed a significant loan to a borrower, secured by properties belonging to a related entity (the first appellant) and private caveats.
• The first appellant partially serviced the loan but subsequently defaulted, leading to multiple suits and counter-suits in the High Court concerning the validity of the loan agreement and related documents.
• The High Court, in response to applications for determination of questions of law, declared the loan agreement void for contravening the Moneylenders Act 1951, invalidated related security documents and caveats, but ordered restitution of the principal sum to the lender under Section 66 of the Contracts Act 1950.

• Whether the loan agreement was void and unenforceable due to non-compliance with the prescribed form and excessive interest rates under the Moneylenders Act 1951.
• Whether related security documents and private caveats were also invalid and unenforceable if the main loan agreement was found to be void.
• Whether the lender was entitled to restitution of the principal loan sum under Section 66 of the Contracts Act 1950, despite the agreement being void under the Moneylenders Act 1951.

• The Court affirmed the High Court's finding that the loan agreement was void due to non-compliance with the prescribed form and excessive interest rates under the Moneylenders Act 1951, rejecting the lender's defence of acquiescence.
• The Court further affirmed that the related security documents and private caveats were inextricably linked to the void loan agreement and thus were also invalid.
• Applying the *Detik Ria Guidelines*, the Court held that restitution under Section 66 of the Contracts Act 1950 was applicable, as the contraventions were not serious enough to constitute substantive illegality or an attempt to conceal the transaction's true nature, and the loan had been wholly performed by the lender.