LAW 486 VOID & ILLEGAL CONTRACT A.Contracts which contravene statutory provisions Sec 24 Contracts Act 1950 a) Object or consideration of the agreement must be lawful i) Arumugam v Somasundram (1934) ii) Aroomugam v Lim Ah Hang iii) Hasmah bt Abdul Rahman v Kenny Chua [2006] 5 MLJ 236 b) Test applicable to determine the validity of the contract which has contravened the statutory provisions ● Note: Does the parties’ conduct fall within the provision of the statute / Act generally, & the relevant sections specifically? Brilliant Team Management Sdn Bhd v South East Pahang Oil Sdn Bhd [ 2007 ] 1 MLJ 536 Consider ba.What is the intention of the Legislature? Is it for i) Regulatory purpose? ii) Revenue purpose? iii)Prohibition of performance of contract St John’s Shipping Corp v Joseph Rank ( 1957 ) 1 QB 267 Re Mahmoud & Ispahani ( 1921 ) 2 KB 716 bb. Is there any sufficient nexus between the requirement of statute and the contract? Case :Hopewell Construction v E & O Hotel ( 1988 ) MLJ 621 c) Cases Application of S.24 (a) & (b) i) Hee Cheng v Krishnan (1955) MLJ 103 ii) Murugesan v Krishnasamy (1958) MLJ 92 ii) Ahmad b. Udoh v Ng Aik Chong (1969) MLJ 116 iv) Menaka v Lum Kum Chum (1977) 1 MLJ 91 v) Chung Khiaw Bank Ltd. v Hotel Rasa Sayang Sdn. Bhd. (1990) 1 MLJ 356 (S.C.) vi) Hopewell Construction v E & O Hotel [1988] Bariam Singh v Pentadbir Pesaka M’sia.) vii) Sababumi (Sandakan) Sdn.A. Bariam Singh’s case ? c) Who is a Malay? Definition ? See : Zaleha bt Sahri v Pendaftar Hak Milik Tanah Johor [1996] 2 CLJ 147 2 ) Conveyance of property i) Kim Nan Development v Khau DawYau (1984) ii) Cheng Mun Siah v Tan Nam Sui [1980] 3 ML 449 3 ) Licencing / registration requirements i) Govindji & Co.) iii) PICA v Lorraine Osman (1989) 3 MLJ 29 . Hamid void abinitio? b) Was there a sale of MR land to a non-Malay in T. Mahmud iii)T. Ariffin v Ahmad b.) .vii) Lim Kar Bee v Duofortis Properties (1992) 2 MLJ 281 (S. Hamid b.C.1983 & Am iii) Brilliant Team Management Sdn Bhd v South East Pahang Oil Palm Sdn Bhd & Ors [2007] 1 MLJ 536 4) Moneylending & licencing requirement Cases : i) Menaka (1977) – above ii) Yeep Mooi v Chu Chin Chua (1981)1 MLJ 14 (F. Osman v Lee Chua (1996) 2 MLJ 141(C. (1976) 2 MLJ 253 Note º What was the basis or distinguishing factors in Theresa Chong’s case? º Why was the contract by an unlicensed remisier valid? º What is the current position? See : Securities Industry Act .(1997) 1 MLJ 587 (CA) d) Examples of categories of contracts 1) Dealings in Malay Reserve Land i) Foo Say Lee v Ooi Heng Wai ii)Hj.(1983) 1 MLJ 232 iv) Mustafa b.) Notes: a) Why was the agreement in Foo Say Lee valid but in Hj. Bhd v Datuk Yap Pak Leong (1998) 3 CLJ 503 (F. v Soon Hin Huat (1982) 1ML 255 ii) Theresa Chong v Kin Khoon & Co.C.C. Tunku Kamariah v Dato James Ling (1989) 2 MLJ 249 j. Hamzah b. Theresa Chong v Kin Khoon & Co. Sinnadurai : Public Policy Under the Contracts Act (1981) 8 JCML 1 C Consequences of illegal or void contracts a) Scope of S. (1980) 1 MLJ 135 iv) Dimpex Gems (Spore) Pte Ltd v Yusoof Diamonds Pte Ltd (1988) 1 MLJ . Amalgamated Steel Mills v Ingeback (1990) – (Supra) f. Hopewell Constr.Who is an ‘Ah Long’ ? What is the legal status of the transaction? 5) Evasion of revenue laws i) Amalgamated Steel Mills Bhd.What is the difference between :a loan from a moneylender and a bridging loan from a venture capitalist ? 2. Nafsiah v. Hasmah bt Abd Rahman v Kenny Chua [ supra] ii) Articles: a)Sharifah Suhana : The doctrine illegality under S.Note: ▫ Which statute /Act governs the moneylenders? Is it regulated by the Ministry of Finance? Quare: 1. Ltd v E& O Hotel (1988) c. Berenger v Rozario (1953) MLJ 239 i.) d. v Ingeback (1990) 2 MLJ 374 ii) Harun b.See: (1988) Mal.24 (1991) Jumal Undang – Undang 89 b)V. Taib (see above) g. Musa v Fatimah Zaharah (1982) 1 MLJ 361 e. (1976) 2 MLJ 253 b.C. Taib v Khor Peng Song (1991) 3 CLJ 248 iii) Patriot Pte.24(e) i)Scope of ‘public policy’ in UK & Malaysia Quare: Is it similar to the English common law position? Are the categories closed? Cases: a. Harun b. Sinyium Anak Mutit v Datuk Ong Kee Hui (1983) 1 MLJ 36 (F. Abd Majid (1989) 2 MLJ 175 h. Ltd v Lam Hong Commercial Co. LR 424 v) Thong Foo Ching v Shigenori (1998) 4 CLJ 674 (CA) vi) Lim Kar Bee ( above ) B : Agreements which are immoral or against public policy –S.66 : Restitutionary reliefs . Osman (Supra) Berenger v Rozario (1953) c) Repudiation of illegal purpose ● Note: Where the contract is executory i) Abd. no party has the right to recover it (get it back) ■ But plaintiff can recover rights over properties if the course of action is independent of the void contract. the Court may grant restitution under S66. v Chee HIn (1984) 2 MLJ 287 [ FC] But S66 is not applicable where both parties knew of the contravention at the time of contract. Award No. Sharikat Kenderaan Bersatu Sdn Bhd v Transport Workers’ Union.) Shaw Brothers Ltd v Kesatuan Kebangsaan Pekerja Wayang Gambar and Taman Industrial Court. 17 (1968) ii). Shukor v Hood Mohamed (1968) 1 MLJ 258 d) Severance of the illegal part from the legal part of the contract i) Carney v Herbet &Ors (1985) 1 All ER 438 C Restraint of marriage agreements : S27 Cases i. Asian Holdings (1980) MLJ 21 v) Mustafa b. iii) Singma Sawmills Co. Bhd. Williams v Luhat Wan & Ors (1990) 2 MLJ 48 Mustafa b. Osman v Lee Chua (1998) 2 MLJ 141 [ CA] b) Recovery of Property Rights ■ Where property rights was transferred to another party under a void contract. i) ii) iii) iv) Sajan Singh v Sardara Ali (1960) MLJ 52 Daniel s/o D.*Note: Where the contract is void ab initio and one of the parties or both parties to the contract is/ are not in pari delicto . Industrial Court Award No 50 (1972 . i) Menaka v Lum Kum Chum (1933) MLJ 228 [ PC] ii) Apex Pharmacy Holdings Sdn. Framroz v Mistri iii. ii. Jupiter Ltd ( trading as Conrad International Treasury Casino v Gan Kok Beng & Anor [ 2007] 7 MLJ 228 Aspinall Curzon Ltd v Khoo Teng Hock [ 1991] 2 MLJ 484 Ritz Hotel Casino Ltd v Datu Seri Osu Sukam[2005] 6 MLJ 760 RAMLAH MOHD NOH FUU. business & employment agreements : Section 28 a) Common law / Singapore position b) Malaysian position : Sec 28 c) Test applied for validity Cases i. Polygram Records Sdn Bhd v The Search [1994] 3 MLJ 127 D. iii. Thomas Cowan v iv. UiTM July 2008 . Wagering / Gaming contracts : Sec 31 Case: i.D Restraint of trade.Wriggleworth v Wilson Anthony [1964] MLJ 269 v. Nordenfelt v Maxim Nordenfelt ii.