Introduction The Federal Court in the case of Triple Zest Trading & Suppliers & Ors v Applied Business Technologies Sdn Bhd [2023] 1 LNS 2016 set aside the decision of the Court of Appeal in Triple Zest Trading & Suppliers Sdn Bhd & Ors v Applied Business Technologies Sdn Bhd and another appeal [2023] 2 MLJ 374, which previously held that an “unlicensed moneylender” can recover the principal loan sum but not the interest. The Federal Court ruled that the Courts will not assist a person who is not a moneylender i.e. an unlicensed moneylender, to recover/ claim both the interest and principal amount lent. Background Facts Triple Zest Trading & Suppliers (“TZT”) approached Applied Business Technologies Sdn Bhd (“ABT”) for a loan of RM800,000. ABT agreed, subject to the loan of RM800,000 being repaid with another RM800,000 as “agreed profit”. After TZT and ABT executed the loan agreement (described as a “friendly loan” by the Courts), TZT deposited the following with ABT as collateral: (i) the title deeds for two (2) parcels of land; and (ii) four (4) undated cheques, each in the sum of RM400,000 (total value RM1.6 million) TZT defaulted in the repayment of the principal amount of RM800,000 to ABT. High Court ABT sued TZT in the High Court and sought for the following reliefs: (i) An order that the two (2) parcels of land be transferred to ABT, or alternatively; (ii) TZT to pay back the amount owed amounting to RM1.6 million (principal loan of RM800,000 + “agreed profit” of RM800,000) to ABT. High Court decided in favour of ABT and ordered the TZT to pay ABT the sum of RM1.6 million (principal loan of RM800,000 + “agreed profit” of RM800,000) with interest at 4% from the date of judgment until the date of full settlement. Court of Appeal Dissatisfied with the decision of the High Court, both parties appealed to the Court of Appeal: (i) TZT against the whole of the decision; and (ii) ABT against that part of the decision that disallowed the transfer of the lands. The Court of Appeal held that the TZT was only liable to repay the principal loan sum of RM800,000 with interest at 4% from the date of the High Court decision until the date of realisation but not the “agreed profit” of RM800,000. Federal Court The Federal Court held that the decision of the High Court was untenable and dangerous as it sets a precedent that an unlicensed moneylender such as ABT can lend money at 100% interest (principal of RM800,000 + interest of RM800,000) without being in breach of Moneylenders Act 1951. ABT was in breach of the Moneylenders Act 1951 when ABT lent TZT the principal of RM800,000 with interest. The “agreed profit” of RM800,000 imposed by ABT clearly constitutes interest under the Moneylenders Act 1951. The Federal Court highlighted that: “[39] So, by clause 1 of the loan agreement the “agreed profit” of RM800,000.00 to be earned by the respondent was the “consideration” for the RM800,000.00 loan. Read with clause 3, this “agreed profit” of RM800,000.00 was in fact and as a matter of law “interest” within the meaning of section 2 of MA51, as it was a sum that was “in excess of the principal paid or payable to the moneylender”. [40] Therefore, when the respondent agreed to lend the RM800,000.00 to the appellants subject to payment of another RM800,000.00 as “agreed profit”, it was carrying on the business of “moneylending” within the meaning of section 2 of MA51 as it was “lending money at interest, with or without security”. [41] The “consideration” of RM800,000.00 payable to the respondent at any time before or at the expiry of the agreement period of 30 days was nothing but “interest” at the rate of 100% disguised as “agreed profit”. By whatsoever label it was given, the RM800,000.00 was “any amount by whatsoever name called in excess of the principal paid or payable to a moneylender”. If a rose by any other name would smell as sweet, a corpse flower by any other name would smell as foul.” ABT failed to show that the RM800,000 that it lent to TZT was not lent at interest. The Federal Court commented that that by describing an exorbitant interest rate of 100% as “agreed profit”, ABT has “pushed profiteering to a new level”. The Federal Court held that the Courts CANNOT lend a helping hand to a person who charges exorbitant interest to claim back the principal amount: “[23] We agree with learned counsel for the appellants that if the court were to lend a helping hand to a person who charges exorbitant interest to claim back the principal amount lent, it would create a fertile breeding ground for illegal moneylenders a.k.a. “Ah Long” because in the event the borrower does not repay, the principal loan amount is guaranteed to be recoverable through the court process. Ah Longs would have nothing to lose. Their only loss, if at all it can be called a loss, is that they will not be able to enjoy the fruits of the exorbitant interest rates that they charged their borrowers, but that should matter little to them as they will get back their money in full. [24] In the present case, not only was the respondent not punished for contravening section 5(2) of MA51 but it was in some way given a helping hand by the court, albeit unwittingly. Without being derogatory, the decision of the courts below can be likened to allowing a robber to claim back his cost and expenses in a botched robbery attempt. [26] This not only goes against the object of MA51 which is for the “regulation and control of the business of moneylending, the protection of borrowers of monies lent in such business, and matters connected therewith” (see the preamble to MA51) but is also against the trite principle that a loss lies where it falls when an agreement is found to be illegal. [27] Such an agreement is also void by statute. Under section 24 of the Contracts Act 1950, an agreement is void if the object or consideration of the agreement is unlawful.” The Federal Court set aside the decision of the Court of Appeal. As such, TZT is not liable to pay to ABT the sum of RM1.6 million (principal loan of RM800,000 + “agreed profit” of RM800,000). The decision of the Federal Court has clarified the position of the law pertaining to “friendly loans”. Companies and individuals are still allowed to provide “friendly loans”, provided that the principal amount lent is not subject to any interest (including any sum/ monies in excess of principal amount of similar nature). Any “friendly loans” which impose interest are prohibited in law and the Courts will not assist the lender to recover the interest and the principal amount lent. This article is intended to be informative and not intended to be nor should be relied upon as a substitute for legal or any other professional advice. About the author Chew Jin Heng Associate Arbitration and Adjudication, Debt Recovery and General Litigation, Construction Disputes, Contractual Disputes, Land Disputes and Family Law Halim Hong & Quek jhchew@hhq.com.my

Section 30 Construction Industry Payment and Adjudication Act 2012 (“CIPAA”) takes precedence over the general sections of Companies Act 2016 (“CA”). Key Takeaway: A separate and distinct statutory obligation under one legislation (for e.g. CIPAA) shall take precedence over a general section in another legislation (for e.g. CA). Brief Background Facts: Concrete Empire Sdn Bhd (“CESB”) applied for direct payment from Turnpike Synergy Sdn Bhd (“TSSB”) who is the principal of Panzana Enterprise Sdn Bhd (“Panzana”), pursuant to Section 30 of CIPAA based on an Adjudication Decision obtained by CESB against Panzana for a sum of RM1,308,958.30 on 11.10.2021. Subsequently, due to the failure of Panzana to make payment to CESB according to the Adjudication Decision, CESB made a demand for direct payment against TSSB under Section 30 of CIPAA on 27.10.2021. TSSB denied the existence of any monies due or payable by TSSB to Panzana. Thereafter, on 14.12.2021, Panzana obtained an adjudication decision against TSSB and was awarded the sum of RM28,457,038.75. It was therefore not disputed that by then, there were monies due or payable by TSSB to Panzana. On 6.1.2022, TSSB wrote to Panzana to provide proof of payment pursuant to Section 30(2) of CIPAA, failing which TSSB will be constrained to pay the adjudicated amount of RM1,308,958.30 to CESB pursuant to Section 30(3) of CIPAA. On 18.2.2022, CESB made another demand for direct payment of the Adjudicated Sum of RM1,308,958.30 by TSSB to CESB. As no payment was forthcoming, CESB then proceeded to initiate a proceeding against TSSB under Section 30 of CIPAA. In response, TSSB filed an interpleader application, amongst other, premised on the ground that TSSB has filed a Judicial Management Application (“JM”) at the Shah Alam High Court. Two (2) questions were posted for the determination of the High Court Judge, namely: (a) whether there were monies owed by TSSB to Panzana at the time of the receipt of CESB’s notices dated 27.10.2021 and 18.2.2022 (“Notices”) – Issue No.1; and (b) the effect of section 410 and section 426 of CA on section 30 of CIPAA – Issue No.2. Issue No.1: Premised on the chronology of events presented to the High Court Judge, the Court was satisfied with the evidence presented which show that there were monies owed by TSSB, the principal, to Panzana as at the date of the Notices received by TSSB. Further, the Court found that TSSB had failed to comply with CESB’s request under section 30 of CIPAA. Issue No.2: Having considered the relevant provisions in CIPAA and CA, the High Court Judge held that sections 410 and 426 of CA would on the face of the same be in direct contradiction to the provision in section 30 of CIPAA. Nevertheless, the High Court Judge was of the view that sections 410 and 426 of CA must be read subject to section 30 CIPAA by applying the maxim of generalibus specialia derogant. The Judge opined that sections 410 and 426 of CA are general sections on the powers of the court at the hearing of the JM, whereas section 30 of CIPAA is a specific section on the powers of the court in a construction industry claim under CIPAA, an Act which deals with specifically construction industry claims only. It is worth mentioning that the High Court Judge maintained his decision even though subsequently a JM Order was granted by the High Court on 23.8.2023. Conclusion This case appears to suggest that a contractor is now able to initiate a proceeding against the principal of the losing party under section 30 CIPAA, subject to compliance and fulfilment of the requirements under section 30 of CIPAA, notwithstanding that a judicial management scheme may be in place (which provides a statutory moratorium on all proceedings, execution and legal process). It would be interesting to see whether this finding by the High Court would apply to the other provisions of the CA that provides a statutory moratorium. This article is intended to be informative and not intended to be nor should be relied upon as a substitute for legal or any other professional advice. About the author Felicia Lai Wai Kim Senior Associate Construction and Engineering, Dispute Resolution Harold & Lam Partnership felicia@hlplawyers.com

Joint Management Body (JMB) and Management Corporation (MC) are legal entities that are established under Section 17 of the Strata Management Act 2013 (SMA), and Section 39 of the Strata Titles Act 1985 (STA), respectively. Both entities have the duty to properly maintain and manage the building or land intended for subdivision into parcels and the common property and keep it in a state of good and serviceable repair, as provided under Section 21(1)(a) and 59(1)(a), respectively. Incidentally, the purchaser, parcel owner and proprietor of a strata property are required to pay for charges, sinking funds, etc. for the maintenance and management of the building, pursuant to the provisions of the Strata Management Act 2013 including Section 12(1), 25(1), 52(1) and 68(1). Although the SMA provisions imposed such obligations, there is still the possibility of default on payment which arises if the purchaser, owner or proprietor fails to pay within 14 days upon the receipt of the notice for such payment. Hence, SMA provides several measures that a JMB and MC can take to recover the sums due to them. The rights to recover the sums due is protected under Sections 33(1) and 77(1) of SMA which provide among others, the payment of any amount of money lawfully incurred by the JMB or MC in the course of its powers or functions or duties, shall be guaranteed by the parcel owners or the proprietor. Section 34(1) and 78(1) of SMA further provide the procedure for the recovery. According to these provisions, the developer, the JMB or the MC may serve a written notice demanding the payment of the sums due within a period which shall not be less than 14 days from the date of the service of the notice. If the sum remains unpaid at the end of the notice, Section 34(2) & Section 78(2) provides an option for the developer, the JMB or the MC to file a summons or claim in a court of competent jurisdiction or the Tribunal for the recovery of the said sum. Alternatively, Sections 35 and 79 of SMA provide a measure of recovery where the developer, JMB or MC may make a sworn application in writing for the Commissioner of Building, which is responsible for carrying out the enforcement of the SMA provisions, to issue a warrant of attachment which authorize the seizing of property of any movable property belonging to the defaulting parcel owner which may be found in the building or elsewhere in the State. It is worth noting that the failure to settle the payment as per the notice of demand from the developer, JMB or MC, constitutes an offence. This is provided in Section 34(3) and 78(3), where it provides, among others, any purchaser, parcel owner, or proprietor who without reasonable excuse, fails to comply with the notice relating to recovery of sums due to the developer, JMB or MC, commits an offence if found liable, may be fine up to RM5,000.00 or imprison up to 3 years or both. In case of a continuing offence, the offender is liable for a further fine not exceeding RM50 for every day or part thereof during which the continues after conviction. In short, proper maintenance and management of a strata property is important to ensure the good condition of the building, and for such purposes, maintenance charges and other payments are needed for that purpose. Failure to do so may give rise to civil liability that may result in further loss for the purchaser, owner and proprietor and even criminal liability. This article is intended to be informative and not intended to be nor should be relied upon as a substitute for legal or any other professional advice. About the author Muhammad Aiman Anuar Associate Real Estate, Banking & Finance Halim Hong & Quek muhammad.aiman@hhq.com.my

Earlier in the case of Havi Logistic (M) Sdn Bhd v Pemungut Duti Setem [2022] MLJU 2801, the High Court (“HC”) held that an asset purchase agreement which does not involve transfer of properties or interest legally or equitably attracts nominal stamp duty. To recap, the HC held, inter alia, that since goodwill has been specifically excluded, the Asset Purchase Agreement clearly fell within the ambit of Item 4 of the First Schedule to the Stamp Act 1949 as there are no properties legally or equitably transferred being transferred, ad valorem stamp duty was not imposable Our article which provides the analysis of the HC’s judgement can be found here. However, the HC’s decision has since been overruled by the Court of Appeal (“CoA”) in Pemungut Duti Setem v Havi Logistics (M) Sdn Bhd [2023] MLJU 2247 but based on different grounds. The CoA held that the issue turned upon  (a) the proper construction of the Asset Purchase Agreement and (b) whether property in the acquired assets passed to the Taxpayer by the Asset Purchase Agreement (in which case it was a “conveyance on sale” within the meaning of the Stamp Act 1949 chargeable with ad valorem duty or whether some other act was required in order to effect delivery of the acquired assets). The CoA considered Clause 2.3(c)(i) of the Asset Purchase Agreement: "2.3 Closing (c ) As of and at Closing: (i) title to the Acquired Assets and all risk of loss as to the Acquired Assets shall be deemed to have passed to the Purchaser and deemed delivered at the place at which the Acquired Assets are located; and…”In overturning the HC’s decision, the CoA held that: a. The goodwill was excluded from the Asset Purchase Agreement. The Acquired Assets are as follows: i. Acquired Assets a) Computer software; b) Computer hardware; c) Fittings; d) Renovations; and e) Plant, machinery and equipment. ii. Inventory b. The definition of “goods” in Section 21(1) of the Stamp Act 1949 includes both capital goods (plant, machinery, office furniture, implements and utensils) as well as inventory (described as stock-in-trade). c. However, whether the consideration paid for the goods subject to ad valorem duty or nominal duty under Section 21(1) of the Stamp Act 1949, the consideration is whether it is a “conveyance on sale” or whether some other act was required in order to effect delivery of the acquired assets. d. In this appeal, since the title to and risk in the Acquired Assets passed automatically by way of the deeming provision (i.e. Clause 2.3(c)(i) of the Asset Purchase Agreement) - such assets were deemed delivered where they are located. Thus, it amounted to a conveyance on sale within the meaning of the Stamp Act 1949 and chargeable with ad valorem duty under item 32 of the First Schedule since no other act was required to be carried In determining whether an agreement for the sale of property attracts ad valorem duty or nominal duty, the Court of Appeal laid down the following test: i. Firstly, in assessing the duty payable in respect of an agreement for the sale of property, if the sale relates to an equitable estate or equitable interest in property, then the duty payable would be at the ad valorem rate specified under item 32 of the First Schedule; ii. If the agreement relates to the sale of a legal estate or legal interest in property, then it must be ascertained if any of the exceptions in Section 21(1) apply. If none apply, then duty would be payable ad valorem pursuant to item 32 of the First Schedule; iii. If the sale relates to legal estate or legal interest in property, and the property in question comes within one of the exceptions in section 21(1), the next question to be asked is whether the agreement or contract in question is a conveyance on sale i.e., does property in assets pass to the purchaser by virtue of the agreement or contract in question? If so, then duty would be ad valorem pursuant to item 32 of the First Schedule; iv. If one of the exceptions applies and the agreement is on its proper construction not a conveyance on sale, then the agreement or contract ought to be stamped as an “agreement” pursuant to item 4 of the First Schedule to the Stamp Act 1949, ad valorem duty is not imposable. (hereinafter defined as “Test”). Comment This is, perhaps, the first local case law wherein our Court of Appeal (a) examined the interpretation and application of section 21(1) of the Stamp Act 1949, (b) determine the definition of “Goods” – does not discriminate between goods held as inventory or stock, and goods that were capital in nature, and (c) what amounts to conveyance of sale. Most importantly, the CoA laid down the Test which is very useful for taxpayers in determining whether an agreement for the sale of property attracts ad valorem duty or nominal duty. Meanwhile, the Court of Appeal also made comment on the interpretation principle in relation to tax statutes wherein tax statutes that impose any tax, duty levy or charge are to be read strictly, with any ambiguity to be construed in favour of a taxpayer, including the Stamp Act 1949. However, when the provision to be construed is one that provides relief to the taxpayer (rather than one that imposes upon the taxpayer a tax), the foregoing principle does not apply. This article is intended to be informative and not intended to be nor should be relied upon as a substitute for legal or any other professional advice. About the author Desmond Liew Zhi Hong Partner Tax Halim Hong & Quek desmond.liew@hhq.com.my Boey Kai Qi Associate Tax Halim Hong & Quek kq.boey@hhq.com.my