17 October 2025

CONTRACT LAW
Restitution – Unjust Enrichment – Consideration – Illegality

Lim Swee Choo & Anor v Ong Koh Hou @ Won Kok Fong
Civil Appeal No: 02(f)-22-07/2024 (W)| Federal Court
– see the grounds of judgment here

Facts Lim Swee Choo and Chiam Eng Huat (the “Appellants”), had entered into a Sale and Purchase Agreement (“SPA”) with DA Land Sdn Bhd to purchase several parcels of land in Rawang for RM84 million. Ong Koh Hou (the “Respondent”), subsequently entered into an Assignment Agreement and Supplemental Assignment Agreement with the Appellants in which RM25.5 million was to be paid, partly by set-off against a debt owed by the 1st Appellant to the Respondent, and the balance by cash and investment. The Appellants then assigned their rights under the SPA to the Respondent. Unknown to them, the Respondent later entered into a backdated SPA with DA Land for the same lands but defaulted on payment of the balance purchase price. The Shah Alam High Court held that DA Land validly terminated the SPA and forfeited the RM23 million deposit, finding the arrangement to be a sham and tainted with illegality as the Respondent was an unlicensed moneylender. The Respondent later sought restitution from the Appellants, alleging a total failure of consideration. The High Court dismissed his counterclaim, which was upheld by the Court of Appeal, leading to this appeal before the Federal Court.

Issues 1. Whether the Respondent was entitled to restitution of monies paid under the doctrine of total failure of consideration.
2. Whether the principle laid down in Berjaya Times Square Sdn Bhd v M-Concept Sdn Bhd [2009] 3 MLRA 1 on the application of that doctrine remained good law.

Held In delivering the decision, YA Tan Sri Ahmad Terrirudin bin Mohd Salleh dismissed the appeal holding that the doctrine of total failure of consideration did not apply and that the Respondent’s own unconscionable conduct and participation in an illegal moneylending scheme barred his claim for restitution. The Court clarified that the right to terminate a contract for breach under section 40 of the Contracts Act 1950 is distinct from a restitutionary claim for money had and received, the former concerns contractual termination, while the latter concerns unjust enrichment. The Court found that the Respondent had not paid any genuine consideration to the Appellants and was the architect of his own loss. Crucially, the Federal Court overruled Berjaya Times Square Sdn Bhd v M-Concept Sdn Bhd, holding that it wrongly conflated contractual termination with the restitutionary concept of total failure of consideration. The Court declared that Berjaya Times Square is no longer good law on this doctrine.

Zul Rafique & Partners
{17 October 2025}

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