Almost half a decade after the Court of Appeal affirmed the High Court’s decision in Wynn Resorts (Macau) S.A. v Poh Yang Hong [2019] MLJU 2003 (“Wynn’s case”) allowing a Macau-based casino to recover a HK$33,186,554 (equivalent to approximately RM17,257,000) debt together with interest thereon arising and owing under a gaming credit facility¹, the Federal Court has now in Dato’ Ting Ching Lee v Ting Siu Hua (Civil Appeal No. 02(f)-27-08/2024(Q)) (“Dato’ Ting’s case”) expressly overruled Wynn’s case, stating that Wynn’s case is “no longer good law”.
 
Dato’ Ting’s case involved a defamation claim made by the Plaintiffs in the suit and a counterclaim by the Defendant/ Respondent, Ting Siu Hua (“TSH”), against the 1^st Plaintiff/ Appellant, Dato’ Ting Ching Lee (“Dato’ Ting”), for the recovery of monies under two lines of credit amounting to US$1,500,000 and an advance of rolling rebate for US$193,800 (equivalent to a total amount of approximately RM6,097,680), both used for gaming at the Naga Casino in Cambodia. TSH, a junket promoter of the Huang Group, had arranged for Dato’ Ting’s trip to the Naga Casino in January 2015 and for the credit lines upon which casino chips were dispensed to Dato’ Ting for gaming. These credit lines and the rolling rebate were granted by the Huang Group, a Specialised Tour Group (STG) Operator of Naga World Limited. 
 
Decision of the High Court
 
The High Court dismissed TSH’s counterclaim on the basis that the recovery sought was for a gambling debt, which is null, illegal and void in contravention with Sections 24 and 31 of the Contracts Act 1950 and Section 26 of the Civil Law Act 1956.
 
Decision of the Court of Appeal
 
The Court of Appeal unanimously reversed the High Court’s decision on TSH’s counterclaim. In coming to its decision, the Court of Appeal relied heavily on Wynn’s case, and found, amongst others, that: 

Question of Law on Appeal to Federal Court
 
Dato’ Ting appealed to the Federal Court on only one question of law (“the Leave Question”):
 
“In construing whether any claim for monies given in the form of credit amounts to a gambling debt or otherwise, should the approach be the approach adopted by the Singapore Court of Appeal in Star City Pty Ltd (formerly known as Sydney Harbour Casino Pty Ltd) v Tan Hong Woon [2002] 1 SLR (R) 306, i.e. to ascertain the overall purpose of the same by considering it in its entirety as a composite contract?”
 
It was submitted on behalf of Dato’ Ting that the Court should view the underlying nature of the transaction and its purpose (i.e. to gamble) as a composite contract. By this approach, it was contended that TSH’s claim was to recover gambling debts or money won upon wagers – it was not an ordinary loan, and thus unenforceable under Section 24 and 31 of the Contracts Act 1950 and Section 26 of the Civil Law Act 1956. Dato’ Ting also submitted that Wynn’s case was wrongly decided as the Court of Appeal in that case misunderstood the nature and mechanics of a gaming transaction and the result of a gaming contract, rendering Section 24 and 31 of the Contracts Act 1950 and Section 26 of the Civil Law Act 1956 superfluous and redundant.
 
On the other hand, TSH took the position that the credit lines and rolling rebate were not gambling debts but credit facilities which did not involve or depend on any uncertainty in the outcome. This was distinct from the act of gaming and wagering which were between Dato’ Ting and the Naga Casino. As such, it was contended that Wynn’s case should be followed.
 
Analysis by the Federal Court
 
The Federal Court confirmed at the outset that the following legislative provisions, which purpose was to curb gaming and wagering activities, were clear and unambiguous, and require no further interpretation: 

The issues to be considered and decided by the Federal Court are summarised as follows: 

The principle of reality of transactions
 
The Federal Court took the view that the reality of the transactions must be examined objectively and in totality, and cited Law v Dearnly [1950] 1 KB 400 (an English Court of Appeal decision), Star City Pty Ltd v Tan Hong Woon [2002]  (a Singapore Court of Appeal decision) and Pet Far Eastern (M) Sdn Bhd v Tay Yong Huat [1999] 5 MLJ 558 (a Malaysian High Court decision) as authorities where this principle was applied.
 
It was undisputed in this case that the credit lines and rolling rebate granted were solely for the purpose of cashing Naga Casino’s chips for the purpose of gambling at Naga Casino. As such, the Federal Court in applying the principle of reality of transactions found that they cannot be considered and treated as genuine, pure loans independent from the gaming activities: the transactions must be examined in their totality objectively, and the reality is that the grant of the credit facilities constituted and formed a part of the gaming or wagering transaction. Such credit facilities granted for gaming may also be termed as a composite gambling contract, with the exchange of casino chips with the credit lines granted to gamble being an essential part of it. Hence, the contracts granting the credit lines and rolling rebate contravened Section 31(1) of the Contracts Act 1950 and Section 26(1) of the Civil Law Act 1956, and were null and void ab initio. Consequently, no suit can be brought to recover any money arising from the same, “whatever the terms or labels used”.
 
The Federal Court also addressed the decision in Wynn’s case, stating that the trial judge in that case did not consider the reality of the transaction in the granting of the credit facility. The credit facility in Wynn’s case was similarly a composite gambling contract and the mere signing of a credit agreement does not legitimise the transaction to render it lawful and enforceable under Malaysian law. A credit agreement for the purpose of gaming cannot be separated from the gaming transaction at the casino, as the credit facility granted was an essential component of the gaming activities which only utilised the casino chips cashed from or exchanged under the credit facility. Following this, the Federal Court declared that “Wynn’s case is no longer good law”.
 
The Federal Court held that any conclusion otherwise only result in parties circumventing and indirectly defeating the law.
 
Public Policy
 
On the issue of public policy, the Federal Court referred to Pollock & Mulla on the Indian Contract and Specific Relief Act, 10^th Ed, which, among others, states Lord Brougham’s definition of “public policy” as “the principle which declares that no man can lawfully do that which has the tendency to be injurious to the public welfare”.
 
The Court then cited Jupiters Limited (Trading as Conrad International Treasury Casino) v Lim Kin Tong [2005] MLJU 534, The Ritz Hotel Casino Ltd v Datuk Seri Osu Haji Sukam [2005] 6 MLJ 760 and Pet Far Eastern (M) Sdn Bhd v Tay Yong Huat (supra) as authorities where the Malaysian Courts have taken a firm stand that gambling activities and their related transactions are against public policy in Malaysia notwithstanding that there are licensed and regulated gaming premises operating within the country.
 
Decision of the Federal Court
 
Premised on the foregoing, the Federal Court answered the Leave Question in the affirmative, allowing Dato’ Ting’s appeal, setting aside the Court of Appeal’s decision on TSH’s counterclaim and restoring the High Court’s decision.
 
Comments
 
Dato’ Ting’s case will in effect put an end to the direct recovery of debts arising from credit facilities granted for the purpose of gaming in casinos situated outside Malaysia against casino patrons or debtors in Malaysia (viz. by way of filing a suit in Malaysia premised on a contractual breach or failure to repay under the credit facilities), which was seen in Wynn’s case and later followed by other foreign casino operators in, amongst others, MGM Grand Paradise SA v Ng Chee Meng [2022] MLJU 33 and Travellers International Hotel Group, Inc (a company incorporated under the laws of Philippines) v Chong Kwai Leong [2023] MLJU 3005. In other words, following Dato’ Ting’s case, the Malaysian courts will no longer enforce credit agreements granted for the purpose of gaming in casinos situated outside Malaysia and allow claims or recovery of monies arising thereunder.
 
Notwithstanding, it should be noted that the Federal Court in Dato’ Ting’s case did not consider or discuss the situation where such credit agreements are legally entered into and enforceable in the foreign country, nor the effect where a foreign judgment against the Malaysian debtor obtained in a foreign court (based on such credit agreements legally entered into) is sought to be registered in Malaysia by way of the Reciprocal Enforcement of Judgments Act 1958 or by way of a civil action on a foreign judgment in common law. In enforcing a foreign judgment in Malaysia, the courts typically do not look into the merits of the claim as that is a question to be determined by the foreign court – however, enforcement of a foreign judgment in Malaysia may be challenged on limited grounds, one of which is that enforcement of the foreign judgment would be contrary to public policy in Malaysia. It remains to be seen whether Dato’ Ting’s case and the discussions regarding public policy therein will affect the enforcement of foreign judgment cases (where the foreign judgment obtained is for recovery of monies under credit facilities granted for gaming) in Malaysia, such as those in Resorts World at Sentosa Pte Ltd v Lim Soo Kok [2016] MLJU 700, Marina Bay Sands Pte Ltd v  Wong Kah Hin [2017] MLJU 491 and Marina Bay Sands Pte Ltd v Ng Kong Seong [2017] 7 MLJ 188.
 
Case Note by Lim Koon Huan (Partner) and Siew Ka Yan (Senior Associate) of the Dispute Resolution Practice of Skrine.
 

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