MAHMOOD OOYUB v LI CHEE LOONG & OTHER [2020] 6 MLJ 755
In business and investment, this scenario has become almost normal — someone holds another person’s money “just for a while.” Supposedly to ease the process, to wait for things to settle, or “let me keep it first.” It sounds harmless. But in reality, this is the graveyard of many friendships and business partnerships.
The problem is simple: once the money enters your personal account, many people start to lose clarity. The line between “I’m just holding it for you” and “this is my money” suddenly becomes dangerously thin.
In a recent case, a substantial sum was handed to one party to be managed. It was clear from the beginning that the recipient knew the money did not belong to them. They were merely holding it on trust for a specific, agreed purpose.
But when the time came to return it — or to use it for its original purpose — the drama began. The money was withheld, or worse, used for something entirely unrelated to the initial agreement.
When the matter was brought to court, the party holding the money tried to “play dirty.” They argued there was no formal contract, no official trust deed, and therefore no binding obligation to return the funds. The court was not convinced.
The court made it clear: a trust does not only exist when there is a document titled “Trust Deed.” What matters more is the intention at the time the money was handed over, the purpose for which it was given, and how it was supposed to be managed.
In this case, the court found that the Sale and Purchase Agreement (SPA) was merely a disguise. It was declared void and unenforceable. No Return of Principal: As a firm stance against illegal moneylending activities, the court ruled that the lender was not entitled to recover the principal sum advanced. Any property that had been unlawfully transferred was ordered to be returned to its original owner, including the removal of any related caveats.
The court also issued a strong reminder: you cannot hide behind the excuse that “the money is in my account” when, in equity and justice, it clearly belongs to someone else.
In the end, the recipient was ordered to bear the consequences and to repay every single cent, along with the appropriate damages.
Lesson learned:
When you hold someone else’s money — even without a thick formal agreement — the law still upholds the value of trust and honesty. Someone else’s money will never become yours simply because it sits in your bank account.
