INTRODUCTION

The Federal Court’s decision in Dato’ Ting Ching Lee v Ting Siu Hua [2025] 2 MLJ 295 marks a critical development in Malaysian contract law, specifically on the enforceability of gambling-related debts. In a decisive shift from previous authority, the apex court held that gambling debts, even those presented as loans or credit facilities, are not recoverable, reinforcing the legislative policy underpinning the Contracts Act 1950 and the Civil Law Act 1956.

FACTUAL BACKGROUND

The dispute stemmed from a gambling arrangement between Dato’ Ting Ching Lee (the appellant) and Ting Siu Hua (the respondent), a junket operator. In January 2015, the respondent facilitated the appellant’s gambling activities at Naga Casino in Cambodia by extending two lines of credit amounting to USD 1.5 million, along with a rolling rebate amounting to USD 193,800. Upon the appellant’s failure to repay the sums advanced, the respondent counterclaimed, asserting that the credit lines constituted genuine loan agreements, separate from the gambling context in which they were utilized. Hence the issue that was brought and addressed exhaustively before our Federal Court: –

[22] … the main issues in this appeal are whether the credit facilities or credit agreements granted to the appellant for the sole purpose of gambling is a gaming contract and whether the sum claim by the respondent is a gambling debt unenforceable under Malaysian law.

DECISIONS OF THE COURTS

High Court

The High Court dismissed both the appellant’s claim and the respondent’s counterclaim. It found that the credit lines and rolling rebate were granted expressly to facilitate gambling. As such, the agreements were void under Section 24 and Section 31 of the Contracts Act 1950 as well as Section 26 of the Civil Law Act 1956, which prohibits any claim founded on gaming or wagering contracts.

Court of Appeal

The Court of Appeal reversed the High Court’s ruling and allowed the respondent’s counterclaim. In doing so, it relied on the precedent set in Wynn Resorts (Macau) SA v Poh Yang Hong, where the court had previously recognized such credit arrangements as enforceable loans, rather than gambling debts.

Federal Court’s Ruling

The Federal Court allowed the appellant’s appeal and restored the High Court’s decision. In doing so, the Court held that the true substance of the transaction must prevail over its form. The credit lines and rebate, although structured as loans, were inextricably linked to gambling activities and therefore fell within the scope of prohibited contracts.

KEY LEGAL FINDINGS

1. Substance Over Form

The Court reiterated the importance of examining the underlying nature of a transaction rather than its label. Where a purported “loan” is intrinsically tied to gambling, it assumes the character of a gaming contract and is rendered void.

[43] This court should not ignore or brush aside the glaring fact that the credit facilities were for gambling purposes and accept that they were pure loans. The reality of the transactions must be examined objectively and in totality. In the present case, the reality is that granting the credit facilities to the appellant was gaming or wagering transactions. To conclude otherwise is to allow parties to get around the law and indirectly defeat the law.

[44] Our position on gaming or waging contracts is almost similar to the earlier position in England. Section 18 of the Gaming Act 1945 of England, which was later replaced by the Gambling Act 2005, provides:

All contracts or agreements, whether by parole or in writing, by way of gaming or wagering, shall be null and void; and no suit shall be brought or maintained in any court of law and equity for recovering any sum of money or valuable thing alleged to be won any wager, or which shall have been deposited in the hands of any person to abide the event of which any wager shall have been made. (Emphasis added.)

2. Public Policy Considerations

The Court emphasised that the prohibition on enforcing gaming and wagering contracts reflects a clear public policy objective. Any attempt to recover gambling-related sums, regardless of whether the gambling occurred overseas or in a legal jurisdiction, undermines that policy.

[93] I do not deny that gambling premises are operating in this country but those premises are licensed and regulated under the relevant laws. That does not mean that gambling is not against public policy. As discussed earlier, the negative effect of gambling activities resulted in the government policy to curb gambling activities and enact laws that nullify any gaming contracts and make any claim for recovery of gambling debts unenforceable.

3. Overruling of Wynn Resorts

In a significant doctrinal shift, the Federal Court expressly overruled its earlier decision in Wynn Resorts, concluding that it was inconsistent with the applicable statutory framework. The Court affirmed that such claims, even when structured as recoverable debts, are unenforceable under Malaysian law.

[73] If this court were to accept the ratio in Wynn’s case, it would defeat the intention of the Legislature to enact the provisions alluded to earlier and make the said provisions obsolete or redundant. This is because by merely signing a credit agreement, parties can go around the effect of ss 24 and 31(1) of the Contracts Act 1950 and s 26(1) and 26(2) of the Civil Law Act 1956. This could not be the position especially when the government had announced its intention to curb gambling or wagering. The court must be alert to whatever term, system, or devise used to evade the law. The court must enforce the law when it is plain and unambiguous as the provisions mentioned in the present case. Thus, Wynn’s case is no longer good law.

LEGAL AND PRACTICAL IMPLICATIONS

This judgment brings clarity to an area of law previously marked by uncertainty. The Federal Court has now conclusively held that:

  • All contracts arising from or connected to gambling are void and unenforceable, regardless of whether the gambling takes place within or outside Malaysia;
  • Courts will not assist in enforcing any claim, even where gambling debts are disguised as loans or credit facilities; and
  • The statutory provisions under the Contracts Act and Civil Law Act take precedence over foreign laws that may recognise such debts.

For financial institutions, junket operators, and individuals engaged in gambling-related financing, the judgment serves as a cautionary reminder of the non-recoverable nature of such arrangements in Malaysia.

CONCLUSION

The decision in Dato’ Ting Ching Lee v Ting Siu Hua marks a pivotal turning point in Malaysian jurisprudence on gambling debts. By reaffirming the statutory prohibition against the recovery of such debts and departing from Wynn Resorts, the Federal Court has drawn a firm line in safeguarding public policy. Moving forward, any contractual arrangement, however creatively structured, will not escape invalidity if its foundation lies in gambling.