TLDR
- The Ipoh High Court ruled that gambling debts cannot form the basis of a bankruptcy case in Malaysia.
- Judge Moses Susayan set aside a bankruptcy order against Lee Fook Khuen, 75, sought by Resorts World at Sentosa.
- The debt totaled S$5.930 million and stemmed from a S$10 million platinum credit facility used for gambling in Singapore.
- The ruling relies on a Federal Court decision that gambling credit facilities are void and not separate loans.
- Resorts World has filed a notice of appeal against the July 6 judgment.
The Ipoh High Court has ruled that gambling debts cannot be used to bring bankruptcy proceedings in Malaysia. The decision came from Judge Moses Susayan on July 6, in a case involving Resorts World at Sentosa Pte Ltd.
The case centered on Lee Fook Khuen, a 75-year-old man who owed S$5.930 million. The debt came from a platinum-status credit facility worth S$10 million that Lee used for gambling in Singapore.
Lee did not appeal the original judgment against him in Singapore. The debt was later registered in Malaysia under the Reciprocal Enforcement of Judgments Act 1958 in November 2018.
How the Case Reached the High Court
Lee tried to stop enforcement of the judgment in Malaysia. That attempt failed, and the case eventually went all the way to the Federal Court.
With that door closed, Resorts World moved forward with bankruptcy proceedings against Lee. The company won approval from the High Court’s senior assistant registrar in February last year.
Judge Susayan later overturned that decision in May. His written judgment, released this week, runs 26 pages.
In it, he said he was bound by an earlier Federal Court ruling in a case called Datuk Ting Ching Lee v Ting Siu Hua. That ruling found that gambling credit facilities are not separate loans.
Instead, the Federal Court treated them as part of a single gambling contract. Such contracts are void from the start under Malaysian law.
Why the Debt Cannot Be Enforced
Susayan said Malaysian law treats gambling debts as debts of honour. This means there is no legal duty to repay them, even if the debt was legal where it was made.
He pointed to Section 26 of Malaysia’s Civil Law Act 1956. This section reflects the country’s public policy against enforcing gambling debts.
Section 26 of the Contracts Act also makes gambling and wagering contracts null and void. It also stops courts from being used to recover money won through a wager.
Susayan said courts can refuse to enforce a debt if it comes from an illegal or void contract. He added that this applies even when the debt has already been registered under the 1958 Act.
The judge said bankruptcy courts can still look into what a debt is actually for. He said this holds true even after a debt has been formally registered in Malaysia.
Susayan also said parties cannot get around the law by renaming a gambling debt as something else, like a credit facility. He described this as a backdoor attempt to enforce something the law does not allow.
Because of this, he set aside the bankruptcy order against Lee. He also decided not to award costs to either side, saying courts should not help enforce agreements that go against public policy.
Lee was represented by lawyers Leong Cheok Keng and Chan Kok Keong. Jasmine Kuan Jie Min represented Resorts World.
Chan confirmed to The Edge that Resorts World has since filed a notice of appeal against the ruling. The case is expected to continue in the courts.
