THE UPDATE SCOOP (#3/2025)
“Credit Lines as Composite Contract with Gambling – Not Recoverable” │ Contract Law
By TAY & HELEN WONG – 28 March, 2025
The Federal Court (the FC) has struck down the claim for monies given in the form of credit lines and advance of rolling rebate as a loan to obtain casino chips for gambling. In Dato’ Ting Ching Lee v Ting Siu Hua [2025], the Respondent (R) had given 2 lines of credits in the sum of USD1 million and USD500,000 and advance rolling rebates of USD193,800 to the Appellant (A) who had then utilized the same to exchange for casino chips to gamble at Naga Casino, Phnom Penh, Cambodia. The Court of Appeal (the COA) had earlier held that it was not a gaming contract or wagering within s.31 of the Contracts Act 1950 (CA) or s.26 of Civil Law Act 1956 (CLA). In their Lordships’ mind, the said lines of credits and rebate were not gambling debts. They were in the nature of a loan which had to be repaid whether or not the borrower had won or lost at the gambling table.
In overturning the decision of the COA, the FC ruled that casino chips were exchanged with the amount of credit facilities granted to A. The reality of the transactions was that it was a gambling contract or a composite gambling contract when viewed in totality, where its purpose was no other than for gaming or waging. In the circumstances, the said contract contravened s 26(1) of the CLA and the first limb of s 31(1) of the CA and was, as such, null and void from the beginning (ab initio). No rights could arise from a void contract or be sued upon. There was a credit agreement signed but it could not be separated from the gaming transaction at the casino, as the credit facility granted was an essential component of the gambling activities that exclusively used casino chips.
Whatever the terms or labels used concerning the money claim against A, it was a gambling debt incurred at the Naga Casino arising from the credit facilities granted to A for gambling. Reading R’s pleadings, it was beyond doubt that R was claiming the recovery of A’s gambling debts. The claim against A, when viewed in totality, was essentially for the recovery of money from gaming or wagering transactions in Naga Casino, Cambodia. Such a gambling debt was unenforceable under Malaysian law.
The answer to the question of law posed, i.e. “”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], i.e. to ascertain the overall purpose of the same by considering it in its entirety as a composite contract?” was in the affirmative. The case of Wynn Resorts (Macau) S.A. v Poh Yang Hong [2019] was no longer good law.
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Tags: [gambling] [gaming] [credit lines] [rolling rebate] [composite contract] [Contracts Act 1950, s 31] [Civil Law Act 1956. s 26]