Greenchain Harvest Sdn Bhd v Nct United Development Sendirian Berhad (BA-24NCvC-1329-08/2022)

GREENCHAIN HARVEST SDN BHD (No. Syarikat: 200601022513 / 742267-M)

LIAU THENG HOOI (No. K/P: 610226-07-5047) … PLAINTIF-PLAINTIF DAN NCT UNITED DEVELOPMENT SENDIRIAN BERHAD (NO. SYARIKAT: 200501024080 / 706212-T) … DEFENDAN JUDGMENT Introduction [1] This case is about the sad tale of (yet) another failed land development project. As in all other cases of abandoned housing projects, the innocent victims here are the purchasers of properties developed and sold by the developer. The twist here is that the dispute before this Court is not between the original purchasers of the properties of this land development project and the original developer. The present case involves an action commenced by the Plaintiffs, who are subsequent purchasers of 3 units of shoplots in that project, against the Defendant, a white knight that had stepped in to revive and complete the project. The Main Issues [2] The issues involved are straightforward. The first is whether the Plaintiffs are the legal and beneficial owners of the units that form the subject-matter in this dispute and are thus entitled to the Individual Strata Titles of these properties. [3] Arising from this first main issue are these additional subsidiary issues, namely,

whether the units involved in this case fall under the scope of a Scheme of Arrangement that had been sanctioned by the

whether the units involved in this case are the “unsold and unredeemed’ units. [4] The second main issue arises from the Defendant’s counterclaim, that is, whether the Plaintiffs are liable to pay damages to the Defendant being the rehabilitation costs of the Plaintiffs’ units. [5] Following this second main issue is the imperative question of whether rehabilitation work had indeed been carried out to the three units that are the subject matter in this dispute. The Parties, the Subject-Matter and the Background Facts [6] In order to resolve the above issues, it is vital that the backgrounds facts and how the present parties become involved be clarified. [7] As noted, central in this dispute are 3 three-storey units of shoplots. For convenience, the units involved are referred to as Unit 26, Unit 28 and Unit 22. All 3 units were originally held under a master title. [8] The original developer of these 3 shoplot units is Kumpulan Sepang Utama Sdn Bhd (“KSU”). Together with Lengkap Legenda Sdn Bhd (“LLSB”), the proprietor of the project lands, KSU and LLSB had entered into an agreement to develop the project lands as a mixed development project. The units involved in this case are part of larger mixed land development project. Both KSU and LLBS are now in liquidation. [9] An important fact is that the entire project was divided or undertaken in numerous or different phases. On this point, it is crucial to note that the units that form the subject matter in the present case are all in Phase 1 of the project. [10] Unit 26 and Unit 28 had initially been purchased by one Chia Tack Kee (“CTK”) and the original purchaser of Unit 22 was one Chia Onn Kay (“COK”). The purchase of Units 26 and 28 and of Unite 22 were financed with a loan obtained from Public Finance Berhad (taken over by Public Bank Berhad vide a vesting order dated 20 August, 2004) and Public Bank Berhad respectively. [11] When CTK and COK defaulted in the repayment of their loans, the said Units were auctioned. The First Plaintiff, Greenchain Harvest Sdn Bhd, was the successful bidder for Units 26 and 28 and the Second Plaintiff, Liau Theng Hooi, was the successful bidder for Unit 22. [12] It is noteworthy that the First and Second Plaintiffs had paid the full purchase price in cash for the units involved to Public Bank Berhad and three separate Deeds of Assignment had been executed by Public Bank Berhad in favour of the Plaintiffs to transfer the ownership of these units to the Plaintiffs absolutely. [13] As for the Defendant, NCT United Development Sdn Bhd, it is engaged in the property development business. As noted in paragraph [1] above, the Defendant is the white knight that had stepped in to revive and complete the abandoned project. [14] The genesis of the Defendant’s involvement can be traced to a Scheme of Arrangement, sanctioned following an Order dated 6 March, 2012 vide Kuala Lumpur High Court No Petition 26NCC-26-02/2012, whereby the Defendant was entrusted to rehabilitate and/or revive and/or complete the said project. [15] A number of additional vital facts that must be borne in mind are that, first, this Scheme of Arrangement only involved the purchasers of Phases 2A, 3A, 3B, 4A, 5A, 5B and 5C of the project. [16] Second, Paragraph 5 of the Sanction Order provides that: “ … NCT United Development Sdn Bhd berhak kepada unit-unit yang tidak dijual dan tidak ditebus di dalam Projek tersebut, Tanah-tanah Projek dan semua hasil dan penerimaan di bawahnya dan daripadanya.” [17] Following the granting of the Sanction Order is this added pertinent detail. The Defendant was registered as owner of the Project Lands on 11 September, 2012. This has resulted in the Defendant being the current registered proprietor, as reflected in the individual titles for the said units/properties. [18] Accordingly, the entire affair leading to this present action can be broken into two distinct periods, namely pre and post the Scheme of Arrangement. In relation to the former period, the Plaintiffs have already stepped in the picture. Entry by the Defendant is only after the Sanction Order was given, that is, during the latter period. The Claims [19] The Plaintiffs sought a great number of reliefs. The orders sought are:

A declaration that the 1st Plaintiff, GREENCHAIN HARVEST SDN BHD, is the legal and beneficial owner of the Property known as a 3- storey unit shop-office currently held by the Defendant under the title of GRN340049, Lot No. 126533, Mukim Dengkil, District of Sepang, State of Selangor (previously held under HS(D) 51621 PT 65051, Mukim Dengkil, District of Sepang, State of Selangor) which has a postal address at No. 26, Jalan Kenanga 1/7, Taman Kenanga, Bandar Baru Salak Tinggi, 43900 Sepang, Selangor Darul Ehsan (hereinafter known as "Unit 26");

A declaration that the 1st Plaintiff, GREENCHAIN HARVEST SDN BHD, is the legal and beneficial owner of the Property known as a 3- storey unit shop-office currently held by the Defendant under the title of GRN340048, Lot No. 126532, Mukim Dengkil, District of Sepang, State of Selangor (previously held under HS(D) 51620 PT 65050, Mukim Dengkil, District of Sepang, State of Selangor) which has a postal address at No. 28, Jalan Kenanga 1/7, Taman Kenanga, Bandar Baru Salak Tinggi, 43900 Sepang, Selangor Darul Ehsan (hereinafter known as "Unit 28");

A declaration that Public Finance Berhad (taken over by Public Bank Berhad vide a vesting order dated 20.8.2004) is an Absolute Assignee on Unit 26 and Unit 28 ("The Properties") where the Deeds of Assignment dated 11.11.2009 and 11.12.2009 which have been completed between Public Bank Berhad and the 1st Plaintiff is valid and in force;

A declaration that the 2nd Plaintiff, LIAU THENG HOOI, is the legal and beneficial owner of the Property known as a 3-storey unit of the shop-office currently held by the Defendant under the title of GRN340082, Lot No. 126566, Mukim Dengkil, District of Sepang, State of Selangor (previously held under HS(D) 51654 PT 65084, Mukim Dengkil, District of Sepang, State of Selangor) which has a postal address at No. 22, Jalan Kenanga 1/7, Taman Kenanga, Bandar Baru Salak Tinggi, 43900 Sepang, Selangor Darul Ehsan (hereinafter known as "Unit 22");

A declaration that Public Finance Berhad (taken over by Public Bank Berhad vide a vesting order dated 20.8.2004) is the Assignee of Unit 22 ("The Properties") where the Deed of Assignment dated 10.6.2008 which has been completed between Public Bank Berhad and the 2nd Plaintiff is valid and in force;

An Order that the Defendant release and assign the Individual Strata Title of The Properties free from any encumbrance to the Plaintiffs and/or to the Plaintiffs’ solicitor and also submit the completed Memorandum of Transfer of The Properties, which is valid and may be registered together with the applicable payment to the Plaintiffs and/or the Plaintiffs’ solicitors within fourteen (14) days commencing from the date of order;

Alternatively, if the Plaintiffs are unable to take back The Properties from the Defendant and/or the Memorandum of Transfer of The Properties cannot be registered, then the Defendant shall pay for all damages and losses suffered by the Plaintiffs where such damages and losses shall be assessed by the Court Registrar;

An interlocutory injunction restraining the Defendant from transferring The Properties referred to in paragraph (a), (b) and (d) above to any third party until the full decision is decided by this

An order that the Defendant shall submit all necessary documents (including a certificate of completion of construction / certificate of fitness and permission to transfer from the lawful authority) to transfer the original property title of The Properties to the Plaintiffs within 14 days from the date of this order;

An order that the Defendant shall settle and pay all outstanding outgoings in respect of The Properties as of prior to the completion of the transaction of the transfer of ownership of The Properties;

General damages and/or exemplary damages and/or severe damages paid by the Defendant to the Plaintiffs assessed by this

The cost of this Originating Summons is to be borne by the

Plaintiffs are allowed and be given liberty to apply for other incidental orders to have effect and enforce in order to fairly protect their rights in action; and

Other and further reliefs as this Honourable Court deems fit and proper. [20] In support of their claims for the above reliefs, the Plaintiffs relied primarily on the Principle of Beneficial Ownership/Doctrine of Bare Trustee. They cited the Federal Court decisions in Tan Ong Ban v Teoh Kim Heng [2016] 2 AMR 813; [2016] 3 CLJ 193; [2016] 3 MLJ 23; [2016] 2 MLRA 433 and Yeo Ping Tieng & Ors v Elitprop Sdn Bhd [2020] 1 CLJ 776; [2020] 3 MLJ 269; [2019] 6 MLRA 616 which explained the principle of beneficial ownership and cases such as Noraini Binti Mohamed Hadi v Pembangunan Tanah Dan Perumahan [2020] AMEJ 0604; [2021] 3 CLJ 518; [2021] 4 MLJ 152; [2020] 4 MLRA 158, Samuel Naik Siang Ting v. Public Bank Bhd [2018] 3 AMR 259; [2015] 8 CLJ 944; [2015] 6 MLJ 1; [2015] 5 MLRA 665 and Seck Mun Foo v Datuk Harris Bin Mohd Salleh [1997] 1 CLJ 321; [1996] MLJU 611; [1996] 3 MLRH 150 in support of their contention that the Defendant, though the registered proprietor of the properties concerned, is a mere bare trustee. [21] It was argued by the Plaintiffs that as the individual titles were not issued for the Plaintiffs’ units in the said Project until recently, subsequent purchasers of units such as the Plaintiffs will have to have these rights and benefits under the original purchasers’ sale and purchase agreements with KSU and the Land Proprietor assigned to them. The Plaintiffs reasoned that it is only by such assignments would “the chain of title to the contractual rights and benefits pass and the subsequent purchasers become successors in title or the lawful [sic] assigns of the original purchasers”. [22] The Plaintiffs underscored the fact that the units/properties were sold to the Plaintiffs by way of a public auction on 25 May, 2007 and 24 August, 2007 and these made them bona fide purchasers for valuable consideration. References were made to cases such as Borneo Housing Mortgage Finance Bhd v Time Engineering Bhd [1996] 2 AMR 1537; [1996] 2 CLJ 561; [1996] 2 MLJ 12; [1996] 1 MLRA 154], J Raju v Kwong Yik Bank Bhd & Anor [1994] 2 AMR 1220; [1994] 2 CLJ 695; [1994] 2 MLJ 408; [1994] 1 MLRA 156 and EON Bank Bhd & Anor v Tay Guan Hui & Ors [2001] AMEJ 0036; [2001] CLJU 182; [2001] 5 MLJ 374; [2000] 5 MLRH 827. [23] The Plaintiffs also submitted that the Scheme of Arrangement did not adversely affect the Plaintiffs’ ownership as the Sanction Order dated 6 March, 2012 excluded the purchasers of properties in Phase 1 and/or Phase 1A. In other words, Unit 26, Unite 28 and Unit 22 do not fall under the Scheme of Arrangement. [24] The Plaintiff also averred to the fact that the Defendant had previously filed an Originating Summons for summary possession of the subject land in 2016 but the Defendant had subsequently withdrawn the 2016 OS against the Plaintiffs. As for the suits against the other purchasers, these purchasers and the Defendant had reached an out-of-court settlement. [25] In response to the above arguments, the Defendant submitted that it had rightly obtained the rights to the Project Lands following the Sanction Order. These rights, according to the Defendant, include “to deal with all the unsold and unredeemed units on the said Land after the Defendant has paid all the settlement sum” and “access to the Project Lands to conduct the rehabilitation works pursuant to the Sanction Order”. [26] In reply to the beneficial ownership and bare trustee principles raised by the Plaintiffs, the Defendant also cited Borneo Housing Mortgage Finance Bhd v Time Engineering Bhd. However, the Defendant went on to rely on the following additional authorities, namely, Karuppiah Chettiar v Subramaniam [1971] 1 LNS 43; [1971] 2 MLJ 116; [1971] 1 MLRA 663 and Hiew Min Chung v Borneo Housing Mortgage Finance Bhd & Ors; [2000] 4 AMR 4178; [2000] 8 CLJ 165; [2001] 1 MLJ 21; [2000] 3 MLRH 148 for the proposition that whether purchasers are beneficial owners depends upon whether a Memorandum of Transfer has been executed. [27] The Defendant read Tan Ong Ban v Teoh Kim Heng as conferring a purchaser only a right in personam and not in rem. Hence, the Defendant adopted the argument that the present action should have been instituted against the original developer KSU and not the Defendant. [28] On the reference by the Plaintiffs to the Originating Summons for summary possession of the subject land by the Defendant in 2016, the Defendant argued that that 2016 OS is irrelevant to the current proceedings. The Counterclaim [29] In its counterclaim, the Defendant prayed for the following reliefs:

That the 1st Plaintiff be ordered to pay a sum of RM320,000.00 to the Defendant being the rehabilitation cost for each of the 1st Plaintiff’s unit in 7 days;

That the 2nd Plaintiff be ordered to pay a sum of RM320,000.00 to the Defendant being the rehabilitation costs for the 2nd Plaintiff’s unit in 7 days;

Interest at the rate of 5% per annum on each of the decreed sums above allowed by this Honourable Court from the date of this counterclaim until full realisation;

In consequence to the respective Plaintiffs paying the full sum decreed in prayers (a) to (c) above [subject always to prayer

(e)], the Defendant shall affect the following:-

The Defendant shall register the respective Plaintiff’s Lots in the name of the respective Plaintiffs;

(ii) Upon successful registration in (i) above, the Defendant shall deliver the original title of those lots to the respective Plaintiffs or their solicitors.

That the Plaintiffs shall pay the costs for the Defendant to effect the transfer of the respective lots stated in prayer (d) above (including but not limited to the legal fees, stamp duty and real property gains tax);

Costs of this action; and

Any further and/or other relief deemed fit and proper by this Honourable Court. [30] The Defendant’s counterclaim is premised on section 71 of the Contracts Act 1950. The Defendant argued that section 71 will come to its aid even if the Plaintiffs’ units have been redeemed. The relevant section 71 reads as follows: Obligation of person enjoying benefit of non-gratuitous act

Where a person lawfully does anything for another person, or delivers anything to him, not intending to do so gratuitously, and such other person enjoys the benefit thereof, the latter is bound to make compensation to the former in respect of, or to restore, the thing so done or delivered.

A, a tradesman, leaves goods at B’s house by mistake. B treats the goods as his own. He is bound to pay A for them.

A saves B’s property from fire. A is not entitled to compensation from B, if the circumstances show that he intended to act gratuitously. [31] The Defendant cited cases such as Usima Sdn Bhd v Lee Hor Fong (trading under the name and style of Pembinaan LH Fong [2017] 6 AMR 652; [2017] 9 CLJ 646; [2017] 7 MLJ 273; [2017] 5 MLRA 552 and Kraas Solutions Sdn Bhd v Konsesi Kota Permatamas Sdn Bhd [2018] 3 AMR 790; [2018] 9 CLJ 26; [2018] 6 MLJ 202; [2018] 4 MLRA 70 to support its contention that section 71 of the Contracts Act 1950 applies in the instant case. [32] In reply to this counterclaim, the Plaintiffs submitted that no rehabilitation works had been carried out by the Defendant to the said units. The Plaintiffs further claimed that neither had there been any issuance of CFO and/or CCC and that the Plaintiffs had obtained vacant possession of the said units even before the Defendant had taken over the said Project. The Decision of this Court [33] After a thorough examination and consideration of the affidavits, submissions (both written and oral), and the authorities filed by the parties, this Court is of the considered view that the Sanction Order issued by the Court (vide Kuala Lumpur High Court No. Petition 26NCC-26- 02/2012) approving a Scheme of Arrangement which transferred the master title to the Defendant is crucial in this application. [34] There is no denying that the Defendant had rightly obtained the rights to the Project Lands following the Sanction Order. [35] As noted in paragraph [3] above, two subsidiary questions arise at this juncture. First, does the Sanction Order that approved the Scheme of Arrangement include the units/properties purchased by the Plaintiffs? [36] The second question is: what is the extent of such rights? [37] On the first subsidiary question, by the Defendant’s own admission, the Scheme of Arrangement did not include Phase 1 of the Project – of which the 3 units in dispute are part of. [38] This brings us to the second subsidiary question, as raised in paragraph [3] above. As further noted in paragraph [25] above, these rights, as admitted by the Defendant, include rights “to deal with all the unsold and unredeemed Units on the said Land after the Defendant has paid all the settlement sum” and “access to the Project Lands to conduct the rehabilitation works pursuant to the Sanction Order”. [39] Are the 3 units which are the subject matter of the present dispute “unsold and unredeemed units”? This is the pivotal question. The units have indeed been sold, not once but twice. Hence, what remains is the question of whether these are unredeemed units. [40] After the successful bids by the Plaintiffs for the units at the public auctions, two separate Deeds of Assignment were executed by Public Bank Berhad in favour of the First Plaintiff to transfer the ownership of Unit 26 & Unit 28 to it absolutely. [41] Likewise, a Deed of Assignment was then executed by Public Bank Berhad in favour of the Second Plaintiff to transfer the ownership of Unit 22 to him absolutely. [42] These events render all these 3 units as units that have been sold and redeemed. [43] On the assertion by the Defendant that the element of full payment of the purchase price was only one element of the concept of bare trustee and that the requirement of Memorandum of Transfer is another mandatory element for the concept of bare trustee to be invoked (Fung Sui Jin v Borneo Housing Mortgage Finance Bhd & Ors [2001] 1 AMR 1104; [2001] 5 CLJ 501; [2000] MLJU 532; [2000] 4 MLRH 435), this Court is in agreement with the submission made by the Plaintiffs that Fung Sui Jin is distinguishable. Fung Sui Jin concerned a purchase of property directly from the developer. In the present case the Plaintiffs had purchased the said properties through public auctions in which the Plaintiffs were never required to sign a Memorandum of Transfer. The requirement here is that a Deed of Assignment (by way of transfer) from the defaulter’s financier, which in this case is Public Finance Berhad, is executed to absolutely assign all the rights and interests to the Plaintiffs. This resulted in the Plaintiffs becoming the legal and beneficial owners of the said properties. [44] On the submission by the Defendant that read Tan Ong Ban v Teoh Kim Heng as conferring a purchaser only a right in personam and not in rem, it must be remembered that that case involved a purchaser who has, unlike the Plaintiffs in the present case, yet to pay the purchase price of the property in full. (See also IB Capital Sdn Bhd v Ivory Indah Sdn Bhd & Anor [2021] AMEJ 1159; [2021] 1 LNS 2348; [2022] 1 MLJ 860; [2021] MLRAU 148.) [45] Based on these findings, this Court answers the first of the two main issues outlined in paragraph [2] above in the affirmative. [46] Order in terms is granted as per prayers (1) to (6), (10) and (13) in Enclosure 1. [47] As for the counterclaim, the reliefs sought by the Defendant is outlined in paragraph [29] above. In support of its counterclaim, the Defendant relied on Exhibit NCT4. [48] After a careful examination of the relevant Exhibit NCT4, this Court finds that that Exhibit does not disclose rehabilitation work having been carried out to the 3 units under consideration in this case. [49] In view of the above conclusion, the answer to the second main question as adumbrated in paragraph [4] above is in the negative. [50] The counterclaim is dismissed. [51] The Defendant to pay costs of RM10,000 to the First Plaintiff and RM10,000 to the Second Defendant. Dated: 5 January, 2024 sgd [CHOONG YEOW CHOY] Judicial Commissioner High Court of Malaya Shah Alam Counsel: YL Phan with Nicole Leaw for the Plaintiffs (Messrs. Leaw & Phan) Gary Ng with Jordan Teng for the Defendants (Messrs. Dennis Nik & Wong)