1. ) Kottaisamy Muthu Nachiyar v Aravind A/L Kottasamy (BA-22NCvC-42-02/2020)

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KOTTAISAMY SIVAGAMI … PLAINTIFFS AND ARAVIND A/L KOTTAISAMY … DEFENDANT JUDGMENT [1] The following is the Court’s decision at the end of a full trial between the parties. In total there were fifteen (15) witnesses called: four (4) for the Plaintiffs and eleven (11) for the Defendants. [2] Having reviewed the entire case and the submission of parties, this Court on 13.06.2024 allowed the Plaintiffs’ claim and dismissed the Defendants’ counterclaim. 23/09/2024 15:35:15 BA-22NCvC-42-02/2020 Kand. 105 FACTUAL MATRIX OF THE SUIT [3] The 1st Plaintiff is the first wife of the late Kottaisamy Karuppiah (“the Deceased”), whilst the 2nd to 5th Plaintiffs are the children of the 1st Plaintiff and the Deceased. [4] Historically, the Deceased was born in India. Thereafter, he migrated to Malaysia where he became a businessman. On 15.05.2012, he successfully became a Malaysian citizen. Unfortunately, he passed away intestate in Malaysia on 13.04.2016 after a road traffic accident. [5] On 15.05.1989, the Deceased married one Madam Tamilselvi a/p Govin Darajan (“Madam Tamilselvi”), the mother of the Defendant. This marriage was not registered as required in law. [6] Due to a road accident on 13.04.2016, the Deceased passed away intestate. [7] Prior to his death, the Deceased was actively engaged in the running of a business or dealership of buying and selling scrap metal in the name and style of VMS GK Bunga Raya Metal Trading Sdn Bhd (“the Company”) which had its principal place of business at Lot 3, Jalan Hang Tuah 2, Taman Salak Selatan, 57100 Kuala Lumpur. [8] When the Company was set up by the Deceased in 2007, both the Deceased and the 1st Plaintiff were directors of the Company. In the years 2008 to 2010, the 1st Plaintiff held 3000 shares in the Company. By 31.12.2010, the 1st Plaintiff held 9000 shares in the Company. By 2011, the 1st Plaintiff held 10,000 shares in the Company. [9] In 2011, the Defendant was appointed as a director of the Company. He also became its majority shareholder by virtue of his 80,000 shares in it. At this point in time, the Defendant was a student at the University Pahang Malaysia. He later on graduated from the university in Bachelor of Mechanical Engineering in the year of 2014. [10] Apart from the 1st Plaintiff and the Defendant, the remaining shareholder of the Company was one Shanmugaraj a/l Munian. [11] Despite being a shareholder of the Company, the Defendant did not work with the Company. Upon his graduation in 2014, the Defendant worked with Tenaga Nasional Berhad as required under the terms of his TNB Scholarship Agreement. Upon the demise of the Deceased, the Defendant resigned from TNB and took over the helm of running the Company. [12] On 30.8.2016, the Defendant successfully applied for and obtained the Grant of Letter of Administration of the Deceased’s estate in the High Court at Kuala Lumpur under Originating Summons No. WA- 31NCvC-1248-08/2016. Despite having knowledge of the Plaintiffs existence and rights as hers to the estate of the Deceased, the Defendant failed to inform and/or disclose to the Court of the same. [13] It is to be noted that in the List of Asset and Liability of the Deceased appended to the Letter of Administration application, the Defendant had listed the 4 insurance policies payouts totalling RM383,000.00 as being the assets of the Deceased. [14] After becoming the administrator to the estate, the Defendant caused the 1st Plaintiff to sign some documents which caused her resignation as a director of the Company with effect on 02.09.2016 and cessation as shareholder with effect from 31.12.2016. [15] On 01.04.2019, the 1st Plaintiff instructed her former solicitors known as Messrs Pathi & Associates to issue a letter to the Defendant and Madam Tamilselvi alleging as follows: i) The Defendant was holding his 80,000 shares in the Company on trust for the benefit of the 2nd to 5th Plaintiffs; ii) The 1st Plaintiff’s share in the Company was transferred without her knowledge; iii) The Deceased had through several successful business ventures acquired substantial amount of wealth in the form of moveable and immoveable assets; iv) There are no documents to evidence any legal marriage between the Deceased and Tamil Selvi; v) The Defendant had suppressed certain information in the application for Grant or Letter of Administration; vi) The Grant of Letter of Administration is tainted with illegality; vii) The Plaintiffs are entitled to receive shares from the Deceased’s estate and any other assets that are being held on trust; and viii) The list of assets of the Deceased as attached in the Grant of Letter of Administration application is inaccurate. [16] Moreover, the 1st Plaintiff through the same letter also demanded the Defendant to provide a complete list of the moveable and immovable assets of the Deceased's estate. [17] The Defendant replied to the above letter of 01.04.2019. Subsequently, the Defendant had applied for, on an ex parte basis, to revoke the grant of the Letter of Administration. The said application to revoke was granted by an order of the Court dated 25.07.2019. No notice of any such application was made to the Plaintiffs. [18] In October 2019, another notice of demand dated 01.10.2019 was sent by the Plaintiffs’ current solicitor making similar allegations as in the former solicitors’ letter of 01.04.2019 and demanded from the Defendant a full account of all monies taken from the estate. The new solicitors also demanded for the assets under the estate to be distributed in accordance with the law with the Plaintiffs being included as beneficiaries. [19] The Defendant in turn denied the Plaintiffs’ solicitors assertion by way of a letter dated 16.10.2019 from his solicitors’ Messrs Kali & Associates. [20] This led to the Plaintiffs commencing the present suit on 03.03.2020. Note: The facts as stated in paragraphs 3 to 15 above are:

not disputed in the pleadings;

(ii) have been admitted by the parties during the course of the trial. [21] Below are the reliefs sought by the Plaintiffs against the Defendant: a) A declaration that the grant of Letter of Administration dated 30.08.2016 be deemed invalid and of no legal effect; b) A declaration that all acts done in pursuance of, and the purported power granted to the Defendant, under the said Letter of Administration dated 30.08.2016 be deemed unlawful and done based on false premise and were done unlawfully and therefore void ab initio, an that there be an order of restitution of all assets and monies and spent during the period of the existence of the said Letter of Administration; c) That the Defendant gives a full and honest account of all monies received by and for VMS CG Bunga Raya Metal Trading Sdn Bhd. And spent for or in the name of VMS GK Bunga Raya Metal Trading Sdn Bhd, from the time of the death of the Deceased till the end of the investigation into the affairs of VMS GK Bunga Raya Metal Trading Sdn Bhd; d) That the Defendant gives his full cooperation in the investigation ordered to be undertaken, and that the Defendant makes available all documents pertaining to monies of VMS GK Bunga Raya Metal Trading Sdn Bhd used for purchases and receipt of money from debtors as well as for purchases and sale of assets; e) That the Defendant be made solely liable for the affairs of VMS GK Bunga Raya Metal Trading Sdn Bhd from the time of death of the deceased until the investigation into the affairs of VMS GK Bunga Raya Metal Trading Sdn Bhd ends; f) That the 4th Plaintiff be appointed and be given full authority to investigate the affairs of VMS GK Bunga Raya Metal Trading Sdn Bhd during the time of death of the Deceased until the end of the investigations, as well as being granted unlimited access to the premise and to books and properties of and pertaining to VMS GK Bunga Raya Trading Sdn Bhd; g) That on completion of the said investigation, the 4th Plaintiff shall compile and exhibit a report in the investigation made; h) That in case of any loss suffered by VMS GK Bunga Raya Metal Trading Sdn Bhd due to, or occasioned by the Defendant, then the Defendant to be made liable to make good such loss; i) That the 4th Plaintiff be allowed to apply for a fresh grant of Letter of Administration for estate of the Deceased with the inclusion of all beneficiaries and thereafter apply of distribution of the said estate in accordance with the provisions of the Distribution Act 1958; j) That costs involves in undertaking all of the prayers above be borne by the Defendant; and k) Such further and / or other orders made by this Honourable Court that are fair and equitable to be granted. [22] In response to the suit by the Plaintiff, the Defendant filed a counter claim seeking inter alia the following reliefs:

an order that the Plaintiffs shall repay all monies expended by the Defendant in the amount of RM917,744-00 towards the debt of the Deceased; and

an order that the Plaintiffs shall disclose the assets of the Deceased in Tamil Nadu, India and fully account for the proceeds derived from those assets. [23] Despite adducing evidence in respect of the debt of the Deceased which the Defendant claimed was settled by him, prior to submissions being filed by both parties, the Defendant vide his solicitors informed this Court that he no longer intends to pursue the said counterclaim. Accordingly, the counterclaim was struck off by this Court. THE PLAINTIFF’S CASE [24] In a nutshell, the Plaintiffs’ case is as follows:-

the Defendant held the Shares as trustee for the benefit of the Plaintiffs and himself. The trust created by the Deceased was created orally (there is no requirement for a declaration of trust to be reduced into writing).

the Defendant committed breach of trust when he took over the management and ownership of the Company to the exclusion of the Plaintiffs upon the demise of the Deceased. There is a constructive trust over the shares held by the Defendant for the Deceased’s estate and the shares of the 1st

the Defendant unilaterally applied for the Grant of Letter of Administration based on false statements made by him in the Affidavit in Support affirmed by the Defendant particularly the statement that there were no other surviving heirs who were entitled to the Deceased’s estate other than the Defendant and Madam Tamilselvi; and

the 1st Plaintiff had been fraudulently and unlawfully removed from being a shareholder and director of the Company after the death of the Deceased based on the Defendant’s persuasion to get her to sign some forms purportedly to appoint someone who was very experienced in the business to run the Company. SUMMARY OF THE DEFENDANTS SUBMISSION [25] In summary the Defendant contends as follows:

the non-joinder of the Company as a party in this proceeding infringes the principle of separate legal entity as the Company is a legal person, separate and distinct from its shareholders. In this regard, a number of the reliefs i.e. prayers (c) to (h) as prayed for by the Plaintiff clearly relates to the affairs of the Company and affect the rights and/or interest of the Company. It also infringes the ‘audi alterem partem rule’ as the Company is not given the right to be heard. That being the case, this Court can only proceed to determine issues affecting the rights and interest of the Defendant alone.

(ii) Upon the death of the Deceased on 13.4.2016, there was a meeting between the Plaintiffs and the Defendant. Based on the meeting, parties had agreed that the Plaintiffs will take ownership of the Deceased’s assets in India and the Defendant will take over the assets of the Deceased in Malaysia. This led to the Grant of Letters of Administration (‘LA”) dated 30.8.2016 being applied for and obtained. The LA was however subsequently revoked on 25.07.2019. As the LA has been revoked, the issue of its validity is no longer a life issue;

(iii) The Defendant had no bad intention or malice by using a false affidavit in support of the application for LA. The non- disclosure of the Plaintiffs as the heirs of the Deceased was based on the advice of his previous solicitor;

(iv) The Defendant had never at any instant misused his powers derived from the LA for his own personal gain. Rather, he had utilised the four (4) Life Insurance policies amounting to RM383,000-00 (being the only assets of the estate) to settle the Deceased’s outstanding debt (approximately RM910,000- 00). The balance of the debt was paid by the Defendant;

Since the Plaintiffs are neither directors, shareholders, members, nor creditors of the Company, they have no rights to investigate the affairs of the Company and/or inspect the books and papers of the Company (reliance based on Sections 48, 254 and 501 of the Companies Act 2016). The Plaintiffs herein do not have any rights or interests in the

(vi) At the time of his death on 13.04.2016, the Deceased no longer had any interest in the Company. This was evident from the fact that the Deceased had resigned as a director of the Company on 01.12.2010 and as of 31.12.2011 ceased to hold any shares in the Company;

(vii) As the Plaintiffs herein do not have any rights or interests in the Company they are not entitled to claim for any assets belonging to the Company (this include Klang land previously owned by the company, company vehicles and lorries).

(viii) The Plaintiffs’ claim for breach of trust ought to be dismissed in limine as the Plaintiffs have not pleaded material facts in its pleadings pertaining to this issue in sufficient detail. All that the Plaintiffs have done in its pleadings is mention in passing that a purported express undertaking was given by the Defendant that he holds his shares in the Company as trustee for the Plaintiffs and himself in equal shares, in the event the Deceased passes on. The Plaintiffs subsequently proceeded to do at the trial is to repair their claim through witness testimonies by leading evidence on this issue.

(ix) There is no existence of trust at all in this case. A scrutiny of the evidence leads to an inevitable conclusion that the Deceased had never intended to include the 2nd to the 5th Plaintiffs in the operation and/or administration of the Company nor did the Deceased intend to include them in the Company as a director or a shareholder. In fact, it was the intention of the Deceased and Tamilselvi to have the Defendant take over the Company after the Defendant had completed his service with TNB. This can be inferred from the fact that the Deceased had elected to appoint the Defendant as a director and majority shareholder of the Company in 2011 when he had not even completed his studies;

There exists no constructive trust as there was no unjust enrichment and/or unconscionable conduct on the part of the Defendant. In fact, the Defendant had paid for the shares through his scholarship monies and from monies given by his mother in the sum of RM50,000-00. In the event, this Court finds that the Defendant did not pay for the shares, they were allotted to him by the Deceased;

(xi) It was not possible for the Defendant to have met the 1st Plaintiff on the 16th day of prayer held for the death of the Deceased for purposes of asking her to sign forms fraudulently which resulted in the transfer of her shares and removal of her directorship from the Company. This is because the SSM search report shows that the 1st Plaintiff was removed as a shareholder and director with effect from 13.04.2016 whereas the Deceased had passed away on the same date of 13.04.2016; Legal Principles Applicable In the present case: [26] The present case before me concerns the principles applicable to the establishment of a valid trust. Hence, it would be prudent to state at this juncture, the basic legal principles that govern such. [27] Firstly, it is not a legal requirement that the establishment of a trust must be by way of a written document. In this regard, a trust can be created orally and without the necessity of executing formal documentation. In opining so, I am guided by the judgment of Suffian CJ in the Federal Court decision of Wan Naimah v Wan Mohamad Nawawi [1974] 1 MLJ 41 which held: “The law is that a declaration of trust may be made quite informally, provided that the words used are clear and unequivocal. As was stated by the Romilly M.R. in Grant v Grant 55 ER 776, words declaring a trust “need not be in writing…They must be clear, unequivocal and irrevocable, but it is not necessary to use any technical words, it is not necessary to say, ‘I hold the property in trust for you,’ nor is it necessary to say, ‘I hold the same for your separate use.’ Any words that the donor means, at the time he speaks, to divest himself of all beneficial interest in the property are, in my opinion, sufficient for the purpose of creating the trust. I think that it is also sufficient for the purpose of shewing that the trust has been created, if he afterwards states that he has so created the trust, though there was no witness except the donee present at the time the trust was created.” (Page 77) The Master of the Rolls was speaking of a declaration of trust in respect of chattels, which may be created by parole. But as a trust in respect of land may be created in Kelantan also by parole (the English Statute of Frauds does not apply), we are of the opinion that the principle above stated in applicable to this case.” [28] Secondly, in order for a trust to be valid, three (3) requirements must be fulfilled namely: i. there must be certainty of intention; ii. there must be certainty of subject matter; and iii. there must be certainty of the objects of the trust. In the event any of the above requirements is missing, the trust created would be void for uncertainty. See: Knight v Knight [1840] 49 ER 68; Fawziah Holdings Sdn Bhd v Metramac Corporation Sdn Bhd & Anor Appeal [2006] 1 CLJ 996 and Ng Kong Beng & Anor v Ong Lok Leong & Ors [2022] 3 MLJ

COURT’S FINDING & ANALYSIS [29] Having reviewed the entire case of parties and the submissions filed by counsel, this Court’s findings are stated below:

that the Plaintiffs have successfully proven the existence of a trust based on the testimony of PW1—PW4. Premised on the testimony of these witnesses, this Court found that the Plaintiffs had adduced sufficient evidence on the establishment of the trust by the Deceased.

(ii) the three (3) certainty requirements i.e. certainty of intention, certainty of object and certainty of subject was proven by the testimony of PW1 who testified that she was present together with the Defendant when the shares of the Company allotted to the Defendant by the Deceased for him to hold the shares on trust for the rest of the Deceased’s children. This testimony was not challenged by the Defendant during cross-examination. Failure to do so, is tantamount to an admission by the Defendant as affirmed in Wong Swee Chin v Public Prosecutor [1981] 1 MLJ 212;

(iii) the testimony of a PW3 who is the brother to the Defendant’s mother, that the Defendant had admitted to the establishment of the trust by the Deceased, lends credence to the Plaintiffs’ case as he is an independent witness who has no interest in the outcome of the present suit;

(iv) the Plaintiffs’ failure to plead the terms of the trust in the Statement of Claim did not prejudice the Defendant. Any complaints on the vagueness of the trust ought to have been dealt with at the early stage of proceeding by a request for further and better particulars and not at the end of the trial. Furthermore, no objection was made by the former counsel for the Defendant when the Plaintiff sought to adduce evidence of the terms of the trust (see Gurbachan Singh s/o bagawan Singh & ors v Vellasamy s/o Pennusamy & Ors [2015] 1 MLJ 773)

the Defendant’s failure to honour the terms of the said trust meant that he was in breach thereof. There was indeed a constructive trust over the shares of held by the Defendant.

(vi) despite the Defendant pleaded case that he had paid for the shares this was not put to the Plaintiffs’ witnesses. Instead, the case put forward to the Plaintiffs was that the shares were allotted to the Defendant;

(vii) the Defendant failed to prove that he had paid for the shares. The manner as to how the Defendant paid for the shares i.e. by using his scholarship money and from monies given by his mother, Madam Tamilselvi was not also pleaded. In light of the Federal Court decision in Samuel Naik Siang Ting v Public Bank Berhad [2015] 8 CLJ 944 this Court is constraint to hold that the Defendant’s failure to plead facts relating to the manner as to how the Shares were paid precludes him from advancing facts which were not pleaded.

(viii) despite the Defendant testifying that Madam Tamilselvi had paid RM50,000-00 for the allotment of the shares, she was not called as a witness. This attracts the presumption under Section 114(g) of the Evidence Act 1948 as highlighted in Takako Sakao v Ng Pek Yuen & Anor [2010] 1 CLJ 381;

(ix) there was no payment made to the 1st Plaintiff in return for her 10,000 shares. Her testimony on this was also not challenged (Q&A 17 at pages 6 and 7 of her W/S) during cross examination. The Defendant’s failure to challenge the 1st Plaintiff testimony render his claim untenable as following the settled law in Browne v Dunn (1893) 6 R 67;

despite being a major shareholder of the Company since 2011, the Defendant played no role in the Company unlike

(xi) the Deceased had meant for the Defendant to continue working for TNB. This is evident from the purchasing of the house in Setiawan, Perak where the Defendant was working. Based on these facts, I can only conclude that it was not the Deceased intention for the Defendant to run the business of the Company as alleged. In other words, the Defendant was only a nominee of the Deceased;

(xii) the Defendant did not continue to run the Company business. Instead, he incorporated 2 new companies: Green Kingdom Solution Sdn Bhd in 2016 and Trishul Kingdom Sdn Bhd in 2018 after the demised of the Deceased and disposed of the company’s assets;

(xiii) the Defendant’s application for the grant of LA is tainted despite him taking steps to revoke the LA on 25.07.2019. The Defendant is not a layman. He is well educated. Under such circumstances, he cannot blame his previous solicitor for the non-disclosure of the Plaintiffs as beneficiaries to the estate of the Deceased in applying for the LA.

(xiv) the Defendant’s explanations is not plausible as it does not gel with the following facts which were adduced at the trial:- a) the subsequent conducts of the Plaintiffs do not seem to suggest that the parties came to a consensus in regard to the distribution of the Deceased’s assets in Malaysia and India especially when the Plaintiffs did not actually file any application in India for administration of the Deceased’s estate there coupled with the undisputed fact that there were a series of negotiation among the parties thereafter and exchanges of correspondences by their solicitors to attempt to resolve their differences on the issues arising from the Deceased’s estate; b) even assuming that the Plaintiffs had indeed agreed to such arrangement as alleged (which is denied), the law still requires the Plaintiffs to have their consent and renunciation executed accordingly in Form 160 of the Rules of Court 2012, which is not the case here; c) unless otherwise proven to the contrary, the solicitors who prepared and filed the said application on behalf of the Defendant must be presumed to have acted under the direct instruction of the Defendant especially when the solicitors, as admitted by the Defendant, were recommended by the Deceased’s insurance agent and had no knowledge about the background of the Deceased’s family; d) more importantly, the subsequent conduct of the Defendant who applied for the Grant of Letter of Administration dated 30.08.2016 to be revoked after receiving the notice of demand issued by Messrs Pathi & Associate which had queried and challenged the legality of the application and the Grant clearly indicates that the Grant of Letter of Administration had been obtained through suppression of material facts and information and had been tainted with illegality; and e) the alleged consensus with regard to the distribution of the Deceased was not mentioned by the Defendant in his letter dated 10.04.2019 in response to the notice of demand and therefore such allegation is nothing more than a mere afterthought.

(xv) there is no evidence to support Defendant’s case that he had utilised the insurance monies to pay off the debts of the Deceased. In the above premise, I find the testimony of the Deceased unworthy of credit.

(xvi) as this was not an action against the Company, the purported failure to join the Company as a co-defendant does not offend the audi alterem partem principle. [30] Based on the fact that the Plaintiffs as shareholders have been deprived of their rights as shareholders of the Company, it is this Court’s considered view that the Defendant was in breach of the trust established by his late father. [31] In light thereof, the Defendant is duty bound as trustee to account for whatever transactions concerning the Company to the Plaintiffs as decided in Tetuan Khana & Co v Saling Lau Bee Chiang & Ors [2019] 3 CLJ 56. The Plaintiffs’ claim is therefore allowed based on prayers (a) to (k) of the Statement of Claim. [32] It is my considered view that the prayers granted do not offend the principle of the separate legal entity of the company. COSTS [33] On the issue of costs of the trial, having heard brief submissions by parties, the cost is fixed at RM55,000-00 based on the folIowing:

RM3,000-00 for each day of trial x 10 days = RM30,000-00;

(ii) RM10,000-00 for getting up and preparation of trial;

(iii) RM15,000-00 for written submissions and clarifications; and [34] It is my considered view that the above sum of RM55,000-00 is sufficient and reasonable towards the cost of the trial (subject to allocator). I order so accordingly. Dated: 17th September 2024, ……………………..…………. (MOHD FIRUZ BIN JAFFRIL) JUDGE HIGH COURT OF MALAYA AT SHAH ALAM Solicitors for the Plaintiff: Messrs Edwin Ong Chambers (Advocates & Solicitors) No. 10, Tingkat 1, Jalan Stesen, 41000 Klang, Selangor. Ref: L/324-07/19-B Solicitors for the Defendant: Messrs S Ravenesan (Advocates & Solicitors) No. 54-1, Jalan Telawi, Bangsar Baru, 59100 Kuala Lumpur. Ref: SR390(23)(AK)(KMN & 4 ORS)- GL(RV)/NV)