W-02(NCVC)(W)-471-03/2017 v Abdul Ravuff Bin Datuk A.S. Dawood (W-02(NCVC)(W)-471-03/2017, W-02(NCVC)(W)-481-03/2017, W-02(NCVC)(W)-702-04/2017, W-02(NCVC)(W)-960-05/2017)

The first three of these four appeals relate to the same decision of the learned High Court Judge delivered on 28/2/2017 where Her Ladyship allowed the claim of the six plaintiffs against the six defendants. Why these many appeals was because the 6th defendant filed its own appeal (for brevity, Appeal no 471), the 1st, 3rd to 5th defendants jointly filed theirs (Appeal no 481), the 2nd defendant’s appeal is Appeal no 702 and in which the plaintiffs have filed a cross appeal. The last appeal, Appeal no 960 was filed by the 1st, 3rd and 5th defendants against the same High Court Judge’s refusal to stay paragraph (c ) of her judgment against all the defendants. That paragraph (c) relates to a previous order of the court dated 19/2/2014 wherein the 5th defendant was ordered to deposit a sum of RM 11 million and to pay out the same together with interest which has accrued, to the plaintiffs. The RM 11 million is part of RM 14,801,518.37 7 ordered by the learned High Court Judge to be paid by all the defendants to the plaintiffs.

The protoganists in these appeal, and who would be referred to as they were in the High Court in this judgment, except for the corporate ones (that is, the 5th and 6th defendants), are all family members. In fact all the plaintiffs and the 1st to 3rd defendants are half-siblings whereas the 4th defendant is the plaintiff’s niece, being the 1st defendant’s daughter. The half-siblings were children of one Datuk AS Dawood (“Dawood”) who passed away on 3/4/1989 leaving behind 4 wives and 20 children but the dispute here was only between the children of two of his wives. The plaintiffs were children with his fourth wife, Aisha Beevi and the 1st to 3rd defendants were from his first wife, Patama @ Ammaji Bt Daud Sha (“Ammaji”). The 5th defendant (“Pasla”) was a company incorporated by Dawood with Ammaji in 1976 with each holding one share in the company. After its incorporation, Dawood transferred almost 626 acres of rubber estate land he owned in Mambau and Labu, Negeri Sembilan to Pasla for a consideration of RM 999,998.00 which sale was discharged by way of an allotment of 999,998 shares of RM1.00 each to himself, Ammaji (19,999 shares) and his 20 children (440,000 shares). Up till his death, Dawood and Ammaji were the only Directors of Pasla. The 6th defendant (“Azinal”) was dragged into this family’s fray because it purchased about 8 180 acres of land from Pasla which the plaintiffs alleged was a sham and not a genuine sale. The plaintiffs’ claim against the other defendants was for breach of trust and the crux of the claim lies with an agreement allegedly executed by Dawood and Ammaji on 29/7/1981 (the 1981 Agreement). The 1981 Agreement

In the 1981 Agreement, Dawood agreed to ‘forthwith’ transfer 390,000 of his shares in Pasla to all 20 of his children. Pursuant to the 1981 Agreement, the plaintiffs would have an additional 110,000 shares in Pasla on top of their then existing 130,000 shares. It was also agreed in the 1981 Agreement that the 1st plaintiff as well as each of his half-siblings from the other 3 wives would be made Directors of Pasla. However, up till his death and until the filing of this action in 2013, the 1981 Agreement was not honoured. About 7 months after Dawood’s demise, on 23/12/1989, Ammaji chaired a meeting for Pasla shareholders cum children of Dawood in which she informed them that via 2 pre-signed transfer forms dated 29/3/1989, Dawood’s entire shareholding in Pasla had been transferred to her – this in order to avoid payment of estate duties. According to the plaintiffs, she assured them at that meeting that she would subsequently act on what was agreed in the agreement but which assurance remained an empty promise. Given its importance to the 9 plaintiffs’ claim and in view of its brevity, the 1981 Agreement is reproduced below: AGREEMENT THIS AGREEMENT made this 29th day of July, 1981 BETWEEN DATUK A.S. DAWOOD, J.P., K.M.N., NRIC No. 1297832 of No. 281, Jalan Temiang, Seremban (hereinafter called the First Party) of the one Part AND DATIN AMMAJI BIBI BTE DAUDSHAH, NRIC No. 1297831, of No. 281, Jalan Temiang, Seremban (hereinafter called the Second Party) of the other part.

In consideration of the Second Party paying to the First Party a sum of $420,000/- (Ringgit Four Hundred and Twenty Thousand Only) the First Party who is the sole proprietor of the business of A.S. Dawood & Co., now carried on at No. 67, Paul Street, shall forthwith transfer the said business without any encumbrances thereon and all its assets including book debts to Syarikat A.S. Dawood Sdn. Bhd. and pending such transfer shall hold the said business in trust for the transferees. The First Party shall pay to the Second Party an additional sum of $100,000/- (Ringgit One Hundred Thousand Only) at the time the transfer of the business is effected. 10

The First Party shall pay to the Second Party a sum of $50,000/- (Ringgit Fifty Thousand Only) when the building plans in respect of premises number 87, Paul Street, Seremban, is approved by the relevant authorities.

Datuk A.S. Dawood, who is the current registered holder of 54 (fifty four) fully paid shares in Pasla Holdings Sdn Bhd. shall forthwith transfer for natural love and affection to Dr. Abdul Rahiman bin A.S. Dawood 3 shares, Mohamed bin Dawod 3 shares, Ibrahim bin Dawood 2 shares, Abdul Razak bin Dawood 3 shares, Halimah binti Dawood 1 share, Hanipah binti Dawood 1 share, Jamilah binti Dawood 1 share and Datin Ammaji BIBI binti Daudshah 1 share , the children by the second wife 4 shares, the children by the third wife 9 shares, the children by the fourth wife 11 shares and shall thereby retain 15 shares for himself.

An additional four (4) persons, namely Dr. Abdul Rahiman bin Dawood, Abdullah Dawood, Sultan Batcha and Abdul Rauf shall be …..

It is an undisputed fact at the trial of the action that the number of shares mentioned in the 1981 Agreement were wrongly stated in that there were four zeroes missing from the last figure. For example, 11 shares in the agreement should read 110,000 shares.

It also has to be mentioned that at the trial, only a photocopy of the 1981 Agreement was produced by the plaintiffs and it was initially marked for identification as ID1 by the learned High Court Judge but Her Ladyship subsequently accepted it as evidence and marked it as Exhibit P1 although the original was never produced. Her Ladyship gave good sound 11 reasons in her grounds of judgment why she decided that the photocopy agreement was admissible and given that at the hearing before us, Mr. Cyrus Das for the appellants in Appeal 481 said he was not pursuing the issue about the admissibility of the agreement, only the legal issues surrounding it, we need not deliberate further on it in this judgment. This stand we took because Mr. Ahmad Mooiden for the appellant in Appeal no 702 informed us at the hearing that he adopted Mr Cyrus Das’s submission. For the record the issue about the 1981 Agreement was only pertinent for these two appeals.

The one significant event, in terms of chronology, which we have to reiterate and which we will elaborate subsequently was the sale of approximately 180 acres of Pasla’s land in Labu to Azinal vide a sale and purchase agreement dated 18/6/1991 for a consideration of RM 5.6 million. It is a term of the agreement that a sum of RM 5.15 million interest free loan by Azinal to Pasla would be set-off against the purchase price as part payment and deposit. This on top of an earnest deposit of RM 280,000.00 also stipulated in the said agreement.

The other significant event to note would be the 1st plaintiff’s filing of a winding up petition on just and equitable grounds against Pasla in July 1997, which was more than 7 years after the meeting chaired by Ammaji and about 8 years 3 months after Dawood’s demise. The breach of the 12 1981 Agreement was the main ground relied on in the petition and the 1st plaintiff (the petitioner) claimed in the petition that he had the support of all his entire family in filing it. The petition was opposed on the ground that since Dawood did not implement the 1981 Agreement in his lifetime, the promises made therein were imperfect gifts. The High Court dismissed the petition, which decision was affirmed by the Court of Appeal and leave to the Federal Court was refused. The citation for the reported decision of the Court of Appeal is (2003) 3 MLJ 296. The Syariah High Court Action

In 1997, the 1st plaintiff also filed an action in the Syariah High Court based on the 1981 Agreement which was dismissed on 5/3/2007 and affirmed by the Syariah Court of Appeal in 2010. The Syariah High Court, citing lack of jurisdiction over the reliefs claimed held as follows: “Mahkamah Tinggi Syariah tidak mempunyai bidangkuasa untuk membuat pengisytihran dan pembahagian harta pusaka yang berada dalam milik Syarikat Pasla Holdings Sdn Bhd”. Sale of Labu lands to Vision Wagon

Vide a trust deed dated 11/8/1997, Ammaji appointed the 2nd defendant as her trustee and two days later she transferred her 560,000 shares in Pasla to the 2nd defendant to hold in trust for her. Following her death, the 2nd defendant was made the administrator of her estate in a 13 grant of probate dated 4/4/2014 as stated in the intitulement of this action and in this action he was sued both in his personal and official capacity.

Thereafter, in 2012, Pasla and Azinal entered into a sale and purchase agreement with Vision Wagon to sell 395 acres of Pasla’s land (inclusive of that which was earlier sold to Azinal) for RM 61,972,993.21. Further pertinent details on this sale would also be stated later in this judgment. Then, in the following year the writ action which is the subject matter of this appeal was filed and as stated in the written submission of the plaintiffs’ counsel before us, this legal action was filed because of the plaintiffs’ dissatisfaction “…. with the conduct of the defendants with regards to the sale of the Pasla Lands to Vision Wagon and the refusal of the 1st to the 5th defendants to recognise the trust arising from the 1981 Agreement …. “. In the plaintiffs’ counsel’s own words, in paragraph 27 of their written submission, the plaintiffs’ pleaded case ís this: “27. In a nutshell the pleaded case of the plaintiffs is as follows:-

under the terms of the 1981 Agreement, the plaintiffs were entitled to 110,000 of the 390,000 shares in Pasla Holdings;

the 1981 Agreement is in truth and substance a trust under the terms of which Datuk Dawood held the plaintiffs’ entitlement to the 110,000 shares on trust for them; 14 (c ) the 540,000 shares of Datuk Dawood was registered in Ammaji’s favour by the usage of a share transfer form, purportedly dated 29-3-1089 and purportedly executed by Datuk Dawood on that date, about 3 weeks after the death of Datuk Dawood (Datuk Dawood died intestate on 3-4-1989);

the said 540,000 shares included the 110,00 shares of which the plaintiffs were the beneficial owners under the trust of which Datuk Dawood was trustee; (e ) that upon the registration of the 540,000 shares in the name of Ammaji, Ammaji held the plaintiff’s 110,000 shares as constructive trustee for the plaintiffs;

Ammaji’s transfer of all the shares held by her, including the plaintiffs 110,000 shares to the 2nd defendant, in or about 1997 constituted a breach of trust;

after the death of Ammaji in 2012, all the shares of Ammaji, including the plaintiff’s entitlement to the 110,000 shares were included as part of the estate of Ammaji, of which the 2nd defendant is the Executor;

upon the transfer of the shares the 2nd defendant and the estate of Ammaji held the 110,000 shares as constructive trustee for the plaintiff;

the 2nd defendant was the controlling mind and will of Pasla Holdings and the 1st, 3rd and 4th defendants acted upon his direction and in concert with him with knowledge of the 15 constructive trusteeship of the 2nd defendant. Hence the 1st, 3rd and 4th defendants were and are also constructive trustees;

Pasla Holdings which held the lands as nominee and agent for the members of Datuk Dawood’s family had knowledge that the plaintiffs’110,000 shares reflected by their interest in the said lands were held on a constructive trust. Hence, Pasla Holdings is and was at all material times a constructive trustee of the plaintiffs’ interest in the said lands and could not deal with the said lands in any manner inconsistent with the plaintiffs’ beneficial ownership therein. Therefore, the 1st to the 5th defendants are not entitled in equity to assert or rely upon the corporate personality of Pasla

the 2nd defendant being the controlling mind and will of the 5th defendant (Pasla Holdings) acted in breach of the fiduciary duty he owed the plaintiffs as constructive trustee when he caused the Pasla Holdings to enter into an agreement with the 6th defendant (1991 SPA) for the purported sale by Pasla Holdings, of approximately 180 acres of the said lands in Labu (which constitutes part of the Pasla Lands) for an undisclosed sum; that there was not genuine sale between Pasla Holdings and Azinal in respect of the 180 acres as inter alia Azinal did not pay the consideration stipulated in the 1991 SPA;

on or about 3rd December 2012 the 1st to the 4th defendants and the 6th defendant acting in concert with each other and in breach 16 of trust caused an agreement to be entered into between the 5th and 6th defendants and one Vision Wagon Sdn. Bhd. (“Vision Wagon”) for the sale of the said lands for a sum of RM 60,532,403.03 being a sum far less than their true market value and thereby unjustly enriched Vision Wagon and caused wrongful loss to the plaintiffs:

as the 6th defendant did not advance any consideration or the consideration stated in the 1991 SPA for the purchase of the 180 acres, hence the 6th defendant does not have any propriety right to the said 180 acres of Pasla lands. The 6th defendant had full knowledge of the said breach by the 2nd defendant and of the plaintiffs’ right, share and interest in the said 180 acres reflected by their shareholding in the 5th defendant and the said 110,000 shares at the time the land was sold to Vision Wagon. The 6th defendant is and was at all material times also a constructive trustee of the proceeds of the sale of the said 180 acres, holding the same for the benefit of the plaintiffs;

the plaintiffs as beneficiaries have been wrongfully deprived of their right, title and interest in the said lands as reflected by the shareholding to which they were entitled under the terms of the 1981 agreement. The defendants having converted the plaintiffs’ right, title and interest in the said lands to their own use and are liable jointly and severally in equity to compensate the plaintiffs for the loss of the true value of their right, title and interest.” 17 Defence of the 1st to 5th defendant

The plaintiffs’ claim was challenged by them primarily on the ground that they have no knowledge about the 1981 Agreement and disputed its authenticity. Of course as mentioned earlier, the authenticity of the 1981 Agreement was no longer an issue in the appeal. More importantly, the defendants said the 1981 Agreement does not create a trust. Further, since Pasla was the registered owner of the lands sold to Azinal and Vision Wagon, the plaintiffs as shareholders have no proprietary interest over the said lands. The defences of limitation (under section 22(2) of the Limitation Act 1953, res judicata and estoppel were also pleaded by these defendants. Defence of the 6th defendants

Basically, Azinal’s defence is to reiterate that of their co-defendants’ that there was no trust created by the 1981 Agreement and the plaintiffs were guilty of laches and delay in pursuing their claim. Azinal also contended that the sale of the ‘Pasla lands was a bona fide transaction which have not been questioned in any legal proceedings before this. 18 The High Court’s decision

The learned High Court Judge wrote a comprehensive judgment and structured it along the issues raised before her but the pertinent ones which merit mention for their relevance to this appeal are :

Whether the 1981 Agreement gave rise to a trust:- Her Ladyship answered this in the affirmative because the 3 elements to create a trust, viz, certainty of words, subject and object were present in the agreement. As for the transfer of the shares to Ammaji, Her Ladyship questioned the genuineness of the transfer for reasons, inter alia, that Dawood could not have signed the two forms on 29/3/1989 as he only returned to Seremban on 31/3/1989, was admitted to Seremban Hospital earliest on 1/4/1989 and the 2nd defendant who was a witness to the transfers was not a witness of truth for the number of lies he told the court. Her Ladyship found that he must have used pre-signed transfer forms for the shares which Dawood always had with him.

(ii) The plaintiffs’ rights in the Pasla lands:- Her Ladyship found that as shareholders of Pasla, the plaintiffs have beneficial rights over the proceeds of the sale. 19

(iii) Sale of the lands to Azinal:- Her Ladyship agreed that it was not a genuine sale for reasons, inter-alia, that the lands were never transferred to Azinal for 21 years before the sale to Vision Wagon and Azinal never lodged a caveat over the land.

(iv) Limitation:- Her Ladyship found section 22(1) b of the Limitation Act 1953 applies, that is, there was no time limit for claims by beneficiaries for properties and for proceeds from their sale.

Res judicata:- Her Ladyship found that the plaintiffs did not sleep on their rights for they took up the winding-up proceedings and went to the Syariah High Court. These previous proceedings did not decide on their shares entitlement as claimed in this action.

(vi) Sale of Pasla land in Labu at an undervalue:- Her Ladyship agreed that the sale of Pasla land in Labu to Azinal was at an undervalue but chose to accept the defendants’ valuer’s opinion which was given when part of the lands were compulsorily acquired by the government. That valuation was RM 6.00 per square foot which Her Ladyship 20 said was the market value of the land. The plaintiff’s cross-appeal which was mentioned at the outset of this judgment was in respect of this particular finding by the learned High Court Judge. Our Decision Creation of a trust

This would be the starting point of our consideration of these appeals. It is worth mentioning that not only the signatories to the 1981 Agreement have died by the time the plaintiffs’ action was filed in court but so too its witness, Noorul Huq, the eldest son-in-law of Dawood and Ammaji. As per the learned High Court Judge’s statement on the law, and as submitted by learned counsel for the plaintiffs, in order to create a trust there must be the three certainties as stated earlier. We have no issue with that requirement but as submitted by learned counsel for the 1st to 5th defendants, based on what was enunciated in Milroy v Lord (1862) 31 LJ Ch 798, there has to be an overt act by the creator of that trust, that is the settlor. The relevant passage in that judgment is reproduced below: “ In order to render a voluntary settlement valid and effectual, the settler must have done everything which, according to the nature of the property comprised in the settlement, was necessary to be done in order to transfer the property and render the settlement binding upon him. He may, of course, do this by actually transferring the property to the persons for whom he 21 intends to provide, and the provision will then be effectual; and will be equally effectual if he transfers the property to a trustee for the purposes of the settlement, or declares that he himself holds it in trust for those purposes …. But, in order to render the settlement binding, one or other of these modes must (as I understood the law of this court) be resorted to, for there is no equity in this court to perfect an imperfect gift”. (emphasis added).

Specifically, for the gift of shares in a company, the English case of Giselle Zeital Kim Zeital v David Norman Kaye and Ors (2010) EWCA Civ 159 held that the donor must ‘do all in his power to transfer’ the shares to the donee. The principle applicable to a gift of shares in a company was discussed at paragraphs 39 and 40 of the judgment and reference was made to 3 earlier decisions on the same issue in paragraph 88 namely;

In re Rose, Midland Bank Executor and Trustee Company Limited v Rose [1949] Ch 78.

In re Rose, Rose v Inland Revenue Commissioners [1952] 1 Ch 499.

Pennington and another v Waine and others [2002] EWCA Civ 227; [2002] 1 WLR 2075 The relevant excerpt of what Lord Justice Rimer said in the aforementioned 2 paragraphs reads : “39. The cases all concerned the question of whether the legal owner of shares had made a valid gift of them. They related to companies, like 22 Dalmar, whose shares were required to be issued in certificated form. To become a member of such a company, the ordinary requirements are that the member must agree to become such and have his name entered on the shareholder register. A member will also have a share certificate evidencing his membership. In order for such a member to transfer his shares to another, he must ordinarily complete and sign a stock transfer form and deliver it to the transferee together with the relative share certificate. The transferee will require both documents in order to apply to be registered as a member in place of the transferor. He will become such a member upon being registered in the share register.

In broad terms, what the two Rose cases decided was that once the legal owner of shares hands to his donee a properly completed share transfer form relating to such shares and the relative share certificate, he will thereby have done all within his own power to transfer the shares to the donee. The donee will only become their legal owner upon being later registered as a member, a matter commonly outside the donor’s control; and until such registration, the donor will remain the legal owner. But once the donor has done all in his own power to transfer the shares, he will be regarded as holding the legal title to them upon trust for the donee, who will thereupon become their beneficial owner…..” Then in para 42, His Lordship continued as follows: “42. ............ The principle of the Rose cases, however, requires that Raymond should have done all within his power to procure the transfer of the share to Stefka. If he duly did that, so that all that remained (subject to restoring 23 Dalmar) was for her to apply to be registered as its legal owner, it may well follow, and I will assume, that pending such registration, Mrs Kumar, as the legal owner, would hold the share upon trust for Stefka, who would thereupon become its beneficial owner.” In this cited case the donor did not forward the share certificates to the donee who was his live-in companion so it was held to be an “imperfect gift”. This decision was followed in Curtis v Pulbrook (2011) 1 BLCC 638 where the same conclusion was reached because the donor of the shares did not send the donees, his wife and daughter living in Thailand, the executed share transfer forms or the share certificates.

Our attention was also drawn to the clause 1 of the 1981 Agreement in respect of the transfer of the business of A.S. Dawood & Co wherein it is specifically stated that pending the transfer it would be held ‘ín trust’ by Dawood for the transferees. In respect of the transfer of shares as provided in clause 2, no such words as highlighted were used. This indicates, submitted the defendants’ counsel, that there was no such intention to create a trust in respect of the shares, that it was merely ‘a comfort agreement’ to possibly appease, or rather assured the disputing family members that Dawood would not part with his block of 540,000 shares to any third party and that these shares would remain within the family. Further, it was submitted that Dawood was, up till his death, very 24 active in the business of Pasla, had entered into a joint venture with Azinal as well as the transactions for the sale of the Pasla land. On this issue, we must say that we appreciate the argument of learned counsel for the plaintiffs, based on Snells’ Equity 32nd Edition at page 654, that it was not necessary for the word ‘trust’ to be used in order to show the intention to create a trust but given the clear use of the word in clause 1, the absence of it in clause 2 is quite deafening.

Further, given the clear evidence that Dawood never did a single act to effect the transfer of the shares in all of the almost 8 years prior to his death and our agreement with the ratio in Giselle’s case (supra) that for an intended gift of shares in a company, the donor must ‘do all in his power’ to effect the transfer such as executing the shares transfer form, we are of the view that the 1981 Agreement did not create a trust in respect of the shares as contended by the plaintiffs because the gift of shares was never perfected by Dawood. In other words, it was an imperfect gift because he had never given the plaintiff the transfer forms with their names on them for we were very much persuaded by the legal argument that in respect of a creation of trust for shares in a company, specific steps must have been taken by the transferor to effect the same. 25 Transfer of shares to Ammaji

The learned High Court Judge in her judgment at paragraph 78 thereof made a finding as stated earlier that Dawood could not have executed fresh transfer forms of the shares to Ammaji on 29/3/1989 and the one ground relied by Her Ladyship which merits mention now is that the 2nd defendant who witnessed the transfer was one without credibility and integrity. However, from the share transfer forms at pages 35 to 36 of the Common Core Bundle Vol 2A in Appeal no 481, Dawood’s signature was actually witnessed by Noorul Huq and the 2nd defendant only witnessed Ammaji’s signature. Now, although the learned High Court Judge mentioned in paragraph 77 of her judgment that the 2nd defendant was “…. the only witness who had purportedly witnessed the execution of the transfer forms …” that paragraph must not be read in isolation but with paragraph 72 where Her Ladyship said :

The only witness who could testify in respect of the 29.3.1989 transfer was D2 as Dawood, Ammaji and Noorul Huq (witness to the transfer) are all deceased.

So it was not entirely correct for the defendants’ counsel to contend that she had made a wrong finding of fact in para 77 above. Further, having examined the grounds canvassed by Her Ladyship at paragraphs 75 to 76 of her judgment we do not find any cause to disagree with her 26 over her reasons to impugn the transfer of shares to Ammaji by the deceased. However this decision does not move us to change our mind with respect of the earlier issue of the non-existent trust.

Our decision on the non-existent trust would obviously impact the issue on limitation decided by the learned High Court Judge because since we are of the view that there was no trust created, the cause of action “to recover trust property or the proceeds thereof …-“ under section 22 (1)(b) of Limitation Act 1953 and for which no limitation period applies as decided by the learned High Court Judge is not applicable to the facts of this case. However, assuming that we were wrong to say so, we agree with the defendants’ counsel that the said section 22(1)(b) does not apply to a constructive trust situation such as in this case based on William v Central Bank of Nigeria (2014) AC 1189, a decision of the Supreme Court of United Kingdom on section 21(1) (a) & (b) of their Limitation Act 1980 which is in pari materia with our section 22 (1)(a) & (b). As explained in William’s case (supra) there are two types of constructive trust-institutional and remedial. Remedial constructive trust is not a true trust and is further classified into two – the knowing recipient and the dishonest assister. This distinction, according to William’s case is relevant when limitation is an issue for section 21(1)(a) & (b) of the English Limitation Act and applies only to express and de facto trustees - not to persons liable 27 only by virtue of their dishonest assistance in a breach of trust. In the words of Lord Sumpton JSC at page 1198 thereof: The distinction between these two categories is not just a matter of the chronology of events leading to liability. It is fundamental. In the words of Millett LJ in Paragon Finance plc v DB Thakerar & Co [1999] I All ER 400, 413, it is “the distinction between an institutional trust and a remedial formula – between a trust and a catch-phrase”. Our section 22(1) (a) & (b) and section 22 (2), which is also in pari materia with the English section 21(3), are reproduced below:

“Limitation of actions in respect of trust property

No period of limitation prescribed by this Act shall apply to an action by a beneficiary under a trust, being an action –

in respect of any fraud or fraudulent breach of trust to which the trustee was a party or privy; or

to recover from the trustee trust property or the proceeds thereof in the possession of the trustee, or previously received by the trustee and converted to his use.

Subject as aforesaid, an action by a beneficiary to recover trust property or in respect of any breach of trust, not being an action for which a period of limitation is prescribed by any other provision of this Act, shall not be brought after the expiration of six years from the date on which the right of action accrued: 28 Provided that the right of action shall not be deemed to have accrued to any beneficiary entitled to a future interest in the trust property, until the interest fell into possession.” The learned High Court Judge refused to apply the ratio in the cited case because of the Federal Court’s decision in RHB Bank Bhd v Travelsight (M) Bhd (2016) 1 MLJ 175 where it was held by Jeffrey Tan FCJ that : “ We are mindful that ‘a constructive trust [in the remedial sense] arises whenever the circumstances are such that it would be unconscionable of the owner of the legal title to assert his own beneficial interest and deny the beneficial interest of another. It arises from circumstances which are, ex hypothesis, known to the legal owner, for if they were not his conscience would not be affected’(Restitution and Constructive Trusts’ 1988 Law Quarterly Review Vol 114 p 399, per Millett LJ at p 400). ‘A constructive trust is the formula through which the conscience of equity finds expression. When property has been acquired in such circumstances that the holder of the legal title may not in good conscience retain the beneficial interest, equity converts him into a trustee’ (Alfred C Beatty v Guggenheim Exploration Company et al

122 NE 378 at p 388 (NY 1919), per Cardozo J).(emphasis added).

Now, although as pointed out by the defendants’ counsel, this RHB’s case does not concern the issue of limitation but with respect to the learned High Court Judge, the above quotation from the judgment does not assist the plaintiffs in any way. This is because applying it to the facts of this case does not take Ammaji out from the position of a 29 constructive trustee and therefore she being a constructive trustee falls squarely within the ratio in William’s case (supra). As was held by the Supreme Court in the said case: “ … the words “trust” and “trustee” in section 21(I)(a) of the Limitation Act 1980 bore their orthodox meaning and so, for the purposes of that subsection, a “trust” did not include a constructive trust of the kind alleged against the bank and a “trustee “ did not include a party who was liable to account in equity simply because he was a dishonest assister in a breach of trust and/or a knowing recipient of trust assets … “ Therefore, even if Ammaji was a constructive trustee in the remedial sense of being a knowing recipient by reasons of her knowledge of the 1981 Agreement, the claim of the plaintiffs comes under section 22(2) and not section 22(1)(b) of the Limitation Act. This means that although it is not an issue that remedial constructive trust is recognised and enforced in Malaysia, the period to do so is 6 years and not left at large. On the plaintiffs’ pleaded case, Ammaji’s refusal to transfer the shares was on or around May 1997. That is when the 6 years began to run and by filing this claim only in 2013, the plaintiffs were definitely way out of time. Laches/delay

The application of the doctrine of laches have been explained by Edgar Joseph Jr J (as His Lordship then was) in the often quoted case of 30 Alfred Templeton & Ors v Low Yat Holdings Sdn Bhd & Anor (1989) 2 MLJ 202 as follows : “ Laches is an equitable defence implying lapse of time and delay in prosecuting a claim. A court of equity refuses its aid to a stale demand where the plaintiff has slept upon his rights and acquiesced for a great length of time. He is then said to be barred by laches. In determining whether there has been such delay as to amount to laches the court considers whether there has been acquiescence on the plaintiff’s part and any change of position that has occurred on the part of the defendant. The doctrine of laches rests on the consideration that it is unjust to give a plaintiff a remedy where he has by his conduct done that which might fairly be regarded as equivalent to a waiver of it or where by his conduct and neglect he has, though not waiving the remedy. Put the other party in a position in which it would not be reasonable to place him if the remedy were afterwards to be asserted: 14 Halsbury’s Laws of England (3rd Ed) paras 1181, 1182. Laches has been succinctly described as ‘inaction with one’s eyes open’.”. Going by the same dates or year rather, we also agree with the defendants’ counsel that the plaintiffs were equally guilty of laches. Section 32 of the Limitation Act provides that the court has the “ … equitable jurisdiction to refuse relief on the ground of acquiescence, laches or otherwise”. Even if we were to ignore the year of the agreement and the year the winding up petition was filed, there was simply no reason canvassed by the plaintiffs why they did not file this action after this court delivered its decision on the winding up petition. This is especially so 31 when this court specifically held in the said judgment that since Dawood did nothing to implement the agreement in the 8 years prior to his death, “… it could be inferred that he had changed his mind in appointing the petitioner as a director of the Company”. It is a statement that we could not help but agree with especially when we bore in mind, as rightly raised by the defendants’ counsel in submission before us, that in the said clause 3 of the 1981 Agreement, the transfer of the shares were to be done ‘forthwith’.

In saying all of the above, we are fully aware that the plaintiffs had provided an explanation why they did not take action all those years against the defendants and that was because they were assured by Ammaji and the 2nd defendant, as conveyed to the 1st plaintiff after the shareholders meeting on 23/12/1989 following Dawood’s death, that the 1981 Agreement would be honoured. Hence, they said they were comforted by the said assurances by Ammaji and the 2nd defendant that she would do so. They were also encouraged to believe the said assurances because as promised by the 2nd defendant, in lieu of a share in cash of RM1.3 million left by Dawood, the defendants would be given Ammaji’s property in Kumbakonan, Tamil Naidu and this was done in

This explanation however is relevant to the period prior to the decisions of the courts at all levels in the oppression petition. It must 32 again be emphasised that the Federal Court refused the motion for leave to appeal in 2004 and the Syariah Court of Appeal affirmed that decision of the High Court in 2010. Yet the plaintiffs were only moved to file this action after the subsequent sale of Pasla lands by Azinal to Vision Wagon, after the Estate Land Board has given approval for the said sale in June 2013 and after the presentation of the memorandum of transfer to effect the transfer in October 2013. Clearly the plaintiffs were not acting with the promptitude that the situation demands. It is of course trite law that laches and acquiescence are equitable doctrines which could be raised to defeat stale demands and we say that these should be applied to the detriment of the plaintiffs in this case.

We have yet another added reason to say that section 21 of the Limitation Act 1953 does not apply. This is because based on the plaintiffs pleaded case, it was a monetary claim and not a proprietory claim so it falls squarely under section 22(2) of the said Act. In Instantcolor System Sdn Bhd v Inkmaker Asia Pacific Sdn Bhd (2017) 2 MLJ 697, it was held that a pleading on breach of trust must be clear. This is what Ramly Ali FCJ said at para 61 page 719 of the judgment : “ [61] The issues of constructive trust, fraud and fraudulent breach of trust as raised by the plaintiff are vital issues in bringing into play the exception to limitation period under s 22 of the Act. They must be specifically pleaded in the pleadings, failing which, as rightly held by the Supreme Court in Lee Ah Chor 33 v Southern Bank Bhd [1991] 1 MLJ 428, they ‘could not be allowed to be argued and to succeed on appeal’.” It was never the pleaded case of the plaintiffs that the transfer of the shares from Dawood to Ammaji was procured by fraud or forgery. Therefore the argument that it was a false document because it was post-dated i.e. dated after it was made cannot, with respect, be accepted. When the issue of forgery was raised during the trial and objected to by the defendants’ counsel, the plaintiffs withdrew reliance on that ground of forgery as it was not their pleaded case (see the note of proceedings at Tab 2 of Rebuttal Bundle and the Appeal Record Vol 2B at page 516-517 and 523 of Appeal no 471). Further, as per paragraphs 17(a) and (b) of the statement of claim the plaintiffs were claiming indemnity for losses suffered because of the breach of trust or alternatively for “equitable compensation” for the said breach and not for the recovery or return of trust property i.e. the shares. Thus, as decided by this court in Dato Wira A Nordin bin Mohd Amin & Ors v Rajoo a/l Selvappan & Ors (2007) 5 MLJ 297, section 22(2) of the Limitation Act 1953 which prescribes a limitation period of 6 years applies.

So the next question is when would the 6 years commenced? If not from 1981 when the agreement was signed, it must be from 1997 when the oppression petition was filed because that was when the 1981 34 Agreement was raised in the proceeding. The sale of the land to Vision Wagon in 2012 cannot be the start of the 6 years limitation period as held by the learned High Court Judge in paragraph 114 of her judgment because the plaintiffs’ cause of action was premised on the failure to transfer the shares to them – not just being deprived of their entitlement to the sales proceed of the Pasla lands. Thus the plaintiffs’ claim filed in the High Court in 2017 was obviously out of time. The plaintiffs tried to argue, based on the House of Lord’s decision in Foskett v Mckeown & Others (2001) 1 AC 102 that, A beneficiary of a trust is entitled to a continuing beneficial interest not merely in the trust property but in its traceable proceeds also, and his interest binds everyone who takes the property or its traceable proceeds except a bona fide purchaser for value without notice. That of course applies if trust was proven to have been created, and the court would be entitled to utilise the process of ‘tracing and following’ to locate the assets upon which a plaintiff asserts ownership. Unfortunately for the plaintiffs in this appeal before us, the creation of that trust over the shares have not been established.

On the other defence of res judicata raised by the defendants, the argument of the plaintiffs’ counsel as decided by the learned High Court Judge was that in both the winding up proceeding and in the Syariah 35 Court, the issue of the plaintiffs’ entitlement on the shares was not decided. The Syariah Court declined jurisdiction to decide on it and the High Court in the winding up proceeding held that “ … the unforeceability of the said agreement is not a matter to be decided by this court”. Given the strong stands taken by these courts, we agree with the learned High Court Judge that on the facts of this case, res judicata does not apply. The Azinal sale

As pleaded in Azinal’s defence, it was a company owned by Tan Sri Azman Hashim and his family and that both Dawood and Tan Sri Azman Hashim were friends as well as business partners. Inspite of that close association, personal and/or otherwise, it was Azinal’s case that it had no knowledge of Dawood’s family disputes – between his first wife’s and the fourth wife’s families. The agreement to sell Pasla’s land in Labu to Azinal was arrived at between Dawood and Tan Sri Azman Hashim in 1986 following a joint venture agreement dated 6/1/1984 between Pasla and Azinal to develop the said lands but which venture never took off. The purchase price was RM 5.6 million, contended by the defendants and is evidenced by a letter of offer from Tan Sri Azman Hashim dated 27/8/1986 (at page 145 of the Core Bundle of Document Volume 2B in Appeal 481) which Dawood accepted. The letter also enclosed a cheque for RM 4.5 million as part – payment of the purchase price with the balance to be paid 36 within 3 years and Dawood acknowledged the payment. Documents pertaining to the sale to Azinal in 1986 were agreed as to authenticity at the trial (Core Bundle of Document Vol 1 page 10-11 of Appeal no 702). However, no formal agreement was signed within that 3 years. It was only signed on 18/6/1991 and that was only after an Extraordinary General Meeting of Pasla held on 4/6/1991, chaired by the 2nd defendant, unanimously resolved that Pasla’s Directors did so. The balance of RM

1.1 million have been paid according to Azinal, in staggered payments, on 22/9/1989 (RM 250,000.00), 12/10/1990 (RM 400,000.00), 25/7/1991 (RM 200,000.00) and the final balance of RM 327,709.88 (inclusive of interest) on 18/10/`995 after payment of real property gains tax. These payments were evidenced by the documents at Tabs 3, 4, 8, 9 and 10 of Core Bundle Document-1 and Tab 35 of Core Bundle Document-2 in Appeal 471.

Pasla also declared the receipt of the RM 5.6 million in its statutory accounts for December 1993 at Tab 31 of Core Bundle Document-2 in the same Appeal 471. The learned High Court Judge nevertheless found that the agreement was a sham but which, with respect we, disagree because if it were, there would have not been a need to pay real property gains tax of RM 250,525.00 as evidenced by a certificate dated 30/4/1996 issued by the Director-General of Inland Revenue Malaysia which clearly stated 37 not just the amount paid but the disposal date of 18/6/1991 (see Tab 32 of Core Bundle of Document-2 in Appeal 471).

Additionally, in our view it would be wrong to set aside the sale when it has been resolved to do so at the said Extraordinary General Meeting on 4/6/1991. The 1st plaintiff attended that meeting and he also admitted in cross examination that he knew beforehand about the sale because Dawood told him about the payment of RM 4.5 million by Azinal. The 3rd plaintiff in his cross-examination also admitted that they all knew about the joint-venture with Azinal even before the winding-up and Syariah High Court proceedings. Yet nothing was done by either one of the plaintiffs, jointly or severally to prosecute their allegation that it was a sham sale in all these years. The statement, reproduced in the written submission of Azinal’s counsel, made by the Earl of Halsbury L.C. in Watt v Assets Company (1905) AC 317, 329 though made so many years ago still resonates for its relevance here: “It appears to me that the matter rests, not upon any question of technical law, but upon broad common sense, and especially upon these two principles-that at this distance of time every intendment should be made in favour of what has been done as being lawfully and properly done, and that the persons who are now insisting upon these rights have lain asleep upon their rights so long that as a matter of fact we know that witnesses have perished, and the opportunities which might have been had if the question had been earlier raised have passed 38 away. We are asked at a distance, in the one case of twenty years, and in the other case of twenty-two years, to rip us a transaction which had apparently been completely disposed of “ (emphasis added).

Thus, although we appreciate the fact that there were some misgivings raised from the fact that the agreement provides, as mentioned earlier in this judgment, that the purchase price of RM 5.15 million would be set off against the loan of that amount given to Pasla by Azinal or that the 2nd defendant was at that material time in 1991 both a Director of Azinal and Pasla and he could not explain about the said loan or the need for an earnest deposit, still the plaintiffs’ inaction which was not explained could not legitimise their allegation of a sham transaction.

It of course cannot be denied that as shareholders of Pasla the plaintiffs were entitled to the proceeds from the sale of the Pasla lands in proportion to their shareholding in it and this the 2nd defendant have agreed to when cross-examined in the High Court but it should not be in accordance with their increased shareholding as per the 1981 agreement. In this regard, it is salutary to remember what Gopal Sri Ram JCA (as His Lordship then was) said in Law Kam Loy & Anor v Boltex Sdn Bhd

3 CLJ 355, and that it is a … “fundamental principle that a company is separate entity distinct from its shareholders. The property owned by a 39 company belongs to it and not its shareholders”. His Lordship then quoted from Macaura v Northern Assurance Co Ltd & Ors (1925) AC 619 where it was held that a shareholder has no … “right to any item of property owned by the company, for he has no legal or equitable interest therein”. This principle was applied in not just that decision of this court but 3 others as well, viz;

Sistem Penyuraian Trafik KL Barat Sdn Bhd v Kenny

(ii) Tai Choi Yu v Syarikat Tingan Lumber Sdn Bhd (1998) 4 CLJ 293

(iii) North Plaza Sdn Bhd v United Securities Sdn Bhd (2010) 1 CLJ 470 Sale to Vision Wagon

There is an added reason why that sale to Azinal should not be impugned. This is not just because Azinal has been shown to have paid good consideration for the sale but also doing so would affect the subsequent sale to Vision Wagon. As was held by the Federal Court in Takako Sakoa v Ng Pek Yuen (No 1) [2009] 6 MLJ 751 at page 767, paragraph 20: “[20] … But equity will not assist the victim of a breach of trust to trace trust property where it will be inequitable to do so, for example because the property to be traced has gone into the hands of a bona fide acquirer for value or because 40 it has gone into the general funds of a charity (see Re Diplock’s Estate [1948] 2 All ER 429)” (emphasis added).

Vision Wagon came into the picture in 2012 when its interest to purchase the whole of the Pasla lands in Labu was formalised into a sale and purchase agreement dated 3/12/2012 for a consideration of RM 61,972,993.21. This was made possible because, as had been mentioned earlier, the joint venture between Pasla and Azinal never took off and they both then agreed to go ahead with the sale to Vision Wagon. At that point in time, Azinal was not the registered owner of the said Labu land which they bought because they only received the original title deeds from Pasla in December 2009 and the memorandum of transfer was rejected by the Land Office on 18/3/2010 because the parties failed to get the approval for the sale from the Estate Land Board. Further there was also an order issued by the Syariah High Court on 7/10/1999 prohibiting any dealings with the land which order was only lifted on 16/8/2007.

The sale to Vision Wagon of the said Labu lands was sanctioned by a resolution passed by Pasla in an Extraordinary General Meeting held on 10/9/2012 for not less than RM 45 million or RM 2.65 per square feet. This was followed by another resolution by Pasla’s Board of Directors for the same sale but for RM 61,972,993.20 or at RM 3.60 per square feet. The sale and purchase agreement (Tab 24 of the Core Bundle of 41 Document-1 of Appeal no 471) in its recital acknowledges that part of the lands have been caveated by Azinal and the amount payable to it for the final and unconditional release and discharge of Azinal’s claim as well as the withdrawal of its caveats over the land. A second sale and purchase agreement in their joint names (Tab 25 of the same Core Bundle of Document) for the said sale was entered on 3/12/2012. The learned High Court Judge adversely commented on the existence of these two agreements for the same sale at paragraph 96(vi) of Her Ladyship’s judgment which eventually led her to conclude that the sale to Azinal was a sham. In respect of the sale to Vision Wagon, Her Ladyship held that it was sold at an undervalue and as stated earlier, she relied on the valuation given by the defendants when part of the Labu land was acquired by the Government at RM6 per square feet. It must be noted that this valuation was not accepted in the acquisition exercise and more importantly was not even tendered as evidence at the trial. Before giving our further view on this issue, it is pertinent for us to pause here to mention that in respect of the plaintiff’s cross appeal, only the 2nd defendant was served with the notice of appeal – not the other defendants especially Pasla and Azinal. So learned counsel for the 2nd defendant submitted that it should not even be heard. That is of course technically correct but regardless we have decided to decide this issue based on the merits. 42

With respect, we have to disagree with Her Ladyship’s findings as stated above for in our view the fairest way to determine the market value of the land would be to rely on the independent assessment of the Government in the acquisition exercise unless the same has been set aside by the court upon an objection raised by the landowner. In this case the notice (Borang H) from the Seremban Land Office (at page 95 of Core Bundle of Document for Appeal no 702) states the land’s value at about RM3.60 per square feet and what is more, the valuation by the Stamp Office in respect of the said sale to Vision Wagon was also at RM3.60 per square feet. Learned counsel for Azinal have drawn our attention to section 4 and item 32 of the First Schedule to the Stamp Act 1949 which provides that the assessment of the stamp duty for the transfer must be based on the market price or the purchase price, whichever is the higher. This provision of the law of course strengthened their argument and we are very much persuaded by it that the sale to Vision Wagon at RM3.60 per square feet was definitely at and not below market price.

The 2nd defendant was alleged to be the controlling mind and will of Pasla but even if that was true, the initial sale of the land to Azinal was agreed to by Dawood himself and further the sale to Vision Wagon was not arbitrarily entered into by him – it was through a proper resolution of 43 Pasla at the Extraordinary General Meeting and was approved by its Board of Directors. It was not, with respect, as alleged by the plaintiffs, intentionally done to cause wrongful loss to the plaintiffs but as we have stated above, transacted at a market value of the land as assessed by the Government. Apportionment of Liability

If we had agreed with the findings and conclusion of the learned High Court Judge we would still say that Her Ladyship erred for not apportioning liability amongst the defendants. It should not be jointly and severally as ordered by the learned High Court Judge. This is because it was not disputed that the 1st, 3rd and 4th defendants were only appointed as Directors of Pasla on 28/3/2003 and 10/10/2011, respectively. The 1st plaintiff had testified that he sued them because they were Directors. However, there were no evidence adduced and neither did the learned High Court Judge made any finding (except on the 2nd defendant) that they were complicit in the transfer of shares to Ammaji. Had we agree with Her Ladyship’s decision, we would rest liability solely on the shoulders of the 2nd defendant, who had already been adjudged a bankrupt when the trial started, and not even on Pasla and Azinal given Her Ladyship’s findings against the 2nd defendent. However, in fairness to the 2nd defendant, we need to mention that there was an errorneous finding on one aspect in the 44 learned High Court Judge’s decision with regards to the credibility or the lack thereof of the 2nd defendant for it is in evidence that he had obtained the Official Assignees’s sanction to continue to be Pasla’s director on 5/8/2014 which was given subject to court’s consent. Such a consent was obtained on 15/1/2015, and he did inform the Bankruptcy Office when he applied for probate of Ammaji’s estate and which the said Office did not object. Further, he never lied about not being shareholder of Desa Pandan Sdn Bhd – only said he was not sure when questioned about it. He then admitted that he was when shown the company search by counsel. Thus, for all the foregoing reasons, the decision of the learned High Court Judge is set aside and the appeals by the defendants are allowed and the cross appeal by the plaintiffs is dismissed with cost to the defendants. Date : 23 October 2018 signed RHODZARIAH BINTI BUJANG Judge Court of Appeal Malaysia Note : This copy of the Court’s Grounds of Judgment is subject to editorial revision. 45 For the Appellant : Civil Appeal No: W-02(NCVC)(W)-471-03/2017 Dato’ M Pathmanathan Messrs R. Sivagnanam & Associates The Chambers of R. Sivagnanam & Associates Suite 16-11 Tingkat 16 Q Sentral, Jalan Stesen KL Sentral, 50470 Kuala Lumpur. Civil Appeal No: W-02(NCVC)(W)-481-03/2017 Civil Appeal No: W-02(IM)(NCVC)-960-05/2017 Dato’ Cyrus Das, En Krishna Dallumah, Cik YH Yong Messrs Krishna Dallumah, No. 62 & 63-1, Jalan S2 D 36, Regency Avenue 2 Seremban 2, 70300 Seremban, Negeri Sembilan Civil Appeal No: W-02(NCVC)(W)-702-04/2017 Encik Ahmad Moosdeen, Encik K. Terrance Messrs Kassim Tadin, Wai & Co, No. 60, Tingkat Satu, Wisma Housecoff Jalan Tuanku Antah, 70100 Seremban. For the Respondents : Civil Appeal No: W-02(NCVC)(W)-471-03/2017 Civil Appeal No: W-02(NCVC)(W)-481-03/2017 Civil Appeal No: W-02(NCVC)(W)-702-04/2017 Civil Appeal No: W-02(IM)(NCVC)-960-05/2017 Datuk Seri Gopal Sri Ram, Dato’ V Manokaran, M. Rajenthirakumar, Chin Yan Leng, David Yii, & Damien Chan Messrs Kumar Associates No. 5, Jalan Maran Off Jalan Kuantan Titiwangsa 53200 Kuala Lumpur. 46 Cases Referred to :

Milroy v Lord (1862) 31 LJ Ch 798

Giselle Zeital Kim Zeital v David Norman Kaye and Others (2010)

Curtis v Pulbrook (2011) 1 BLCC 638

Williams v Central Bank of Nigeria (2014) AC 1189 (2014) 2 All ER 489

RHB Bank Bhd v Travelsight (M) Bhd (2016) 1 MLJ 175

Dato Wira A Nordin bin Mohd Amin & Ors v Rajoo a/l Selvappan &

Law Kam Loy & Anor v Boltex Sdn Bhd & Ors (2005) 3 CLJ 355

Macaura v Northern Assurance Co Ltd & Others (1925) AC 619

Sistem Penyuraian Trafik KL Barat Sdn Bhd v Kenny Heights Sdn

Tai Choi Yu v Syarikat Tingan Lumber Sdn Bhd (1998) 4 CLJ 293

North Plaza Sdn Bhd v United Securities Sdn Bhd (2010) 1 CLJ 470

Takako Sakoa v Ng Pek Yuen (No1)[2009] 6 MLJ 751

Alfred Templetion & Ors v Low Yat Holdings Sdn Bhd & Anor (1989)

Instantcolor System Sdn Bhd v Inkmaker in Asia Pacific Sdn Bhd

2 MLJ 697

Lee Ah Chor v Southern Bank Bhd [1991] 1 MLJ 428

Paragon Finance plc v DB Thakerar & Co [1999] 1 All ER 400, 413

Midland Bank Executor and Trustee Company Limited v Rose [1949] Ch 78 47

Rose v Inland Revenue Commissioners [1952] 1 Ch 499

Pennington and another v Waine and others [2002] EWCA Civ 227; [2002] 1 WLR 2075

Foskett v Mckeown & Others (2001) 1 AC 102