Alexma Corporation Sdn Bhd v China Orient Asset Management Corporation (W-02(NCVC)(W)-1602-08/2018)

BCM REALTY (M) SDN BHD (digulungkan)

PENDAFTAR PEJABAT TANAH & GALIAN, NEGERI SELANGOR … Defendan-Defendan CORUM: VERNON ONG LAM KIAT, JCA YAACOB BIN HAJI MD SAM, JCA 2 YEW JEN KIE, JCA

This is an appeal by the Appellant against the decision of the learned trial Judge of the Kuala Lumpur High Court, given on 18.7.2018 after a full re-trial, in allowing the Respondent’s claim that the registration of the two parcels of land held under HS (D) 35253 PT No.18536 and HS(D) 35254 PT No 18537 in the Mukim of Rawang, District of Gombak, State of Selangor [“the Properties”] in the name of the Respondent is valid and effective and the Respondent is the lawful owner of the Properties.

The Appellant is the 1st Defendant [“China Orient”] in the High Court Suit whereas the Respondent is the Plaintiff. The Appellant will be referred to as China Orient and the Respondent will be referred to as in the High Court Suit.

The case is about two competing interests in the Properties between the Plaintiff and China Orient arising from the purported double sale of the Properties by the former registered owner, the 2nd Defendant [“BCM Realty”]. The Plaintiff’s claim

The Plaintiff claimed that it is the registered owner of the Properties by virtue of the two sale and purchase agreements both dated 28.8.19961 [“1996 SPA”] executed between the Plaintiff and BCM Realty and upon payment of the full purchase price under the 1 CCB Jilid 2 pages 330-355 and 356-381. 3 Settlement Agreement dated 28.8.1996 2 executed between the Plaintiff, BCM Realty and Huang Heqind.

BCM Realty was wound up by order of the High Court on 26.11.20043.

Six days later on 2.12.2004, the Properties were transferred by BCM Realty to China Orient4. The transfer and registration of the Properties in the name of China Orient is invalid as BCM Realty had already sold the Properties to the Plaintiff and the full purchase price had been paid.

The transfer of the Properties by BCM Realty to China Orient is fraudulent.

The Plaintiff sought the following reliefs: a. a declaration that the registration of the Properties in the Plaintiff’s name is legal and effective; b. a declaration that the Plaintiff is the registered owner of the Properties; c. as the registered owner of the Properties, the Plaintiff claims indefeasibility of title under section 340(1) of the National Land Code [“NLC”]. 2 CCB Jilid 2 pages 447-449. 3 CCB Jilid 2 pgs 323-325. 4 CCB jl2 433-440 4 China Orient’s defence 9. China Orient (a foreign company) claimed that it is a bona fide purchaser for value without notice of the presentation of winding up petition No. D4-28-621-2004 dated 2.9.2004 [“Petition 621”] at the Kuala Lumpur High Court and/or the winding up order dated 26.11.20045 against BCM Realty.

The winding up proceedings and/or the winding up order against BCM Realty had been stayed on 3.5.2015 6 . As such, the registration of the transfer of the Properties to China Orient on 2.12.2004 is not void.

China Orient did not commit any fraud in purchasing and registering the Properties to itself.

China Orient’s title in the Properties is indefeasible.

The Plaintiff cannot claim indefeasibility of title. Background facts 14. The background facts are set out chronologically as follows.

15.

28.8.1996: Execution of the 1996 SPA between the Plaintiff and BCM Realty.

16.

28.8.1996: The Settlement Agreement executed between the Plaintiff, BCM Realty and one Huang Heqind (People’s Republic of China Passport: 1115884) whereby the purchase price of 5 CCB Jilid 2 pgs 323-325. 6 CCB Jilid 3 pgs 655-656. 5 RM2,554,807.43 was deemed to be paid by Huang Heqind on the Plaintiff’s behalf by way of direct payment to BCM Realty .

After execution of the 1996 SPA and the Settlement Agreement, the Properties were not transferred and registered in the name of the Plaintiff.

18.

26.5.2000: Plaintiff entered caveat against the Properties.

19.

26.5.2000: Plaintiff filed claim in Kuala Lumpur High Court vide Civil Suit No. S3-22-360-20007 [“Suit 360”] against BCM Realty and Pendaftar Pejabat Tanah & Galian, Negeri Selangor [“The Registrar”] for specific performance, that is, BCM Realty to transfer and deliver vacant possession of the Properties to the Plaintiff.

20.

27.12.2002: The caveat was removed upon application by BCM Realty.8 The Plaintiff claimed it was not aware of the removal of the caveat.

21.

9.9.2003: China Orient executed the two Sale and Purchase Agreements [“2003 SPA”]9 for the purchase of the Properties from BCM Realty.

22.

12.3.2004: BCM Realty submitted application for consent 10 to transfer the Properties to China Orient. 7 RR Jilid 3 page 587-605. To check 8 CCB Jilid 1 page 261 line 22 NOP. 9 CCB Jilid 2 pages 481-497 & 498 – 509. 10 CCB Jilid 2 page 510-521. 6 23.

12.8.2004: The signing of the Memorandum of Transfer [“MOT”] [also referred to as “Form 14A”] with BCM Realty.

24.

12.8.2004: Memorandum of Transfer prepared for adjudication.11

25.

2.9.2004: Winding-up petition no D4-28-621-2044 (petition 621).

26.

26.11.2004: Winding up Order against BCM Realty.12

27.

2.12.2004: The Properties were registered in China Orient’s name.13

28.

3.5.2005: BCM Realty obtained an order of stay14 of the winding-up Petition and winding-up order.

29.

25.5.2006: 2nd winding up order15 against BCM Realty.

30.

1.9.2009: Plaintiff obtained Judgement16 against BCM Realty in Suit 360.

31.

24.7.2012: Plaintiff filed a claim in Kuala Lumpur High Court the present suit vide Civil Suit No. 21 NCvC-185-07/2012 [“Suit 185”] against China Orient, BCM Realty and the Registrar seeking, inter alia, declaration that the registration of the Properties in the name of China Orient is invalid and ineffective.

32.

23.11.2012: Plaintiff obtained Judgment in Default of defence17 [“JID”] against China Orient and BCM Realty in Suit 185. 11 CCB Jilid page 522-525 & 526-529.. 12 Footnote 3 13 CCB Jilid 2 page 433-440. 14 Footnote 6. 15 RR Jilid 3 page 657-658. 16 RR Jilid 2 page 445-446. 7

33.

23.11.2012: Plaintiff and the Registrar entered into Consent

34.

13.12.2012 – pursuant to the consent judgment in Suit 185 above, the Registrar cancelled China Orient’s name and instead registered the Properties in the name of the Plaintiff.

35.

10.9.2013: China Orient applied to set aside the JID against it on 23.11.2012 in Suit 185.

36.

14.2.2014: JID dated 23.11.2012 against China Orient was set aside and the High Court ordered that the registration of the Properties be reverted to China Orient.

37.

30.1.2015: Consent Order 19 entered between the Plaintiff and China Orient whereby ownership of the Properties would remain in the Plaintiff pending disposal of Suit 185.

Suit 185 against China Orient proceeded to full trial.

39.

27.11.2015: Suit 185 was dismissed with costs of RM15,000.00.20 [Suit 185 Judgment].

40.

8.1.2016: China Orient proceeded to register the Properties to itself.

41.

26.4.2016: The Court of Appeal allowed the Plaintiff’s appeal and ordered a retrial of Suit 185 [“COA Order”]21. Reasons for a re-trial 17 RR Jilid 2 page 328-329. 18 RR Jilid 2 page 326-327. 19 RR Jilid 3 page 703-706. 20 RR Jilid 3 page 707-708. 8 were that the properties were already in the name of the plaintiff, which the first trial Judge ought to have considered.

In the wake of the COA Order, the Plaintiff amended the statement of claim in Suit 185 and sought, inter alia, declarations that the registration of the Properties in the name of the Plaintiff is valid and effective and that the Plaintiff is the lawful owner of the Properties.

Based on COA Judgment, the Plaintiff proceeded to re-register the Properties to its name.

At the retrial of Suit 185, the parties agreed to adopt the notes of evidence in the 1st trial.

The learned trial Judge made a finding that China Orient is not a bona fide purchaser for value for the following reasons: a. The Form 14A or MOT were presented for registration on 2.12.2004 [six days after the winding up order]. In view that BCM Realty was already wound up on 26.11.2004, BCM Realty was therefore not clothed with the legal capacity to execute the MOT. As a result the MOT “is tainted with insufficient or void instrument within the meaning of s 340(2)(b) of the NLC”.22 21 RR Jilid 7 page 871-872. 22 CCB Jilid 1 pages 102 [39] 103 [43], 104 [44], 105 [46]. 9 b. Learned trial Judge opined that the subsequent stay on the winding up order on 3.5.2005 pursuant to s 243(1) of the Companies Act 1965 would not validate the insufficient or void MOT on the ground that the stay order was granted only after the execution of the MOT and “eventual” registration of the Properties in the name of China Orient. He held that the stay order does not operate retrospectively unless expressly provided so.23 c. The MOT i.e. Form 14A were also void being in contravention of s. 223 of the Companies Act 1965.24

In the premise, the learned trial Judge opined that it is therefore irrelevant whether China Orient “was aware of the existence of SPA-1 [i.e. 1996 SPA], suit 360 or Petition 621. The defeasibility of the 1st defendant in the said Lands arose from s 340(2) of the NLC due to insufficient or void instrument.”

On the issue whether the Plaintiff had failed to prove that it had given valuable consideration to BCM Realty under the 1996 SPA, the learned trial Judge held25: [55] …..The Plaintiff had obtained judgment against the 2nd Defendant in Suit 360 on 1.9.2009 23 CCB Jilid 1 page 103 [41] [42]. 24 CCB Jilid 1 page 107 [49]. 25 CCB Jilid 1, pages 109 [55][56]. 10 after a full trial. It was on record, as can be seen in Exhibit D-13, that the Insolvency Officer acting on behalf of the 2nd defendant did not object to the plaintiff’s claim against the 2nd defendant. For that reason, Aziah Ali J (as the FCJ then was) had recorded the judgment against the 2nd defendant in open court. [56] I therefore take judicial notice that the plaintiff must have paid the consideration in full for the Court to have entered judgment against the 2nd defendant in Suit 360.

Accordingly, the learned trial Judge allowed the Plaintiff’s claim as prayed for in the amended statement of claim.

China Orient raised altogether 16 Grounds in the Memorandum of Appeal26 [“MOA”] which, for the purpose of this appeal, learned counsel for China Orient has grouped them into seven issues as follows: Issue (a): The legal capacity of BCM Realty and the Plaintiff [Ground Nos. 2, 3 and 4 of the Memorandum of Appeal]. Issue (b): The Memorandum of Transfer by the Plaintiff is void pursuant to section 223 of the Companies Act 1965 [Ground Nos. 8 and 15 of Memorandum of Appeal]. 26 CCB Jilid 1 pages 1-6. 11 Issue (c): The Plaintiff failed to prove payment of purchase price for the Properties [ground Nos. 10 and 14 of Memorandum of Appeal]. Issue (d): The Consent Judgment dated 23.11.2012 does not exist anymore [Ground Nos. 5, 6 and 7 of the Memorandum of Appeal]. Issue (e): China Orient is a bona fide purchaser for value without notice [ground No. 16 of the Memorandum of Appeal]. Issue (f): Laches and Delay [Ground Nos. 13 of Memorandum of Appeal]. Issue (g): The effect of Suit 360 [ground Nos. 9, 11 and 12 of Memorandum of Appeal]. Issue (a): The legal capacity of BCM Realty and the Plaintiff [Ground Nos. 2, 3 and 4 of the MOA].

Grounds 2, 3 and 4 of MOA states:

Yang Arif Hakim salah disisi undang-undang dan/atau fakta apabila memutuskan bahawa perayu tidak ada apa-apa “legal capacity” untuk menandatangani “memorandum of transfer” (Borang 14A Pindahmilik Tanah) pada masa ia ditandatangani.

Yang Arif Hakim salah disisi undang-undang dan/atau apabila tanpa apa-apa fakta dan atau keterangan telah membuat satu “finding of fact” bahawa memorandum of transfer (Borang 14A Pindahmilik Tanah) telah ditandatangani.

Yang Arif Hakim salah disisi undang-undang dan/atau fakta apabila mengambil kira fakta yang tidak diplidkan oleh Responden iaitu bahawa memorandum of transfer (Borang 14A Pindahmilik Tanah) telah ditandatangani selepas Syarikat BCM Realty (M) Sdn. Bhd digulungkan dan memutuskan keseluruhan tindakan atas fakta ini. Parties’ Contention 51. Learned counsel for China Orient submitted that the learned trial Judge had fallen into error in deciding that BCM Realty has no “capacity” to sign the MOT or Form 14A at the time of its signing and that the MOT was signed after BCM Realty was wound up. This issue that MOT were signed after BCM Realty was wound up was not even pleaded by the Plaintiff, yet the whole action was based on this fact.

It was submitted that the learned trial Judge failed to consider that the 2003 SPA27 and the MOT were signed by BCM Realty and China Orient on or about 9.9.2003 which is way before the Petition 621 dated 2.9.2004 [date of presentation is not available on the record] and the winding up order dated 26.11.200428. There 27 See Footnote 9. 28 See Footnote 3. 13 existed a valid contract after signing the 2003 SP Agreement. Thereafter BCM Realty proceeded to file its application for consent to transfer the Properties to China Orient on 12.3.2004 29 to the relevant authority. This application could only be submitted after the 2003 SPAs had been signed by BCM Realty and China Orient as a copy thereof need to be submitted along with the said applications.

It was submitted that it was only after obtaining the relevant consents and approvals, could China Orient proceed to register the MOT dated 12.8.200430 on 2.12.2004 to give effect to the valid contract and for completion of the 2003 SPAs.

Learned counsel for China Orient further submitted that there is no doubt that BCM Realty had the legal capacity when it signed the 2003 SPAs and the MOT on 9.9.2003 with China Orient.

On the other hand, learned counsel for the Plaintiff submitted that the learned trial Judge’s finding is consistent with China Orient’s pleaded defence in paragraph 6 of its Amended Defence 31, which pleaded: “Defendan Pertama menafikan kenyataan di perenggan 17 iaitu Hartanah tersebut telah dibeli dan dibayar harga pembelian oleh Plaintif terlebih dahulu pada 28/7/1996 dan meletakkan Plaintiff atas dasar bukti yang ketat. Hanya mengaku 29 See Footnote 18. 30 Pages 522-525 and 526-529 CCB Jilid 2. 31 CCB Jilid 1 page 69. 14 bahawa pindahmilik 14A dilaksanakan pada 2/12/2004.” [Underline added]

It was submitted that the word “dilaksanakan” translated is “executed”. By this, we understand learned counsel for the Plaintiff take the word “dilaksanakan” which, translated into English, means “signing, presentation and registration” of the MOT had taken place on 2.12.2004, post the winding up order dated 26.11.2004. Our decision on Issue (a)

For a better understanding of China Orient’s pleading in paragraph 6 of its Amended Defence, it is essential to refer to what the Plaintiff’s had pleaded in paragraph 17 of its amended statement of claim. The said paragraph 17 reads:

Pendaftaran Borang Pindahmilik 14A untuk hartanah tersebut telah dilaksanakan bagi pihak Defendan Pertama pada 2/12/2004 sedangkan hartanah tersebut telah dibeli dan dibayar harga pembelian oleh Plaintif terlebih dahulu pada 28/8/1996. [Emphasis added]

As can be clearly seen from paragraph 17 above, the Plaintiff pleaded that “pendaftaran” [which, translated in English, mean “registration”] of Form 14A on 2/12/2004, was “dilaksanakan” [which, translated into English, means “executed”] on 2/12/2004. China Orient denied the allegation in paragraph 17 save for admitting that “pindahmilik 14A dilaksanakan pada 2/12/2004”.

Reading paragraph 6 of the amended defence of China Orient in context of paragraph 17 of the Plaintiff’s amended statement of claim, it is amply clear that China Orient only admitted to “pindahmilik [which, translated in English, means “transfer”] of the Properties was “dilaksanakan” [or executed] on 2/12/2004 when the MOT was presented for registration or “didatarkan”. One cannot read into it as an admission to “signing” of the MOT on 2.12.2004.

Based on the documentary evidence on record, it is plain to us the signing of the MOT was ‘dilaksanakan” i.e. executed prior to 2.12.2004. Here are our reasons.

It is worth recalling that after signing the 2003 SPAs between China Orient and BCM Realty on 9.9.2003, the latter applied for consent to transfer and the execution page of the documents pertaining to this application were dated 12.3.200432, which was prior to both the Petition 621 dated 2.9.2004 and the winding up order dated 26.11.2004

After the application for consent to transfer, MOT or Form 14A were also prepared for adjudication. It can be seen from the execution pages33 of the MOT that both BCM Realty and China Orient signed the said documents on 13.8.2004, prior to both the winding up petition dated 2.9.2004 and the winding up order dated 26.11.2004. 32 CCB Jilid 2, pages 510-513 at page 513. 33 CCB Jilid page 523-524 [in respect of PT. 18536] & 526-527 [in respect of PT 18537].

It is evidently clear from the above documents that as of 12.8.2004 [prior to the winding up order dated 26.11.2004], BCM Realty had duly executed a valid and registrable MOT for the transfer of the Properties to China Orient. Given BCM Realty had not at the material time been wound up, it was clothed with legal capacity to execute the 2003 SP Agreement and to execute a valid and registrable MOT in respect of the Properties.

Accordingly, we find merit in grounds nos. 2, 3 and 4 of the MOA. Issue (b): The Memorandum of Transfer by the Plaintiff is void pursuant to section 223 of the Companies Act 1965 [Ground Nos. 8 and 15 of MOA]

Ground Nos. 8 and 15 of the MOA reads as follows: Ground No. 8: Yang Arif Hakim salah disisi undang-undang dan/atau fakta apabila memutuskan bahawa Borang 14A adalah “void” kerana melanggar peruntukan section 223 Akta Syarikat 1965. Ground No. 15: Yang Arif Hakim salah disisi undang-undang dan/atau fakta bahawa apabila tidak mengambil kira bahawa Section 223 Akta Syarikat 1965 tidak terpakai didalam tindakan ini.

S. 223 of Companies Act 1965 states:

Avoidance of dispositions of property, etc. Any disposition of the property of the company including things in action and any transfer of shares or 17 alteration in the status of the members of the company made after the commencement of the winding up by the Court shall unless the Court otherwise orders be void. Parties’ Contention 67. Learned counsel for China Orient submitted that prior to the winding up petition dated 2.9.2004, the transactions of the Properties were already formalized upon the signing of the 2003 SPA and MOT and all relevant documents such as application for consent to transfer and preparation of MOT for adjudication had been put in place. To put in another way, the disposition of the Properties to China Orient by BCM Realty did not take place after the commencement of the winding up proceeding, but long before the presentation of the winding up petition on 2.9.2004 against BCM Realty. Combined that with the perpetual stay order, s. of the Companies Act 1965, the MOT submitted for registration by China Orient on 2.12.2004 is valid and effective. Reliance is placed on Ernest Cheong Yong Yin v Mohammed Jamal bin Inche I M Salleh & Ors [CA]34.

On the other hand, learned Counsel for the Plaintiff contended that the stay order dated 3.5.2005 does not assist China Orient for the reasons that the stay order took effect from the date of the pronouncement of the order and it had no retrospective effect, citing American International Assurance Bhd v Coordinated 34 [2014] 2 MLJ 404 18 Services L Design Sdn. Bhd,35 which held that stay order takes effect from the date of pronouncement of the order and not backdated to the date of the winding up order.

Learned Counsel for the Plaintiff also submitted that China Orient’s reliance on Ernest Cheong’s case, supra, is misplaced and it contradicted China Orient’s pleaded defence that the MOT was “dilaksanakan” or executed on 2.12.2004. Our Decision on Issue (b)

We had earlier in paragraph 56 to 63 above found that there is no inconsistency between the pleaded defence and China Orient’s contention that the 2003 SPAs and the MOT were long signed and executed before the winding up petition and the winding up order.

We are in agreement with the legal principle pronounced in American International Assurance, supra, that is, stay order takes effect from the date of pronouncement of the order and not backdated to the date of the winding up order.

That said, we found that valid and registrable MOT were already duly executed by BCM Realty well before the Petition 621 and the winding up order dated 26.11.2004. As such, the parties argument on the effect of stay order is in our view of not relevance.

In Ernest Cheong’s case, supra,36 this Court held: 35 [2012] 1 MLJ 369. 36 See Footnote 34. 19

Once the SPA had been duly executed by the parties and the said forms were executed, the transaction was formalised and subsequently, when the full price for the said property had been paid by the purchaser to the vendor, the transaction was finalised and concluded. After receipt of full purchase price and surrender of possession of the said property to the purchaser, the vendor was clearly a bare trustee for the purchaser of the said property. Effectively, the vendor ('the second respondent') was regarded as having divested itself of all the beneficial interest in the property and vested it in the purchaser ('the first respondent') at the time when Form 14A had been executed and the purchase money was paid in full. The creditors could not then look to its property for satisfaction of any money judgment that might have been obtained (see para 43).

The transaction occurred before the commencement of the winding up petition against the second respondent. The crucial time in determining the applicability of s 223 of the Companies Act 1965 was at the point of the transaction (see para 44).

It can be gleaned from the 2003 SPA particularly paragraphs (a) to (l) as to the mode of payment of the full purchase price of the Properties, indicating that China 20 Orient as purchaser “have agreed to the request of CUEC and the VENDOR [BCM Realty] to accept the transfer of the Property at the purchase price more particularly set out in Section 1 of the Second Scheduled (hereinafter called “the PURCHASE PRICE”) as partial settlement and/or set off against such part of the said DEBT, the sum of which is more particularly set out in Section 2 of the Second Scheduled (hereinafter called “the SETTLEMENT SUM”) free from all encumbrances caveats lien and other restraints but subject nevertheless to all conditions……..”

From the above documentary evidence, it cannot be gainsaid that the transaction occurred upon signing the 2003 SPAs and due execution of valid and registrable MOT and upon full payment of the purchase price, which all took place before BCM Realty was wound up. Consequently BCM Realty had the legal capacity to enter into the transaction with China Orient.

As such, as submitted by learned Counsel for China Orient, s. 223 Companies Act 1965 does not apply as the transaction for the sale and purchase of the Properties had already completed and formalized prior to the winding up of BCM Realty.

Accordingly, we find merit in grounds nos.8 and 15 of the MOA. Issue (c): The Plaintiff failed to prove payment of purchase price for the Land [ground Nos. 10 and 14 of MOA]. 21

Ground Nos. 10 and 14 of the MOA read: Ground No. 10: Yang Arif Hakim salah disisi undang-undang dan/atau fakta apabila memutuskan bahawa Mahkamah boleh mengambil “judicial notice” bahawa Responden telah membayar balasan “valuable consideration” kepada Defendan kedua. Ground No. 14: Yang Arif Hakim salah disisi undang-undang dan/atau fakta apabila tidak mengambil kira fakta bahawa Responden tidak membuktikan balasan untuk pembelian tanah-tanah tersebut. Parties’ Contention 79. Learned Counsel for China Orient contended that the learned trial Judge rejected the contention of China Orient’s Counsel that the Plaintiff had failed to prove that it had given valuable consideration to BCM Realty under the 1996 SPAs on the ground that the Plaintiff had obtained a judgment against BCM Realty in Suit 360 after a full trial. It was submitted that there was no full trial, the trial of Suit 360 was interrupted by the winding up of BCM Realty and judgment in default of defense was entered against BCM Realty as the Insolvency Office did not intend to contest the Plaintiff’s claim against BCM Realty. It was submitted that the notes of evidence for Suit 360 were not produced to show that the court had taken into account the valuable consideration given by the Plaintiff under the 1996 SPA. 22 80. Learned counsel for China Orient further submitted that the purchase price for the 1996 SPA were purportedly settled under a Settlement Agreement dated 28.8.1996.37 The Plaintiff’s purchase of the Properties under 1996 SPAs is doubtful and questionable as the Plaintiff has not produced proof of payment of the purchase price. Clause 1 of the Settlement Agreement stated that Party C [Huang Hequind] will pay. There is no evidence that Party C has paid. In fact, Party C is not even mentioned in Clause 2 of the Settlement Agreement. The DGI cannot obtain the proof of payment as shown in the DGI’s letters dated 2.8.201038 addressed to Tetuan Oh Teik Keng & Partners as well as the DGI’s report.39

It was submitted that in the letter dated 2.8.2019, the DGI requesting for “(a) bukti penyelesaian penuh pembayaran diantara pihak Alexma Corporation Sdn. Bhd. dengan BCM Realty (M) Sdn. Bhd.; (b) resit/baucar pembayaran; dan (c) sebarang dokumen yang berkaitan defence kes ini sebagai dokumen sokongan”. Subsequently there were several reminder letters to the same Solicitors40 requesting for the same documents to prove payment of the purchase price under 1996 SPAs.

It also submitted that at paragraph 12-2041 of the DGI’s Report, the DGI had written to the Plaintiff’s Solicitors on numerous occasions for evidence of payment and no evidence was forthcoming from the Plaintiff. 37 See Footnote 2. 38 CCB Jilid 3 page 686-687, 39 CCB Jilid 3 pages 680-685. 40 CCB Jilid 3, pages 688-689, 690-691, 692-693. 41 CCB Jilid 3 pages 683-685.

Learned Counsel for China Orient submitted that without proof of payment of the purchase price, the Plaintiff had merely signed the 2003 SPA. Thus, the learned trial Judge had erred in failing to consider that the Properties are registered in the name of the Plaintiff on the strength of Suit 360 Order.

Learned counsel for the Plaintiff submitted that the consideration has been paid by way of contra under the Settlement Agreement. Clause 2 of the Settlement agreement stated that the purchase price was deemed fully settled by the plaintiff. How paragraph 2 tied in with paragraph 1 of the Settlement Agreement is a question to be dealt with DGI. Suit 360 was a full trial with witnesses called, the DGI did not want to contest the case. If there is any doubt that the purchase price had not been paid, the DGI would have raised it. DGI’s refusal to contest Suit 360 tantamount to an admission that full valuable consideration had been received. As such, the Appellant should not raise the issue that the consideration had not been paid. Our Decision on Issue (c)

We agree with learned Counsel for China Orient that a close perusal of the Settlement Agreement created more doubt about the payment of the full purchase price. We say so for the following reasons.

Paragraph 2 of the Settlement Agreement 42 made between the Plaintiff and BCM Realty showed that it is in respect of three 42 See Footnote 2. 24 separate sale and purchase agreements [undated] entered into between BCM Realty [described as “Party A”] and the Plaintiff [described as Party B”] and Huang Heqind [descried as “Party C”] whereby Party A/BCM Realty agreed to sell and Party B/the Plaintiff agreed to buy three parcels of vacant land described and identified as Lot Nos. 80, 81 and 82 Type: IBA Velox Rawang referred to as the “said Lands” for the total consideration of RM 3,809,119.91. The Settlement Agreement reads: NOW IT IS HEREBY AGREED as follows:

Party A hereby agree and accept that Party C shall pay the purchase price of the said lands for and on behalf of Party B.

Upon the execution hereof, the purchase price under the said agreements shall for all intent and purposes be deemed to have been fully settled by Party B and the said amount receivable by Party A shall be treated as a civil debt payable by Party B to Party A. ……..

Clause 1 says that Party C shall pay the purchase price for the “said Lands” on behalf of Party B [China Orient]. In Clause 2, however, it says the purchase price has been deemed paid by 25 Party B. The two clauses are contradictory as to who paid for the purchase price.

Clause 1 says Party C shall pay the purchase price of the “said Land” on behalf of Party B. However, Clause 2 says the amount received by Party B shall be treated as a debt. It begs the question: if payment of the purchase price had been made, why is there still a debt owing?

Cross refer to the 1996 SPAs, in particular clause 3.2 under “Purchase price and the Payment Thereof”, which states, “The purchase price shall be paid by the Purchaser to the Vendor by instalments and at the time and in the manner as prescribed in the Second Schedule hereto”. It is inconsistent with the Settlement Agreement which stated that Party C was to pay for the purchase price.

Further, Second Schedule in the 1996 SPAs listed down the progressive payment to be made under the said Agreement, it made no mention whatsoever to the Settlement Agreement. It is inconsistent with the manner of payment as stated in Clause 2 of the Settlement Agreement.

We are of the view that the fact that the DGI did not challenge the plaintiff’s claim in Suit 360 is not sufficient in law and in fact to establish the fact of the payment of the purchase price. We find that the learned Judge had erred in relying on the order of Suit 360 to find as a fact that the Plaintiff did in fact pay the purchase price when there is no evidential basis for doing so. 26

We therefore find merit in grounds nos. 10 and 14 of the MOA. Issue (d): The Consent Judgment dated 23.11.2012 does not exist anymore [Ground Nos. 5, 6 and 7 of the MOA]

Ground Nos. 5, 6 and 7 of the MOA read: Ground No. 5: Yang Arif Hakim salah disisi undang-undang dan/atau fakta apabila tidak mengambil kira fakta bahawa penghakiman persetujuan yang dimasuki oleh defendan ketiga iaitu PENDAFTAR PEJABAT TANAH & GALIAN, NEGERI SELANGOR dan Perayu telah dimasuki oleh kerana satu penghakiman ingkar pada 23.11.2012. Ground No. 6: Yang Arif Hakim salah disisi undang-undang dan/atau fakta apabila tidak mengambil kira fakta bahawa penghakiman ingkar 23.11.2012 telah diketepikan dan asas penghakiman persetujuan diantara PENDAFTAR PEJABAT TANAH & GALIAN, NEGERI SELANGOR dan perayu tidak lagi wujud. Ground No. 7: Yang Arif Hakim salah disisi undang-undang dan/atau fakta apabila tidak mengambil kira fakta bahawa PENDAFTAR PEJABAT TANAH & GALIAN, NEGERI SELANGOR tidak boleh bersetuju untuk mendaftar tanah yang berdaftar atas nama perayu keatas nama Responden secara sendiri.

It is the contention of China Orient that the learned trial Judge had failed to consider the events leading to the Properties being registered in the Plaintiff’s name. It was submitted that the consent judgment between the Plaintiff and the Registrar was made subsequent to JID against China Orient and BCM Realty in Suit 185. Pursuant to the said Consent Agreement, the Registrar substituted the ownership of the Properties, which were originally registered in the name of China Orient, with the name of the Plaintiff.

Learned counsel for China Orient submitted that the learned trial Judge had erred by taking into account that the Registrar had caused the ownership of the Plaintiff to take precedence over the China Orient by registering the Properties in the name of the Plaintiff.

Learned counsel for China Orient submitted that the learned trial Judge had failed to consider that the JID in Suit 185 had been set aside by the High Court and affirmed by the Court of Appeal. Accordingly, the basis on which the Consent Agreement was entered ceased to exist. It was submitted that the Registrar “cannot agreed”” to determine the Plaintiff as the registered owner “on its own”. Thus, the learned trial Judge ought to have disregard the Consent Agreement.

Learned counsel for the Plaintiff disagreed. It was submitted that notwithstanding that the JID in Suit 185 against China Orient and BCM Realty had been set aside, the Consent Agreement still 28 stands. Further, the issue of the Consent Agreement was not pleaded nor any evidence led on it. Our Decision on Issue (d)

It is stating the obvious that the Registrar who is not a party to either the transaction under the 1996 SPAs or 2003 SPAs is cited as a third defendant in Suit 185 as a nominal party so that he could put into effect the relief sought by the Plaintiff under prayer (iii) and

(iv) of the original statement of claim dated 22.7.2012, that is, “mengenepikan dan/atau membatalkan pendaftaran hakmilik hartanah tersebut atas nama Defendan Pertama ….” and “mendaftarkan pendaftaran hakmilik hartanah tersebut atas nama Plaintif …..”.

In the wake of the setting aside of the JID in Suit 185 on 14.2.2013, it logically follows that the Consent Agreement is thereby rendered meaningless and it ceased to exist, as there is no longer any order for the Registrar to put into effect anymore.

For the reason aforesaid, we find merit in grounds nos. 5, 6 and 7 of the MOA. Issue (e): China Orient is a bona fide purchaser for value without notice [ground No. 16 of the Memorandum of Appeal].

Ground No. 16 of the MOA reads: Yang Arif Hakim salah disisi undang-undang dan/atau fakta apabila tidak mengambil kira fakta 29 bahawa perayu adalah pembeli “Bona Fide dengan valuable consideration” tanpa apa-apa notis.

Learned counsel for China Orient submitted that the learned trial Judge had erred by not taking into account the fact that China Orient is a bona fide purchaser with valuable consideration.

It was submitted that China Orient entered into the 2003 SPA based on BCM Realty’s warranties and representation that BCM Realty is the legal and absolute beneficial owner of the Properties, it had full power and authority to enter into the agreement [Clause 13.1(a)] and there was no previous sale or agreement for the sale of the Properties or any part thereof nor any option granted for the sale of the Properties which are subsisting [Clause 13.1(m)].

It was submitted that the learned trial Judge had failed to consider the Plaintiff’s failure to prove that China Orient had direct and/or actual notice of Suit 360 and the winding up proceeding against BCM Realty, and that at the time of the registration of the MOT on 2.12.2004, China Orient was never a party to Suit 360 and the winding up action and had no knowledge of those actions.

It was further submitted that the learned trial Judge failed to consider that the Properties were first registered in the name of China Orient and its title is indefeasible under s. 340 NLC unless challenged and defeated in the circumstances set out in s. 340(2) of NLC. There is no proof of China Orient committing fraud in purchasing and registering the Properties to itself. 30

Learned counsel for the Plaintiff, on the other hand, submitted China Orient is not a bona fide purchaser. It was submitted that China Orient deliberately shut its eyes and relied totally on BCM Realty’s instruction. This willful blindness is equivalent to actual knowledge of the Plaintiff’s competing claims and amounted to fraud on the part of China Orient. Thus, China Orient was not a bona fide purchaser.

Learned counsel for the Plaintiff further submitted that China Orient had not proven that it was a bone fide purchaser for value. This is because DW1, the sole witness for China Orient, started working for China Orient on 1.7.2013 and he is not in the position to deny the Plaintiff’s allegation that China Orient knew or conspired with BCM Realty to defraud or deprive the Plaintiff’s interest in the Properties. It was submitted that the no weight ought to be given to the 2003 SPA which had been admitted as Exhibit D1 and D2 through DW1 and they do not prove that China Orient was a bone fide purchaser because the makers of this agreement had not made themselves available for cross-examination .

Furthermore, submitted learned counsel for the Plaintiff, once the 1996 SPA were signed, the legal owner BCM Realty had divested its equitable interest in the Property. As such, BCM Realty had no equitable ownership to pass to China Orient in 2004.

Learned Counsel for the Plaintiff further submitted at length why its registered title is indefeasible under s. of the NLC, which states: 31 The title or interest of any person or body for the time being registered as proprietor of any land, or in whose name any lease, charged or easement is for the time being registered, shall, subject to the following provisions of this section, be indefeasible.

Learned Counsel for the Plaintiff submitted that section 340 NLC does not differentiate how the Plaintiff became an owner. Once the Plaintiff has become the registered owner “for the time being”, the statutory protection of indefeasibility applies unless China Orient can defeat it under the circumstances in s. 340(2). Our Decision on Issue (e)

We do not agree with the contention of learned counsel for the Plaintiff that once 1993 SPA were signed, BCM Realty had divested of its beneficial interest. This is against the decided case authorities that established the principle of law of bare trustee.

In Borneo Housing Mortgage Finance Bhd v Time Engineering Bhd 43, the Federal Court laid down the two conditions which must be fulfilled in order for a vendor to become bare trustee. The first requirement is the timeous payment of the full purchase price and the second is a duly executed, valid and registration form in favour of the purchaser. 43 [1996] 2 MLJ 12 32

In Fung Sui Jin v Borneo Housing Mortgage Finance Bhd & Ors44, the High Court reiterated the principle of law laid down in Time Engineering’s case, supra, and held: [1] For the concept of bare trustee to arise, two elements must be present. The evidence of full payment of the purchase price by the plaintiff was only one element of the concept of bare trustee. With the absence of a memorandum of transfer, the other element of the concept was not satisfied. Hence, the concept of bare trustee did not arise. At best, the relationship of the plaintiff and the 2nd respondent was only contractual in nature. (see also, Ernest Cheong’s Case, Supra45)

There are two competing claims and it behooves the court to decide which of the two agreements - The 1993 SPA or The 2003 SPA – is the valid agreement. The learned trial Judge’s view is that it is immaterial whether China Orient was a bone fide purchaser for value without notice by reason that “the purported transfer of the said Lands from the 2nd defendant to the 1st Defendant on 2.12.2004 was not valid in law due to insufficient or void instruction in the Form 14A of the NLC.”

The learned trial Judge allowed the Plaintiff’s claim because the Plaintiff had paid the full amount of the consideration as reflected 44 [2001] 5 CLJ 501 45 See Footnote 34 33 in the Settlement Agreement and “recognized by the Court in Suit 360” and that the Plaintiff’s name as appeared on the register is indefeasible within the meaning of “Tan Ying Hong and s 340(1) of the NLC.”

We had earlier in paragraphs 84 to 91 above found that the Plaintiff had failed to adduce evidence to show that the full purchase price for the Properties had been paid under the 1996

Not only there was no evidence pertaining to payment of the purchase price, it would also appear that BCM Realty had not executed any valid and registrable memorandum of transfer in favour of the Plaintiff. In fact, the Properties were first registered in the name of the China Orient and not the Plaintiff, though the Plaintiff executed the 1996 SPA prior.

The Properties were subsequently registered in the name of the Plaintiff not pursuant to memorandum of transfer but pursuant to the Consent Judgement between the Plaintiff and the Registrar in Suit 185 and subsequently by the Consent Order [to maintain the status quo until the disposal of Suit 185 in the Federal Court as per the Consent Order between the Plaintiff and China Orient].

The evidence on the Appeal Record clearly shows that the Plaintiff has failed to prove two conditions – timeous payment of purchase price and duly executed valid and registrable memorandum of transfer - to support the Plaintiff’s contention that BCM Realty had become a bare trustee. Such failure means that BCM Realty had not divested its equitable interest in the Properties to the Plaintiff 34 and thereby became a bare trustee and it still had good title to pass to China Orient.

Based on the evidence on the Appeal Record, we are compelled to find that the 1994 SPA is not a valid agreement. As such, the plaintiff has no basis to assert its purported legal interest in the properties. Thus, the learned trial Judge’s finding that the Plaintiff has acquired indefeasible title in the Properties is clearly wrong and unsubstantiated by evidence.

Based on the evidence on Appeal Record, we find the 2003 SPAs is the valid agreement. BCM Realty had divested its beneficial interest to China Orient after the due execution of the 2003 SPAs, timeous payment of the purchase price and the duly executed, valid and registrable MOT dated 13.8.2005 in favour of China Orient which was subsequently presented for registration on 2.12.2004.

Accordingly, we find merit in ground no. 26 of the MOA. Issue (f): Laches and Delay [Ground Nos. 13 of Memorandum of Appeal]. Issue (g): The effect of Suit 360 [ground Nos. 9, 11 and 12 of Memorandum of Appeal].

In our view we have considered sufficient grounds to dispose of the appeal without considering Issue (f) and (g). 35

Conclusion For all the reasons aforesaid, we allowed the appeal with costs of RM20,000.00. However, notwithstanding our finding that the 2003 SPA is the valid agreement, as there is no counter-claim, the Plaintiff is still the registered proprietor of the Properties. Dated: 5th August 2019 Sgd YEW JEN KIE (delivering judgment of the court) Court of Appeal Judge Putrajaya For Appellants : AMRITPAL SINGH (KUALA LUMPUR) For Respondents : OH TEIK KENG & PARTNERS (KUALA LUMPUR) Notice: This copy of the court’s reasons for judgment is subject to editorial revision.