Chong Yaw Ming v Hew Ah Fatt (B-02(NCVC)(W)-1051-06/2019)

This is the Appellant/Defendant’s appeal against the decision of the High Court on 30.4.2019 after a full trial and allowing the Plaintiff’s Statement of Claim as per prayer 21 (a), (b), (c), (d), (e), (g) and (h) with cost of RM15,000.00 subject to allocator.

For ease of reference, parties will be referred to as they were in the proceedings before the High Court.

Having considered the appeal records and the submissions of the parties, it is our unanimous decision that there is merit in the appeal and we allowed the Defendant’s appeal with costs. The decision of the High Court is set aside. We now give our reasons for the same.

The Defendant had entered into a sale and purchase agreement (“the SPA”) for a property known as GM2742, Lot No. 3631 Mukim Sabai

District of Bentong (“the said Property”) for the purchase price of RM230,

[5] The Defendant, at all material time, had made all the necessary payment to procure the said Property. Particulars of such payment are as follows: 3 Date Bank Cheque No. Amount 11.11.2010 Public Bank 119751 RM25,568.70 10.06.2011 Public Bank 139233 RM100,000.00 10.06.2011 Public Bank 622093 RM130,118.10 13.07.2011 Public Bank 622100 RM7,430.20 [6] The Plaintiff and Defendant were at one time good friends and partners in managing a vegetable farm. In that spirit, the Defendant had entered into a Declaration of Trust dated 25.07.2011 declaring that the Defendant stand possessed and hold one half ½ of the said Property on behalf of the Plaintiff (“the said Declaration”). A copy of the said Declaration was served on the Plaintiff’s by Messrs. Tan Kong Hai & Tui (Plaintiff’s and Defendant’s previous solicitors). For ease of reference, the said Declaration is reproduced as follows: THIS DECLARATION OF TRUST is made the 25th day of July, 2011. By Chong Yaw Ming (NRIC No: 550311-08-5205) of 8, Jalan SP 5, Taman Sri Putra, 47000 Sungai Buloh, Selangor (hereinafter called the ‘Trustee’) of the part, Haw Ah Fatt (NRIC No: 610526-08-5271) of No: Jalan Semarak 1C, Bandar Utama Batang Kali, 44300 Batang Kali, Selangor of the second part.

In consideration of the premises aforesaid, the Trustee hereby declare that they the Trustee stand possessed of and hold the Trust Property UPON TRUST for the parties hereby absolutely in the share as indicated against their respective names herein below: Names: Proportions The Trustee (Chong Yaw Ming One-Half (1/2) Hew Ah Fatt One-Half (1/2) 4

In the event of the sale or transfer of the agreed of any party(s) hereto under and pursuant to the PROVISO of Clause 4 hereinabove, the purchase price shall be calculated on the basis of the acquisition price stipulated in the Sale and Purchase Agreement stated in clause 1 hereinabove notwithstanding the time and date of the sale or transfer of the agreed shares.’ [7] Further, by virtue of the said Declaration, the Plaintiff had entered a caveat on the said Property to preserve his rights. [8] By letter dated 27.05.2016, the Plaintiff through his solicitor offered to the Defendant to sell his share of the said Property for the amount of RM536, 000.00 in which the Defendant rejected the offer. According to the Defendant, any sale and purchase and/or dealing of the said Property are subjected to the said Declaration. The said Declaration had specifically prescribed that the purchase price shall be calculated on the basis of acquisition price stipulated in the SPA of the said Property. [9] Dissatisfied, the Plaintiff brought an action against the Defendant and sought prayers from the court with regard to the “selling price” of the said Property without raising any cause of action to dispute the said Declaration. The Plaintiff, in paragraph 21 of the Statement of Claim prayed as follows: “21. Justeru itu, Plaintif menuntut terhadap Defendan:-

Plaintif dibenarkan melantik seorang Penilai Berdaftar yang bertauliah bagi melakukan laporan penilaian terhadap Hartanah yang di bawah No. Hakmilik GM2742, Lot No. 3631 Mukim Sabai Tempat Rancangan Tanah Pinggir Sg Dua, Daerah Bentong, Negeri Pahang (selepas ini 5 dikenali sebagai “Hartanah”) untuk menentukan nilai harga pasaran semasa Hartanah tersebut;

Defendan harus menyerahkan sesalinan kunci Hartanah tersebut kepada Plaintif dalam tempoh tujuh (7) hari selepas tarikh penyampaian Penghakiman ini;

Plaintif dibenarkan untuk menjualkan Hartanah tersebut secara perjanjian jualan persendirian (“private treaty sale”) berdasarkan nilai harga pasaran semasa yang dinyatakan dalam laporan penilaian Hartanah tersebut yang disediakan dalam perenggan (a) di atas;

Sekiranya Defendan gagal untuk memasukkan kehadiran di dalam tindakan ini, Mahkamah Yang Mulia ini dibenarkan untuk menandatangani sebaran perjanjian jualan persendirian untuk pihak Defendan bagi tujuan menjualkan Hartanah tersebut;

Bahawa harga belian (“purchase price”) Hartanah tersebut (setelah ditolak cukai tanah, cukai pintu, duti setem, fee pelantikan Penilai Berdaftar dan penyediaan laporan Penilaian Hartanah tersebut serta fee guaman dan lain-lain bayaran yang wajib dalam transaksi jual beli Hartanah tersebut) akan digunakan terlebih dahulu untuk menyelesaikan pinjaman Hartanah tersebut (sekiranya ada);

Bahawa kos permohonan ini (berdasarkan kos yang kena dibayar kepada peguamcara oleh kliennya sendiri) hendaklah dibayar dari baki hasil belian (sekiranya ada dan selepas mengambil kira perenggan (e) di atas;

Bahawa hasil keuntungan bersih (sekiranya ada dan selepas mengambil kira perenggan (e) dan (f) di atas, hendaklah dibahagi sama rata di antara Plaintif dan Defendan; dan 6

Sekiranya wang hasil keuntungan bersih yang telah dibahagi sama rata tersebut (mengikut perenggan (g) di atas) yang dimiliki oleh Defendan tidak dituntut oleh Defendan daripada Plaintiff dalam tempoh 30 hari walaupun suatu notis bertulis telah diberikan kepadanya, maka wang yang dimiliki oleh Defendan tersebut akan dihantar secara pos berdaftar dalam bentuk bank deraf (atas nama Defendan) oleh Plaintif kepada Defendan yang beralamat di 8, Jalan SP 5, Taman Sri Putra, 47000 Sungai Buloh, Selangor Darul Ehsan.” The Plaintiff’s Case [10] The Plaintiff in the submission had argued on the followings:

that he had given his contribution towards the purchase of the said Property from the profit held under the joint account held by the Plaintiff and Defendant;

He is a partner and not a salaried partner. Both parties had contributed RM20,000.00 to start the vegetable farming project and the proceed of business was credited into a joint account;

With regard to the said Declaration, it was submitted that due to restriction of interest pursuant to Land Act (Group Settlement Areas), 1960, only one of them can be cited as the purchaser in the SPA and became the registered proprietor of the said Property. The learned counsel Tan Tuck Mun from Messrs. Tan Kok Hai & Tui, had registered the name of the Defendant to the transaction and had executed the said 7 Declaration declaring that the Defendant stand possessed and hold one half ½ of the said Property on behalf of the Plaintiff. The said counsel had also registerd the caveat on behalf of the Plaintiff;

On June 2016, the partnership was dissolved because the Plaintiff claimed that the Defendant had not shared any proceed of the durian’s orchard on the said Property. Pursuant to the dissolution, the Plaintiff proposed to sell his share to the Defendant for the price of RM536,000.00 but had been refused by the Defendant; and

There is an element of mala fide on the part of the Defendant in preparing the said Declaration whereby the Plaintiff was not involved in the discussion or preparation of the said Declaration. The Defendant’s Case [11] On the other hand, the Defendant submitted as follows:

That the said Declaration is a valid legal instrument. The Plaintiff did not challenge its validity. Since the said Declaration was made as an appreciation for the Plaintiff’s contribution in vegetables farming project, it was considered as an express trust which only bind the trustees and did not require consent from the beneficiaries; 8

Parties had agreed to the validity and content of the said Declaration. In pre-trial management, parties agreed to place the said Declaration in Part A thus agreeing on both the authenticity and content of the same;

Plaintiff’s claim did not disclose any relevant cause of action due to the fact that the Plaintiff had agreed to the validity and content of the said Declaration;

Plaintiff stands as a salaried partner. There is no partnership agreement which binds the Plaintiff and the Defendant. Circumstantial evidence and witness testimony during the trial revealed a finding that at all material time the Plaintiff was accorded a fix amount of salary each month;

The amount paid for the purchase of the said Property even though was taken from joint account but belongs to the

The Plaintiff had failed to obtain the court’s order in order to conduct a survey on market value of the said Property. Therefore, the purchase price stipulated in the said Declaration could not be varied. Decision of the High Court [12] On 30.07.2019, at the conclusion of the trial, the learned Judicial Commissioner ( ‘learned JC’) found on a balance of probabilities, the 9 Plaintiff had succeeded in proving its claim and allowed the Plaintiff’s claim as in paragraph 21 of the claim namely prayers (a), (b), (c), (d), (e),

and (h) with cost of RM15,000.00 subject to allocator. [13] The learned JC’s views are as follows:

That the Plaintiff and the Defendant were partners in the said cultivating of vegetables project. Both had opened a joint account at the Public Bank Selayang branch with account number 31461218808 for the purpose of banking in the proceeds from the sale of vegetables. The learned JC was also of the view that by opening a joint account it showed that the Plaintiff was a partner and not a salaried partner. The learned JC referred to Malaysian International Trading Corp (Japan) Sdn Bhd v Bentini SPA & Ors (2014) 11 MLJ 255 which inter alia states as follows: ‘….it seems to me impossible to say that as a matter of law a salaried partner is or not necessarily a partner in the true sense. He may or may not be a partner depending on the facts.’

The learned JC further was of the view that both the Plaintiff and Defendant agreed to purchase the said property in 2010 as co-owners. Both had appointed the same solicitors to act for them in the sale and purchase transaction of the said property. The said property is subjected to the General Settlement Act, 1960 (GSA Act) and on the advice of the solicitor the said property could only be registered in one name. It was agreed that the said property be registered in the name of the Defendant. 10 [14] Dissatisfied with the decision, the Defendant filed this appeal. The Appeal [15] This appeal is premised on the following grounds:

that the learned JC erred in law and/or facts in allowing the Plaintiff’s claim with costs of RM15,000.00;

that the learned JC erred in law and/or facts when he failed to consider that at all material time the said Declaration dated 25.07.2011 is a valid legal instrument;

that the learned JC erred in law and/or facts when he failed to consider that the said Declaration is applicable towards any transaction with regards to said Property;

that the learned JC erred in law and/or facts when he failed to consider that the Plaintiff failed to plea and/or to produce any cause of action which would render the said declaration be void or voidable;

that the learned JC erred in law and/or facts when he failed to consider that during the trial the said Declaration was marked as Document Part A whereby the authenticity, content and truthfulness is undisputed; 11

that the learned JC erred in law and/or facts when he failed to properly apply and adhere to the clearly espoused principle in the Court of Appeal case of Tiow Weng Theong v Melawangi Sdn Bhd (2018) MLJU 845 particularly to the legal standing of Documents in Part A;

that the learned JC erred in law and/or facts when he failed to consider that the Plaintiff did not at all submit any Written Submission and/or Submission in Reply to the aforesaid mentioned issue;

that the learned JC erred in law and/or facts when he failed to consider that at all material time the Plaintiff stands as salaried partner to the Defendant wherefore all shares of profit and salary has been divided and distributed to the Plaintiff;

that the learned JC erred in law and/or facts when he failed to consider documentary evidence pertaining to the payment of salary and/or the Plaintiff’s portion throughout the partnership;

that the learned JC erred in law and/or facts when he failed to consider that the source of fund in the joint account was acquired solely by the Defendant; and

that the learned JC erred in law and/or facts when he failed to consider the demeanour and veracity of the testimony given by SP1 pertaining to his involvement and role within the partnership wherefore it was clear that SP1 does not have the capacity to commute in English or Malay. 12 Our Decision [16] The dispute between the Plaintiff and the Defendant with regard to property held under Hakmilik GM 2742, Lot No: 3631 Mukim Sabai, Tempat Rancangan Tanah Pinggir Sg Dua, Daerah Bentong , Pahang (hereinafter called ‘the said Land’ are as follows:

whether the Plaintiff had contributed financially towards the purchase of the said Land ?;

whether the Plaintiff is the co-owner of the said Land?;

whether the Declaration of Trust dated 25.7.2011 was signed by the Defendant and not the Plaintiff ?;

whether the Defendant had breached Clause 6 of the Declaration of

whether Clauses 4 and 5 of the Declaration of Trust was unreasonable and unjust and mala fide ?;

whether the Plaintiff was entitled to sell the said Land ?. [17] It is the contention of the Plaintiff that in 2008, the Plaintiff and the Defendant were partners in a project for the growing of vegetables in Kundang and Kuang, Selangor. No written agreement was signed and everything was agreed orally. It was further averred by the Plaintiff that 13 the profit generated from the sale of the vegetables was banked in into a joint account at Public Bank vide account No: 3146 121 808. The so-called partnership between the Plaintiff and Defendant was dissolved in June,

Prior to that date, the Plaintiff had vide letter dated 27.5.2016 offered to sell his undivided half share to the Defendant at a market value of RM536,000.00. [18] The Plaintiff further averred that the partnership had made profit and it was agreed to use the money from the profit to purchase the said Land at a purchase price of RM125,568.70 ; [19] On the advice of their common solicitor, and because of the restriction in title, the said Land could only be registered in one name and it was agreed that the said Land be registered in the name of the Defendant; [20] The Defendant prepared a Declaration of Trust dated 25.7.2011 whereby it was agreed that the Defendant is to hold an undivided ½ share of the said Land for and on behalf of the Plaintiff. [21] It is pertinent to note that despite the Declaration of Trust by the Defendant agreeing to hold the undivided ½ share of the said Land, the evidence showed that the Defendant had made full contribution towards the purchase of the said Land. This is evident from the documentary evidence which showed that the Defendant had made full payment in the sum of RM230, 118.10. [22] The Plaintiff did not contribute any money towards the purchase of the said Land and the Defendant’s agreeing to give an undivided ½ share 14 of the said Land to the Plaintiff in the spirit of their friendship and partnership. [23] The act of the Plaintiff by offering his undivided ½ share of the said Land to the Defendant at the market value of RM536,000.00 was unacceptable to the Defendant and both parties are bound by the Declaration of Trust dated 25.7.2011. [24] It is our view that the Declaration of Trust is binding on both parties and the Defendant agreed to hold the undivided ½ share of the said Land on trust for and on behalf of the Plaintiff. If at all the Plaintiff wants to sell his half share to the Defendant, then the Plaintiff must comply with Clause 5 which states as follows: ‘5. In the event of the sale or transfer of the agreed shares of any party(s) hereto under and pursuant to the PROVISO of Clause 4 hereinabove, the purchase price shall be calculated on the basis of the acquisition price stipulated in the Sale and Purchase Agreement stated in Clause 1 hereinabove notwithstanding the time and date of the sale or transfer of the agreed shares.’ [25] The proper calculation for the entitlement of the Plaintiff in accordance with Clause 5 of the Declaration of Trust is as follows: Purchase Price of the said Land --- RM255,686.80 Less legal fees ----RM7,430.20 Less legal fee for preparing Declaration of Trust ----RM863.00 Total RM 247,393.60 = RM123,696.80 2 15 26] In Yong Nyee Fan & Sons Sdn Bhd v Kim Guan & Co Sdn Bhd

1 MLJ 182, Hashim Yeop Sani FJ said as follows: ‘It is difficult to give a satisfactory definition of a trust but it has been accepted that the most satisfactory definition is by Professor Keeton which definition is that a trust is the relationship which arises whenever a person called the trustee is compelled in equity to hold property, real or personal and whether by legal or equitable title, for the benefit of some persons (of whom he may be one) or for some object permitted by law in such a way that the real benefit of the property accrues, not to the trustee, but to beneficiaries or other objects of the trust.’ [27] We are of the considered view that the words in the Declarations of Trust are clear, certain and unequivocal. [28] We are constraint to state that the reliefs sought by the Plaintiff in his claim are unreasonable. The Plaintiff does not have the right to go against the terms of the Declaration of Trust. Conclusion [29] Based on the reasons as adumbrated above and in all the circumstances, it is our unanimous decision that there is merit in the appeal which required an appellate intervention. We hereby allowed the 16 appeal with costs of RM5, 000.00 subject to the payment of allocator fee. The order of the High Court is set aside. Dated: 12. 6. 2021 -sgd- (MOHD SOFIAN BIN TAN SRI ABD RAZAK) Judge Court of Appeal Malaysia Putrajaya For Appellant/ Defendant: Aref Zackry, Advocate & Solicitor; Messrs. Amin Petra & Partners. For Respondent/ Plaintiff: Norshuhada Hazim Advocate & Solicitor; Messrs. Shu Halim & Co.