Ker Boon Kee v Tan Sin Hwa (JA-22NCvC-127-10/2020)

This is a claim by the Plaintiff that 50% of the shares of Pacific Goals Sdn. Bhd. (the “Company”) held collectively in the name of the three

Defendants rightfully belong to the Plaintiff. The Plaintiff claimed that the three (3) Defendants were merely holding 50% of the Company’s shares on trust on behalf of the Plaintiff.

The Defendants have filed a counter claim against the Plaintiff for the sum of RM1,500,000.00 being the transfer 250,000 unit of shares transferred to the Plaintiff on 28.01.2018 for the sum of RM1,126,790.00 as the net tangible assets on the shares 02/01/2026 19:44:05 JA-22NCvC-127-10/2020 Kand. 75 transferred.

After going through the evidence presented during the full trial and having read the parties’ written submissions, I allowed the Plaintiff’s claim and dismissed the 1st, 2nd and 3rd Defendants’ counter claim with costs of RM10,000.00 to be paid by each of the Defendants to the Plaintiff subject to allocator.

Below are the grounds of my decision.

The background facts in this suit are gathered from the cause papers and submissions filed by the parties and stated in chronological order.

The Plaintiff and the Defendants are shareholders of the Company wherein the Plaintiff holds 50% of the shares in the Company while the Defendants hold the remaining 50% of the shares collectively in the Company at the material time. The shares allocation between the Plaintiff and the Defendants are as follows: Allocation of Shares Plaintiff 250,000 1st Defendant 83,332 2nd Defendant 83,334 3rd Defendant 83,334 Total 500,000

The subject matter of the Plaintiff’s claim involves 250,000 shares of the Company that is currently held in the names of the three (3) Defendants. In this regard, the Plaintiff’s claim is predicated on the law of trust wherein the Plaintiff is claiming that the 250,000 shares that are in the name of the three (3) Defendants, all 250,000 shares belong to the Plaintiff and the dividend for the 250,000 shares during the relevant period be paid to the Plaintiff.

In this action, the Plaintiff sought inter alia, the following reliefs:

a declaration that the 1st, 2nd and 3rd Defendants held on trust for the Plaintiff 250,000 shares of the Company for the period of 01.06.2012 to 28.01.2018;

a declaration that all dividends at all relevant times are held by the 1st , 2nd and 3rd Defendants as constructive trustees for the Plaintiff and the Plaintiff as the beneficial owner of the shares have full rights over the dividends;

an order that the 1st, 2nd and 3rd Defendants to pay RM750,000.00 to the Plaintiff;

interest at the rate of 5% per annum on the sum of RM750,000.00 to be calculated from 17.12.2015 until the date of judgment pursuant to section 11 of the Civil Law Act 1956 [Act 67];

interest at the rate of 5% per annum on the sum of RM750,000.00 to be calculated from one day after the date of judgment until it is fully satisfied pursuant to Order 42 Rule 12 of the Rules of Court 2012 (“ROC 2012”);

costs of this action; and

such other reliefs that this Court thinks fit and proper.

On or around 01.06.2012, the Plaintiff executed a Trust Agreement with the Defendants. At the same time, the Plaintiff transferred 250,000 shares originally held by the Plaintiff without any consideration to the Defendants in the following proportion:

1st Defendant : 83,334 shares

(ii) 2nd Defendant : 83,333 shares

(iii) 3rd Defendant : 83,333 shares Total : 250,000 shares

On or around 07.05.2012, the Defendants signed blank shares transfer forms and handed the same over to the Plaintiff as a security that the Defendants will transfer the ownership of 250,000 shares back to the Plaintiff upon the Plaintiff’s instructions without any consideration.

On 28.01.2018, pursuant to the Plaintiff’s instructions, the Defendants transferred the total of 250,000 shares held on trust back to the Plaintiff without any consideration.

Hence, during the period from 01.06.2012 to 28.01.2018 (the “relevant time period”), the Defendants were holding the Plaintiff’s 250,000 shares on trust for the Plaintiff. At all material times, the Defendants did not make any payment or provide any consideration for the 250,000 shares.

In view of the above, it is the Plaintiff’s case that the three (3) Defendants held 250,000 of the Company’s shares on trust for the Plaintiff and the Plaintiff has beneficial interest over the 250,000 shares during the relevant time period, and is therefore entitled to half of the dividend payment of RM1,500,000.00 i.e. the sum of

The dispute arose after the Plaintiff demanded for the sum of RM750,000.00 from the Defendants vide a letter of demand dated 20.08.2019 as instructed by the Plaintiff.

However, the 1st, 2nd and 3rd Defendants argued that the Plaintiff was not entitled to his claim and the Defendants’ defence, inter alia, pleaded as follows:

the Defendants have paid the entire sum of RM500,000.00 to the Plaintiff as consideration for the transfer of 250,000 shares of the Company around the year 2012;

there was no trust in existence or any agreement for the creation of any trust by the Defendants in favour of the Plaintiff; and

the Defendants claim that the Plaintiff was not shareholder of the Company in the year 2015 and has no rights to receive any dividends paid by the Company to its shareholders around the year 2015.

The Defendants submits that the Plaintiff bears the burden of proof to prove his claim against the Defendants.

Due to the conduct of the three (3) Defendants, the Plaintiff has instituted the action to enforce his position that he is the beneficial owner of the remaining 50% of the shares of the Company held collectively in the name of the three (3) Defendants, on trust on behalf of the Plaintiff.

ISSUES TO BE DETERMINED The issues for the determination of this Court are as follows:

whether the 1st, 2nd and 3rd Defendants were merely holding 50% of the Company’s shares on trust for the Plaintiff;

whether the Plaintiff is entitled to the dividend declared on 16.12.2015 for the 250,000 shares allegedly held on trust by the

whether the 1st, 2nd and 3rd Defendants are entitled to claim the consideration for 250,000 shares that transferred back to the Plaintiff. COURT ANALYSIS AND FINDINGS

Whether the 1st, 2nd and 3rd Defendants were merely holding 50% of the Company shares on trust for the Plaintiff

In order to determine the issues raised by both parties, I will examine the evidence presented during the trial before me.

The Plaintiff has given evidence that he has made those payments for the shares in the Company. He further informed that even though 50% of the shares of the Company were registered in the name of the 1st, 2nd and 3rd Defendant, those 50% shares were meant to be held on trust by them in his favour.

According to the Plaintiff, a Trust Agreement for Shares (“Trust Agreement”) (Exhibit P1) was executed between the Plaintiff and the Defendants on or around 01.06.2012 in order for the Defendants to hold the 250,000 shares on trust for the Plaintiff.

Secondly, the Plaintiff ensured that a trust was created over the said shares as the 1st , 2nd and 3rd Defendants all pre-signed share transfer forms of the 250,000 shares back to the Plaintiff. The pre-signed shares transfer forms for 250,000 shares were duly signed by all three (3) Defendants without any consideration.

The blank shares transfer forms were produced during trial and the Defendants did not dispute that they had indeed executed these forms. This is admitted by the 3rd Defendant during cross-examination [see page 93 of the Notes of Proceedings (“NOP”)].

At all material times, all transfer of shares, whether it was from the Plaintiff to the Defendants or vice versa, did not involve payment of any form of consideration by either party. The 1st, 2nd and 3rd Defendants did not pay any money for the 50% of the shares of the Company.

The Defendants alleged that they have no knowledge of the Trust Agreement and that the signatures of the Trust Agreement do not belong to them. The said Trust Agreement was attended by Mr. Ker Min Choo (PW1) who gave evidence that he dealt with the Defendants at the material time and provided copies of the Trust Agreement to be signed by the Defendants. Thereafter, PW1 handed over the original copy of the Trust Agreement duly executed by the Defendants to the Plaintiff for safekeeping.

During re-examination, PW1 testified that he could recognize the signatures of the Defendants in the Trust Agreement as the Defendants used to work with the Plaintiff and PW1 (see page 36 of the NOP).

At all material times, the original copy of the Trust Agreement has been securely kept in a deposit box in Pasir Gudang and the said original copy was produced to the Court during the trial on 01.11.2022 and has been marked as exhibit P1. This shows that the Trust Agreement is a material document which had been securely kept by the Plaintiff for more than ten (10) years before it was produced in Court as documentary evidence in this trial.

I note that only the 3rd Defendant, DW2 gave evidence in Court. Conversely, the 1st and 2nd Defendant refrained from testifying in Court that the signatures on the Trust Agreement are not their signatures and had been forged. Furthermore, the Defendants did not proffer any reason or explanation for the failure to call the 1st and 2nd Defendant to give evidence during the trial that the signatures on the Trust Agreement are not their signatures.

The Defendants had also failed to tender any handwriting expert evidence report and did not provide any reason or explanation for their decision not to introduce such a handwriting expert report.

During the trial, the 3rd Defendant (DW2) informed that the payment of RM500,000.00 was paid to the Plaintiff in the year 2015 and RM200,000.00 was paid through two (2) Company’s cheques and RM300,000.00 was paid in instalments of RM10,000.00 to the Plaintiff’s son, Ker Min Choo, PW1 over the course of two (2) years. Court analysis and findings

From the evidence presented, it can be summarized that that it is the Plaintiff’s case that the three (3) Defendants held 250,000 of the Company’s shares on trust for the Plaintiff and the Plaintiff has beneficial interest over the 250,000 shares during the relevant time period, and is therefore entitled to half of the dividend payment of RM1,500,000.00 i.e. the sum of RM750,000.00.

However, the 1st , 2nd and 3rd Defendant argued that the Plaintiff was not entitled to his claim as the Trust Agreement had not been dated as to when it had been signed or executed. The Defendants submit that the Plaintiff was simply making a bare claim whose witnesses’ oral evidence in Court was inherently unbelievable.

The 1st, 2nd and 3rd Defendants contended that there was no trust in existence or any agreement for the creation of any trust by the 1st, , 2nd and 3rd Defendants in favour of the Plaintiff.

The Defendants argued that the Plaintiff during cross-examination also could not give the exact date as to when the Trust Agreement was entered into by all parties.

The Defendants further argued that the Plaintiff’s claim is predicated on afterthought only when the Plaintiff wanted to take the dividend for the period of 01.06.2012 to 28.01.2018 amounting to RM750,000.00 after witnessing the Company making profit under the helm of the Defendants.

The Defendants submit that the Plaintiff bears the burden of proof under subsection 101(1) of the Evidence Act 1950 [Act 56] to prove his claim against the Defendants but had failed to prove that there indeed, had been shares held on trust by the 1st, 2nd and 3rd Defendants on behalf of the Plaintiff.

The Defendants submit that the Plaintiff had failed to discharge that burden on a balance of probabilities.

However, I find from the evidence presented, it is clear as day that the Plaintiff’s 50% of the shares of the Company collectively in the name of the three (3) Defendants, were held on trust by the three

Defendants on behalf of the Plaintiff as evidenced by the Trust Agreement and the shares transfer forms.

This is evidenced through the various documents produced before the Court as below:

in relation to 250,000 of the Company’s shares to be held on trust by the three (3) Defendants for the Plaintiff, a Trust Agreement had been duly executed; and

in relation to the 250,000 of the Company’s shares to be held on trust by the three (3) Defendants for the Plaintiff, five (5) blank shares transfer forms which had been pre-signed by three (3) Defendants as a security that the Defendants will transfer ownership of the 250,000 shares back to the Plaintiff upon the Plaintiff’s instructions in the future without consideration (see pages 10-14 of Bundle A).

The evidence of the Plaintiff on the Trust Agreement was corroborated by PW1 who had known the Plaintiff and the 1st, 2nd and 3rd Defendants. PW1 informed that—

he has prepared and printed the Trust Agreement;

in the Trust Agreement, it was agreed that the 1st, 2nd and 3rd Defendants shall hold the 50% shares on trust for the Plaintiff and there was no consideration involved; and

the pre-signed shares transfer forms were prepared as a security that the Defendants will transfer ownership of the 250,000 shares back to the Plaintiff without any consideration.

I find the fact on the execution of the shares transfer forms was not disputed by the Defendants. The evidence of the 3rd Defendant was not rebutted. This has been admitted by the 3rd Defendant during cross-examination (see page 93 of the NOP).

Further, I find that the Plaintiff has irrevocably proven the existence of the Trust Agreement by producing the original Trust Agreement even though it was undated 04.03.2013 (Exhibit P1, page 393-394 of Bundle A).

In contrast, the evidence of the 3rd Defendant (DW2) is a bare assertion without any documentary evidence. The Defendants failed to produce any documentary evidence to prove that the signatures duly signed on the Trust Agreement were not signed by them and the Defendants also failed to tender any handwriting expert evidence report except bare denial. The 3rd Defendant (DW2) has admitted during cross-examination that he had signed the blank share transfer forms.

The Defendants have failed to provide any proof or evidence that the signatures on the Trust Agreement have been forged. If the allegation is true, the Defendants would have been able to produce documentary evidence in Court whether through a handwriting expert evidence report or by calling a handwriting expert to prove the same.

In the present case, PW1 informed that he can recognized the signatures of the Defendants as they were working with the Plaintiff and PW1. Therefore, based on section 47 of the Act 56, PW1 who is acquainted with the signature of the Defendants can verify the signature in those documents.

Further, section 76 of Act 56 provides that the Court or the witness may compare the signatures of the 3rd Defendants in the shares transfer form which is admitted by 3rd Defendant (DW2) with the signatures of the Defendants in the Trust Agreement.

I refer to the case of Letchumanan Chettiar Alagappan @ L Allagappan (as executor to SL Alameloo Achi alias Sona Lena Alamelo Acho, deceased) & Anor v Secure Plantation Sdn. Bhd. [2017] 4 MLJ 697, the Federal Court held that – “Comparison may be made, by a handwriting expert under s 45 of the Evidence Act, by anyone familiar with the handwriting of the person concerned as provided by s 47 of the Evidence Act, or by the court itself. ‘As a matter of extreme caution and judicial sobriety, the court should not normally, take upon itself the responsibility of comparing the disputed signature with that of the admitted signature or handwriting and in the event of the slightest doubt, leave the matter to the wisdom of the experts. But this does not mean that the court does not have any power to compare the disputed signature with the admitted signature.”. [Emphasis added]

Based on the above decision and sections 47 and 76 of Act 56, it is clear that without the evidence of the expert in writing, the Court or PW1 can compare the disputed signature in the Trust Agreement (see page 394 Bundle A) with the admitted signatures made by the Defendants in the share transfer forms (see pages 10-14 Bundle A). By comparing the signatures of 3rd Defendant on both documents, it shows a consistent pattern of 3rd Defendant’s signature such as distinctive loops and overall style that strongly indicate that the signature in the Trust Agreement belong to the 3rd Defendant. The signatures of the 3rd Defendant on both documents bear striking similarity.

3rd Defendant (DW2) claimed that the signatures on the Trust Agreements did not belong to the Defendants. They did not provide any explaination as to how the said signature differ from their normal signatures. I find the allegation by the 3rd Defendant is a bare denial and not supported by any evidence.

I further find the Defendant’s arguments on the payment of the shares were refuted simply because during trial, they have failed to produce a single document such as bank statements or cheque images to prove that they had indeed paid the said sum to the Plaintiff.

The Defendants kept changing their line of defence from the bare denial to the meagre defence and outlandish counter claim. It has cleary departed from the pleadings and was a mere afterthought.

Upon perusing the documentary evidence, it clearly depicts that at all material times, it had been the Plaintiff’s shares and, the oral testimony of the Plaintiff shows that even though 250,000 of the Company’s shares were registered in the name of the three (3) Defendants, those 250,000 shares were at all times, meant to be held on trust by them in his favour.

Further, the Plaintiff informed all three (3) Defendants had pre-signed blank share transfer forms for the shares to be transferred back to the Plaintiff and the pre-signed share transfer forms were confirmed by the 3rd Defendant (DW2) during trial and is unrebutted.

Therefore, based on the evidence produced in Court, I rule that the 1st, 2nd and 3rd Defendants were merely holding 250,000 of the Company’s shares on behalf of the Plaintiff as per the terms as directed by the Plaintiff.

At every step of the way, the 1st, 2nd and 3rd Defendants had pre-signed shares transfer forms for the shares held under all three (3) of their names on trust to be transferred back to the Plaintiff.

Based on the above, the Plaintiff is entitled to his claim for the 250,000 shares and the dividends.

I am guided by the Federal Court’s decision in the case of Takako Sakao (f) v Ng Pek Yuen (f) & Anor [2009] 6 MLJ 751 where the concept of resulting trust and constructive trust was explained as follows: “…The device of a resulting trust was invented by the Court of Chancery to give effect to the implied intention of parties in relation to the acquisition and disposal of moveable or immovable property. SeeWestdeutsche Landesbank Girozentrale v Islington LBC [1996] AC 669, where Lord Browne-Wilkinson said: Under existing law a resulting trust arises in two sets of circumstances:

(A) where A makes a voluntary payment to B or pays (wholly or in part) for the purchase of property which is vested either in B alone or in the joint names of A and B, there is a presumption that A did not intend to make a gift to B: the money or property is held on trust for A (if he is the sole provider of the money) or in the case of a joint purchase by A and B in shares proportionate to their contributions. It is important to stress that this is only a presumption, which presumption is easily rebutted either by the counter-presumption of advancement or by direct evidence of A’s intention to make an outright transfer: see Underhill and Hayton, Law of Trusts and Trustees at pp 317 et seq; Vandervell v Inland Revenue Commissioners [1967] 2 AC 291 at pp 312 et seq; In re Vandervell’s Trusts (No 2) [1974] Ch 269 at pp 288 et seq. (B) Where A transfers property to B on express trusts, but the trusts declared do not exhaust the whole beneficial interest: ibid and Quistclose Investments Ltd v Rolls Razor Ltd (In Liquidation) [1970] AC 567. Both types of resulting trust are traditionally regarded as examples of trusts giving effect to the common intention of the parties. A resulting trust is not imposed by law against the intentions of the trustee (as is a constructive trust) but gives effect to his presumed intention. [Emphasis added]

I further refer to the Court of Appeal case of Wong Kim Cheng v Aidil Fahmy bin Zainal Abedin & Ors [2014] 2 MLJ 63 bear striking similarities to the case at hand and it was held as such in that case— “…[15] We have examined the evidence and we are satisfied that, from the evidence adduced, the plaintiff (PW1) (Mdm Wong Kim Cheng) has succeeded in establishing on a balance of probabilities that the 390,000 shares in question are hers and that the first defendant held the shares on trust for her benefit; and that the first defendant, in breach of that trust, had fraudulently or dishonestly transferred the shares to the second, third and fourth defendants; the transfer facilitated by the professional negligence of the fifth defendant, the company secretary. [16] We hold that there is a resulting trust relationship between the plaintiff and the first defendant in relation to the 390,000; the first defendant being the trustee, and the plaintiff, the beneficiary. … [30] According to the evidence of PW2, the first defendant had pre-signed blank transfer forms, namely, Forms 32A, in relation to the 390,000 shares; and the forms were kept in escrow with the company secretary, Norvic..”. [Emphasis added]

The Plaintiff and the Defendants had entered into a Trust Agreement as evidenced through the various documents produced before the Court. The executed Trust Agreement was kept by the Plaintiff. It is not disputed that the Defendants have pre-signed the blank shares transfer form on 07.05.2012. The 250,000 shares were subsequently transferred back to the Plaintiff on 28.01.2018 pursuant to the Plaintiff’s instructions.

I refer to the recent Court of Appeal case of Chong Chee Piao & Ors v Koh Wah Leong (as Chairman of Pertubuhan Penganut-Penganut Ting Leong Keng Lee Hu Tong Chu, Pantai Remis, Manjong, Perak) [2023] 2 MLJ 229 where it was held as such in that case— “…[32] We find merit in the submission of counsel for the respondent that in the case of implied and constructive trust as opposed to an express trust, the element of intention to create a trust on the part of the testator is not essential. It is a trust that is imposed by the law to prevent unfairness or injustice. In the recent case of Ng Hoo Kui & Anor v Wendy Tan Lee Peng (administratrix for the estate of Tan Ewe Kwang, deceased) & Ors [2020] 12 MLJ 67; [2020] 10 CLJ 1, Zabariah Mohd Yusof FCJ at the Federal Court said as follows about the irrelevance of intention in a finding of constructive trust: [111] It is trite law that the intention to create a trust is applicable in situation of express trusts and not in constructive trusts. Constructive trust are trusts that may be implied in the absence of any declaration/intention of a trust, where the trustee has induced another to act to their detriment they would acquire a beneficial interest in the land/property. A characteristic feature of this trust does not owe its existence to the parties’ intention, but by operation of law. In Takako Sakao v Ng Pek Yuen [2009] 6 MLJ 751; [2010] 1 CLJ 381, it was held that: A constructive trust is imposed by law irrespective of the intention of the parties. And it is imposed only in certain circumstances, eg where there is dishonest, unconscionable or fraudulent conduct in the acquisition of property. What equity does in those circumstances is to fasten upon the conscience of the holder of the property a trust in favour of another in respect of the whole or part thereof. [112] Constructive trust is viewed as a device under which equity will intervene so as to create a trust relationship between the parties in order to make a person accountable for the trust to prevent any unfairness or injustice. Equity will impose obligation on the defendant to hold the property for the benefit of another. (Emphasis added.) [33] In the earlier case of Perbadanan Kemajuan Pertanian Selangor v JW Properties Sdn Bhd [2017] MLJU 1107; [2017] 8 CLJ 392, the Federal Court also emphasised the principle that constructive trust is a trust imposed by equity in order to satisfy the demands of justice and good conscience without reference to intention of the parties. Zulkefli Ahmad Makinudin PCA who delivered the decision of the court said as follows: [59] It has also been held that a constructive trust is a trust which is imposed by equity in order to satisfy the demands of justice and good conscience without reference to any express or presumed intention of the parties (see the case of Hassan Kadir & Ors v Mohamed Moidu Mohamed & Anor [2011] MLJU 1556; [2011] 5 CLJ 136 (FC)). A constructive trust is a remedial device that is employed to prevent unjust enrichment. It has the effect of taking the title to the property from one person whose title unjustly enriches him, and transferring it to another who has been unjustly deprived of it (see the case of Tay Choo Foo v Tengku Mohd Saad Tengku Mansur & Ors. And Another Appeal [2009] 1 MLJ 289; [2009] 2 CLJ 363 CA). [34] Thus, a written document evidencing the existence of a trust is also unnecessary..” [Emphasis added]

Based on the abovementioned authorities and upon perusing the documentary and financial evidence, I find that although the Trust Agreement was not stamped, the pre-signed shares transfer forms together with the undated Trust Agreement evidenced the intention of the Plaintiff and the 1st , 2nd and 3rd Defendants to have a Trust Agreement wherein it was agreed that the Plaintiff shall be the legal and beneficial owner of 250,000 of the Company’s shares and the 1st, 2nd and 3rd Defendants are merely holding the 250,000 shares on trust on behalf of the Plaintiff.

Further, I am of the considered view that non-stamping Trust Agreement does not render a claim void or invalid pursuant to the Federal Court decision in the case of Malayan Banking Bhd. v Agencies Service Bureau Sdn. Bhd. & Ors. [1982] 1 MLJ 198. Hence, applying the principles enunciated in the case of Malayan Banking Bhd.(supra), section 52 of the Stamp Act 1949 [Act 378] does not render the Trust Agreement relied on by the Plaintiff invalid.

Therefore, I ruled that the non-stamping of the Trust Agreement does not vitiate the claim against the Defendants. The Trust Agreement and the executed the Shares Transfer Forms are valid and binding on the 1st , 2nd and 3rd Defendants.

I further rule that at all material times, the Plaintiff was the beneficial owner of the Company’s 250,000 shares from 01.06.2012 to 28.01.2018 despite he has transferred some of the shares to the 1st, 2nd and 3rd Defendant on his own terms to be held on trust on behalf of the Plaintiff. At all material times, the 1st , 2nd and 3rd Defendant are unable to show any proof or documentary evidence that they had paid the Plaintiff for any of the shares held under their names.

whether the Plaintiff is entitled to the dividend declared on 16.12.2015 for the 250,000 shares allegedly held on trust by the Defendants

The Plaintiff’s claim against the Defendants for the sum of RM750,000.00 being 50% of the total dividend amount of RM1,500,000.00 declared and paid to all the shareholders of the Company. It is evident in the written resolution dated 01.12.2015 and 16.12.2015 signed by the Defendants (see pages 156 -157 of Bundle

The Plaintiff claimed that he was not awared the said resolutions were passed at that material time and the Plaintiff only found out the said resolutions in year 2018.

3rd Defendant (DW2) admitted during the cross-examination that the Defendants have received the RM1,500,000.00 dividend from the Company (see page 101 of NOP).

I refer to the case of Fernite Sdn. Bhd. v Perbadanan Nasional Bhd. [2012] 1MLJ 1, the Federal Court held that— "[24] On those factual matrix, both the High Court and the Court of Appeal held it is highly unconscionable on the part of the defendant to lay a claim on the dividends attached to the subject shares during the relevant period when the defendant had not at all paid for the subject shares. It is their concurrent findings that in the circumstances, equity would construct a trust in favour of the plaintiff as regards the dividends. The plaintiff as beneficial owner of the subject shares is therefore entitled to the said dividends. … [28] ... However, in view of our finding that the defendant has no beneficial interest in the subject shares, therefore, it necessarily follows that, the defendant could not likewise claim beneficial interest in the dividends ... [29] The Court of Appeal further found in favour of the plaintiff on the principle of unjust enrichment. The Court of Appeal opined that the defendant would be unjustly enriched if it was allowed to retain the dividends which were derived from the subject shares when the defendant has never paid the purchase price for those shares. Before us, learned counsel for the defendant argued that the principle of unjust enrichment has no application to the present case. In view of our earlier findings, we do not think it is necessary for us to consider this issue.". [Emphasis added]

Based on the Federal Court decision in the abovementioned case, I ruled that since the Defendants failed to prove that they have made payment for the 250,000 shares and hence the Defendants have no beneficial interest on those shares. Following from that, the Defendants are not entitled to the dividend for those shares.

I am further guided by the case of Datuk M Kayveas v See Hong Chen & Sons Sdn. Bhd. & Ors. [2014] 4 MLJ 64 where the Federal Court decided that— “From the various opinions above it may be construed that a constructive trust arises by operation of law irrespective of the intention of the parties, in circumstances where the trustee acquires property for the benefit of the beneficiary, and making it unconscionable for him to assert his own beneficial interest in the property and deny the beneficial interest of another. Being bereft of any beneficial interest, and with equity fastened upon his conscience, he cannot transfer any interest to himself let alone a third party. If he does, then a constructive trust comes into existence. An aggrieved party, by equitable remedy, may demand restitution of the property if he has been deprived of his beneficial interest. On the issue of restitution, Lord Denning MR in Hussey v Palmer [1972] 3 All ER 744 had occasion to say at p 747: Although the plaintiff alleged that there was a resulting trust, I should have thought that the trust in this case, if there was one, was more in the nature of a constructive trust … By whatever name it is described, it is a trust imposed by law whenever justice and good conscience require it. It is a liberal process, founded on large principles of equity, to be applied in cases where the defendant cannot conscientiously keep the property for himself alone, but ought to allow another to have the property or a share in it. The trust may arise at the outset when the property is acquired, or later on, as the circumstances may require. It is an equitable remedy by which the court can enable an aggrieved party to obtain restitution..”. [Emphasis added]

In the present case, there is no documentary evidence of proof that consideration had been paid by the 1st , 2nd and 3rd Defendants for the 250,000 shares. The 1st, 2nd and 3rd Defendants are not bona fide purchasers for value of the Company’s 250,000 shares as there has been no documentary evidence produced before this Court to show that the 1st, 2nd or 3rd Defendants had made any payment whatsoever to purchase the Company’s 250,000 shares. The inadequacy of consideration made it abundantly clear there is a presumption of a trust arrangement, a presumption which is not rebutted on the evidence before this Court.

The ingredients of a Trust Agreement are found on the facts since the 250,000 shares are being held in circumstances where it would be inequitable to allow the 1st, 2nd and 3rd Defendants to defeat the Plaintiff’s claim for the sum of RM750,000.00. There is an understanding that the 250,000 shares belong to the Plaintiff and this is fortified by the various documents produced during trial.

Therefore, based on the foregoing authorities, it would be unfair and unjust for the 1st , 2nd and 3rd Defendants to enrich themselves by keeping the the dividends declared during the relevant period for the said 250,000 shares i.e. RM750,000.00 which had already been paid to them earlier. It would be unconscionable to allow the 1st, 2nd and 3rd Defendants to keep the dividends of RM750,000.00 since the facts and evidence show that the 250,000 shares are meant to be held on trust on behalf of the Plaintiff.

Based on the premise, I ruled that the Plaintiff is entitled to the 50% of the RM1,500,000.00 dividend, namely RM750,000.00. I then order the Defendant to return the sum of RM750,000.00 to the Plaintiff.

whether the 1st , 2nd and 3rd Defendants are entitled to claim the consideration for the 250,000 shares that transferred back to the

I refer to subsection 101(1) of Act 56 which reads as follows: “Whoever desires any court to give judgment as to any legal right or liability, dependent on the existence of facts which he asserts, must prove that those facts exist.”.

Therefore, the Defendants bear the burden to prove that Plaintiff agreed to purchase the 250,000 shares from the Defendant for the sum of RM1,500,000.00.

During the cross-examination of PW1 and DW1 respectively, they have informed that there is no evidence of payment for the transfer of the 250,000 shares from the Plaintiff to the Defendants.

3rd Defendant (DW2) testified that the consideration of RM500,000.00 was paid to the Plaintiff around 2012. However, there is no documentary proof that RM500,000.00 was indeed paid to the Plaintiff for the 250,000 shares (see page 84 of NOP).

The Defendants claimed that PW1 has agreed to pay them RM1,500,000.00 which is three (3) times more than the alleged amount of consideration in 2012 and the Defendants will obtained the profit of RM1,000,000.00 (see page 88 NOP).

There is no discussion between the Plaintif and the Defendants took place on the consideration of RM1,500,000.00 indicate it is a bare allegation with the purpose to frustrate the claim of the Plaintiff. It is illogical that the Plaintiff would agree to pay RM1,500,000.00 for the 250,000 shares in 2018 where there is no consideration paid by the Defendant in year 2012 when 250,000 shares transferred to them from the beginning.

When the Defendants transferred back the 250,000 shares to the Plaintiff in January 2018, the Defendants did not demand or request for payment of consideration from the Paintiff during the material time until the Plaintiff’s letter of demand dated 20.08.2019 was issued demanding the payment of dividends of RM750,000.00.

The Defendant’s claim for the payment of the 250,000 shares for the sum of RM1,500,000.00 and/or the sum of RM1,126,790.50 based on the net tangible asset after the letter of demand is an afterthought.

If the allegation is true, the Defendants would not have transferred back the shares to the Plaintiff in year 2018 when no payment was made by the Plaintiff. Further, the Defendants never demanded the payment of RM1,500,000.00 from the Plaintiff after the transferred of shares from 28.01.2018 till the letter of demand issued by the Plaintiff on 20.08.2019 demanding the payment of the dividend of RM750,000.00. The silence of the Defendant for a period of almost of one (1) year six (6) months indicate the allegation is baseless and is an afterthought to defeat the claim made by the Plaintiff.

I find the evidence of the 3rd Defendant (DW2) is not reliable and his evidence is not supported by any contemporaneous document. Hence, I rule the allegations made by the Defendants are baseles and devoid of merits.

Thus, it is unconscionable for the 1st, 2nd and 3rd Defendants to retain and to exercise rights over the trust shares when the 1st, 2nd and 3rd Defendants counter claimed for the sum of RM1,500,000.00 and/or the sum of RM1,126,790.50 based on the net tangible asset. There is no evidence whatsoever that there was consideration in the transfer of shares from the Plaintiff to the three (3) Defendants in the beginning.

Therefore, I rule that the 1st , 2nd and 3rd Defendants are not entitiled to claim the payment for the sum of RM1,500,000.00 and/or the sum of RM1,126,790.50 based on the net tangible asset for the 250,000 shares that they have transferred back to the Plaintiff.

I therefore dismissed the Defendants’ counter claim against the Plaintiff.

Conclusion In the present case, I find the 1st , 2nd and 3rd Defendants lacked good faith and their argument that the shares were not held on trust for the Plaintiff was not supported by any contemporeneous documents and hence I stand guided by the Court of Appeal case of Wong Kim Cheng v Aidil Fahmy bin Zainal Abedin & Ors [2014] 2 MLJ 63.

Based on the abovementioned, I allowed the Plaintiff’s claim against the 1st,2nd and 3rd Defendants and gave the following orders:

a declaration that the 1st, 2nd and 3rd Defendants held on trust for the Plaintiff 250,000 shares of the Company for the period of 01.06.2012 to 28.01.2018;

A declaration that all dividends at all relevant times are held by the 1st , 2nd and 3rd Defendants as constructive trustees for the Plaintiff and the Plaintiff as the beneficial owner of the shares have full rights over the dividends;

an order that the 1st , 2nd and 3rd Defendants to pay RM750,000.00 to the Plaintiff;

interest at the rate of 5% per annum on the sum of RM750,000.00 to be calculated from 17.12.2015 until the date of judgment pursuant to section 11 of Act 67; and

interest at the rate of 5% per annum on the sum of RM750,000.00 to be calculated from one day after the date of judgment until it is fully satisfied pursuant to Order 42 Rule 12 of the ROC 2012.

I further dismissed the Defendants’ counter claim against the Plaintiff and awarded costs of RM 10,000.00 to be paid by each of the Defendants to the Plaintiff within fourteen (14) days from the date of the Judgment dated 14.08.2024. Dated 20 December 2025. Signed by SGD ………………….. Wong Mee Ling Judge High Court of Malaya Johor Bahru Johor Darul Ta’zim. Counsel/Solicitor For the Plaintiff: Mr. Wong Fook Meng Messrs Siah Le Kee & Partners Counsel/Solicitor For the Defendants: YM Ungku Ahmad Hafis Bin