Land Custody and Development Authority v Pang Chee Hun @ Phang Chee Hun (Q-01(NCvC)(W)-468-09/2023)

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All of No. 647F, Lot 4572, Lorong 11 Di Jalan Pisang Barat 93400 Kuching, Sarawak

[Registration No. 199401032211 (317893-T)] c/o The Official Receiver Jabatan Insolvensi Malaysia Cawangan Kuching 1st Floor, Wisma Hong No. 202, Batu 23/4, Jalan Rock 93200 Kuching, Sarawak 16/01/2026 15:20:08 Q-01(NCvC)(W)-468-09/2023 Kand. 56

[Regisration No. 200601001066 (720813-U)] 1st Floor, P1-1-3(c), Chonglin Park Lot 58 & 124, Section 55, Jalan Tabuan 93100 Kuching, Sarawak …RESPONDENTS (In the matter of High Court Suit No. KCH-22NCvC-12/2-2022(HC4) in the High Court in Sabah and Sarawak at Kuching) Between

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All of No. 647F, Lot 4572, Lorong 11 Di Jalan Pisang Barat 93400 Kuching, Sarawak …Plaintiffs And

[Registration No. 199401032211 (317893-T)] c/o The Official Receiver Jabatan Insolvensi Malaysia Cawangan Kuching 1st Floor, Wisma Hong No. 202, Batu 23/4, Jalan Rock 93200 Kuching, Sarawak

Levels 5, 6 and 12 Wisma Satok, Jalan Kulas 93400 Kuching, Sarawak

[Regisration No. 200601001066 (720813-U)] 1st Floor, P1-1-3(c), Chonglin Park Lot 58 & 124, Section 55, Jalan Tabuan 93100 Kuching, Sarawak …Defendants HEARD TOGETHER WITH IN THE COURT OF APPEAL OF MALAYSIA (APPELLATE JURISDICTION) CIVIL APPEAL NO.: Q-02(NCvC)(W)-1365-08/2023 BETWEEN [Regisration No. 200601001066 (720813-U)] 1st Floor, P1-1-3(c), Chonglin Park Lot 58 & 124, Section 55, Jalan Tabuan 93100 Kuching, Sarawak …Appellant

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All of No. 647F, Lot 4572, Lorong 11 Di Jalan Pisang Barat 93400 Kuching, Sarawak

[Registration No. 199401032211 (317893-T)] c/o The Official Receiver Jabatan Insolvensi Malaysia Cawangan Kuching 1st Floor, Wisma Hong No. 202, Batu 23/4, Jalan Rock 93200 Kuching, Sarawak

Levels 5, 6 and 12 Wisma Satok, Jalan Kulas 93400 Kuching, Sarawak …RESPONDENTS [In The Matter of High Court Suit No. KCH-22NCvC-12/2-2022 (HC4) In the High Court of Sabah and Sarawak at Kuching Between

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All of No. 647F, Lot 4572, Lorong 11 Di Jalan Pisang Barat 93400 Kuching, Sarawak …Plaintiffs And

[Registration No. 199401032211 (317893-T)] c/o The Official Receiver Jabatan Insolvensi Malaysia Cawangan Kuching 1st Floor, Wisma Hong No. 202, Batu 23/4, Jalan Rock 93200 Kuching, Sarawak

Levels 5, 6 and 12 Wisma Satok, Jalan Kulas 93400 Kuching, Sarawak

[Regisration No. 200601001066 (720813-U)] 1st Floor, P1-1-3(c), Chonglin Park Lot 58 & 124, Section 55, Jalan Tabuan 93100 Kuching, Sarawak …Defendants] CORAM: AZMAN BIN ABDULLAH, JCA AZMI BIN ARIFFIN, JCA LIM HOCK LENG, JCA GROUNDS OF JUDGMENT The Appeals, Cross-Appeals, Parties and Their Relationship

There are two appeals before us which were heard together with two cross-appeals by the original purchasers of two strata title shophouses who were the successful Plaintiffs in the High Court.

The 1st Defendant in the High Court was Merces Builders (S) Sdn Bhd (in liquidation).

The 2nd Defendant is the registered owner of the parcel of land known as Lot 9291 on which various properties of a large development, including the two shophouses were constructed. It had engaged the 1st Defendant to be the developer.

As between the 1st and 2nd Defendants, there was an arrangement as to their respective entitlements out of the project. The 2nd Defendant charged its land to Bumiputra Commerce Bank Berhad (later CIMB Bank Berhad) as security for credit facilities for the 1st Defendant. The 2nd Defendant is the Appellant in Appeal No. 468-09-2023.

The 3rd Defendant is the subsequent purchaser of, inter alia, the two shophouses. It is the Appellant in Appeal No, 1365- 08/2023.

The parties will in the main be referred to as they were in the High Court, or by their abbreviated names. Timeline of Events

By two Sale and Purchase Agreements dated 6 September 2002, the Plaintiffs agreed to acquire the two shophouses from the 1st Defendant-developer for the total purchase price of

Messrs Lim & Teo Advocates acted as solicitors for both parties.

The Plaintiffs paid RM472,000.00 towards the total purchase price.

On 12 May 2004, they obtained a loan of RM314,800.00 from Public Bank Berhad to pay for the balance.

The balance sum was never disbursed. It was not due to the Plaintiffs’ fault. The 1st Defendant failed to return the 4 copies of the duly consented Deed of Assignment and 4 copies of the duly executed Letter of Undertaking to the common solicitors; and the 1st Defendant failed to pay the shortfall amount to the chargee bank, CIMB Bank Berhad (“CIMB Bank”).

The redemption sum stood at RM639,820.80 as at 28 June 2004.

The Occupation Permits for the two shophouses were issued on 5 December 2005.

Later that same year, the 1st Defendant handed over the keys and vacant possession of the two shophouses to the Plaintiffs who thus took possession, paid assessment rates, and collected rental from tenants.

On 12 July 2007, the 1st Defendant was wound up on the petition of the Government of Malaysia, and the Official Receiver was appointed as the liquidator.

On 4 September 2007, the Plaintiffs lodged a caveat against the subject properties.

In 2008, the Plaintiffs wrote to CIMB Bank, informing it that they wanted to pay the balance purchase price of RM314,800.00 in full and that efforts to require the 1st Defendant to pay the shortfall were unsuccessful.

While the balance purchase price remained unpaid, the SPAs between the Plaintiffs and the 1st Defendant were never terminated.

On 15 March 2017, the 2nd and 3rd Defendants entered into an agreement concerning the abandoned project on Lot 9291.

The 3rd Defendant agreed to pay RM10 to the 2nd Defendant to acquire the “Remaining Lots” which included the two shophouses claimed by the Plaintiffs.

The 3rd Defendant also paid the redemption sum of RM10 million due to CIMB Bank over Lot 9291 which the 2nd Defendant had charged to CIMB Bank for credit facilities to the 1st Defendant.

Further, the 3rd Defendant had to complete the abandoned project.

The Official Receiver as the liquidator of the 1st Defendant and CIMB Bank consented to the acquisition by the 3rd Defendant.

The Plaintiffs’ names and interests in the two shophouses were not mentioned in the agreement. The 2nd Defendant purported to sell various properties including the two shophouses in dispute, although the 1st Defendant had already sold those two shophouses to the Plaintiffs vide the SPAs dated 6 September 2002.

In 2021, Bayu Sempurna sought vacant possession of the two shophouses, employing allegedly forcible measures.

On 11 February 2022, the Plaintiffs obtained leave from the High Court in Kuching for leave to commence an action against the 1st Defendant. LCAD was named as the 2nd Defendant. Bayu Sempurna was named the 3rd Defendant, and it counterclaimed for, inter alia, vacant possession of the subject properties.

The 1st Defendant through the Official Receiver did not enter appearance or file its Defence. The Official Receiver took no part in the hearing of the appeals and cross-appeals. The High Court’s Decision

On 15 August 2023, after a full trial, the learned HCJ granted the following declarations and orders which are summarised as follows:

(i) the Plaintiffs are rightful purchasers of the two shophouses pursuant to the SPAs dated 6 September 2022;

(v) the 2nd and 3rd Defendant’s Counterclaim was dismissed; and

Both the 2nd and 3rd Defendants canvassed a number of grounds of appeal to assail the judgment of the High Court, including the broad contention that the circumstances did not justify the imposition of a constructive trust since the Plaintiffs did not make full payment of the purchase price and could not be considered beneficial owners.

The 2nd Defendant argued that it was not unconscionable for the 3rd Defendant to assert rights over the subject properties and to deny the Plaintiffs of their alleged interest when both of them had not acted dishonestly, an argument with which the 3rd Defendant concurred.

On the 3rd Defendant’s part, it argued that there was no unjust enrichment on its part since it had paid RM10 million to CIMB Bank for loans taken by the 1st Defendant/original developer. It also argued that there was no privity of contract between the Plaintiffs and the 3rd Defendant whose acquisition was consented to by the Official Receiver.

The Appellants found common ground in contending that delay and laches on the part of the Plaintiffs ought to militate against the invocation of a constructive trust.

LACD went a step further and argued that the Plaintiffs’ claim is time-barred, and the High Court ought to have dismissed the action. Whether the Respondents Failed to Pay the Initial Payments Totalling RM472,000.00 and are Accordingly not Beneficial Owners

To begin with, the 2nd Defendant disputed the payment of RM472,000.00 by the Plaintiffs.

We are of the view that the learned HCJ cannot be said to be plainly wrong in admitting the 8 receipts proving such payment in the absence of the maker. These were produced from the custody of the 1st Plaintiff (PW3) whose credibility was accepted on account of his demeanour and educational background, among other factors. The 1st Plaintiff was a fruit vendor who had only studied up to Form 3 in a Chinese school. The receipts were more than 20 years old at the time of the trial. In the upshot, they were admissible under section 73A(2) of the Evidence Act 1950.

As the identity of the maker of the receipts could not be ascertained with any degree of certainty, the maker could not, by extension, be found; and since the receipts would have been issued in the ordinary course of business, these disputed documents were properly allowed to be adduced at the trial pursuant to section 32 of the Evidence Act 1950 which provides:

Further, the fact that Public Bank Berhad had approved a loan of RM314,800.00 to settle the balance purchase price, indicates that part payment of RM472,000.00 had been made to the 1st Defendant. Significantly, there was no denial that such earlier payment had been made and there was no demand for such payment, even when informed by the solicitors that the loan for the balance had been approved.

Furthermore, it appears that the 2nd Defendant has abandoned the issue raised in its grounds of appeal, as not a murmur was raised in its submissions concerning the alleged non-payment of RM472,000.00. Whether there can be a Constructive Trust without Full Payment

Next, both the 2nd and 3rd Defendants took the position that the learned HCJ was plainly wrong to make the finding of a constructive trust when the Plaintiffs had not paid the full purchase price and could not accordingly be considered beneficial owners.

It is not disputed that the Plaintiffs had not paid the full purchase price. In fact, the 1st Plaintiff gave evidence in his witness statement that the total balance for the two shophouses outstanding was RM314,800.00.

Placing much reliance on the decision of the Federal Court in Tan Ong Ban v Teoh Kim Heng [2016] 3 CLJ 193, the 3rd Defendant argued that in order for the Plaintiffs in the present case to succeed to recover the subject properties, the Plaintiffs must show that they are beneficial owners and have fully paid the 1st Defendant for the properties.

It was highlighted by learned counsel for the 3rd Defendant that, on his reading of the Federal Court’s decision, a purchaser who has not settled the full purchase price will not have any beneficial interest in the property and, in the event of any dispute, such purchaser can only institute action against the vendor with whom he or she has contracted.

At this point, we digress to consider the Plaintiffs’ response.

It bears noting that the Plaintiffs here are indeed pursuing contractual rights against the 1st Defendant by seeking specific performance, while maintaining its position that the subject properties had already been sold by the 1st Defendant (which was the owner of those properties) pursuant to two SPAs dated 6 September 2002.

The SPAs were subsisting. They were never terminated by either the 1st Defendant or the Plaintiffs on the basis of non-payment of the balance purchase price.

The SPAs were in fact affirmed by the handover of the keys to the shophouses and the delivery of vacant possession by the 1st Defendant. The Plaintiffs, on their part, accepted vacant possession, paid assessment rates, and collected rental from the two shophouses.

Oddly enough, it is the 2nd Defendant’s pleaded case that the 1st Defendant had acquired all the beneficial interest in the two shophouses, and it (the 2nd Defendant) no longer had any beneficial interest in the two shophouses. See the 2nd Defendant’s Defence, paragraph 9.

In line with the nemo dat quod non habet principle, LCAD having divested itself of all beneficial interest in the subject properties and the 1st Defendant having then sold the subject properties to the Plaintiffs, LCAD could not sell what it did not have to Bayu Sempurna.

In the circumstances that obtain, the purported consent by CIMB Bank and the Official Receiver cannot assist the 2nd and 3rd Defendants.

The purported consent by the Official Receiver cannot operate as a conveyance when the wound-up 1st Defendant had already sold the two shophouses and affirmed the SPAs. It is at most a form of non-objection which is of no utility.

As for the 3rd Defendant’s argument that the Plaintiffs did not tender overdue interest on the balance sum under clause 4.2 of the SPAs, or that the learned HCJ ought not to have held the Plaintiffs as beneficial owners of the subject properties upon payment of the balance sum without ordering payment of overdue interest, it is unmeritorious.

Learned counsel for the Plaintiffs points out that the matter of overdue interest was not pleaded and thus not in issue. Also, it is a matter as between the Plaintiffs and the Official Receiver (on behalf of the 1st Defendant) who did not even enter appearance and makes no claim for it.

We venture to think that overdue interest clause cannot be invoked against the Plaintiffs who were not at fault, since they had in fact obtained a loan from Public Bank to pay for the balance purchase price but it was the 1st Defendant which did not return the loan documentation forwarded to it by their common solicitors Messrs Lim & Teo Advocates. As noted by the learned HCJ, the loan for the balance in the sum of RM314,800.00 could not be released. The 1st Defendant also failed to pay the shortfall in the redemption sum. That may well be why the Official Receiver makes no claim for overdue interest.

In the upshot, the learned HCJ was right to grant a declaration that upon payment of the balance of purchase price in the sum of RM314,800.00 to the 1st Defendant, the Plaintiffs are the beneficial owners of the subject properties with all rights of ownership, without ordering payment of an unpleaded claim for overdue interest.

The SPAs continue to be binding even after the 1st Defendant was wound up, more so as “(t)hese SPAs are not in the nature of contracts of personal or professional service which would be terminated unless affirmed by the Liquidators.” See the decision of the Court of Appeal in Lim Meow Khean & Ors v Pakatan Mawar (M) Sdn Bhd (in Liquidation) & Ors [2021] CLJU 173; [2021] MLJU 127. In the instant case, the SPAs were not terminated but in fact affirmed.

The Plaintiffs’ caveat lodged in 2007 is notice to the world at large of their interest in the subject properties. See Aik Ming Case [1995] 3 CLJ 639.

It is doubtful if the 3rd Defendant can claim otherwise or profess to be a bona fide purchaser without notice.

The learned HCJ cannot be faulted for holding that a constructive trust arises by operation of law against Merces, LCAD and Bayu Sempurna, as the Plaintiffs would otherwise lose the subject properties they had purchased and lose the monies they had already paid. The balance that remains unpaid was not by dint of any wrongdoing on their part. By contrast, if a constructive trust were not invoked, the Defendants would be unjustly enriched.

It may be added that the 2nd Defendant’s conduct in selling the subject properties when it no longer had any beneficial interest in them - more so when the 1st Defendant had already sold them to the Plaintiffs – is tantamount to fraud. See Yeo Ping Tieng & Ors v Elitprop Sdn Bhd [2020] 1 CLJ 776.

In any event, as submitted by learned counsel for the Plaintiffs/Respondents, the agreement between the 2nd and 3rd Defendants “defines “Remaining Lots” to exclude lots sold to purchasers where redemption statements had been issued, such as the plaintiffs and therefore it excludes the Properties from the definition of “Remaining Lots” purportedly sold to the 3rd defendant.”

Any suggestion that the Plaintiffs had no right to sue LCDA or Bayu Sempurna because there is no privity of contract between the Plaintiffs and either of them has to be rejected.

The Plaintiffs here are suing to invoke and enforce a trust which is an exception to the common law rule of privity of contract. See Takako Sakao v Ng Pek Yuen & Anor [2010] 1 CLJ 381.

The non-payment of the balance purchase price does not bar recourse to the remedial device of a constructive 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 Edmund Davies LJ in Carl Zeiss Stiftung v. Herbert Smith & Co. (No. 2) [1969] 2 Ch. 276, 301.

In IB Capital Sdn Bhd v Ivory Indah Sdn Bhd & Anor [2021] 1 LNS 2348 which was cited by the learned HCJ, S Nantha Balan JCA held: “Clearly, there is some confusion as to whether there can be any beneficial ownership under a constructive trust when the purchaser has not paid the full purchase price. We therefore take this opportunity to clear up the confusion. … Hence, in our view, the position which obtains before the full purchase price is paid is that a constructive trust arises upon the execution of a valid contract and upon the full purchase price being paid, a bare trust comes into existence. … Hence, to summarize the legal position, whilst a bare trust is established upon payment of the full purchase price by the purchaser, the non-payment of the balance of the purchase price is not a bar to a claim for relief under a constructive trust…” Laches

In Hassan Kadir & Ors v Mohamed Moidu Mohamed & Anor [2011] 5 CLJ 136, Arifin Zakaria CJM (as His Lordship then was), in delivering the judgment of the Federal Court, cited with approval the following headnote in Williams v Greatrex [1957] 1 WLR 31, 36: “That the purchaser, having paid the deposits on and having entered into possession of the land, became the equitable owner of the land under a contract binding on the vendor such that the vendor could not now object to specific performance on the ground of laches unless he could show that he had not acquiesced in the purchaser's acts of possession or that the purchaser had abandoned the contract; and that the evidence showed sufficient acquiescence by him and no abandonment by the purchaser. Accordingly, despite the lapse of time, the purchaser was entitled to specific performance on payment of the balance of the price and interest thereon for the intervening years.”

In that English case, Denning LJ held that “as long as the purchaser remained in possession under a contract which entitled him to be there, he had an equity which the courts will protect. There was no need for him to claim specific performance in order to give him a right to be there. Laches or delay is not a bar to this action.”

The principle enunciated puts to rest the 2nd and 3rd Defendants’ argument predicated on laches. Applying that principle to the facts in the instant case, the 1st Defendant had delivered the keys and vacant possession to the Plaintiffs who took possession of the two shophouses, collected rental, and paid the assessment rates without protest by the 1st Defendant which did not terminate the SPAs or seek to recover possession.

In the absence of such action by the original developer/1st Defendant, there was no reason for the Plaintiffs to commence proceedings until the 3rd Defendant demanded vacant possession of the two shophouses on 25 November 2021. Limitation

That brings us to the 2nd Defendant’s contention that the Plaintiffs knew that they had a cause of action since 2007 and took no action until 2022, as a result of which their action for specific performance against the 1st Defendant was time-barred under the Limitation Ordinance (Cap. 49).

The contention is unmeritorious.

Under section 3 of the Limitation Ordinance (Cap. 49), a suit instituted after the period of limitation shall only be dismissed if limitation has been set up as a defence.

In the instant case, the action for specific performance was against the 1st Defendant and since the Official Receiver did not even enter appearance, let alone plead limitation as a defence, it is not for the 2nd Defendant to do so on behalf of the 1st Defendant. Cross-Appeals

We now turn to consider the cross-appeals filed by the Plaintiffs to correct certain sentences and omissions in the learned HCJ’s grounds of judgment.

An example was the learned HCJ’s statement (paragraph 2) that the Plaintiffs had obtained “sanction from the Official Receiver” though they had actually obtained leave from the Winding Up Court, which fact was agreed among the parties.

Another example relates to the part of the judgment which reads “a declaration that the plaintiffs are beneficial owners of the Properties with all rights of ownership attaching thereto,”

At the outset of the hearing on 16 October 2025, learned counsel for the 3rd Defendant raised a preliminary objection on the back of the Federal Court’s decision in Kabushiki Kaisha Ngu v. Leisure Farm Corporation Sdn Bhd & Ors [2016] 8

Under Rule 8 of the Rules of the Court of Appeal 1994, a cross-appeal can only be filed to vary the decision.

It is pertinent that the Respondents are not challenging the decision. Nonetheless, they say that they filed the cross-appeals out of an abundance of caution. It would appear that the purpose of the cross-appeals was to take the wind out of the Appellants’ sails, that is, to highlight and correct any inconsequential deficiencies which may otherwise distract from the core issues.

Be that as it may, the cross-appeals have to be dismissed.

In any event, since the appeals brought by the 2nd and 3rd Defendants are by way of re-hearing pursuant to section 69 of the Courts of Judicature Act 1964 and Rule 5 of the Rules of the Court of Appeal 1994, we are conferred with a right to review all the evidence and arrive at the same conclusion as the learned HCJ, even if it is for different reasons. See Inas Faiqah Mohd Helmi (a child suing through her father and next friend; Mohd Helmi Abdul Aziz) v. Kerajaan Malaysia & Ors [2016] 2 CLJ 885. Conclusion

For the reasons given, we do not find that the learned HCJ has been plainly wrong in arriving at the decision as he did. Appellate intervention is not warranted. The appeals are accordingly dismissed.

Taking into account the dismissal of the cross-appeals and the various issues raised in relation to the appeals which all counsel advanced with much erudition, each Appellant is to pay costs of RM50,000.00 to the Respondents who were the Plaintiffs in the High Court and represented by a common firm of solicitors, such costs to be subject to payment of the allocatur fee.

To be clear, in respect of Civil Appeal No.: Q-01(NCvC)(W)- 468-09/2023, LCAD is to pay total costs of RM50,000.00 to the 1st to 3rd Respondents. In respect of Civil Appeal No.: Q- 02(NCvC)(W)-1365-08/2023, Bayu Sempurna is to pay total costs of RM50,000.00 to the 1st to 3rd Respondents. Both sets of costs are subject to payment of the allocatur fee. No order as to costs is made in relation to the Official Receiver who took no part in the hearing of the appeals and cross-appeals. Dated the 15th day of January 2026 CIVIL APPEAL NO.: Q-01(NCvC)(W)-468-09/2023 Counsel for the Appellant

Mr. Nicholas Wung Duk Ying 2. Ms. Anastasia Chin Mengxing 3. Ms. Liew Sheau Kie [Messrs Wung & Co., Kuching] Counsel for the Respondents For the 1st - 3rd Respondents :

Mr. James Lo Kuin Chuan

Mr. Andy Tan Tung Sii [Messrs Andy and Associates] For the 4th Respondent : Jabatan Insolvensi Malaysia For the 5th Respondent :

Mr. Alvin Yong Sze Lung

Ms. Shirleen Ong [Messrs Alvin Yong Advocates] CIVIL APPEAL NO.: Q-02(NCvC)(W)-1365-08/2023 Counsel for the Appellant 1. Mr. Alvin Yong Sze Lung 2. Ms. Shirleen Ong [Messrs Alvin Yong Advocates Kuching] Counsel for the Respondents For the 1st – 3rd Respondents :

Mr. James Lo Kuin Chuan

Mr. Andy Tan Tung Sii For the 4th Respondent : Jabatan Insolvensi Malaysia For the 5th Respondent :

Mr. Nicholas Wung Duk Ying

Ms. Anastasia Chin Mengxing

Ms. Liew Sheau Kie [Messrs Wung & Co., Kuching]