Lee Bee Kiow v Lee Bee Hong (B-02(NCvC)(A)-1832-10/2024)

This appeal arises from a breakdown in the relationship between co-proprietors of a residential property. The Appellant and the Respondent, who are sisters, jointly purchased the property and are registered proprietors thereof. The Respondent has been in exclusive occupation of the property since the purchase and claimed to have incurred costs in renovating the property. The Appellant, on the other hand, had partially repaid the bank loan taken jointly to reduce the monthly instalment payments, which are borne equally by the parties. However, due to their inability to agree on the division of the sale proceeds, the parties are unable to sell the property.

The aforesaid led to the Appellant filing the Originating Summons seeking, inter alia, an order permitting the Appellant to sell the property and for a suitable approach to an equitable accounting between the co-proprietors, in particular, in relation to the loan repayment, the renovation costs, and other expenses incurred related to the property. The Court is also to determine if the Appellant is entitled to claim from the Respondent the rent for her occupation of the property.

The Appellant and the Respondent are siblings. They jointly purchased a 2-storey terrace house at Bandar Parklands, Klang (“the House”) sometime on 7.7.2009 for RM296,000.00.

The Appellant and Respondent each paid RM18,000.00 (totaling RM36,000.00) as a down payment for the purchase of the House. They took out a loan with Public Bank Berhad (“PBB”) for the balance of RM260,000.00. The monthly instalments for the loan are borne equally by them.

There is no dispute that the Appellant and the Respondent are registered as co-proprietors of the House, with each owning a ½ share. Further, with the Appellant’s consent, the Respondent has occupied the House rent-free and has borne all related expenses for the House since.

Not disputed is the fact that the Appellant had made a partial repayment of the bank loan of RM193,000.00 (“Partial Redemption Sum”). In turn, the Respondent claimed that she had incurred costs in renovating and maintaining the House to the tune of RM157,714.54 (“Renovation Costs”).

Sometime in May 2024, both the Appellant and the Respondent agreed to sell the House at a sale price of RM720,000.00. However, they could not reach an agreement as to how the sale proceeds are to be divided between them. The Respondent wanted the sale proceeds to be divided equally between them, while the Appellant insisted that the Partial Redemption Sum and an amount equivalent to the rent payable for the Respondent’s occupation of the House ought to be deducted from the sale proceeds and paid to her first before the sale proceeds are to be divided equally between the parties. This prompted the Respondent to insist that the Renovation Costs should also be deducted from the sale proceeds and be paid to her before the equal distribution of the sale proceeds.

By reason of the aforesaid, the sale of the House was aborted, and the parties could not proceed with the sale unless there can be a resolution to the impasse.

This prompted the Appellant to file the present Originating Summons before the High Court, Klang, seeking, inter alia, the following orders: a) the Appellant be permitted to sell the House by private treaty; b) the Respondent to pay the Appellant rent of RM 600 a month from 2011 (“the Rents”); c) the Partial Redemption Sum and all expenses related to the House to be paid out of the sale proceeds; d) the assessment, quit rent, stamp duty, agent’s commission, legal fees, and related expenses necessary for the sale and purchase transaction of the House to be deducted from the sale proceeds; and e) thereafter, the net sale proceeds to be divided equally between the Appellant and the Respondent.

After hearing submissions from counsel, the learned High Court Judge made the following orders: a) The Appellant’s claim for the Rents was dismissed as the Respondent is a co-joint owner or co-proprietor of the House and the Appellant had only decided to seek the Rents after the Respondent had disagreed to the Appellant’s proposed division of the sale proceeds; b) The sale proceeds are to be divided equally between the Appellant and the Respondent after deducting all accrued expenses related to the House, including utility, assessment, quit rent, stamp duty, estate agent’s commission, legal fees, and other payments relating to the sale and purchase transaction (subject to proof of payment). All or any payments or expenditure incurred by the Appellant and the Respondent (including the Partial Redemption Sum and the Renovation Costs on the House, if any, and subject to proof) are to be taken into consideration in the division of the sale proceeds. (emphasis mine) (“the High Court Order”)

The Appellant contended that: a) the High Court Order is uncertain and vague and failed to provide the rationale in arriving at the decision; b) the learned High Court Judge failed to give proper consideration to the Renovation Costs incurred by the Respondent and whether the same had in fact contributed to the enhanced value of the House. The Respondent should bear the burden of proving the Renovation Costs and that the same, in fact, has contributed to the increase in the market value of the House; c) in any case, the Renovation Costs should not be deducted from the sale proceeds, as the Respondent had enjoyed the benefit of occupying the House free of rent; d) most of the items claimed as part of the Renovation Costs are unsupported by any documents; e) the Appellant is entitled to claim for the Rents as she has not derived any benefits from the House since the Respondent has been in occupation of the same for the last 13 years. The market rent rate for the House is at least RM1,200 a month, and the Appellant is therefore seeking only RM600.00 a month from the Respondent.

This is a case where the co-proprietors of a residential property are unable to agree on the sale of the property. As it stands, neither the Appellant nor the Respondent can unilaterally sell the House without the other’s consent. Accordingly, we viewed the application by the Appellant in this case as an appeal to the Court to exercise its equitable jurisdiction to avoid the House from being “locked” indefinitely. In the instant case, as the subject property is a residential house where an order for partition is practicably incapable of being made, an order to permit a co-proprietor to sell instead of partition is one way to break the deadlock, especially since both parties in this case are in favour of the sale of the House.

In this regard, we find no appealable error in the learned High Court Judge’s order dismissing the Appellant’s claims for the Rents. This is because the Respondent is a co-proprietor of the House, and as co-proprietor, she is entitled to possession and enjoyment of the whole of the House. This is clear from section 343(b) of the National Land Code (revised 2020), which provides: 343 Incidents of co-proprietorship

…

they may at any time apply for the partition of the land under Chapter 2 of Part Nine but, so long as their co-proprietorship continues, shall each be entitled to possession and enjoyment of the whole; and

…

Thus, a co-proprietor in occupation is not liable to pay rent to the other co-proprietor unless there is an ouster or agreement. In this case, the Appellant was never ousted from the House, she simply did not occupy and had agreed to the Respondent occupying the same. There was never any agreement that rent would later be charged retrospectively when the House is to be sold. Accordingly, the Respondent’s occupation of the House since 2011 is nothing more than lawful co-ownership use, and by reason thereof, the Appellant is not entitled to seek the payment of the Rents at all.

In any case, it is our judgment that the Appellant is estopped from claiming the Rents as the Respondent, in reliance on the Appellant’s agreement to permit the Respondent to occupy the House free of rent for the last 13 years, had incurred expenditures towards maintaining the House and renovating the same. For this reason, we see no merit to the Appellant’s claim for the Rents, especially since, as rightly pointed out by the learned High Court Judge, the claim for the Rents was prompted by the Respondent’s insistence that the Renovation Costs be reimbursed to her out of the sale proceeds of the House.

However, as regards the High Court Order dealing with the deductions to be made before distributing the sale proceeds equally between the Appellant and the Respondent, we find that it is necessary to vary the order to give not only certainty and clarity but also to make the distribution more equitable to the parties in the light of the facts of this case.

We are clear that in making the order on the distribution of the sale proceeds, we are dealing with the parties making a prospective sale and not an existing sale. The purpose of the order is to break the deadlock.

Given that the order is dealing with a prospective sale, this must necessarily mean that the precise amounts for the expenses to be incurred in relation to the sale and purchase transaction for the House cannot be determined definitively in the order. Such costs and expenses can, however, be identified, and in this case, the High Court Order has identified these as the assessment, quit rent, stamp duty, real estate agent’s commission, legal fees, and all mandatory payments involved in the sale transaction, These are expenses that would be necessary in any typical sale and purchase transaction (“Necessary Sale and Purchase Expenses”).

These Necessary Sale and Purchase Expenses, quietly rightly, should be borne equally by the Appellant and the Respondent and deducted from the sale proceeds before any distribution to the parties. The Necessary Sale and Purchase Expenses must be duly supported by proof of payment.

We are of the view that both the Partial Redemption Sum and the Renovation Costs were incurred for the benefit of the House and ultimately benefit both the Appellant and the Respondent. The former reduces the monthly loan instalment payments, and the latter maintains and possibly enhances the value of the House. In this regard, the High Court Order merely provides that these two payments are “to be taken into consideration” in the division of the sale proceeds without specifying how they are to be treated. In our view, as co-proprietors, these payments ought to be borne equally by the Appellant and the Respondent.

Whilst the Partial Redemption Sum of RM193,000.00 is not disputed, the Renovation Costs are hotly disputed. The burden is on the Respondent, who claimed to have incurred the costs, to provide the necessary documentary evidence in support of the sum of RM157,714.54 as Renovation Costs. Once the proof of the Renovation Costs has been established, just as the Respondent is to bear 50% of the Partial Redemption Sum, the Appellant must also bear 50% of the Renovation Costs.

We noted the Appellant’s contention that the Renovation Costs were voluntarily incurred by the Respondent. However, regardless of whether the expenditure incurred has increased the market value of the House or not, such expenditure would have preservation added value to the House that would make it inequitable to discount the same entirely. The benefit would be enjoyed by both parties, contributing to the marketability (as opposed to an increase in value) of the House for sale.

To our mind, by apportioning the Renovation Costs equally between the Appellant and the Respondent, the question as to whether the Renovation Costs in fact increased the value of the House, which is a contentious point, becomes irrelevant for the distribution of the sale proceeds.

In any case, the Originating Summons filed by the Appellant requires the Court to determine if an order for the sale of the House by the Appellant is appropriate and, if so, to direct how the sale proceeds are to be applied and divided between the parties. It is not suitable in an Originating Summons application for this Court to resolve seriously disputed facts based on affidavit evidence alone. The disputes as to whether certain items claimed by the Respondent as Renovation Costs were, in fact, actually incurred and whether such costs resulted in an increase in the market value of the House cannot be summarily determined in this application.

Finally, we also took cognizance of the fact that the Respondent has been paying the assessments and quit rents for the House for the last 13 years. These are expenses directly related to the House, necessary to preserve the House, and incurred for the benefit of both the Appellant and Respondent as co-proprietors. The obligations to pay the assessments and quit rents fall on the co-proprietors jointly. These expenses, which we termed “expenses related to the property” in our Broad Grounds, should also be borne equally between the Appellant and the Respondent. In this connection, we have deliberately excluded the utility expenses (water and electricity bills) from this category because the expenses in respect of utility were incurred only for the benefit of the Respondent.

Accordingly, we are unanimous in our view that the High Court Order be varied such that: a) The following items, all of which are subject to proof, shall be borne equally between the Appellant and the Respondent: i) the Partial Redemption Sum and the Renovation Costs; ii) the Necessary Sale and Purchase Expenses; and iii) the expenses related to the House (assessment and quit rents, excluding utilities) b) The net sale proceeds after the deductions and apportionments above shall be divided equally between the Appellant and the Respondent.

Given that this is an unfortunate dispute between two siblings and with the hope that both the siblings can come to a resolution of their disputes, in exercise of our discretion, we make no order as to costs.

We appreciate that even with our decision, the Appellant and the Respondent may not come to an agreement on the Renovation Costs and the expenses related to the House, as the quantum is subject to proof and the parties may disagree on the sufficiency of the documentary proof produced. We hope that good sense will prevail, and if the quantum is still unresolved, the parties may have to file separate proceedings or an application to determine the same. DATE: 27 January 2026 -sgd-ONG CHEE KWAN JUDGE COURT OF APPEAL For the Appellant : Ng Ka Choon (Messrs. Tengku Maria Lim & Ong) For the Respondent : Armikayani Binti Amiruddin (Messrs. K. Francis & Varghese)