Lee Hwa yang v 1. Yahaya Bin Bujang (BA-24-979-09/2016)

1.

2.

MOHD NOR BIN HASSAN DEFENDANTS GROUNDS OF JUDGMENT (Enclosure 1 & Enclosure 25) A. BRIEF BACKGROUND [1] The present Originating Summons concerns a Trust Deed executed on 8.12.2002 (the said “Trust Deed”) between the Plaintiff and the three Defendants pertaining to ordinary shares of a company. [2] The three Defendants who were trustees had opted to breach their duties as holders of a trust under the Trust Deed, in the face of unambiguous, clear, and concise terms of the Trust Deed. 3 [3] As much as the three Defendants here attempt to muddy the waters with unnecessary convoluted narratives on facts, and even a supposition of fraud, it is patently obvious that this Court finds no necessity to delve and indulge in all these distractions and rightfully enforce and respect the party autonomy in entering into a Trust Deed, and the terms codified within it. [4] From the outset, this Court must emphasise that the terms of the trust deed and even the supporting document to the trust deed is sublimely clear that there is not even an inch of room for this Court to derail itself from what the parties had meant to be agreed, and in fact had already been codified into the trust deed. [5] The underlying facts of the present Originating Summon is verily simple. The Plaintiff (“Beneficiary”) had under trust deed dated 8.12.2002 (“said Trust Deed”) agreed to put his shareholdings in Syarikat Sujaman Sdn Bhd (“Company”), on trust to the holding of the three Defendants. In view of the said Trust Deed, a shareholders’ agreement was entered into between the three Defendants and Lee 4 Wah Lian on the same date of the said Trust Deed to give effect to the said Trust Deed (“said Shareholders’ Agreement”). [5] The terms of the said Trust Deed is simple, logical, easy to understand, and leaves very little room for extrinsic interpretation beyond the four corners of the said Trust Deed. The salient terms of the Trust Deed entails as follows: i. In clear and capital letters, the Defendants holds the Plaintiffs’ shares on trust to the benefit of the Plaintiff (Preamble and paragraph (i) of the said Trust Deed); ii. It was agreed, admitted, acknowledged that the Defendants had not furnished even a single cent’s worth of consideration for the shares and this agreement, admission and acknowledgment holds true notwithstanding anything stated in any other documents (Clause B of the said Trust Deed); and iii. Whenever it is required or recalled, at the request of the Plaintiff, the Defendants are contractually required to expend 5 every single effort and necessities to ensure that the shares are transferred or re-transferred back to the Plaintiff (paragraph (ii) of the said Trust Deed) [6] In line and in compliance with the said Trust Deed, there was never any evidence tendered by any/all the Defendants to prove that any consideration was ever paid to the Plaintiff, which adds further weight to the probability that the Defendants unequivocally hold the shares on trust for the benefit of the Plaintiff. [7] The Plaintiff filed the present Originating Summons to vitiate the said Trust Deed and have the shares returned to his legal ownership considering that the trustees have in total breach of the said Trust Deed, refused to adhere to the terms they themselves have agreed and return the shares at the request of the Plaintiff. Owing to the same breach, the Plaintiff has rightfully lodged a police report against the Defendants. B. THE RULES OF CONTRACTUAL INTERPRETATION DOES NOT AID THE DEFENDANTS’ CASES 6 [8] There is no doubt in the Court’s comprehension and understanding that a trust deed is a contract and the same rules of interpretation of contract should apply. This Court has no intention to contradict this time-celebrated principle of law. Nonetheless, under the scrutiny and application of the same contractual interpretative rules, it is more probable than not that the parties have all mutually and unequivocally agreed that the shares were to be held on trust. [9] This Court is minded of the barrage of cases which have decided that a trust deed is a contract which were submitted by the Defendants. (See CIMB Bank Bhd v Maybank Trustees Bhd and other appeals [2014] 3 MLJ 169; Pavilion Yields Sdn Bhd v Universal Trustee (Malaysia) Berhad & Ors [2016] MLJU 1389). Nonetheless, even having said that the said Trust Deed is a contract, it gleaned from the rules of interpretation of contracts that none of the rules would lend any support or credence to the Defendants’ cases. In fact, the rules of interpretation of contracts lend more credibility and probability to the Plaintiff’s case. 7 [10] By and large the counsel for the Defendants has furnished two trite principles in interpretation of contracts: iv. That the Court ought to consider the surrounding facts and circumstances of the said Trust Deed. Here the Defendants’ counsel had referred to numerous decisions from the Courts of Common Law (see Prenn v Simmons [1971] 1 WLR ; Reardon Smith Line Ltd v Yngvar Hansen-Tangen [1976] 1 WLR 989 ; Investors Compensation Scheme v West Bromwich Building Society [1998] 1 WLR 896) as well as a Federal Court decision of our jurisdiction in SPM Membrane Switch Sdn Bhd v Kerajaan Negeri Selangor [2016] 1MLJ 464; v. That the Court ought to look at the subsequent conduct of parties after the culmination of the said Trust Deed. Again the Defendants’ counsel had referred to numerous decisions from the Courts of Common Law (see Schuler (L.) A. G. v Wickam Machine Tool Sales Ltd [1974] AC 235 ; AG Securities v Vauhan [1990] 1 AC 417) as well as a case from our jurisdiction in Kedah Cement Sdn Bhd v Masjaya trading Sdn Bhd [2007] 3 MLJ 597. 8 [11] Nonetheless, just these mere two rules of interpretation are not even close to cover the entire breadth of the trite rules of interpretation of contracts. The Defendants’ counsel has undoubtedly skipped and omitted an equally commanding and celebrated rule of interpretation which is a precursor or the first hurdle before the other two principles above even come into relevance. It is the most fundamental rule of interpretation of contracts that the Courts ought not to interfere with the terms of a contract, when the terms of a contract are sufficiently clear and unambiguous. And indeed the clauses that the Defendants are attempting to vary in interpretation is sublimely clear and leaving no room at all for any addition or subtraction of intent or meaning. [12] The rule of interpretation in cases of clear and unambiguous terms had already been clearly set out in the landmark decision in the case of Brett Andrew Macnamera v Kam Lee Kuan [2008] 7 CLJ 450: “When the words used were clear and unambiguous it was not the court’s business to go behind those written terms or read new terms to it. There was not the slightest doubt about the intention of the parties. Both the plaintiff and the defendant were very 9 conscious of the fact about the ownership of the property which was purchased on the very same day of the execution of the trust deed, and both knew their relative positions, one being the trustee and the other the beneficiary of the trust” [13] Directly applying the same excerpt above, the terms of the said Trust Deed was supremely clear. The clauses clearly spell out that the Defendants shall hold the shares in trust to the benefit of the Plaintiff. The parties are very well aware and conscious of their intended positions and in fact the said Shareholders’ Agreement was entered into the very same day the said Trust Deed was executed. [14] Lim Beng Choon J in the case of The Royal Selangor Golf Club v Anglo-Oriental (Malaya) Sdn Bhd [1990] 1 CLJ 995 has brilliantly digested the plethora of authorities that have upheld the same pinnacle rule of interpretation of contracts. It is clear from the following excerpt that the first hurdle before any consideration could be paid to the factual matrix surrounding the contract, the Court must first identify if the wordings of the contract are clear or otherwise. If they are clear, then the Court ought not go beyond those wordings: 10 “In considering the dispute of the parties, I must first of all bear in mind the general principles of construction of contract as enunciated in National Coal Board v Neill (William) & Son Ltd [1984] 1 All ER 555 where it is said at p 560: The first two issues involve the construction of the contract. I bear in mind the principles of construing a contact. The relevant ones for the purpose of this case are: (1) construction of a contract is a question of law; (2) where the contract is in writing the intention of the parties must be found within the four walls of the contractual documents; it is not legitimate to have regard to extrinsic evidence (there is, of course, no such evidence in this case); (3) a contract must be construed as at the date it was made: it is not legitimate to construe it in the light of what happened years or even days later; (4) the contract must be construed as a whole, and also, so far as practicable, to give effect to every part of it. In Central Bank of India v Hartford Fire Insurance Co Ltd AIR 1965 SC 1288, the Supreme Court of India lays stress on the second 11 principle advocated in the Neill & Son Ltd [1984] 1 All ER 555 case when it says at p 1290: Now it is common place that it is the court's duty to give effect to the bargain of the parties according to their intention and when that bargain is in writing the intention is to be looked for in the words used unless they are such that one may suspect that they do not convey the intention correctly. If those words are clear, there is very little that the court has to do. The court must give effect to the plain meaning of the words however much it may dislike the result. [15] The first wisdom and guidance that can be extrapolated from the excerpt above is that if the terms of the contract is clear, then it is not lawful to construe the contract based on whatever that may have transpired “years or even days later” from the contract. [16] The second wisdom and guidance is that if the words of the contract is clear, there is very little for the Court has to do or can do to derogate or derail itself from the clear terms of the contract. It is 12 incumbent upon the Court to enforce the word of the contract to its plain meaning notwithstanding the sentiments of the parties of the contract. [17] Thus, it is this Court’s finding that the terms of the said Trust Deed is ultimately clear, vivid, and unambiguous. There is no room or necessity for this Court to be overtly vigilant to scrutinize any extrinsic facts outside of the said Trust Deed when the terms of the trust deed is clearly identifiable, understandable, sensible and logical. [18] For the sake of completeness, even if this Court were too look at the factual matrix of the case, and even the subsequent events following the said Trust Deed, there were no evidence or facts which were put forth to Court which would indicate that the Plaintiff intends to relinquish the trust or his beneficial ownership. It is pertinent to highlight here that whatever arrangement, communication and understanding (leading up to the said Trust Deed) which was deposed by the Defendants in their affidavits were sheer bare assertions with glaring absence of any exhibit evidence to support the Defendants’ cases. 13 [19] In fact, the only subsequent events which were put forth by the Defendants are mere evidence of businesses which the company has obtained. None of these evidences evinced any intention of the Plaintiff to relinquish the trust and surrender his beneficial ownership over the shares. On the same note, none of these facts and evidences ever evinced any intention of the parties to have the profits of the Company to be considered as consideration paid for the shares held by the Defendants. There is simply no evidence, no contemporaneous documents to indicate these averments. [20] Clearly the Defendants’ case by and large is heavily reliant on bare assertion of facts, mere presumptions and baseless inferences. There is no feasible nexus that can be drawn between mere statements of business and profits with the intent to relinquish the trust and beneficial ownership over the shares. [21] It is opportune for this Court to discuss the sheer fact that the Defendants themselves have ultimately either failed to or willingly withheld material evidence to prove the payment of consideration of RM840,003.00 for the supposed purchase of the shares. Here, the 14 Defendants have attempted to prove that the Plaintiff had intended to derail himself from the terms of the said Trust Deed in accepting the alleged sum. [22] Nonetheless, even after repeated challenges by the Plaintiff, and after the string of affidavits the Defendants have affirmed and filed, the Defendants have consistently failed or willingly withheld any evidence to prove the payment of this alleged consideration. Clearly the proof of the payment of this alleged consideration is utterly material to the case and if the Defendants are attempting to prove such payment, it is incumbent upon the Defendants to prove the same, in line with Section 103 of the Evidence Act 1950. But this is exactly what the Defendants have failed to do. Thus, it is only appropriate for this Court to draw an adverse inference under Section 114(g) of the Evidence Act 1950 against the Defendants for failing or willingly withheld such material evidence. (see also Juahir bin Sadikon v Perbadanan Kemajuan Ekonomi Negeri Johor [1996] 3 MLJ 627) 15 C. MISCELLANEOUS [23] Just as a side note, this Court would like to comment on the Defendants’ supposed allegation on the illegality of the said Trust Deed. Clearly from the outset, this Court ought not to delve into such facts when the terms of the Trust Deed are already clear and unambiguous. [24] But it is interesting to this Court that the Defendants would take this trajectory in attempting to defeat the Trust Deed when the Defendants themselves are clearly complicit to the same alleged illegality that the Defendants are pressing against the Plaintiff. [25] It is a classic case of the pot calling the kettle black. Now, if the Defendants should contend that the Court ought not to assist the Plaintiff for being complicit in an illegal contract, the same contention would work against the Defendants for consciously entering into, benefiting and profiting from the same alleged illegal contract. It is then incumbent for the Court to ensure that no parties shall retain any benefits from the alleged illegal contract. 16 [26] Nonetheless, it is utterly unnecessary for this Court to delve deeply (or at all) into this issue when the true nature of the present Originating Summons is simply for a breach of contract (said Trust Deed) which terms are completely clear and unambiguous. The supposition of fraud here is merely an attempt by the Defendants to inflate the issues to be bigger than they really are. It is verily proper for the present case to be determined via an Originating Summons. D. DECISION ON ENCLOSURE 1 [27] Having all of the above findings and deliberations above, it is this Court’s decision that the Plaintiff’s Originating Summons be allowed. Consequently this Court grants order-in-terms to the Plaintiff’s Originating Summons. [28] In view of clause B (ii) of the Trust Deed, this Court also further orders that there will be no order as to costs in respect of Enclosure 1. 17 E. GROUNDS OF JUDGMENT IN RESPECT OF ENCLOSURE 25 [29] Prior to the disposal of the substantive application in Enclosure 1, this Court had dismissed the Defendants’ application in Enclosure 25 on 6.6.2017 with costs of RM 5000.00 to the Plaintiff. [30] Enclosure 25 is the Defendants’ application filed pursuant to Order 28 rule 4(3), Order 28 rule 4(4) of the Rule of Court, 2012 read with Order 38 rule 2(2) of the Rules of Court, 2012 seeking for an order that the Plaintiff be cross examined on all his affidavits sworn by him namely the:

Plaintiff’s Affidavit in Support affirmed on 19th September 2016 [Enclosure 2];

(ii) Plaintiff’s Affidavit in Reply to the 1st Defendant’s Affidavit affirmed on 31st October 2016 [Enclosure 7];

(iii) Plaintiff’s Affidavit in Reply to the 2nd Defendant’s Affidavit affirmed on 31st October 2016 [Enclosure 8]; 18

(iv) Plaintiff’s Affidavit in Reply to the 3rd Defendant’s Affidavit affirmed on 31st October 2016 [Enclosure 9];

Plaintiff’s Affidavit in Reply to the 1st Defendant’s 2nd Affidavit affirmed on 18th November 2016 [Enclosure 13];

(vi) Plaintiff’s Affidavit in Reply to the 2nd Defendant’s 2nd Affidavit affirmed on 18th November 2016 [Enclosure 14];

(vii) Plaintiff’s Affidavit in Reply to the 3rd Defendant’s 2nd Affidavit affirmed on 18th November 2016 [Enclosure 15];

(viii) Plaintiff’s Affidavit in Reply to the Defendants’ 3rd Affidavit affirmed on 8th December 2016; and

(ix) Plaintiff’s Affidavit in Reply to the Defendants’ 4the Affidavit affirmed on 30th December 2016 [Enclosure 23]; F. THE LAW ON APPLICATION TO CROSS EXAMINE OF DEPONENT UNDER ORDER 38 RULE 2(2) OF THE RULES OF COURT 2012 (ROC 2012) 19 [31] The law and the principle relating to an application for cross-examination of a deponent are trite and well settled. It is trite law that where in any matter or cause which had been begun by Originating Summons and in such proceedings, on the application by any party the Court has discretionary power to order or to compel a deponent of an affidavit to attend court for cross-examination on his/her affidavit. [32] The Court’s wide discretionary power to summon attendance of a deponent to be cross-examined is clearly stipulated under Order 38 Rule 2(2) of the Rules of Court 2012 (ROC 2012) which reads; “ In any cause or matter begun by originating summons and on any application made by notice of application, evidence shall be given by affidavit unless in the case of any such cause, matter or application any provision of these Rules otherwise provides or the Court otherwise directs, but the court may, on the application of any party, order the attendance for cross examination of the person making any such affidavit, and where, after such an order has been made, the person in question does not attend, his affidavit 20 shall not be used as evidence without the leave of the Court.” [33] While this Court recognizes the conferment of such general and unlimited power under Order 38 Rule 2(2) of the ROC 2012, this Court also acknowledges that this discretionary power must be judiciously exercised with due regard to the principle of law and authorities binding on it. Thus it would be apt for this Court at this juncture to address and digest the cases which were brought to this Court’s attention by both solicitors of the Plaintiffs and the Defendant in light of this discretionary power. i. In Tetuan Kumar Jaspal Quah & Aishah (suing as a firm) v The Co-Operative Central Bank Ltd [2007] 4 MLJ 638, it was held in paragraph [25] that there are three prime considerations which would influence the Court in the exercise of its discretion to allow or disallow cross-examination on affidavits, namely:- i) the truth of the averment in the affidavit must be challenged or the issues of fact identified. 21 ii) cross-examination would only be allowed if the disputed fact is relevant to the issue to be decided and must be limited to that issue only; and iii) cross-examination would not advance the cause of justice and should be refused if there is sufficient affidavit evidence or contemporaneous documents to enable the court to property decide without the need of cross-examination. ii. In Regional Centre for Arbitration v Ooi Beng Choo & Anor [1998] 2 MLJ 383, it was held at page 391 that:- “It is settled law that the court retains an absolute discretion whether or not to allow to cross-examine a deponent on his affidavit. Generally, cross-examination will not be allowed unless there is a 22 question of fact to be tried which requires viva voce testimony tested by cross-examination (see Arab-Malaysian Merchant Bank Bhd v City Properties Sdn Bhd [1992] 4 CLJ 2123), or where there are ‘special circumstances’” Re Smith & Fawcett Ltd [1942] 1 All ER 542; [1942] Ch 304. In the sphere of judicial review proceedings, it is matter for the discretion of the court; it should not be allowed except where the court believes that it is necessary in order that justice may be done between the parties (per Lord Denning MR in George v Secretary of State for Environment & Anor (1979) 38 P & CR 609…” iii. In Leisure & Allied Industries Pty Ltd v Udaria Sdn Bhd [1980] 1 MLJ 189, Salleh Abas FJ in considering whether to exercise his discretion as regards the respondent’s application for cross-examination at page 190 had stated this: “It is necessary for me to see how the proposed cross-examination would be relevant to the issue in 23 the appellant’s application. An examination of this issue is therefore essential…” iv. In Emporium Jaya (Bentong) Sdn Bhd v Emporium Jaya (Jerantut) Sdn Bhd (No. 2) [2002] 5 MLJ 675, Ramly Ali J (as he then was) stated at page 685 C-D:- “In order to enable me to exercise my judicial discretion as regards the present application made by the applicants in the present case, it is necessary for me to see how the proposed cross-examination would be relevant to the issue in the petition. An examination of this issue is therefore essential in order to enable me to determine whether the applications are made ‘without just cause, or motivated by desire to delay proceedings or without bona fide or sham or vexatious.” v. In Indrani a/p Rajaratnam & Ors v Fairview Schools Bhd [2001] 4 MLJ 56, the Court of Appeal held inter-alia: 24

(Per Siti Norma Yaakob, NH Chan JJCA and KC Vohrah J concurring) As to whether the dismissal of the appellants' oral application fell within the ambit of ss 67(1) and 68 of the Courts of Judicature Act 1964 so as to be a judgment or order which was appealable, the instant case was concerned with a substantive application under O 38 r 2(3) of the Rules of the High Court 1980 ('the RHC'). The lack of formal application here which the parties were prepared to do away with due to a constraint of time did not change the character of the application. As such, when the judge decided that the petition could proceed without the necessity of cross-examining any deponent, he had made an order on a substantive application for which a dissatisfied party could appeal (see pp 60H, 61D-E); Re Products Ltd [1985] 1 NZLR 710 distinguished. 25

(Per Siti Norma Yaakob JCA, KC Vohrah J concurring) The grant or refusal of an application under O 38 r 2(3) of the RHC was very much an exercise of a judge's power of discretion and the question which had to be determined was whether the judge had exercised his discretion judicially. He had taken into consideration that the appellants had never identified the issues for which they maintained cross-examination had become necessary, nor had they shown that the factual disputes which they alleged were raised by the respondents' affidavits were relevant to their petition to warrant cross-examination. The judge had also taken into consideration the appellants' delay in making the application to cross-examine. Under these circumstances, the trial judge had not erred in law or in principle when he exercised his discretion, as he had put his mind to 26 relevant considerations in deciding as he did (see pp 61F-I, 62A, C).

(Per KC Vohrah J, Siti Norma Yaakob JCA concurring) It was important to take into account all factors when considering an application for cross-examination and if it has little relevance or little weight to the issue which the judge has to decide, then cross-examination should not be permitted (see p 64B); Comet Products v Hawkex Plastics [1971] 1 All ER 1145 (folld) and Leisure & Allied Industries Pty Ltd v Udaria Sdn Bhd [1980] 1 MLJ 189 (folld) followed. The judge below had certainly considered the issue of relevancy. He was mindful that although the petition was grounded under s 218 of the Act, yet counsel for the petitioners had argued that cross-examination was necessary because the basis of the petition was not only mismanagement of the affairs of 27 the company, which fell under s 218 of the Act, but also oppression of minority rights, which fell under a different provision, s 181 of the Act. Quite clearly, the bringing in of the ground of oppression of minority rights under s 181 of the Act was completely irrelevant (see pp 64H-65A). vi. In Wako Merchant Bank (Singapore) Ltd v Lim Lean Heng [2003] 5 MLJ 56), Abdul Aziz J (as he then was) held inter alia: “It is, therefore, not true in every case that the court is equipped to deal with conflicts in affidavit evidence without resort to cross-examination. Where it is necessary to come to a determination of the matter that is the subject of a conflict of affidavit evidence and it is not possible to reject the evidence of one side for any of the stated reasons, the court is not equipped to deal with the conflict without resort to cross-examination.” 28 [34] The Plaintiff had objected to the Defendant’s application on the ground that there are no merits in the Defendant’s application. G. THE DEFENDANT’S ARGUMENT [35] The Defendant’s application to cross-examine Lee Hwa Yang (LHY – the Plaintiff) was grounded on the following arguments:

There is a clear conflict of evidence in the Plaintiff’s Affidavits and Defendant’s Affidavits.

(ii) The purpose of the cross-examination of Lee Hwa Yang, the Plaintiff, would be directed towards challenging his pleaded claim that the Trust Deed accurately represents the understanding between the parties.

(iii) The matters in dispute are relevant to the Originating Summons and warrant cross-examination to determine the veracity of the averments and/or allegations contained in the Plaintiff’s Affidavits as the Defendants have credibly challenged the same in the Defendant’s Affidavits. 29

(iv) It is in the interest of justice to permit cross examination of the Plaintiff so as to assist the Court in determining the matters in dispute. H. THERE IS NO NECESSITY TO CROSS-EXAMINE LHY TO DETERMINE THE ISSUES RAISED IN THE ORIGINATING SUMMONS [36] This Court is very much guided by the principles laid down by numerous decided authorities on the exercise of court’s power under Order 38 of the ROC 2012. [37] In the present case, for this Court to determine whether the cross examination of LHY is necessary to enable this Court to make its finding on the issues raised, this Court needs only to refer to the reliefs sought by the Plaintiff in his Enclosure 1. On the premise of the Trust Deed, the Plaintiff being the beneficiary of the Trust Deed, sought for an order from this Court pursuant to section 60 of the Trustees Act 1949 (TA) that the Trust Deed be revoked and the shares held by the Defendants be transferred to the Plaintiff. 30 [38] Section 60 of the TA provides as follows: Persons entitled to apply for orders 60.

An order under this Act for the appointment of a new trustee or concerning any interest in land, stock, or thing in action subject to a trust may be made on the application of any person beneficially interested in the land, stock, or thing in action, whether under disability or not, or on the application of any person duly appointed trustee thereof.

An order under this Act concerning any interest in land, stock, or thing in action subject to a charge may be made on the application of any person beneficially interested in the property charged, whether under disability or not, or of any person interested in the money secured by the charge. [39] Having considered the Defendants’ application and the grounds supporting the application, this Court opines that in this present case there was no necessity at all to call LHY to be cross examined. The affidavits filed by the Plaintiff and the Defendants relevant to the case 31 are ample and sufficient to enable this Court to decide and determine the issues raised. [40] This Court also opines that the arguments/grounds raised by the Defendants in support of their application to cross examine LYH were baseless and of no merits. [41] Based on the reasons mentioned above, this Court had dismissed Enclosure 25 with costs of RM5000.00 to the Plaintiff. ...................................................... (DATUK AZIMAH BINTI OMAR) Judge High Court Shah Alam Selangor Darul Ehsan Dated the 09th June, 2017 32 For the Plaintiff - Messrs B.Espran & Nor Karlidaa Mr. K. Periasamy For the Defendant - Messrs Dorairaj, Low & Teh Ms. Annete Rachel Edwin Mr. Robert Lazar Messrs Shearn Delamore & Co Ms. Lai Wai Fong