Low Tuck Choy v Low Teik Kien (W-02(IM)(NCVC)-339-02/2018)

Page 1 of 13 IN THE COURT OF APPEAL AT PUTRAJAYA CIVIL APPEAL NO: W-02(IM)(NCVC)-339-02/2018 BETWEEN LOW TUCK CHOY [IC NO.: 580305-10-5991] … APPELLANT AND LOW TEIK KIEN [IC NO.: 641002-10-6387] … RESPONDENT [IN THE HIGH COURT OF MALAYA AT KUALA LUMPUR CIVIL SUIT NO: WA-22NCVC-419-08/2017 BETWEEN LOW TEIK KIEN [IC NO.: 641002-10-6387] … PLAINTIFF AND LOW TUCK CHOY [IC NO.: 580305-10-5991] … DEFENDANT] CORAM IDRUS HARUN, JCA SURAYA OTHMAN, JCA STEPHEN CHUNG HIAN GUAN, JCA Page 2 of 13 JUDGMENT OF THE COURT Factual background of case [1] The Appellant (TC Low), the Respondent (TK Low), Datin Chan Bee Leng and Amelia Chong as Trustees, the Estate of Tang Sau Kuan and Low Lai Yoong (LY Low) were shareholders in Low Chee & Sons Sdn Bhd (company). The number of shares held and the names of the directors of the company were set out in Annexure A of a Shares Sale Agreement dated 27.1.2010 (SSA). [2] In the SSA, the Respondent, in his personal capacity as shareholder, and together with Amelia Chong as parents and trustees of TK Low’s daughter, and the Appellant and the Respondent as executors of the estate of Tang Sau Kuan agreed to sell 34.5% shares in the company to the other shareholders (the sale shares) for a total purchase price of RM34,500,000.00, out of which a sum of RM22,000,000.00 was to be paid to the Respondent and RM12,500,000.00 to be paid to TK Low’s daughter Alexandra Christine Low (referred to as Alexandra or Alex) to be kept in trust until she attains the age of 25 in accordance with a Trust Deed dated 24.12.1980. [3] Under the SSA, the Respondent and Amelia Chong were required to and had deposited the certificates of the sale shares and the registrable transfers of the shares with a firm of solicitors in favour of the other shareholders to be released upon completion of the SSA. [4] Part-payments were made towards the purchase price of RM22,000,000.00 with a balance of RM3,055,465.15 due and owing to Page 3 of 13 the Respondent whereas the sum of RM12,500,00.00 due to Alex was unpaid. [5] In Suit No. WA-22NCVC-38-01/2016 (2016 Suit), the Respondent and Alex claimed for the outstanding sums due under the SSA. The Appellant and LY Low agreed to settle the suit and agreed to enter into a Settlement Agreement dated 15.7.2016. [6] In the Settlement Agreement, the Respondent agreed to an extension of time to complete the SSA in consideration of the Appellant and LY Low jointly and severally agreeing to pay the outstanding sums due under the SSA in two instalments. [7] Under the Settlement Agreement, in the first instalment, the sum of RM3,055,465.15 had been paid to the Respondent and a sum of RM500,000.00 out of the sum of RM12,500,000.00 due to Alex had been paid. [8] Under the second instalment in respect of the balance of RM12,000,000.00 due to Alex, two payments of RM30,000.00 each were paid on 18.4.2017 and 12.5.2017. The Appellant and LY Low defaulted in paying the balance of RM11,940,000.00 due under the Settlement Agreement. [9] In breach of the Settlement Agreement, the Respondent filed Suit No. WA-22NCVC-419-08/2017 (2017 Suit) against the Appellant to recover the sum of RM11,940,000,00 due. By a notice of application (Enclosure 5), the learned High Court Judge, pursuant to the application, the affidavits and exhibits filed and upon hearing counsel Page 4 of 13 for the parties, entered judgment for the Respondent against the Appellant for the said sum with interest and costs and hence this appeal. The Appellant’s submission [10] The Appellant submitted that in the Statement of Claim, it was indisputable that the Respondent's claim was for the balance purchase price of RM11,940,000.00 allegedly for the sale of "Alex's 625,000 shares in the company" pursuant to a Settlement Agreement dated 15.07.2016. The Appellant contended that the Statement of Claim was vague in that it did not explain the identity of ‘Alex’ nor the relationship between ‘Alex’ and the Respondent and therefore the Respondent's claim was fundamentally flawed since at all material times ‘Alex’ is not and was never the beneficial owner of the 625,000 shares in the company known as Low Chee Group Sdn Bhd. [11] The Appellant submitted that there was no dispute that the purchase price of RM22,000,000.00 for the sale of the Respondent's shares had been fully paid to the Respondent pursuant to the Settlement Agreement while the Appellant disputed the balance sum of RM11,940,000.00 in respect of the 625,000 shares because the trust in respect of these shares had entirely failed and the beneficial interest results automatically to Low Chee, the Settlor, by operation of law. [12] The Appellant referred to a Deed of Trust dated 20.5.1994 executed by Low Chee who appointed 2 additional beneficiaries to the Low Chee Trust Fund, namely:- Page 5 of 13

(ii) the eldest male child born to my son Low Teik Kien" (the Respondent). The Appellant submitted that it was also undisputed that the Respondent has no male child but only one daughter, Alexandra who was born on 30.07.2001 and presently 17 years of age. [13] The Appellant submitted that to the extent that the object of the Trust Deeds was uncertain, the Trust Deeds was void and that the object of the Trust Deeds had entirely failed and the beneficial interest results or returns automatically to Low Chee ("the Settlor") by operation of law, citing several cases including Yeong Ah Chee v Lee Chong Hai & Anor and other appeals [1994] 2 MLJ 614; Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1969] AC 669; David Wee Eng Siew v Lim Lean Seng & Anor [2014] 1 CLJ 299 in support of the submission. [14] It was submitted that Alexandra is not and was never the beneficial owner of the 625,000 shares on the fact that the Respondent does not have a male child. It was submitted that it is axiomatic that the object of the Trust Deeds had entirely failed and the beneficial interest results automatically to Low Chee (Settlor) by operation of law. [15] The Appellant also submitted that the SSA in respect of the 625,000 shares was void ab initio and accordingly the Settlement Agreement was ineffective, null and void. It was submitted that in the Page 6 of 13 SSA Amelia Chong as trustee who had purportedly agreed to sell the 625,000 shares could not do so on behalf of Alexandra because Alexandra was never the beneficial owner of the said shares and which should be held as trustee for Low Chee. The Appellant contended neither Alexandra nor Amelia Chong had title to pass and the SSA was therefore void ab initio in respect of the 625,000 shares. [16] The Appellant submitted that it is trite law that an appeal of an interlocutory matter is by way of rehearing and that if, in a summary judgment application, "the defendant can show that there is a serious conflict of material facts as disclosed in the opposing affidavits, or there is otherwise a triable issue worthy of judicial investigation in the trial of the action, or there is an important and difficult point of law requiring further and mature consideration at the trial, summary judgment should be refused” (see Abdul Rahim Abdul Hamid & Ors v Perdana Merchant Bankers Bhd & Ors [2000] 2 CLJ 45730). The Appellant submitted that therefore the learned High Court Judge had erred which required appellate intervention. The Respondent’s submission [17] The Respondent submitted that it was not in dispute that the Appellant and Respondent had entered into the Settlement Agreement to settle the 2016 Suit and that it was not in dispute that the Appellant under the first payment under clause 3.1(a) of the Settlement Agreement had paid the sum of RM3,055,465.15 and RM400,000.00. The Respondent submitted that under the second payment, the Appellant only paid RM60,000.00 in 2 payments of RM30,000.00 each and that it was not in dispute that these payments were made towards Page 7 of 13 the second payment which the Appellant’s solicitor’s letter specifically referred to clause 3.1(b) of the Settlement Agreement. [18] The Respondent submitted that his solicitors had already demanded for the balance of RM11,940,00.00 due on 31.5.2017. The Respondent submitted that after making part-payment towards the second payment, the Appellant gave another cheque for RM30,000.00 on 14.6.2017 “as instalment to Mr. Low Teik Kien”. The Respondent submitted that he had rejected this payment as it was past the due date of 31.5.2017 to fully settle the second payment and there was no agreement to pay the second payment by instalments. [19] It was submitted that the Appellant’s unconditional payments under the Settlement Agreement amounted to admissions of the Appellant’s liability to settle the debt due under the Settlement Agreement and therefore the Appellant is estopped from raising any disputes or challenges to the Respondent’s claim in the face of his unconditional payments under the Settlement Agreement without any protest or dispute at the material times. [20] The Respondent referred to the Appellant’s contention that the Respondent was aware that the payments were made by the Low Chee Group Sdn Bhd, that the payments were treated as advances to the Respondent and therefore the company was prohibited from extending financial assistance in the purchase of the shares contrary to section123 of the Companies Act 2016. The Respondent submitted that the Appellant could not take advantage of his own wrong of using the company’s money to pay the Respondent to assert that the Settlement Agreement was illegal. It was submitted that under section Page 8 of 13 124 of the Companies Act, the validity of the financial assistance and of any contract or transaction connected with the financial assistance was not affected only because of the contravention. [21] It was also submitted that the Appellant could not revisit the history and background to the Settlement Agreement which led to the 2016 Suit. It was submitted that these were irrelevant because the Respondent sued the Appellant on an unpaid sum under the Settlement Agreement. Further it was submitted that if the Appellant wished to challenge or raise issues concerning the Trust Deeds or Share Sale Agreement (SSA), he should have done so when the 2016 Suit was filed to claim the outstanding sum of RM12,500,000.00 and RM3,055,465.15 under the SSA but he failed to do so. It was submitted that it was too late in the day and it was clearly an afterthought. [22] The Respondent submitted that in the light of the facts of the case, the Appellant was bound and estopped from denying the binding nature and validity of the Settlement Agreement, citing the cases of CCG Concrete Constructions (M) Sdn Bhd v Rich Avenue Sdn Bhd [2000] 7 MLJ 46; RHB Sakura Merchant Bankers Bhd v Tan Sri Dato’ Ting Pek Khiing (No 1) [2003] AMEJ 0012. The Court’s decision [23] In this appeal, we were referred to the three essentials of a valid trust namely, (a) certainty of words; (b) certainty of subject; and (c) certainty of object: see Yeong Ah Chee v Lee Chong Hai & Anor and other appeals [1994] 2 MLJ 614. The Appellant submitted that there Page 9 of 13 was uncertainty of the identity of ‘Alex’ and the uncertainty of the object of the trust. We shall deal with these ‘uncertainties’. [24] During the appeal hearing, we were referred to the documents in the appeal record and to the facts of the case. By a trust deed dated 24.12.1980, a trust was set up by Low Chee and Mdm. Tang Sau Kuan for the maintenance, education and advancement for the Appellant, LY Low and the Respondent as beneficiaries and became vested when each one attained the age of 25 years. By another trust deed dated 20.5.1994, Low Chee appointed his eldest grandson Low Kheng Lun and the eldest male child of the Respondent as additional beneficiaries to the trust. Subsequent to this deed, the Respondent did not have a male child but has a daughter by the name of Alexandra Christine Low (Alexandra) born on 30.7.2001. However, by a deed dated 22.1.2010, Alexandra was substituted as the beneficiary to take in place of TK Low’s (Respondent) unborn male child. This was acknowledged in recital 11 of the SSA. [25] In the SSA, she (Alexandra) was referred to as TK Low’s daughter and her shares in the company as TK Low’s daughter’s shares. [26] In recital 12 in the SSA, it was acknowledged that TK Low’s daughter’s shares in the company were held in the name of the Estate of Tang Sau Kuan and Amelia Chong. In clause 2.1(d) of SSA, it specifically provided that the sum of RM12,500,000.00 was payable to TK Low’ daughter. The Appellant and LY Low were parties to and had signed the SSA. Subsequently both of them entered into and signed the Settlement Agreement which specifically referred to TL Low’s Page 10 of 13 daughter Alexandra Christine Low as “Alex” in the Settlement Agreement. [27] In the light of the facts admitted in the SSA and Settlement Agreement, the Appellant could not turn around and say that he did not know who is ‘Alex’ or ‘Alexandra’ or that she was not TK Low’s daughter or that she was not or could not be substituted to take in place of the unborn male child of TK Low. [28] When the deed dated 22.1.2010 was executed, substituting ‘Alex’ as the beneficiary and inheriting the 625,000 shares under the trust, the Appellant did not challenge the deed as being invalid, null and void or that ‘Alex’ should not be made a beneficiary under the trust or that she was not entitled to the shares under the trust. Again, when the SSA and Settlement Agreement were signed, on two different separate occasions, the Appellant never questioned the identity or the appointment of ‘Alex’ as the beneficiary to take in place of the unborn male child of the Respondent in the trust of Low Chee or that the shares did not vest or belonged to her. [29] Although the Appellant had included in his bundle of authorities the cases of Twinsectra Ltd v Yardley and others [2002] UKHL 12 and Supreme Envy Sdn Bhd v Abdul Rahim bin Sinon (suing and acting as personal representatives and representing the estate of Sinon bin Karten, the deceased) & Anor [2017] 1 MLJ 43 in respect of fraud and dishonest breach of trust, the Appellant did not allege fraud or dishonest breach of trust against the Respondent or the trustees. These two cases can be distinguished on the facts of this appeal. Similarly, Law Tanggie v Untong ak Gantang & Anor [1993] 2 MLJ 530 Page 11 of 13 and Liew Choy Hung v Fork Kian Seng [2000] 1 MLJ 635 can be distinguished on the facts of this appeal. [30] Based on the facts stated in the SSA and Settlement Agreement in respect of the 625,000 shares held on behalf of ‘Alex’ by the Estate of Mdm. Tang Sau Kuan and Amelia Chong in the company known as Low Chee Group Sdn Bhd, which at the material times were not in dispute, and on the conduct of the Appellant in failing to challenge these at the material times, there was no basis and it was wrong for the Appellant to submit that the trust had failed and that ‘Alex’ is not and was never the beneficial owner of the 625,000 shares. [31] Pursuant to the Settlement Agreement, by two letters, dated 18.4.2017 and 12.5.2017, from the Appellant’s solicitors to the solicitors of the Respondent, the Appellant had made part-payments and subsequently tendered another cheque towards part-payment for the 625,000 shares belonging to ‘Alex’ but this cheque was rejected. Clearly the Appellant had made part-payments towards the 625,000 shares belonging to ‘Alex’ pursuant to the Settlement Agreement. The Appellant could not approbate and reprobate: Affin Bank Bhd v Mohd Kasim @ Kamal bin Ibrahim [2018] sup MLJ 106; Pan Malaysian Pools Sdn Bhd v Kwan Tat Thai & Anor and other appeals [2018] 4 MLJ 461. [32] Therefore there were no merits in the submission that there were uncertainties on the identity of ‘Alex’ or that she should not be substituted or made a beneficiary or that she was not entitled to the 625,000 shares under the trust. There were no merits that the trust had failed or is void so that the 625,000 shares ‘results automatically’ to Low Chee (the Settlor) by operation of law. Page 12 of 13 [33] If there were any issues in respect of ‘Alex’ being a beneficiary and her entitlement to the 625,000 shares under the trust, the Appellant had ample time and opportunity to raise and challenge these since January, 2010 but the Appellant and LY Low chose not to do so. When the Respondent and ‘Alex’ filed the 2016 Suit against the Appellant and LY Low to recover the balance of purchase price of the sale shares due and owing under the SSA, they could and should have challenged the status of ‘Alex’ as a beneficiary and her entitlement to the shares if there were any issues but they chose not to do so and did not file any statement of defence to the writ and statement of claim. Instead the Appellant and LY Low agreed to settle the suit and had entered into the Settlement Agreement. [34] The facts showed that after they failed to pay the balance as set out in the Settlement Agreement, the Respondent filed and served the 2017 Suit against the Appellant for the sum of RM11,940,000.00. The Respondent then filed an O.14 application for judgment for the said sum against the Appellant. The Appellant in opposing the application then raised these issues for the first time. He could and should have raised these issues when the SSA was entered into. He could and should have raised these issues when the 2016 Suit was filed but he did not. Instead the Appellant chose to settle the 2016 Suit by entering into the Settlement Agreement. By doing so, the Appellant had admitted to the facts set out therein and the suit was brought to its finality. The Settlement Agreement became the truth between the parties, or in other words the parties had accepted it as the truth. Therefore, cause of action estoppel and issue estoppel applied or had set in and the Appellant was estopped from raising any disputes or challenges against or re-litigating the status of ‘Alex’ as a beneficiary Page 13 of 13 or her entitlement to the shares or that the trust had failed: see Asia Commercial Finance (M) Bhd v Kawal Teliti Sdn Bhd [1995] 3 MLJ 189; Kerajaan Malaysia v Mat Shuhaimi bin Shafei [2018] 2 MLJ 133; Sistem Linkaran Lebuhraya Kajang Sdn Bhd v Orchard Circle Sdn Bhd & Ors and other appeals [2018] 2 MLJ 243. [35] In her grounds of decision the learned High Court Judge has stated that the Appellant and LY Low had legal advice and had signed the Settlement Agreement before their own lawyers. Therefore it was not wrong for the learned High Court Judge to say that it was not open to the Appellant to revisit to SSA and Settlement Agreement and re-ventilate the issues which had been put to rest by these agreements which raised the bona fides of the Appellant’s contentions. [36] We were unanimous in our decision that there were no merits in this appeal and we affirmed the decision of the learned High Court Judge. Therefore the appeal was dismissed with costs of RM10,000.00 subject to allocatur and the deposit to be refunded. Dated: 22nd November, 2018 signed STEPHEN CHUNG HIAN GUAN (delivering judgment of the court) Court of Appeal Judge Putrajaya For Appellant : Simon Hue, Edward Yii and Ng Ken Yong Messrs. Simon Hue & Associates For Respondent : Chew Chang Min Messrs. Chew Chang Min