Norsitah Binti Ottoh v Rosinah Binti Nasry (s-02(w)-1564-08/2017)

(a) A declaration that the sale and purchase agreement dated 25.10.2007 between the 2nd Plaintiff and the 8th Defendant is 10 terminated and/or illegal and null and void;

(b) An Order for the transfer of NT093110439 from the 2nd Plaintiff to the 8th Defendant and the sublease of NT093110439 from 8th to 4th Defendant be revoked cancelled 15 and set aside;

(c) A declaration that the sale and purchase agreement dated 25.10.2007 between the 4th Plaintiff and the 9th Defendant is terminated and/or illegal and null and void;

(d) An order that the transfer of NT093110457 from the 4th Plaintiff to the 9th Defendant and the sublease of NT093110457 from 9th Defendant to the 4th Defendant be revoked cancelled and set aside;

(e) A declaration that the sale and purchase agreement dated 25.10.2007 between the 3rd Plaintiff and the 10th Defendant is terminated and/or illegal and null and void; 30 5

(f) An order that the transfer of NT093110448 from the 3rd 5 Plaintiff to the 10th Defendant and the sublease of NT093110448 from 10th Defendant to the 4th Defendant be revoked cancelled and set aside;

(g) An order that the transfer of NT093110411 from Nasry Bin 10 Yahya to the 1st Defendant, the subsequent transfer from the 1st Defendant and the sublease from 7th Defendant to the 4th Defendant be revoked cancelled and set aside;

(h) An order that the transfer of NT0933020994 (Land A) from 15 the 2nd Plaintiff to the 2nd Defendant and the subsequent transfer to the 5th Defendant is null and void and be cancelled;

(i) That the sublease of Land A to the 4th Defendant be 20 cancelled and set aside;

(j) That the transfer of NT0933021017 (Land C) from the 4th Plaintiff to the 1st Defendant and the subsequent transfer to the 6th Defendant is null and void and be cancelled;

(k) That the sublease of Land C to the 4th Defendant be cancelled and set aside; 6

(l) An order that the 11th Defendant to expunge from records the 5 above transfers and subleases;

(m) An order for Land A, Land C, and NT093110411, NT093110439, NT093110457 and NT093110448 to be transferred to the Plaintiffs;

(n) An order for the Defendants to return land titles to Land A, Land C, and NT093110411, NT093110439, NT093110457 and NT093110448 to the 11th Defendant to carry out the above orders; and 15

(o) An order to restraint the Defendants by themselves or their agent or servants or workers or anyone else claiming a right or interest or title thereunder from entering, attempting to enter, remaining, occupying or interfering with the Plaintiffs’ 20 possession and cultivating of Land A, Land C, and NT093110411, NT093110439, NT093110457 and NT093110448. [4] Aggrieved by that decision, the Defendants appealed to the Court 25 of Appeal via Appeal No. S-02-1479-08/2014. The Court of Appeal heard the appeal on 18.11.2016 and by consent of parties, struck out the appeal with no order as to cost and decided that: 30 7

(i) Right of parties to appeal are preserved;

(v) Deposits to be refunded to the Appellants (Defendants) 15 [5] When the matter was remitted back to High Court, the High Court Judge via his Supplementary Ground of Decisions dated 12.6.2017 explained his findings regarding the issue of the purchase price of the land. He decided that the full purchase 20 price of the said lands have not been paid by the 1st Defendant to late Nasry. [6] Aggrieved with the decision, the Defendants appeal to this Court of Appeal via Appeal No: S-02(W)-1564-08/2017. 25 BRIEF FACTS OF THE CASE [7] The Defendants are natives of Sabah from Sungai community in Kinabatangan and daughters of the late Nasry Bin Yahya. 30 8 [8] The 4th Plaintiff is a company (Ramai Aktif) and has two 5 shareholders namely the 2nd and 3rd Defendant. The 3rd Defendant is a Japanese national. [9] The late Nasry owned 3 pieces of land in Kinabatangan whereby NT093020994 was transferred to the 2nd Defendant on 18.4.2005. 10 NT093021017 was transferred to the late Nasry’s wife, Halimah on 20.12.1993 and NT093021008 was transferred to 4th Plaintiff on 20.12.1993 and these 3 pieces of land subsequently charged to Southern Bank for a total of RM310,000.00. 15 [10] Sometimes in 1998, the late Nasry, the Plaintiffs and their brothers applied these lands measuring an area approximately 121.31 acres more or less in total and these 7 pieces of land applies by them and were issued with title deeds with several names on each pieces of land. 20 [11] Sometime in 2001, the late Nasry told the 1st Defendant that he had financial difficulties and he wanted to charge the 6 pieces of lands. The 3rd Defendant approached and entered negotiations with the late Nasry to purchase 7 pieces of lands and on 25 27.6.2001 the Plaintiffs together with their brother and the late Nasry entered into a Sale and Purchase Agreement with the 1st Defendant to sell the 7 pieces of lands with a purchase price of RM317,500.00 and under clause 2(c) of the agreement, the outstanding loan to Southern Bank Bhd was RM254,000.00 and 30 9 this will be paid by the 1st Defendant to the said bank upon the 5 issuance of the title deeds. [12] However, one piece of land under NT093110439 registered in the name of Rahah Bte Nasry was able to be transferred into the name of the 1st Defendant as the lands which the late Nasry and 10 his family had sold under the small holders scheme and the rest of the lands could not be transferred into the name of the 1st Defendant. [13] The late Nasry passed away on 26.4.2005 and before his death 15 he told the Respondents that Kawagoe; the 3rd Defendant was the one who actually bought the said lands and has not paid the full purchase price. [14] The rest of the late Nasry’s family members refused to deliver the 20 documents of titles of the lands to the 1st Defendant, the 1st Defendant then filed a suit against the Plaintiffs, Ruhaya Bte Nasry and Azman @ Aman bin Nasry for specific performance for the Sale and Purchase Agreement dated 27.6.2001 and to transfer the ownership of the lands. The 1st Defendant obtained 25 Judgment in default against 2nd, 3rd and 4th Plaintiffs. The 1st Plaintiff and Ruhaya Binti Nasry disputed the suit and filed defence. 10 [15] However, 3 months after the 1st Defendant had commenced the 5 2007 suit, the 2nd, 3rd and 4th Plaintiffs and their brother Azman had all signed their respective rescission of agreements with the 1st Defendant and entered into fresh sales agreement. [16] After a full trial of the 2007 suit, the High Court Sandakan 10 dismissed the 1st Defendant’s 2007 suit with costs on 19.2.2010 and Y.A. Clement Skinner J (as he then was) amongst others found that:

(a) The 1st Defendant, Norsitah Bt Ottoh is not a native of 15 Sabah and she was the nominee of Kawagoe.

(b) As the land was still under application, and as the title had not been issued or registered, the 5th and 7th Defendants Jorberey bin Jukil and Surianah Bte Duangsa could not in law 20 have sold any interest in the lands to the Defendants as Plaintiffs.

(c) The loan by Ramai Aktif to the 1st Defendant was contrary to Section 133 of the Companies Act.

(d) That the power of attorney from the 5th and 7th Defendants was null and void due to illegality.

(e) The 5th and 7th Defendants not entitled to damages. 30 11

(f) The Sale and Purchase agreement dated 27.6.2001 is invalid 5 and shall not be recognized by the Court. [17] After Judgment delivered, the 3rd, 4th and 6th Defendants in suit 2007 applied for Default Judgement entered against them on 11.12.2007 to be set aside and it was granted and the Court 10 ordered the Plaintiff in 2007 to filed Notice of Discontinuation against the 3rd, 4th and 6th Defendants. [18] The Plaintiffs filed this action against the Defendants claiming for several orders amongst others that the transfer of lands and sub 15 leases involving 6 Native Titles be declared null, void, revoked or cancelled. [19] There are three (3) pieces of Lands (NT09311049, NT093110448 and NT093110457 which were sold by the 2nd, 3rd and 4th 20 Plaintiffs to the 8th, 9th and 10th Defendant vide Sales and Purchases Agreement dated 25.10.2007. The 8th, 9th and 10th Defendant became the registered owner of these lands on 19.11.2007. They had executed Memorandum of Sublease dated 23.1.2008 respectively to sublease the 3 pieces of lands to Ramai 25 Aktif. [20] The other 3 Lands involved the transfers and subleases are as follows – 30 12

(i) NT093021017 5 This land was transferred from the 4th Plaintiff to the 1st Defendant on 25.9.2002 based on the Sales and Purchase Agreement dated 27.6.2001. On 9.12.2010, the 1st Defendant transferred the said land to the 6th Defendant. 10

(i) Was the purchase price paid to the late Nasry under the 2001 agreement and therefore the Respondents have no locus standi to interfere with the affairs of the Appellants;

(v) Are the Respondents parties to an illegal transaction and therefore the loss lies where it falls? [32] Having heard the oral submissions from the Appellants’ and Respondents’ counsels and read the Records of Appeal, the 30 17 grounds of decisions (the main decision and the supplementary 5 decision) by the learned judge and considered their written submissions filed herein, we found there is merit in the Appellants’ appeal and our decision is unanimous that the Appellants’ appeal is allowed with costs of RM55,000.00 subject to the payment of allocator fee and deposits to be refunded to the Appellant. 10 DECISION OF THIS COURT [33] We would addressed the issues accordingly. 15 Was the purchase price paid to the late Nasry under the 2001 agreement [34] The Appellants submitted that the full price was already paid to the late Nasry. We heard the full submissions on this issue with 20 the points to support the argument. In summary, what the Appellants were submitting is that the learned judge had misdirected himself in fact and in law and his decision is erroneous on ground that the finding that the 1st Appellant or the 8th Appellant had not paid the purchase price to the 2nd Plaintiff 25 was based on hearsay evidence. It was the Appellant’s case that the Respondents were relying on hearsay evidence. On point of law he submitted that hearsay evidence cannot be accepted by the Court as the truth. The burden is on the Respondents to prove that the balance of the purchase price was never paid. 30 18 They have failed to do so as they had relied on 'hearsay' 5 evidence and the improbability that the balance of the purchase price was never paid. Without the payment of the purchase price, the loans would not have been settled. [35] The learned judge in his supplementary grounds of decision held 10 that there is no evidence that the 1st Appellant had paid the full purchase price to the 2nd Respondent in accordance with the invalid Agreement dated 27.6.2001. There is also no evidence to show that the 8th Appellant had paid the full purchase price to the 2nd Respondent and no evidence that actual money changed 15 hands and the full purchase price was paid by the 1st or the 8th Appellant to the 2nd Respondent. [36] We had considered the Appellants points of submission and we agreed with the Appellants that there is an appealable error in the 20 learned judge’s decision because he had made his finding based on the hearsay evidence of the Respondents’ witness. The Respondents witness PWI-WS, Rosinah Bte Nasry had testified that each of them received RM2,000.00 and that before the late Nasry passed away in April 2005, their late father had 25 informed them that the purchase price had not been paid in full. [37] Her evidence at page 411 and 412 of Record of Appeal (AR) (Vol.2B) (TAB Core Bundle) stated as follows – 30 19 “Q&A 5 5. What happened after that?

5.1 Sometimes in 2001, the late Nasry had some financial difficulties and he told me that he wanted to charge the said Lands. At that time, the title deeds to the said Lands had not been issued by the Government. As far as I can 10 recall, the late Nasry did not say that he wanted to sell the said Lands. He only wanted to charge the said Lands.

What happened after that? 15 6.1 I remembered going to a lawyer’s office and signing some documents purportedly to charge the said Lands. I cannot speak, read nor write English. I did not understand the documents that I signed. If I remember correctly, each of us received RM 2,000 after signing the 20 said documents. Later on I came to know that the document that we all signed was a Sale and Purchase Agreement dated 27th June 2001 between the late Nasry, and my siblings and one Norsitah Binti Ottoh. This Agreement is at pg. 15 of the Plaintiffs’ Bundle of 25 Documents. Norsitah binti Ottoh is the 1st Defendant in this case. 30 20

What happened next? 5 7.1 The late Nasry died in April 2005. However, about one week before he died, I went to visit my farther at his house in Taman Utama, Sandakan. He told me that a Japanese man had actually bought the said Lands and that he has not paid the full purchase price. I was very 10 suprised when he told me this because all this while I thought the said Lands were only charged but not sold. He also said that this Japanese man had cheated him because he did not pay the full purchase price for the said Lands. My farther also told me that this Japanese 15 man had used the 1st Defendant’s name (Norsitah Binti Ottoh) to buy the said Lands”. [38] We noted that the evidence by PW 1 in her witness statement above is worded exactly with the Respondents pleading at 20 paragraph 17 of their Amended Statement of Claim. This is the Respondents’ pleaded case and we agreed with the Appellants that the burden is on the Respondents to prove that the balance of the purchase price of the said Lands was never paid by the Appellants. In this case the learned judge referred to Clause 2 of 25 the Sales and Purchase Agreement dated 25.10.2007 between the 2nd Respondent and the 8th Appellants which says the purchase price only shall be paid by the purchaser to the vendor upon signing of the Agreement in one lump sum (the receipt of whereof is hereby acknowledge by the vendor) however, ruled 30 21 that it is the 1st Appellants who failed to provide evidence that the 5 1st Appellant had paid the full purchase price to the 2nd Respondent and as far as the Court is concerned, there is no evidence that actual money changed hands and the full purchase price was paid by the 1st or the 8th Appellant to the 2nd Respondent. Similarly, it was also held that there is no evidence 10 that the full purchase price had been paid by the Appellants to other Respondents in respect of other Lands (Ground of Judgment at pages 65 to 67 in AR (Vol.1). In other words, the burden rests on the Appellants to prove it instead of the Respondents. 15 [39] We think that the learned judge had made a grave error because the cardinal rule is that he who asserts the facts must prove those facts exist. It is the Respondents who pleaded that the full purchase price had not been paid by the Appellants, therefore, 20 they must prove it. In Alliance Bank Malaysia Berhad v. Sail Bin Yalang [2010] 7 MLJ 316 the Court held that: “There can be no dispute that the respondent’s liability depends on the existence of the appellant’s assertion that he 25 executed the second letter of guarantee. Clearly therefore the burden of proof lies on the appellant by virtue of s 101 of the Act which provides: - 101 Burden of proof 22

(a) Any fact may be proved which would invalidate any document 5 or which would entitle any person to any decree or order relating thereto, such as fraud, intimidation, illegality, want of due execution, want of capacity in any contracting party, the fact that it is wrongly dated, want or failure of consideration, or mistake in fact or law”. 10 [49] In our view, the learned judge had missed the point. This exclusionary provisions of section 92 of Evidence Act is applicable only in respect of an attempt to contradict the evidence found in the documents establishing the contractual relationship 15 between the contracting parties to the written agreements entered into between the Appellant and the Respondent but its introduction was purely for purpose of establishing the existence of an independent oral contract (See: Abdul Kadir Sulaiman JCA in KTS Sdn. Bhd. v Standard Chartered Bank (2004) 2 CLJ 85) 20 [50] The issue before the learned judge is all about the claim of non-payment of the full purchase price of the said Lands by the Respondents against the Appellants. As alluded to earlier this claim was pleaded in Paragraphs 17 of the Respondents’ 25 Amended Statement of Claim. The pleaded facts were reproduced as testimonies of PW 1 for the Respondents. The evidence by PW1 is to show that the full purchase price had not been paid by the Appellant. It may be argued that this fact would invalidate any document on ground of want or failure of 30 29 consideration under the exception. However, in this case the 5 issue is not whether the agreement is invalid because the non-payment of the purchase price i.e want or failure of consideration but it is solely on the issue whether the full purchase price had been paid. Therefore, In our view, the exception under Section 92 does not apply. Similarly, the Respondents’ pleaded case on the 10 issue of non-payment is not to prove that the agreement is illegal. The learned judge found that the transfers of the said Land to the 1st Appellant who are the nominees of the 3rd Appellant is illegal. It is not related to the non-payment of the full purchase price which made the agreement illegal. It can be clearly seen at the 15 last paragraph of the learned judge’s decision dated 12.6.2017 when he clearly said that he was satisfied that on the balance of probability that the full purchase price of the said Lands have not been paid by the 1st Defendant/Appellant to late Nasry. Therefore, the exception under Section 92 also does not apply. 20 [51] Be that as it may, the Respondents could not rely on the exception of Section 92 of the Evidence Act 1950 as their evidence was hearsay evidence. They had testified that they were informed by their late father that there was an outstanding 25 balance not paid but could not say how much was still unpaid. In the result, there is no evidence except this piece of hearsay evidence which is inadmissible for the Respondents to prove that the full purchase price had not been paid by the Appellants. In that circumstances, in our view, the Appellants could rely on 30 30 Section 91 and 92 of the Evidence Act 1950 that the 2nd to 4th 5 Respondents had signed the Sale and Purchase which had been reduced in writing and the Respondents’ evidence on non-receipt of the purchase price would contradict or vary the terms in clause 2 of the Sale and Purchase Agreements. In other words, the purchase price had been paid in full by the Appellants to the 10 Respondents and they had duly acknowledged receipt of the payments. [52] The burden is on the Respondents to prove that the balance of the purchase price was never paid. They had failed to do so 15 therefore, it is our view that the decision by the learned judge that 1st Appellant had not paid the full purchase price to the 2nd Respondent in accordance with the Agreement dated 27.06.2001 is based on hearsay evidence and is erroneous which allowed us to intervene. 20 Was the agreement reached between the late Nasry and the 3rd Defendant (Appellant) for an illegal purpose to intentionally breached section 17 of the Land Ordinance? 25 [53] The Appellants submitted that the learned judge erred to find that the Agreement dated 27.06.2001 was for an illegal purpose. The learned judge had found that it was because the lands could not all be transferred into the name of the 1st Appellant and fresh agreements have to be signed with separate persons. The 30 31 lands are all registered into the natives of Sabah. The learned 5 judge also found that it was the 3rd Appellant who had come out with the money to pay the Bank. [54] We had considered the Appellant submission on this point. It was not a disputable fact that the late Nasry owed the bank 10 RM360,000.00 and had to sell the lands charged and also land under applications to the 1st Appellant for the price of RM317,500.00 in 2001. No one knew that the land were under small holders scheme and none of the parties knew that the 1st Appellant was not a native of Sabah either when the agreement 15 was signed in 2001 with the Respondents’ family members. The late Nasry knew that the 3rd Appellant would be able to pay the purchase price to pay off the loans and the balance to be paid to the late Nasry. 20 [55] The learned judge had earlier on found that the said Lands cannot be sold to the 1st Appellant being a non-native of Sabah and as a nominee of Kawagoe, the 3rd Appellant. He agreed with the decision of Clement Skinner J. 19.2.2010, which had ruled that the Sale and Purchase Agreement dated 27.6.2001 is invalid and 25 shall not be recognised by the Court. The High Court judge had also ruled that the 1st Appellant was merely a nominee of Kawagoe to circumvent the provision of Section 17 of the Sabah Land Ordinance prohibiting non-native to deal with the native land. 30 32 [56] The Appellants did not appeal against the decision by Clement 5 Skinner J. There is no record to show Notice of Appeal was filed. The facts remains that the transfer of the said lands to the 1st Appellant, Norsitah Bte Ottoh under the Sales and Purchase Agreement dated 27.6.2001 is illegal because the 1st Appellant is non-native of Sabah. In consequence of the decision of Clement 10 Skinner J, the 2nd, 3rd, 4th Respondents and his brother entered into the Rescission Agreement with the 1st Appellant on 25.10.2007 to rescind the 2001 agreement and simultaneously entered with a new Sales and Purchase Agreement on the same day. Clement Skinner J’s decision it was said as follows – 15 “However after the commencement of this suit the 2nd, 3rd, 4th and 6th defendants have delivered the titles deeds to their respective land to the plaintiff who in turn requested them to 20 enter into Recession Agreement (of the said agreement) and Agreement dated 25.10.2007 to sell their respective lands to new purchasers, namely Lee bin Duangsa, Karmat Bin Salamat, Siti Halimah Bte Selamat and Rodey Bin Sairi in place of the plaintiff. The lands belonging to the 2nd, 3rd, 4th 25 and 6th Defendant have consequently been transferred to these four (4) later names. The evidence shows that they have in turn leased their land to Ramai Aktif for 30 years”. [57] The learned judge adopted the finding of Clement Skinner J 30 however, despite holding that the transfers of lands to the 33 Defendants were illegal, the learned judge went one step ahead 5 by making a further order that the sub-lease to Ramai Aktif be cancelled and set aside. This is because the learned judge had found that Ramai Aktif was the nominee of the 3rd Appellant and the illegality of the transfers is extended to the subsequent transfers and the subleases which were also illegal in 10 contravention with Section 17 of the Sabah Land Ordinance. [58] In the present case, it is not disputed that all the said lands had been transferred and registered into the names of the Respondents who are the natives of Sabah. The issue of the 1st 15 Appellant or the 2nd Appellant are non-native purchasing the lands are not in issue anymore and overtaken by the Rescission Agreement and the fresh Sales and Purchase Agreement dated 25.10.2007. Our view is that it was a separate matter. The current situation is that the Respondents had subleased the lands 20 to Ramai Aktif. [59] The learned judge had held that the sublease was also void and be cancelled and set aside because it circumvents Section 17 of the Sabah Land Ordinance which prohibits non-native to deal with 25 the land. Assuming the learned judge was right in his finding that Ramai Aktif is the nominee of the 3rd Appellant (Kawagoe) who is non-native, the issue is whether the subleases of the land are prohibited under Section 17 of the Sabah Land Ordinance. 30 34 [60] Section 17 (5) of the Sabah Land Ordinance provides as follows - 5 “ Sublease of Native Title to Non-Native

(5) Notwithstanding the provisions of this section 64, it shall be lawful for the owner of land held under the 10 provisions of Part IV to grant a sublease of such land to a non-native for a term not exceeding thirty years”. [61] Section 64 of the Sabah Land Ordinance provides as follows - 15 “64.(1) This Part shall apply only to lands held by natives, and non-native may purchase any land held under this Part, unless in accordance with the terms of section 17, or acquire any interest therein by way of charge or otherwise”. 20 [62] We agreed with the Appellant submission that the creation of sublease under Native title allowed for a term of 30 years under Section 17(5) of the Sabah Land Ordinance and it allows the lending of money to a native to buy the lands and sublease to 25 non-native. The late Nasry owed the bank RM360,000.00 and had to sell the lands charged and also land under applications to the 1st Appellant for the price of RM317,500.00 in 2001. We found there is no difference in borrowing money from a bank as native title can be charged. 30 35 [63] The fresh agreements signed in 2007 were to complete the 5 agreement reached in 2001 after the loans were settled and the balance paid to the Plaintiffs’ late father. All the legal documents were done by a law firm and the parties were never intended that it was for an illegal purpose. The law firm did not advise the parties this would be infringing Section 17 of the Sabah Land 10 Ordinance. The consideration had been paid in full to their late father to mainly settle the loans. In the circumstances, we agreed with the Appellant that the Agreement was merely for the purpose to help the late Nasry to settle the loan and not for any illegal purpose. The learned judge failed to consider these all together and 15 hence a miscarriage of justice is caused to the Appellants. [64] In Chang Yun Tai & Ors v HS.BC Bank (M) Bhd & Others Appeals [2001] 7 CLJ 909] the Federal Court held that – 20 “[26] It was also argued for the appellants that the consideration and object of the loan given by the respondent to the appellants were such of a nature that if permitted would defeat any law contrary to the provision of s. 24(b) of the Contracts Act 1950 ("Contracts Act"). Learned counsel for 25 the appellants contended that the "in pari delicto " rule applies to this case in that the respondent would not be able to assert the rights under the financing agreement without showing that it was entered into to finance the purchase of the apartments under the SPA which the appellants had 30 36 alleged as being illegal and to which the respondent itself 5 was a party. With respect, we could not agree with the appellants' contention. We find that the appellants and the respondent in the first place did not have any intention to advance any unlawful purpose. The respondent has not acted in pari delicto as alleged by the appellants. 10 Consequently, the provision of s. 24 of the Contracts Act in our view does not apply. [27] It is to be noted there is no illegal object or consideration under the financing agreement. It strains credulity to suggest that the consideration or object of a loan facility to advance 15 money to the appellants to enable them to purchase the apartments is unlawful. This is unlike providing financing for the purchase of illegal drugs or illegal arms. The object or consideration of the SPA for the sale and purchase of the apartments is also not unlawful. In Kin Nam Development 20 Sdn Bhd v. Khau Daw Yau [1984] 1 CLJ 347; [1984] 1 CLJ (Rep) 181, Salleh Abas CJ (Malaya) (as he then was) considered the application of s. 24 of the Contracts Act and at p. 186 held: In any case there is nothing illegal about the 25 consideration or object of the contracts because they are only contracts for the sale and purchase of houses, and neither do they come within any of the paragraphs of section 24 quoted above, although the appellant may 37 well be guilty of an offence under Rule 17 for 5 contravening Rule 11(1) of the Housing Developers (Control and Licensing) Rules, 1970. [28] On the applicability of the provision of s. 24(b) of the Contracts Act to the present case the learned judge of the High Court had rightly summed up at para. 30 of his 10 judgment as follows: It is clearly repugnant to good reason and common sense to find a cause of action based purely on the assertion that the banks were expected to know of those alleged irregularities and should therefore be stopped 15 from enforcing their rights under the loan agreements. I would agree entirely with the submission of counsel for the banks that the consideration and object of the loan given by the banks to the plaintiffs were clearly not of such a nature that, if permitted, would defeat any law 20 contrary to s. 24(b) of the Contracts Act 1950”. [Emphasis added] [65] As the sale was to help the Plaintiffs' late father to settle the loans, the sale was not to infringe Section 17 of the Land 25 Ordinance of Sabah. We found that the Appellants and the Respondents in the very beginning did not have any intention to advance any unlawful purpose. 38 5 Are the Respondents claim statute barred? [66] The Appellant submitted that the Respondents knew that the 1st and 2nd Appellants were purportedly not natives of Sabah sometime in December 2006 and yet did not take any action 10 until 2012, some six (6) years later. The Respondents were suing for rescission of the 2001 agreement and they should have filed their action within three (3) years of learning this fact in December 2006. The Respondents had also alleged that they were informed by their late father before he passed away 15 in April 2005 that the purchase price had not been paid in full. The time to file the action was three (3) years from April 2005, which is April 2008. The learned judge had failed to consider these important facts. 20 [67] The learned judge in his decision had held that the Sabah Land Ordinance on limitation is not applicable because he had ruled earlier that the transfer of the 6 native lands were illegal. He was of the opinion that a void contract generates neither right nor duty to be enforced in Court of Law. The issue of period of limitation 25 cannot be invoked where there is no right. The period of limitation is simply a procedural device which bars a right if it is not exercised within a definite period. It is said that it makes no sense for lapse of time to make an act efficacious when it was forbidden 39 under the law. However old it may be, a void act can produce no 5 effect. [68] The main plank of the Appellants’ case is that the Respondents’ action is time barred for failing to file their action within 3 years when they signed their respective agreements with the 1st, 2nd, 5th, 6th, 7th and 8th Appellants. 10 [69] For this issue, we noted that five of the lands in dispute in this case NT093110439, NT093110411, NT093110457, NT093110448 and NT093021017 were involved in the Sales and Purchase Agreement dated 27.6.2001. The said agreement had 15 been declared to be illegal by the Sandakan High Court after full trial on 19.2.2010. The Respondents filed this suit on 7.3.2012. In other words, the Respondents only knew of the illegality of the 2001 agreement in 2010 and filed the action to nullify the subsequent transfers and the sublease to the Appellant in 2012. 20 Our view is that the Respondents’ action was not time barred. The learned judge had made a correct decision that the plea of limitation raised by the Appellants is misconceived. Are the Respondents entitled to the declarations as they did not 25 come to court with clean hands [70] On this issue, we agreed with the Appellants’ submission that the other ten (10) family members did not join this action as they possibly knew that the 3rd Appellant had helped their late father 30 40 in repaying the loans to the Bank and that the purchase price 5 had been paid in full to their late father. They have kept their side of the bargain and enjoyed the benefit of the loans being settled. The Respondents and their family members had received a benefit and had known that the lands charged to the Bank and lands under land applications were sold to the 1st 10 Appellant and to be subleased to the 3rd Appellant’s company to recover the money used to pay for the purchase price. The Respondents’ late father could not settle the Bank and the Bank would have foreclosed on the lands charged to the Bank. Their late father would have lost all the three (3) parcels of lands 15 charged to the Bank. [71] The Respondents’ claim is mainly for declarations and for certain orders (see paragraphs 56 of the Amended Statement of Claim at page 87 to 89 of AR (Vol. 1). In the case of Tan Beng Sooi v. 20 Penolong Kanan Pendaftar (United Merchant Finance Bhd, Intervener) [1995] 2 CLJ 846; [1995] 2 MLJ 421, the court referred to O. 15 r. 16 of the Rules of the High Court 1980 which provides no action or other proceeding shall be open to objection on the ground that a merely declaratory judgment or order is 25 sought thereby, and the court may make binding declarations of right whether or not consequential relief is or could be claimed. And the court held that the court's jurisdiction to make a declaratory order is unlimited, subject only to its own discretion. In our view, while O. 15 r. 16 of the Rules of the High Court 30 41 1980 gives the court the jurisdiction to make an unlimited 5 declaratory order, the court in exercising its discretion must act judicially of what right and interest the plaintiff wants the court to declare. [72] In Sakapp Commodities (M) Sdn Bhd-V-Cecil Abraham 10 (executor of the estate of Loo Cheng Ghee) [1998] 4 MLJ 651, it was held that remedy of declaration is discretionary in nature. The court can refuse granting a declaration where a plaintiff was guilty of laches, other inequitable conduct, 'cloaked declaration' for a collateral purpose or with an improper motive. The list is not 15 exhaustive. [73] In the above case, the Court of Appeal had allowed the appeal as the learned judge failed to address his mind on those evidence before him and failed to apply his judicial mind to the 20 relevant principles of law and the Court could interfere with his decision. [74] The Appellants submitted that in this case, the learned judge failed to address his mind on the 2001 agreement where 25 full consideration had been paid and the fresh documents were just to carry out and complete the sale of the lands as the loans to the Bank were settled and the bargain reached be honoured by the parties. 30 42 [75] The learned judge had found that 2001 agreement is null and void 5 and also based on the 2010 decision by the Sandakan High Court which had declared the said agreement is null and void. This was done after examining the facts in this case in the full trial. It must be remembered that in this case, the learned judge was dealing with the 2007 agreement that the Respondents sought to declare 10 the said agreement as null and void. The Respondents in their Amended Statement of Claim had pleaded the illegality factor of the 2001 agreement to declare the 2007 agreement is null and void. The learned judge had considered this fact and after hearing the evidence from witnesses he granted the declaration to the 15 Respondents. By granting the declaration, he had exercised his discretion upon finding the declaration sought was not frivolous or for some other collateral purpose. [76] The Sakapp Commodities’ case (supra) had referred to 20 Trawnik & Anor v Ministry of Defence [1984] 2 All ER 791 and Everett v Griffiths [1924] 1 KB 941 at p 960 where declaration would be refused if the declaration is for a collateral purpose or with an improper motive. In fact, the Appellants had in their submission submitted that the Agreement was merely for the 25 purpose to help the late Nasry to settle the loan and not for any illegal purpose. The Respondents had the right to bring an action to declare the agreement was for illegal purpose and is null and void. We did not find that the Respondents was guilty of laches or delay in commencing this action as ground to refuse Respondents 30 43 claim for declarations. Therefore, we failed to see how it can be 5 said that the Respondents did not come to Court with the clean hands and that the claim for the declaratory relief should be refused. [77] Our decision here is mainly concern on the Appellants’ appeal 10 against the learned judge decision granting the declaratory relief to the Respondents to declare the 2007 agreement as null and void. It does not concern the 2001 agreement which had been declared as null and void. 15 Are the Respondents parties to an illegal transaction and therefore the loss lies where it falls? [78] The Appellants submitted that if the Court should find that the arrangement between the 1st Appellant was illegal, then the 20 Respondent were also parties to an illegal act. Their late father and they had taken part in an illegal act by selling their lands to a non-native in 2001. In other words, learned counsel for the appellants contended that the "in pari delicto" rule applies to this case in that the Respondent would not be able to assert the rights 25 under the Sale and Purchase Agreement. [79] With respect, we could not agree with the Appellants' contention. As alluded to earlier, the Agreement was merely for the purpose 44 to help the late Nasry to settle the loan and not for any illegal 5 purpose. We find that the appellants and the Respondent in the first place did not have any intention to advance any unlawful purpose. The Respondent has not acted in pari delicto as alleged by the Appellants. 10 [80] In any event, the said Lands had been transferred to the 5th to 10th Appellants who are the Native of Sabah. Section 17 of the Land Ordinance does not apply. CONCLUSION 15 [81] In the result, we unanimously allowed the Appellants‘ appeal with costs of RM55,000.00 subject to the payment of allocator fee and deposits to be refunded to the Appellant. 20 Dated this 23rd October, 2018 Sgd 25 KAMALUDIN MD. SAID JUDGE COURT OF APPEAL MALAYSIA PUTRAJAYA 30 45 5 Parties

Edwin Tsen for the Appellants (Messrs Tan Pang Tsen & Co.,)

Rizwandean M Borhan for the Respondent (Messrs Yusri & Rizwan)