See Hong Chen & Sons Sdn Bhd & Ors v Datuk M Kayveas (as Public Officer of People'
s Progressive Party of Malaysia (PPP)) [2012] 2 MLJ 460
Benjamin Goo Koon Wern A132312 Muslan Hong bin Muslin Hong A132205 Lee Zhen Ying A132558 Lim Kai Hau A131599
Facts
1998, pf was in occupation of a property. It was public auctioned and plaintiff bought it through 5th defendant (said to be plaintiff incorporated investment arm). 26/12/2003, purchase price RM2,673,000. Pf paid RM263K through 5th df and balance of payment obtained from 1st df was also paid through 5th df.
17/3/2005, 5th df shares transferred to 1st df 99,998 shares, and his nominees 2nd and 3rd df held 100K shares of RM1.00 each on trust pending repayment from the loan given by 1st df to pf to buy the property. No consideration given by df. 29/11/2005, alleged breach of trust whereby 1st df transfer to 4th defendant through share sale agreement.
12/11/2007, actual transfer of share to 4th df.
Issue
Whether constructive trust exist between Pf and Df?
Plaintiff Contention
- Payment RM1.8M was made several occasion. Balance due RM605K, since purchase date, plaintiff occupied the property , no rental $ was made and had paid all assessment rlvt authorities, have receipt (conduct showing constructive trust) - No consideration given by 4th df when transaction of share was made as it was a security for 4th df giving loan to 1st df.
Defendant Contention
- Loan was paid by 1st df t 4th df after 2003. - There exist consideration of monetary payment by 4th df. - 4th df is bona fide purchaser as it has no notice of plaintiffs right.
High Court (Y.A.Datuk Dr. Haji Hamid Sultan bin Abu Backer)
- Judgment for Pf. - There was no evidence from the 4th to 7th df to show that they actually paid for the property or for the purchase of shares in the 5th Df. - plaintiff has discharged the burden of proof on a balance of probabilities as to the existence of the trust via both documentary evidence as well as oral evidence and I accept the submission of the plaintiff that the doctrine of constructive trust will be applicable in the instant case to provide the relief as prayed against the 4th, 6th and 7th defendants.
- 4th df is not a bona fide purchaser as there is no evidence of payment of the shares.
COA
Judgment in favour of appellant
Constructive trust did not exist neither express trust exist .
Respondent contended gentleman agreement on 2003 as express trust. However it is not in favour of respondent as it is not a valid trust. 'certainty of subject' is one of the three essentials of a valid trust, the 99,998 shares not being in existence in 2003 could not conceivably be the subject matter of an express trust in favour of the respondent in 2003.
- in 2003, PW1 and B Vijayandran a/l S Balasingam were the only registered shareholders of the second appellant. Following the definition of an express trust, it is reasonable therefore to examine whether the first defendant declared himself to be a trustee and, if so, for whom. However, in order for the first defendant to declare himself a trustee, the aforesaid two shareholders ought to have transferred their shares to him. This is consistent with the rule of equity that a settlor must vest the trust property (subject) in the trustee com-pletely for the trust to come into existence. The vesting of property only have in 2005.
- Respondent take loan from 1st df however no documentary evidence of the loan and was stated 1st df held share on trust.
- Taking account of circumstances, PPP is a registered political party and size of loan approximate RM2.41M, respondent should be in possession of documentary evidence of repayment. However the loan was still outstanding( non-existent of constructive trust).
Characteristic of CT
Bona fide purchaser protected from constructive trust. In order for constructive trust to be valid, 3 certainties must exist. Conduct of parties must shows that it is inferred to be held on trust. By operation of law and not intention.
