DALAM MAHKAMAH RAYUAN MALAYSIA
(BIDANGKUASA RAYUAN)
RAYUAN SIVIL NO.
W-02-121-2001
ANTARA
LOO HON KONG …
PERAYU
DAN
LOO KIM LIM @ LOO KIM LEONG
… RESPONDENT
[Dalam Mahkamah Tinggi Malaya di Kuala
Lumpur
(Bahagian Sivil)
Guaman No. S3-22-543-05
Antara
Loo Hon Kong
… Plaintiff
Dan
Loo Kim Lim @ Loo Kim Leong …
Defendant
Coram: Gopal Sri
Ram, J.C.A.
Abdul Kadir bin Sulaiman,
J.C.A.
Ariffin bin Haji Jaka,
J.C.A.
JUDGMENT OF THE COURT
1. This is the
judgment of the court.
2. Two questions arise
in this appeal. One is
a question of fact and the other a question of law. The factual matrix from which these
questions arise fall within a small compass. For convenience, we will refer to
the parties in accordance with the title assigned to them in the court below.
This is the plaintiff’s appeal.
The
facts and issues
3. The plaintiff and the defendant are brothers. The defendant is the registered proprietor of a piece of land which was acquired by way of two separate transactions. In the first transaction the plaintiff purchased a ½ undivided share in the land under an agreement dated February 25, 1975. The price was RM 21,654.
About a year later, the remaining half was purchased for
RM 24,000. No written agreement was prepared
for this second transaction. The
land was then registered in the defendant’s name. However, in or around October 1980,
upon the plaintiff’s request the defendant transferred the ½ share of the
said land to the plaintiff while the other (½) undivided share remained in
the defendant’s name. Later
the plaintiff has by a notice in writing dated October 17, 1995 to the defendant’s
solicitors demanded the retransfer of the remaining half (½) undivided share
still in the defendant’s name to the plaintiff’s name, but the defendant refused.
He claimed that he paid RM 24,000.00 under the second transaction and
was therefore both legal and beneficial owner of the remaining (½) undivided
share in the land. The plaintiff then commenced proceedings
to recover the ½ undivided share of the land from the defendant.
4. The plaintiff’s
case is that he provided the whole of the purchase price for the land. His reason for having the land
registered in his brother’s name appeared for the first time during his evidence
in chief. This is what he
said:
“I wanted my
brother's name because I had some money in Singapore and brought it back to
Malaysia and I was not sure of the tax position in Malaysia. So I wanted to use his
name.
I was worried about
being taxed - about losing the property. I told the lawyer Lek Yan to put
the Defendant's name on the property.
I told the lawyer
that I want my brother's name to be in the title and to hold it for me first -
later I will take it from him.
I told the
Defendant about putting the property in his name. I told Lek Yan I was not sure about
the tax position in Malaysia - that's why I want the Defendant's name to be in
the title first.”
5. The defendant did
not pursue this point with any vigour in the cross-examination of the plaintiff.
His pleaded case is that he provided part of the purchase price and
that is the case he pursued throughout the trial.
He did not at anytime amend his pleadings to raise an alternative case
of illegality.
The
factual question
6. So, the first
question – the question of fact – is whether it was the plaintiff who had paid
the entire price or whether the defendant had contributed an equal share. It is a straightforward
question. The High Court
resolved it in the defendant’s favour. Was it right in doing this? Learned counsel for the plaintiff
submitted that it was not.
Learned counsel for the defendant submitted that it was. With respect, we agree with
plaintiff’s counsel.
7. The best evidence
to prove who had paid the whole of the purchase price was that of the
vendor. And his evidence,
unshaken under cross-examination is that he had dealt entirely with the
plaintiff and that it was the plaintiff who had paid the price at each of the
two stages. There was
absolutely not a shred of documentary evidence put in by the defendant to show
that he had paid any part of the purchase price. His answers given at the trial
would not, when objectively viewed, inspire any confidence in his testimony in
any reasonable tribunal of fact.
Indeed, the evidence before the High Court was to the effect that the
defendant was not in a financial position to have paid the purchase price of RM
24,000 under the second transaction.
It defies credibility and is highly improbable that the defendant who was
impecunious had RM 24,000 with which to pay the vendor.
8. In a case as the
present the proper approach for the trial court is to test the evidence of the
defendant against the probabilities of the case. This is the approach that
commended itself to the Federal Court in Tindok Besar Estate Sdn Bhd v Tinjar Co
[1979] 2 MLJ 229 where Chang Min Tat FJ said:
“For myself, I would with respect feel
somewhat safer to refer to and rely on the acts and deeds of a witness which are
contemporaneous with the event and to draw the reasonable inferences from them
than to believe his subsequent recollection or version of it, particularly if he
is a witness with a purpose of his own to serve and if it did not account for
the statements in his documents and writings. Judicial reception of evidence
requires that the oral evidence be critically tested against the whole of the
other evidence and the circumstances of the case. Plausibility should never be
mistaken for veracity.”
9. Unfortunately,
the trial court did not adopt this approach. There was simply no assessment of
the defendant’s evidence, particularly against the probabilities of the case and
with the defendant’s own documents.
We refer in particular to the defendant’s own letter dated February 1,
1981 in which he frankly acknowledged that the plaintiff had paid the full
purchase price for the land.
10. Further,
the court below failed to sufficiently bear in mind that the burden of proving
that he paid the purchase price under the second transaction lay on the defendant
which he had to discharge by adducing cogent evidence. Needless to say cogent evidence
from the defendant was wanting.
The relevant evidence in fact went the other way. The trial court therefore misdirected
itself on the facts and failed to draw proper inferences. Having carefully scrutinised the
whole of the oral and documentary evidence we are satisfied that the finding
that the defendant had contributed to the purchase price under the second
transaction cannot stand. He
should have held that it was the plaintiff who had provided the entire purchase
price.
The
question of law
(i)
Resulting trust
11.
The question of law that arises on the facts is whether the plaintiff can
compel the defendant to transfer the legal title to the land to him. This is an equally straightforward
issue. The law on the point
is not in doubt. Neither is
there any difficulty in applying it to the facts here.
12.
The plaintiff having paid the entire purchase price for the land, the act
of registering the land in the defendant’s name merely vested the nominal legal
ownership in the latter. The
beneficial ownership results to the plaintiff. This is because the relationship
between the parties here does not come within one of the special categories
recognised by equity as creating a presumption of advancement in favour of the
holder of the legal title.
13.
The very limited and well-established circumstances in which a resulting
trust may arise were dealt with by Lord Browne-Wilkinson in Westdeutsche Landesbank Girozentrale v
Islington London Borough Council [1996] AC 669, 708. He said:
“Under existing law a resulting trust arises
in two sets of circumstances: (A) where A makes a voluntary payment to B or pays
(wholly or in part) for the purchase of property which is vested either in B
alone or in the joint names of A and B, there is a presumption that A did not
intend to make a gift to B: the money or property is held on trust for A (if he
is the sole provider of the money) or in the case of a joint purchase by A and B
in shares proportionate to their contributions. It is important to stress that this
is only a presumption, which presumption is easily rebutted either by the
counter-presumption of advancement or by direct evidence of A's intention to
make an outright transfer: see Underhill
and Hayton pp 317ff, Vandervell v
IRC [1967] 1 All ER 1 at 8, [1967] 2 AC 291 at 312ff and Re Vandervell's Trusts (No 2), White v
Vandervell Trustees Ltd [1974] 1 All ER 47 at 63ff, [1974] Ch 269 at
288ff. (B) Where A transfers property to B on
express trusts, but the trusts declared do not exhaust the whole beneficial
interest: ibid and Barclays Bank Ltd v
Quistclose Investments Ltd [1968] 3 All ER 651, [1970] AC 567. Both types of resulting trust are
traditionally regarded as examples of trusts giving effect to the common
intention of the parties. A resulting trust is not imposed by law
against the intentions of the trustee (as is a constructive trust) but gives
effect to his presumed intention.
Megarry J in Re Vandervell's Trusts (No 2) suggests
that a resulting trust of type (B) does not depend on intention but operates
automatically. I am not
convinced that this is right. If the settlor has expressly, or by
necessary implication, abandoned any beneficial interest in the trust property,
there is in my view no resulting trust: the undisposed-of equitable interest
vests in the Crown as bona vacantia:
see Re West Sussex Constabulary's Widows,
Children and Benevolent (1930) Fund Trusts [1970] 1 All ER 544, [1971] Ch
1.”
14.
We pause to emphasise – if emphasis is required – that the categories of
cases in which a resulting trust may arise are closed and no new category may
now be admitted. In
particular we would reject – as did the House of Lords in Westdeutsche Landesbank – the
suggestion by Professor Peter Birks (“Restitution and Resulting
Trusts” in Equity and
Contemporary Legal Developments p 335 at 360) that a resulting trust
should arise wherever money is paid under a mistake or when money is paid on a
condition which is subsequently fails.
15. The
facts of the present instance clearly fall within the second limb of category
(A) of the Browne-Wilkinson formula. For, this is a case of a purchase
in the name of another with no intention of making a gift of the property. We would for good measure add that
it is not the instant defendant’s pleaded case that although the property
was paid for by the plaintiff, he intended to make a gift of it to the defendant.
The defendant, both in the court below and before us, put forward only
one ground, namely, that he had paid part of the purchase price, an assertion
which, as we have already said, does not stand up to close scrutiny.
(ii) Bar to recovery
16.
Is there anything to bar the plaintiff from enforcing his equitable title
against the defendant? The
High Court thought there was.
With respect, we do not agree.
17. The High Court denied
recovery on the ground that the plaintiff’s claim was tainted with
illegality. In the words, of
the learned trial judge the plaintiff “was trying to evade payment of revenue to
the Government” by having the land registered in the defendant’s name. We are respectfully unable to
agree with this finding. The
evidence does not support it.
What the plaintiff said was that he purchased the land in the defendant’s
name because he was not sure of the tax position in this country and was worried
about losing the land. No
question of defrauding the revenue arose. We are therefore of the view that
this is an ordinary case of a resulting trust in the plaintiff’s favour. The plaintiff was therefore
entitled to call for a transfer of the remaining ½ undivided share in the land
to him and to compel a transfer upon the defendant’s refusal to
comply.
18.
Even assuming that the plaintiff’s purpose was to evade the payment of
revenue, he is nevertheless entitled to enforce the resulting trust operating in
his favour by compelling the defendant to transfer the land to him. For, it is a settled principle of
law that the owner of property, whether legal or equitable, which is the subject
matter of an illegal transaction may sue and recover it if he does not have to
rely upon the illegality to support his claim. Or, as Yong Pung How CJ
(Singapore) said in Public Prosecutor
v Intra Group (Holdings) Co Inc [1999] 1 SLR 803, employing language
unrivalled for its trenchant lucidity:
“The courts will, however, render assistance
to recover property transferred for an illegal purpose provided that the
underlying illegal purpose does not have to be relied upon: Bowmaker’s Ltd v Barnet Instruments Ltd
[1945] KB 65.”
19.
There are many authorities that support the proposition. It is unnecessary to go through
them all here. Suffice that
we cite two of the leading cases on the point. Amar Singh v Kulubya [1964] AC
142 is the first.
Kulubya, the respondent, was an African. He owned some Mailo land. He agreed to lease three plots in
it to the appellant, Amar Singh, an Indian, without obtaining the consents that
were necessary by the relevant East African legislation. Kulubya allowed Amar Singh to
remain in possession of the land.
Later, he brought an action to recover possession, as well as rent, mesne
profits and damages. The
appellant pleaded illegality.
Thereupon, the respondent abandoned his claims for rent, mesne profits
and damages and confined his claim to vacant possession. The trial judge dismissed the
action. On appeal, the East
African Court of Appeal reversed the judge and granted the respondent vacant
possession. On further
appeal, the judicial committee affirmed the Court of
Appeal.
20.
Lord Morris of Borth-y-Gest, delivered the advice of the Board. He said (at p
503):
“Their Lordships consider therefore that the
plaintiff’s right to possession was in no way based on the purported agreements.
It was the defendant who
might have needed to rely on them, because, had they been valid and permissible
agreements, the defendant would have contended that the tenancies would have
needed for their termination longer periods of notice than those contained in
the notices to quit that were given. As it was, the contention of the
defendant (based on para 3 of the defence) was that the plaintiff was disabled
from suing because he had been a party to illegal agreements. It was quite correct, as set out
in that paragraph of the defence, that the plaintiff had been a party to illegal
agreements. At the time of the trial, however, he was
not basing his claim ‘on the said agreements’. Indeed he could have presented his
claim (if it were limited to a claim for possession) without being under any
necessity of setting out the unlawful agreements in his plaint. He required no aid from the illegal
transactions in order to establish his case. (Compare Simpson v Bloss [1816] 7 Taunt 246).
It was sufficient for him to
show that he was the registered proprietor of the plots of land and that the
defendant who was a non-African was in occupation without possessing the consent
in writing of the Governor for such occupation and accordingly had no right to
occupy. It is true that the
plaintiff referred to the purported agreements to which he had been a party and
that he repudiated them and acknowledged that they were illegal. It was, however, in spite of and not
because of those illegal agreements that he was entitled to possession. Though the plaintiff had offended by
being a party to the illegal and ineffective agreements their Lordships do not
consider that considerations of public policy demanded the failure of his claim
for possession: on the contrary such considerations pointed to the necessity of
upholding it in order to eject a non-African who was in unlawful
occupation.” (Emphasis
added.)
21.
Amar Singh v Kulubya
concerned the enforcement of a legal title to property. But the position is no different
where what is sought to be enforced is an equitable title. The point has been established by
Tinsley v Milligan [1994] 1 AC
340, which is the second authority we cite. Two single women who were living
together purchased a house.
It was registered in the sole name of the plaintiff so as to enable the
defendant to make false claims for social security benefits. Later, a quarrel ensued and the plaintiff
moved out while the defendant remained in occupation. The plaintiff then commenced
proceedings against the defendant claiming possession and asserting sole
ownership of the property.
The defendant delivered a defence and counterclaim claiming an equitable
interest in the house on the basis of a resulting trust. The House of Lords by a majority
allowed the defendant’s counterclaim.
22.
Lord Jauncey of Tullichettle framed the issue at the heart of the case as
follows:
“The ultimate question in this appeal is, in
my view, whether the respondent in claiming the existence of a resulting trust
in her favour is seeking to enforce unperformed provisions of an unlawful
transaction or whether she is simply relying on an equitable proprietary
interest that she has already acquired under such a
transaction”
23.
His Lordship then answered that question:
“I find this a very narrow question but I
have come to the conclusion that the transaction whereby the claimed resulting
trust in favour of the respondent was created was the agreement between the
parties that although funds were to be provided by both of them, nevertheless
the title to the house was to be in the sole name of the appellant for the
unlawful purpose of defrauding the D.S.S. So long as that agreement remained
unperformed neither party could have enforced it against the other. However, as soon as the agreement
was implemented by the sale to the appellant alone she became trustee for the
respondent who can now rely on the equitable proprietary interest which has
thereby been presumed to have been created in her favour and has no need to rely
on the illegal transaction which led to its creation.”
24.
Lord Lowry said that he was:
“convinced that the right view is that a
party cannot rely on his own illegality in order to prove his equitable right,
and not that a party cannot recover if his illegality is proved as a defence to
his claim.”
25.
Lord Browne-Wilkinson who led the majority said:
“In my judgment the time has come to decide
clearly that the rule is the same whether a plaintiff founds himself on a legal
or equitable title: he is entitled to recover if he is not forced to plead or
rely on the illegality, even if it emerges that the title on which he relied was
acquired in the course of carrying through an illegal
transaction.”
26.
So too here. The
plaintiff is not seeking to enforce an incomplete executory bargain that is
tainted with illegality. Here
the land has already been registered in the defendant’s name. The alleged illegality relied on by the
High Court has nothing whatsoever to do with the resulting trust which the
plaintiff seeks to enforce.
As Lord Jauncey of Tullichettle in his majority speech in Tinsley v Milligan pointed out,
in words wholly apposite to the present case:
“At the outset it seems to me to be important
to distinguish between the enforcement of executory provisions arising under an
illegal contract or other transaction and the enforcement of rights already
acquired under the completed provisions of such a contract or
transaction.”
27.
It is significant that the pronouncement of the majority in Tinsley v Milligan was applied
by the Supreme Court of India in BOI
Finance Ltd v The Custodian AIR 1997 SC 1952, where Kirpal J (later
Chief Justice) said:
“While there can be no dispute that the
transactions in question have to be viewed in the context of the law in this
country but the decisions of the Courts in England, based on common law
principles, have been applied and followed by the Courts in India. This will be evident from the fact
that the decision in the Sajan Singh
case, [Sajan Singh v Sardara Ali [1960] AC 167] which was approved by the
House of Lords in Milligan’s case, has been followed by this Court in Smt. Surasaibalini Debi v. Phanindra Mohan
Majumdar (1965) 1 SCR 861 : (AIR 1965 SC 1364).”
28.
The present case is readily distinguishable from the case of Chettiar v Chettiar [1962] MLJ
143. In that case, a father purchased certain
property in his son’s name to practise deceit upon the public
administration. The purchase
created the presumption of advancement in the son’s favour. Later, the father called on the
son to convey the land to him.
The son refused. The
father brought an action to recover the land. He tried to rebut the presumption
of advancement by proving the true purpose for the purchase. It was held that the father failed
because he had to rely on the illegal purpose to rebut the presumption of
advancement. Lord Denning who
delivered the judgment of the Board put the point beyond
doubt:
“But in the present case the plaintiff had of
necessity to disclose his own illegality to the Court and for this reason: He
had not only to get over the fact that the transfer stated that the son paid
$7,000 for the land. He had also to get over the presumption
of advancement: for whenever a father transfers property to his son, there is a
presumption that he intended it as a gift to his son: and if he wishes to rebut
that presumption and to say that his son took as trustee for him, he must prove
the trust clearly and distinctly, by evidence properly admissible for the
purpose, and not leave it to be inferred from slight circumstances, see Shephard v Cartwright [1955] AC 431 at
page 445.”
29.
In the present case there is no presumption of advancement operating in
the defendant’s favour. The
presumption is quite the other way around. It operates in the plaintiff’s
favour by way of a resulting trust.
There is no presumption for him to rebut.
30.
In our judgment the present case is much closer to Gorog v Kiss [1977] 16 OR (2d)
569. There, the
plaintiffs, husband and wife transferred their farm to the defendant, the
husband’s sister, for the purpose of defeating the plaintiffs’ creditors. Later, the plaintiffs called on
the defendant to re-convey the farm but she refused. The plaintiffs then brought an action to
recover the farm. In their
statement of claim they alleged the illegality of the transfer. The High Court of Ontario found for the
plaintiffs on the ground that the defendant held the farm lands on a resulting
trust for the plaintiffs. An
appeal to the Court of Appeal failed and the Supreme Court of Canada refused
leave. [See, [1977] 2 S.C.R.
ix].
31.
MacKinnon JA when delivering the judgment of the Ontario Court of Appeal
said:
“There is no presumption of gift by way of
advancement as between brother and sister, as happens in the husband-wife,
father and child cases relied on by the appellant. The sister here was certainly not
financially dependent on her brother, if anything, it was the other way
around. There is, rather, a presumption of a
resulting trust to the transferors when, having paid for the property, the
purchasers put it in the name of a stranger in law, because equity assumes
bargains and not gifts. With
respect, in my view, the principles which are applicable here were correctly and
concisely stated by Kelly, J.A., in Maysels v Maysels [1974] 3 O.R. (2d)
321, at p. 325:
‘It has long been established that, save
where the grantee is the wife or child of the grantor, where a spontaneous
conveyance is, as between grantor and grantee, voluntary, upon the title to the
property becoming vested in the grantee there arises a presumption of a
resulting trust thereof of which the grantor is the beneficiary: Dyer v. Dyer (1788), 2 Cox 92. In contrast to the foregoing,
where the grantee is the wife or child of the grantor no such resulting trust in
favour of the grantee arises but there does arise a presumption of advancement
and that the wife or child as a donee has the beneficial interest in the
property: Christ's Hospital v. Budgin
(1712), 2 Vern. 683, 23 E.R. 1043.’
It is true that, for reasons best known to
the pleader, the plaintiffs pleaded the illegal basis for the transfer which was
not necessary to their case. The defendant, however, pleaded, as
already stated, that the reason for the transfer was that the defendant would
become the legal owner and become responsible for all mortgage payments so that
the farm would not be lost either by foreclosure or to creditors. It was only at the trial, as
already pointed out, that the defendant alleged that the transfer was for
valuable consideration which evidence was not believed by the trial
Judge.
At no time did the defendant allege that the
transfer was a gift. Neither did the relationship give
rise to a presumption of advancement.
More importantly, the
defendant did not allege or admit the illegal purpose. Quite the contrary, although she
now wishes to rely on it.
As Sir W. M. James, L.J., said in Haigh v. Kaye (1872), L.R. 7 Ch. 469 at
p. 473:
‘If a Defendant means to say that he claims
to hold property given to him for an immoral purpose, in violation of all honour
and honesty, he must say so in plain terms, and must clearly put forward his own
scoundrelism if he means to reap the benefit of it. Here he has simply said that the
Plaintiff, fearing an adverse decision in the suit of Haigh v. Haigh, conveyed
the property to him. I think that is not sufficient.’
Despite the allegation in the statement of
claim, it was not necessary for the plaintiff to rely on the illegality to raise
the presumption of a resulting trust once the defence of consideration was
rejected. I would adopt here the statement of
Idington, J., in Scheuerman v
Scheuerman (1916) 52 SCR 625:
‘I find cases where the man has, accidentally
as it were, or incidentally, to the relation of his story told that which he
might if skilfully directed both in pleading and in giving evidence have avoided
telling, yet has told enough to disclose that he was far from being always
guided by the law or morality in his intentions, and still entitled to succeed
because he had in fact established, by the untainted part of his story as it
were, enough to entitle him to succeed without reliance upon that which was
either illegal or immoral.’
In order to attempt to rebut the resulting
trust it was the defendant who had to rely on the illegal arrangement, to which
arrangement she was an active and willing party.” (Emphasis
added.)
32.
As in Gorog v Kiss,
here too the defendant did not at any time allege that the land was a gift to
him from the plaintiff.
Again, as in Gorog,
here too the defendant did not allege or admit the illegal purpose. Whereas in Gorog, the plaintiffs pleaded
the illegal purpose for transferring the farm to the defendant, the plaintiff
here volunteered during his evidence in chief the reason for having the land
registered in the defendant’s name.
To this extent, the present case is much stronger for the plaintiff. And if the plaintiffs in Gorog succeeded, there is no
good reason why the instant plaintiff should not succeed.
33.
We would note in passing that by the common law of Singapore, (in which
expression we include the doctrines of Equity) a resulting trust created by an act of parties will not be
enforced where to do so will be contrary to public policy. See, Suntoso Jacob v Kong Miao Ming [1986] 2
MLJ 170; Cheong Yoke Kuen v Cheong Kok Keong [1999] 2 SLR
476. However,
Malaysian jurisprudence, anchored on the foundation of binding precedent as
Chettiar v Chettiar and Singh v Ali
[1960] MLJ 52, does not admit of such a principle.
34. The
difference between the position in Singapore and Malaysia demonstrates the
flexibility and dynamism of common law jurisprudence. The common law of each jurisdiction
develops in the context of its own particular and peculiar circumstances by
adapting and modifying principles and doctrines to meet the hopes and aspirations
of the members of its society.
The
upshot
35. For
the reasons already given we are of the view that this appeal must succeed.
Accordingly the appeal is allowed.
The orders of the High Court are set aside.
There shall be judgment for the plaintiff as prayed for in his statement
of claim. The defendant
must duly execute and deliver to the plaintiff’s solicitors within 14 days
from today, a registrable memorandum of transfer of a half undivided share
in the land in question. The
stamp duty for the transfer, registration fees and all conveyancing costs
shall be borne by the plaintiff.
The defendant must pay the plaintiff the costs of this appeal and those
incurred in the court below. The
deposit shall be paid out to the plaintiff.
The parties shall be generally at liberty to apply to the High Court
for the carriage of the order of this Court made herein.
Dated this 14th day of June,
2004
Gopal Sri Ram,
Judge, Court of Appeal,
Malaysia.
Counsel for the appellant: P.S. Gill
Solicitors for the appellant: T/n Gill & Tang
Counsel for the respondent: N. Sivagurunathan (K.E. Ng with him)
Solicitors for the respondent: T/n Shamiah K.E. Ng & Siva