HIGH COURT OF MALAYA
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www.ipsofactoJ.com/highcourt/index.htm [2006] Part 2 Case 6 [HCM] |
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HIGH COURT OF MALAYA |
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Tengku Mohd Saad - vs - Tay |
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ZULKEFLI AHMAD MAKINUDIN J |
20 OCTOBER 2005 |
Judgment
Zulkefli Ahmad Makinudin, J
THE PLAINTIFFS' CLAIM
The relevant facts relating to the plaintiffs' claim against the defendants are as follows:
The plaintiffs are the administrators of the estate of Tunku Mansur Tunku Yaacob, deceased (TMY estate).
The first defendant is an individual.
The second defendant is a company incorporated in Malaysia and currently listed on the Kuala Lumpur Stock Exchange and is presently the 100% registered proprietor of the following companies:
Harrisons & Crossfield (Malaysia) Sdn Bhd (now known as "Harrisons Trading (Peninsular) Sdn Bhd"); and
Harrisons & Crossfield (Sabah) Sdn Bhd (now known as "Harrisons Trading (Sabah) Sdn Bhd").
(collectively known as the "H&C subsidiaries").
Tunku Mansur Tunku Yaacob had worked for about 20 years and was the chairman of both the companies since 1978.
Sometime in 1990, Tunku Mansur proposed to effect a management buy-out [MBO] of the H&C subsidiaries from their then shareholder, Harrisons & Crossfield Plc.
The first defendant proposed the participation of a group of Indonesian businessmen known as the "Bumi Raya Utama Group" [BRUG] in providing Financial assistance to the proposed management buy-out of the H&C subsidiaries. An agreement/understanding was reached between Tunku Mansur and BRUG that the proposed management buy-out of the H&C subsidiaries be effected on, inter alia, the following terms:
BRUG will "contribute" up to a maximum amount ofRM50 million for the acquisition of the H&C subsidiaries and be entitled to 60% of the share ownership of the H&C subsidiaries at par value, via the second defendant;
Tunku Mansur and his group will be entitled to up to 40% of the share ownership of the H&C subsidiaries at par value, through their ownership in the second defendant;
Tunku Mansur will stay on as the chairman of the H&C subsidiaries for as long as he liked; and
In recognition of Tunku Mansur's long service in the H&C subsidiaries and the assurance given by Tunku Mansur that he will be able to obtain some discount to the acquisition price of the H&C subsidiaries from Harrisons & Crossfield Plc, BRUG agreed to pay a sum of RM5 million to Tunku Mansur.
As the final acquisition of the H&C subsidiaries was agreed at RM52.5 million, Tunku Mansur agreed to bear the excess amount of RM2.5 million in the acquisition price of the H&C subsidiaries.
In part implementation of the agreement/understanding between BRUG and Tunku Mansur stated above, an amount of 2,600,000 ordinary shares in the second defendant was paid for and issued to Tunku Mansur.
Meanwhile, Tunku Mansur had agreed to sell 10% of his shareholding in the second defendant amounting to 1,200,000 ordinary shares in the second defendant [said shares] to the First defendant at its nominal value of RM1,200,000 [purchase price] on the terms, inter alia, that until the full purchase price is paid by the first defendant, the beneficial ownership of the said shares shall remain with, and vest in, Tunku Mansur.
The said shares were registered in the name of the first defendant sometime in March 1992. However, the purchase price for the said shares was not paid by the first defendant at all.
Tunku Mansur passed away on October 27, 1993.
After the death of Tunku Mansur, the first defendant was in communication with the plaintiffs from time to rime. On several occasions, the first defendant has made express admissions that he has not paid the purchase price to Tunku Mansur for the said shares, but suggested that the said shares were given to him by Tunku Mansur for free.
The plaintiffs aver that the first defendant is obliged to pay the purchase price for the said shares and he has until todate tailed or refused to make such payment to Tunku Mansur or the plaintiffs. Alternatively, the plaintiffs aver that the transfer of the said shares to the first defendant was made without any consideration at all and it is unlawful and unconscionable for the first defendant to retain ownership of the said shares.
On November 10, 1998, the plaintiffs made a demand against the first defendant, inter alia, that the first defendant is liable to pay the purchase price for the said shares, failing which the plaintiffs shall commence proceedings to, inter alia, recover the said shares from the first defendant.
Up to date, the first defendant has failed or refused to comply with the aforesaid demand. No consideration whatsoever has been given by the first defendant for the said shares.
The plaintiffs' claim against the defendants are for the following reliefs:
A declaratory order that the plaintiffs are the beneficial owners of the 4,380,600 ordinary shares in the second defendant presently registered in the name of the first defendant, third, fourth and fifth defendants [the said shares] and are entitled to the return of the said shares from the first, third, fourth and fifth defendants together with all rights, title, interest and benefits (including all moneys, dividend, bonus issue or other distributions) arising out of, or accrued under, the said shares which were, and will be, acquired by the first, third, fourth and fifth defendants as the registered holder of the said shares.
An order that the first, third, fourth and fifth defendants be restrained, whether by himself or his servants or agents or otherwise, from selling, transferring, assigning, changing or howsoever dealing with or disposing of the said shares and all or any of the rights, title, interest and benefits (including all moneys, dividend, bonus issue or other distributions) arising our of, or accrued under, the said shares acquired by the first, third, fourth and fifth defendants to any third party.
An order that the second defendant be restrained, whether by himself or his servants or agents or otherwise, from giving, extending or paying any money, dividend, bonus issue or any other rights, title, interest or benefits (including all moneys, dividend, bonus issue or other distributions) arising out of, or accrued under the said shares to the first, third, fourth and fifth defendants.
An order that the second defendant rectifies the register of members of the second defendant by deleting all entries relating to the first, third, fourth and fifth defendants and substituting for the first, third, fourth and fifth defendants the plaintiffs as the owners of the said shares in their capacity as the administrators of the TMY estate.
An order that all rights, title, interest and benefits, including all money, dividend, bonus issue and other distributions arising out of, or accrued under the said shares be retained by the second defendant and/or placed in a fixed deposit account with a bank in Kuala Lumpur until the disposal of this action or until further order.
Cost of the action.
Any other relief or order which this honourable court deems fit.
It is the plaintiffs' case against the first defendant that the first defendant was to pay a sum of RM1.2 million to the late Tunku Mansur for the said 1.2 million shares and agreed that until the full RM1.2 million is paid, the beneficial ownership of the said 1.2 million shares shall remain with, and vest in, the late Tunku Mansur. The plaintiffs contended that the first defendant has failed or refused to pay the said RM1.2 million despite demands made by the plaintiffs and notice that that unless that he pays the said RM1.2 million, the plaintiffs would commence proceedings, to inter alia, recover the said 1.2 million shares.
As against the third, fourth and fifth defendants it is the plaintiffs' case that pursuant to a bonus issue made, a total of 3,380,660 new shares in the second defendant were issued to the first defendant by virtue of the first defendant being the registered holder of the said 1.2 million shares and this resulted in the first defendant having 4,580,600 shares registered in his name. The plaintiffs contended that the first defendant subsequently transferred 4,000,000 shares in the second defendant to his wife, the third defendant. The third defendant then transferred 1,000,000 shares each to her daughters, the fourth and fifth defendants without any valuable consideration and the third, fourth and fifth defendants are holding the shares as the first defendant's nominees and these transfers were a collective attempt by the first, third, fourth and fifth defendants to evade, circumvent and/or frustrate the recovery and the plaintiffs seek the return of the 4,000,000 shares in the second defendant held in the name of the third, fourth and fifth defendants who are mere volunteers and holding the said shares as constructive trustees.
THE FIRST DEFENDANT'S DEFENCE
The first defendant in his defence dated October 30, 1998 (which was amended once pursuant to an order dated December 1, 1999), contended, inter alia, as follows:
That the first defendant and the late Tunku Mansur have agreed that in the MBO, any shares (as opposed to money) given to or acquired by the late Tunku Mansur personally would be divided equally between the first defendant and the late Tunku Mansur. [See paragraphs 9 and 14 of the first defendant's defence].
That in the MBO, the first defendant has agreed with the late Tunku Mansur that the first defendant would pay for any acquisition price in excess of RM35 million. [See paragraph 11 of the first defendant's defence].
That the first defendant is the owner of the said 1.2 million shares based on the above agreements between the first defendant and the late Tunku Mansur. [See paragraph 18 of the first defendant's defence].
CAUSE OF ACTION AGAINST THIRD FOURTH AND FIFTH DEFENDANTS
At the outset, I would like to deal with the issue raised by the third, fourth and fifth defendants relating to the cause of action against them. The learned counsel for the third, fourth and fifth defendants had contended that the plaintiffs' claim against the third, fourth and fifth defendants as constructive trustees should be dismissed as the plaintiffs have failed to plead in the amended statement of claim that the third, fourth and fifth defendants are constructive trustees. It is also their contention even assuming that it is pleaded in the amended statement of claim that the third, fourth and fifth defendants are constructive trustees, the plaintiffs' claim would fail as the plaintiffs had failed to establish that the said 4,000,000 shares are the subject matter of a trust before they were transferred to the third, fourth and fifth defendants and that the third, fourth and fifth defendants:
had knowingly or dishonestly assisted the first defendant in committing a breach of trust, i.e. the ingredients of the doctrine of "dishonest assistance" were not proven to be present; or
had received the said 4,000,000 shares with knowledge that they were transferred in breach of trust, i.e. the ingredients of the doctrine of "knowing receipt" were not proven to be present.
On the above points and argument raised, I am of the view that the essential ingredients to sustain an action against the third, fourth and fifth defendants as constructive trustees for the said 4,000,000 shares have been sufficiently pleaded in the amended statement of claim. The plaintiffs need not expressly plead that the third to fifth defendants are constructive trustees of the said 4,000,000 shares. In the case of Koh Siak Poo v Sayang Plantation Bhd [2002] 1 MLJ 65, the Court of Appeal cited with approval the following statement on the necessity to plead only material facts made by Scrutton LJ in Lever Brothers Ltd v Bell [1931] 1 KB 557:
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The practice of the courts is to consider and deal with the legal result of pleaded facts, although the particular legal result alleged is not stated in the pleading. |
In that case, the Court of Appeal held that the necessary facts to sustain a cause of action for money had and received have been sufficiently pleaded in the statement of claim. The fact that the defendant was in no way misled by what the plaintiff was seeking to prove or establish is confirmed by the defendant's defence in the way in which the defendant has answered the allegations in the statement of claim.
I am also of the view that the existence or non-existence of constructive trust is a question of law and not of fact and therefore it arises by operation of law. Constructive trust comes into existence when it is unconscionable for the legal owner of the property to assert beneficial ownership of the property. A constructive trust is sometimes referred to as an implied trust. In the case of Pathma Naganather v Nivedita Naganather (No 1) [2002] 3 AMR 3309; [2002] 6 MLJ 361, Abdul Malik Ishak J on this point had this to say:
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A constructive trust, on the other hand, is sometimes referred to as an implied trust. A case in point would be where the court in exercising its equitable jurisdiction, imposes a trust on a party who has the control of the property of which he is not entitled to. The trust is presumed to exist otherwise it would be difficult for a person claiming the beneficial interest to the property to stake his claim. It is pertinent to note that constructive trusts have developed by leaps and bounds (Boase v Cluny Rubber Estate Ltd [1913] 1 FMSLR 130; Paruvathy Murugiah v Krishnan Doraisamy [1983] 2 MLJ 121 and Muschinski v Dodds (1985) 160 CLR 503) over the years). |
It is my finding that the plaintiffs have pleaded sufficient material facts in the amended statement of claim to sustain the claim that the third, fourth and fifth defendants were and still are the constructive trustees of the said 4,000,000 shares held under their names. There is no necessity for the plaintiffs to expressly plead that the third to fifth defendants are constructive trustees of the said 4,000,000 shares. In any event it is clear that they were in no way misled by what the plaintiffs were seeking to prove or establish from the defence filed by them.
As regards the doctrines of "dishonest assistance" and "knowing receipt" raised by learned counsel for the third, fourth and fifth defendants, it is my view that the said doctrines have no application here, as such doctrines would only be applicable if the plaintiffs are pursuing personal remedies against the third, fourth and fifth defendants. However, in this case, the plaintiffs are only pursuing their proprietary remedy/claim (as opposed to a personal remedy/claim) that allows them to follow or trace the trust property (which in this case is the said 4,000,000 shares) to the third, fourth and fifth defendants. In the case of a proprietary remedy, it matters not that the person who is holding the trust property commits no wrongdoing.
Where a property is subject to a trust, the trust follows the legal estate wherever it goes, unless it comes into the hands of a purchaser for valuable consideration without notice. On this point I would like to refer to Halsbury's Laws of England (4th edn 2000 Reissue) vol 48 at paragraph 598 as follows:
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Acquisition without notice of trust. A person who, without notice of the trust, acquires property or an interest in property which is in fact subject to a subsisting trust takes the property as and subject to the performance of the trust if he acquires gratuitously either the legal estate or an equitable interest of the property .... Even if he no longer has the trust property or its traceable proceeds, a person who acquires the trust propel may be liable as a constructive trustee on the basis of knowing receipt or dealing. However, a recipient of trust money will not be personally liable if he pays it away to a third party where at the date of payment he was ignorant of the existence of the trust. |
In the case of Foskett v McKeown [2000] 3 All RR 97 at 122f-h, Lord Miller observed as follows:
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.... A beneficiary's claim against a trustee for breach of trust is a personal claim. It does not entitle him priority over the trustee's general creditors unless he can trace the trust property into its product and establish a proprietary interest in the proceeds. If the beneficiary is unable to trace the trust property into its proceeds, he still has a personal claim against the trustee, but his claim will be unsecured. The beneficiary's proprietary claims to the trust property or its traceable proceeds can be maintained against the wrongdoer and anyone who derives title from him except a bona fide purchaser for value without notice of the breach of trust. The same rules apply even where there have been numerous successive transactions, so long as the tracing exercise is successful and no bona fide purchaser for value without notice has intervened. |
On the same point I would also like to refer to the book on Equity and Law of Trusts (7th edn) by Philip H Petit wherein at pp 505 and 506 it states as follows:
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In addition to a personal action for breach of trust, a beneficiary may have a proprietary remedy ... And a proprietary remedy may be available in circumstances in which no personal action can be brought against the defendant. The question now to be discussed are how far a beneficiary can follow or trace property which has come into the hands of another, and, where tracing is possible, what rights and remedies he can claim ... [p 505] At common law the legal owner of an asset who is deprived of the possession thereof has a right to follow it no matter in whose hands it may come, and notwithstanding that it may change its form, and so long as the means of identifying the asset in its original or converted form continue to exist ... [p 506] |
In view of the foregoing, it is my finding that the third, fourth and fifth defendants' contention with regard to the application of the doctrines of "dishonest assistance" and "knowing receipt" to the plaintiffs' claim are unsustainable in the circumstances of this case.
DECISION OF THE COURT
Having considered the evidence of the witnesses called by the plaintiffs and the defendants including the documentary evidence tendered and having considered the submissions of counsel for the plaintiffs and the defendants, I find that the plaintiffs have proven on the balance of probabilities their claim against the defendants. I hereby allow the plaintiffs' claim with costs against the first, third, fourth and fifth defendants and make the carders as prayed for by the plaintiffs in their amended statement of claim. In allowing the plaintiffs' claim I make no order as to costs against the second defendant. I find that the second defendant is only a nominal defendant in this case. The learned counsel for the second defendant had submitted that the second defendant is a neutral party and would abide by any decision and orders made by this court at the conclusion of the trial.
It is my finding that the plaintiffs have proven on the balance of probabilities that the first defendant is holding the said 1.2 million shares (or 4,580,600 shares after a bonus issue) on trust for the late Tunku Mansur. I also find that the first defendant after the commencement of this suit and in breach of his undertaking as in Encl.17 of the court's file of this case transferred the said 4,000,000 shares to the third defendant without any valuable consideration.
With regard to Encl.17, simultaneously with the commencement of this action on November 27, 1998 the plaintiffs had applied by way of summons in chambers dated November 27, 1998 [Encl.3] for, inter alia, an interlocutory order that the First defendant be restrained from selling, transferring, assigning, charging or howsoever dealing with the said 1.2 million shares until the trial of this action or until further order. In lieu of the application for interlocutory injunction, the first defendant offered an undertaking on the following terms, which was recorded by this court in Encl.17 as follows:
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UPON the consent of the plaintiffs to withdraw the Summons in Chambers dared 27th November 1998 with no order as to costs, AND without any admission to liability by the first defendant and without prejudice to any defence of the First defendant in this action, the first defendant hereby undertakes not to dispose off any of the shares which are the subject matter of this action until the date of the trial herein AND will not take the dividend declared under warrant No. 98/5 at the same time AND FURTHER that the first defendant agrees that the dividend be deposited in an interest bearing fixed deposit account until the date of the trial of this action. |
I further find that the third defendant took the transfer of the said 4,000,000 shares although she had knowledge of the First defendant's undertaking in Encl.17 and that from the said 4,000,000 shares the third defendant subsequently transferred 1,000,000 shares each to the fourth and fifth defendants also without any valuable consideration.
It is my finding that the third, fourth and fifth defendants arc constructive trustees of the said 4,000,000 shares held in their respective names for the estate of the late Tunku Mansur.
In coming to the finding that "the plaintiffs have proven their case against the defendants, I have relied substantially on the evidence of Mr. Gabriel Patrick O'Holohan (PW2). I accept the evidence ofPW2 of the fact that he was told by the late Tunku Mansur that the first defendant was to pay a sum of RM1.2 million to the late Tunku Mansur as consideration for the said 1.2 million shares transferred by the late Tunku Mansur to the first defendant and that it was agreed between the late Tunku Mansur and the first defendant that until the first defendant pays the sum of RM1.2 million, the beneficial ownership of the said 1.2 million shares shall remain with, and vest with the late Tunku Mansur. The first defendant never paid the said RM1.2 million to the late Tunku Mansur or the plaintiffs. Although PW2's knowledge of the matter came from what was told to him by the late Tunku Mansur, I am of the view that PW2's evidence on the matter is admissible under s 32(1)(b) of the Evidence Act 1950 which provides as follows:
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32. |
Cases in which statement of relevant fact by person who is dead or cannot be found, etc. is relevant —
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I find the evidence in this case showed that PW2 was the late Tunku Mansur's good and trusted friend and confidante for more than 33 years, i.e. from 1960 until the late Tunku Mansur's demise on October 27, 1993. The late Tunku Mansur appointed PW2 as his power of attorney on September 2, 1977 via a power of attorney (exh P77). Under the power of attorney, PW2 was granted very wide power that would allow PW2 to do practically everything which the late Tunku Mansur could do himself and PW2 was to look after the late Tunku Mansur's personal and business affairs when the late Tunku Mansur was away. This power of attorney was never revoked.
PW2 had stated that the late Tunku Mansur consulted and kept PW2 informed on practically every aspect of his business dealings and personal affairs. The late Tunku Mansur informed and discussed with PW2 on matters relating to the MBO from the inception of the idea, the involvement of BRUG, its completion and the transfer of the said 1.2 million shares by the late Tunku Mansur to the second defendant. At all material times, PW2 was the holder of the power of attorney of the late Tunku Mansur.
For the foregoing reasons, I am of the considered view that the statements made by the late Tunku Mansur to PW2 relating to the MBO and the transfer of the said 1.2 million shares to the first defendant were statements made in the ordinary course of business and thus come within the exception of s 32(1)(b) of the Evidence Act 1950.
The provision of s 32 of the Indian Evidence Act is in pari materia with s32 of the Evidence Act 1950. In the case of Devi Singh v Mt Phulma AIR 1961 HP 10 which was cited in Sarkar's Law of Evidence, 13th edn at p 685 it was held that the words "in the ordinary course of business" in s 32(2) should be given a broad and liberal connotation. In that case the question that arose for consideration was whether the statement made by a deceased husband to his wife could be said to have been made "in the ordinary course of business". The court held at pp 12 to 13 as follows:
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The passing of information about the important and chief events in the history of a family by the male members of the family to the women folk or by the elders to the younger's should be held to be in the ordinary course of business and those words should be given a broad and liberal connotation. To hold otherwise would result in the shutting out of proof of facts on which on account of lapse of time direct evidence is not available. .... The disruption of the status of a joint family is, in my opinion, a matter with which the ladies of the family not only keep themselves in touch, but usually, if not invariably, have also a say thereon and it might well be presumed that if a lady of the family does not participate in the actual deliberations, she is kept fully conversant with them by her nearest male relative. Thus, an important event in the history of a family communicated by either the husband to his wife or by an elder to a younger even in the ordinary course of conversation at a time when there is no controversy about it may well be held to be a statement made in the ordinary course of business. |
In the case of Ramamurthi v Subba Rao AIR 1937 Mad 19, a letter was written by a party to his wife making reference to a settlement and asking her to do certain acts to forward the settlement, such as by telling his uncle that he would execute a mortgage deed in his favour and was filed to prove family settlement. It was held by Horwill J that the letter was relevant under s 32(2) of the Indian Evidence Act and in the course of his judgment, His Lordship observed, inter alia, that the words "in the course of business" as used in s 32(2) of the Indian Evidence Act mean the way the business (which may be of a purely private or even trivial nature) is conducted and have no connection with the course of business suggesting a series of acts of business.
Based on the above cited case authorities it is my view since PW2 was at all material times the holder of a power of attorney from the late Tunku Mansur and was required to manage the business and personal affairs of the late Tunku Mansur anytime when he was away, all statements made by the late Tunku Mansur to PW2 with regard or pertaining to his business and personal affairs would necessarily be statements made in the "ordinary course of business" and therefore admissible in evidence. I also find that PW2 is a credible and reliable witness. PW2 is not an interested witness and he did nor have any pecuniary interest in the outcome of the present suit.
As regards the allegation of the first defendant that PW2 was the executor of the estate of the late Tunku Mansur and yet this claim was not even included as an asset of the estate, the short answer is that no probate was ever granted to the estate of the late Tunku Mansur. Therefore PW2 could never have become the executor of the estate of the late Tunku Mansur. Only a letter of administration to the estate of the late Tunku Mansur with the plaintiffs as administrators was issued. [See exh D34 for the letters of administration issued on April 6, 1994].
This claim was not included as an asset in the list of assets to the letter of administration (exh D34) as the plaintiffs only became aware of the fact that the first defendant was to pay but has not paid for the said 1.2 million shares after the letters of administration were issued. The fact that the list of assets attached to the letter of administration (exh D34) does not include the claim in this suit will not affect the plaintiffs' claim herein as such a list of assets is not conclusive proof of the late Tunku Mansur's assets. In the case of Chua Chee Chor v Chua Kim Yong [1960] MLJ 127, His Lordship Smith J took the view that failure to include a right of action as an asset in the list annexed to the grant of letters of administration does not affect a personal representative's statutory power to sue in respect of all causes of action that survive the deceased person. His Lordship, at p 130, states as follows:
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The principal object of the schedule to the grant of letter of administration appears to be for the purpose of ensuring that correct security is given. It does not prove the deceased's title to the property scheduled. |
In the case of Kwa Hock Kee v Kwa Kian Sing [1985] 2 MLJ 283, His Lordship Thean J has pointed out that it is the grant of letters of administration, not the schedule of assets that confers a title on the plaintiffs in their representatives capacity and the main purpose of the schedule of assets is for the calculation of estate duty. In the case of Khoo Kay Hock v LJ Ketting [1978] 2 MLJ 57, the then Federal Court held that the title of the personal representative of a deceased person to sue is conferred by s 59 of the Probate and Administration Act 1959 and the schedule of assets to the grant of letters of administration did not in law affect the title of a personal representative to commence legal proceedings. His Lordship Raja Azlan Shah FJ (as His Majesty then was) said at p 58 as follows:
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The schedule of property to the grant of letters of administration does not in law affect the title of the personal representative of a deceased person to institute legal proceedings. It is only a description of the property to be administered and not a description of his status to sue. |
WHETHER FIRST DEFENDANT WAS TO PAY RM1 .2 MILLION TO THE LATE TUNKU MANSUR AS CONSIDERATION FOR THE 1.2 MILLION SHARES TRANSFERRED BY THE LATE TUNKU MANSUR TO FIRST DEFENDANT
It is incontrovertible that the late Tunku Mansur and the first defendant executed the transfer form on January 27, 1992 (exh P5) and the consideration for the transfer was stated as RM1.2 million. Stamp duty for the said transfer calculated based on a consideration of RM1.2 million was paid on January 28, 1992 to the Collector of Stamp Duty. The transfer from (exh P5) was subsequently submitted by the First defendant to the second defendant on February 7, 1992 to have the transfer effected. The first defendant claimed that the consideration of RM1.2 million was filled in the transfer from (exh P5) to comply with the requirement of PW7, the second defendant's company secretary. However the contemporaneous documents and the objective facts do not support this claim of the first defendant as the transfer form (exh P5) had been duly completed and executed before the first defendant submitted the same to the second defendant. Instead the contemporaneous documents and the objective facts clearly lend support to the plaintiffs' claim that the first defendant was to pay RM1.2 million for the said 1.2 million shares.
WHETHER FIRST DEFENDANT HAS PAID RM1.2 MILLION TO THE LATE TUNKU MANSUR OR THE PLAINTIFFS
It is my finding that it is an undisputed fact that the first defendant never paid any money to the late Tunku Mansur for the said 1.2 million shares. In his defence, the first defendant pleaded that the shares to be given or acquired by the late Tunku Mansur personally in the MBO were to be divided equally between the first defendant and the late Tunku Mansur as the first defendant has agreed to pay for any acquisition price in excess of RM53 million. In support of this contention exh D39 was introduced in evidence by the first defendant during the cross-examination of PW1. However, in his witness statement (DWS1), the first defendant took a different position and claimed that the late Tunku Mansur and him would share "whatever money" opposed to shares) that they get from BRUG and therefore the issue of him having to pay for the said 1.2 million shares never arose.
WHETHER BENEFICIAL OWNERSHIP OF THE 1.2 MILLION SHARES REMAINS WITH AND VEST IN THE LATE TUNKU MANSUR UNTIL FIRST DEFENDANT PAYS RM1.2 MILLION
It is clear from the evidence ofPW2 that it was agreed between the late Tunku Mansur and the first defendant that the first defendant was to hold the said 1.2 million shares for the late Tunku Mansur until the first defendant pays for them. This can be found in Q & A 45, 46 and 59 in the witness statement (PWS2) of PW2 as follows:
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Q45 |
Do you know when did the late Tunku Mansur transfer the 1,200,000 shares in the second defendant to Mr. Tay, the first defendant? |
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A |
Sometime in late 1991 or early 1992, Tunku Mansur told me that he was considering transferring the 1,200,000 shares in the second defendant that he has agreed to sell to Mr. Tay although he had not been paid. Tunku Mansur told me that Mr. Tay needed the shares as collateral to raise a loan to pay for the shares. Tunku Mansur said that he was inclined to allow the transfer of the 1,200,000 shares to be effected as he could then paid for the same. He also mentioned in passing that there was other reason why he was inclined to agree to the transfer but he did not elaborate. |
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Q46 |
What did you say to the late Tunku Mansur about his intention to transfer the 1,200,000 shares in the second defendant to Mr. Tay, the first defendant? |
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A |
I told Tunku Mansur that I did not trust Mr. lay, the first defendant with the shares registered in his name. Tunku Mansur was however confident that he could control Mr. Tay and Mr. Tay would pay for the shares once he managed to raise the loan for the same. Tunku Mansur told me that he had made Mr. Tay agree that he was to hold the shares for Tunku Mansur until he had paid for them. I believe that Tunku Mansur would never expect Mr. Tay to now claim that the shares were transferred to him. |
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Q59 |
Did the late Tunku Mansur tell you anything when you met him on October 26, 1993? |
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A |
When I arrived in Perth and met Tunku Mansur, he asked me several things including the price for Malex Bhd's shares and the status of Tunku Yaacob Plaza. When I told Tunku Mansur that there was no development on the Tunku Yaacob Plaza project, he was very angry and told me that he had trusted Mr. Tay but Mr. Tay had let him down like Mr. Tay's promise to pay for the 1,200,000 shares in Harrisons, the second defendant. I volunteered to call Mr. Tay for the payment for the shares in the second defendant but Tunku Mansur cold me not to do so as this is his problem and I am co concentrate on Polyolefins Pipe Sdn Bhd and Tunku Yaacob Plaza project. He said he would get his shares back when he returns to Malaysia. Unfortunately, he passed away the next day. |
It must be noted that PW2 was not cross-examined on his above evidence.
At the time when the second defendant was preparing for its listing on the KLSE, the first defendant was requested by the second defendant to declare that he holds the shares registered in his name for their beneficial interest and not as a nominee or trustee for any other person but he failed to make such a declaration. [See exhs P102 and P103]. I take the view that this conduct of the first defendant in not submitting the said declaration form to the second defendant further lends support to the fact that he did not hold the shares in the second defendant registered in his name for their beneficial interest.
It is my finding that the first defendant's testimony nor only does not support the first defendant's contention but conflicted with the case as pleaded by the first defendant in his defence on the following issues:
the first defendant's claim that he was entitled to the said 1.2 million shares for free;
the first defendant's claim that his entitlement to the said 1.2 million shares was due to his agreement with the late Tunku Mansur to pay for any acquisition price in excess of RM55 million and which agreement was first produced as exh D59 at the trial of this suit; and
the first defendant's claim that he was entitled to 1/2 of the RM5 million credit given by BRUG.
On the first defendant's claim of having negotiated for the payment of a sum of RM5 million by BRUG to the late Tunku Mansur, I find it is not supported or borne out by the contemporaneous documents and the objective facts of this case. In fact the contemporaneous documents and the objective facts contradicted the first defendant's claim that he negotiated for the payment of the said sum of RM5 million from BRUG.
I also find that the need for the late Tunku Mansur to write exh P3, the handwritten note dated September 3, 1990 from the late Tunku Mansur to the first defendant clearly shows that the first defendant was not involved in the negotiations with BRUG as the late Tunku Mansur has to explain to the first defendant in some details as to how the said RM5 million credit given by BRUG came about. This is what is stated in exh P3 as follows:
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3/9/90 Tay Choo Foo (Confidential) Re: Free Shares Originally it was assumed that the discount given by PLC to me would be £2,000,000 BRUG offered to give this to me in the form of free shares -(i.e. MR10,000,000). However, when the price was increased to MR50,000,000, the free shares were reduced to MR5,000,000. Subsequently the price was finalized at MR52,500,000 BRUG only agree to ceiling of MR50 million. In order to secure the deal, I offered to meet any additional costs from the MR5,000,000 provided. I did this as a gesture of goodwill as the free shares would not be meant for this purpose. I stand by this commitment which I understand could mean that the MR5,000,000 provided may not even be enough to meet the additional costs. I further understand that this arrangement originated from Bapak Adijanto. For your information also, the offers by LARGUS and other bidders were in excess of the MR52,500,000 secured by me. I trust the above clears all doubts. |
It is also noted that in his evidence given in Civil Suit No S4-23-22-1994 [defamation suit], the first defendant said that exh P3 was written by the late Tunku Mansur to explain the late Tunku Mansur's entitlement to RM2.5 million from BRUG so that the first defendant could speak to BRUG on behalf of the late Tunku Mansur. At p 73 of exh 130 (i.e. the notes of evidence of the evidence given by the first defendant in Civil Suit No S4-23-22-1994), the first defendant said as follows:
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The late Tunku was trying to get the money from BRUG, i.e. either from the first plaintiff or fourth plaintiff. When he couldn't get it on a few occasions, he asked me whether I was willing to speak to them. The first, third and fourth plaintiffs gave the impression to the staff that this money is some kind of 'under table money' resulting in the late Tunku facing difficulty in raising the issue again. The late Tunku then hinted that since I was the one who brought in the plaintiffs, he tried to convince me that this RM2.5 million was his entitlement as gratuity to be paid ... |
During cross-examination, the first defendant said it was by exh P3 that the late Tunku Mansur explained to him with regard to the benefits given by Harrisons & Crossfield to the management buy-out team. The late Tunku Mansur also told him the reasons why the management buy-out team was given preference to justify him to demand RM5 million from Bumi Raya Utama Group.
From the facts and documentary evidence adduced, it is my finding that the first defendant's claim to half of the said RM5 million credit given by BRUG was an afterthought created after the plaintiffs demanded for payment or return of the shares in the second defendant registered in the first defendant's name.
It is my finding that I cannot accept that exh 41 supports the first defendant's claim that he was not required to pay for the said 1.2 million shares in the second defendant. Exhibit 41 in fact lends support to the plaintiffs' contention that the late Tunku Mansur had agreed to sell the said 1.2 million shares to the first defendant during the MBO time. Exhibit 41 is a letter written by the late Tunku Mansur to persuade the second defendant's company secretary (PW7) to give effect to the transfer form (exh P3), which gave the consideration for the transfer as RM1.2 million.
With regard to the words "free shares" in exh P3, I am of the view that it was in reference to the free shares to be given by BRUG to the late Tunku Mansur. On exh D105 at best the first defendant could only use it to show that he attended the first shareholders meeting of the second defendant on April 11,1990 but not to show that he was already a shareholder of the second defendant at the time of the meeting as he was not.
It is to be noted that the paid up capital of the second defendant was only increased from RM2 to RM2 million by the issuance and allotment of 11,999,998 ordinary shares of RM1 each on a date after the second defendant's directors' circular resolution (exh D51) approving the calling of an extraordinary general meeting to approve the issuance of the additional 1,999,998 ordinary shares of RM1 each. Exhibit D51 clearly show that the-first defendant was not allotted any shares in the second defendant. It is not disputed that the first defendant wrote exh D115 as a director and shareholder of the second defendant as it is a fact that at the time when exh D115 was written, the said 1.2 million shares were already registered in the first defendant's name and the first defendant was a director of the second defendant. However exh D115 clearly could not be used by the first defendant to support his claim that he does not need to pay for the shares in the second defendant.
As regards the evidence of the first defendant (DW1) I do not accept his evidence as to the following:
that the first defendant was at all material time the true owner of the shares in dispute.
that the said shares belong to the first defendant by reason of an agreement between the first defendant and the late Tunku Mansur.
that the first defendant arranged for a third party to finance a management buyout of the second defendant.
that in return Tunku Mansur agreed that any shares in the second defendant allotted to Tunku Mansur would be shared equally between Tunku Mansur and the first defendant.
I find that the first defendant is not a credible witness. He was found to be evasive and gave contradictory evidence. The first defendant has said in evidence that when the late Tunku Mansur asked him to work with him on the MBO, there was an "understanding or agreement" between the late Tunku Mansur and him that "whatever money" (as opposed to shares as pleaded in his defence) they get from BRUG would be shared equally and that the first defendant would bear all costs in excess of RM55 million. This "understanding or agreement" was said to have been reached in early 1990.
On the above contention of the first defendant, it must be emphasized that although the first defendant had in his evidence claimed that under the understanding or agreement between the late Tunku Mansur and him they had agreed to share "whatever money" they get from BRUG equally, the first defendant's defence only pleaded that the shares to be given to or acquired by the late Tunku Mansur personally were to be divided equally between the first defendant and the late Tunku Mansur.
In support of his contention that there was an understanding between the late Tunku Mansur and him chat the first defendant was to pay for any excess amount if the purchase price of the H & C subsidiaries was above RM55 million, the first defendant produced a written understanding which on the face of it is dated July 1, 1990 (exh D59). The first defendant claimed that exh D59 was prepared personally by the late Tunku Mansur and was signed by him in the presence of the first defendant and his wife, the third defendant.
For convenience, the whole of exh D59 is reproduced verbatim below:
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UNDERSTANDING RE: ACQUISITION OF HARRISONS & CROSSFIELD IT IS UNDERSTOOD AND AGREED BETWEEN us the undersigned with regards to the above matter as follows:
Dated this 1st day of July 1990
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It is my finding that the terms set out in exh D59 arc ambiguous and written using future tenses. As such the plaintiffs could only speculate as what were in fact agreed therein. Reading the terms in exh D59 literally, would seem that by exh D59 the late Tunku Mansur would, at the first defendant's request and when negotiating with BRUG, ask BRUG for contingency fund of RM5 million. The question that may be posed here why would the late Tunku Mansur need to negotiate with BRUG for file contingency fund when the late Tunku Mansur and BRUG] had already agreed on the same sometime before the sale and purchase agreement was entered into between H&C Plc and the second defendant on March 23, 1990. [See (exh P83)]. It is also to be noted that as at the date of exh D59 (i.e. July 1, 1990), the price for H&C subsidiaries had been fixed at RM52.5 million and the sale and purchase agreement dated March 23, 1990 (exh P83) had already been executed. The question then why was a need for the first defendant to talk on behalf of BRUG?
It is my considered view taking into consideration the facts and circumstances of this case the late Tunku Mansur could not have possibly prepared and signed exh D39 nor agreed to the terms therein. There was nor an iota of evidence that the purchase price of H&C subsidiaries during the negotiation between the late Tunku Mansur and H&C Plc might be finalized at a price that exceeds RM35 million. In any event it makes no sense at all that the first defendant was prepared to pay for the excess amount if the takeover price of H&C" subsidiaries is above RM35 million, when the first defendant would not get anything in return for such payment.
I also find the first defendant has failed to provide evidence as to his financial position in 1990 to show that he was in the financial position to pay for any amount in excess of RM55 million. In fact it is noted that the first defendant avoided providing such evidence although he was reminded of the same during cross-examination. On this point it would be reasonable to invoke that adverse inference should be presumed, under s 114(g) of the Evidence Act 1950 against the first defendant as to his financial ability at the time when exh D59 was purportedly to have been entered. This is because unless the first defendant was in a financial position to pay for the excess amount if the price exceeds RM55 million, there was no reason why the late Tunku Mansur should enter into the understanding in exh D59 with the first defendant.
The first defendant claimed that the understanding in exh D59 was reached in early 1990 during the negotiations for the acquisition of H&C subsidiaries. However no credible explanation was given as to why exh 59 was only prepared and signed by the late Tunku Mansur and the first defendant allegedly on July 1, 1990. If it is true that exh D59 was signed on July I , 1990, why would it be necessary for the late Tunku Mansur to later on September 3, 1990 write to the first defendant (exh P3) to explain "further his entitlement to" the said RM5 million credit.
It is to be noted in exh D59, H&C Plc was spelt as "Harrison & Crossfield" when the correct spelling should be "Harrisons & Crossfield" as can be seen from exh P83. I am of the view that if it is true that the late Tunku Mansur prepared exh P59, he would not have spelt wrongly, the name of the company that he had worked for about 20 years. I find exh D59 which was purportedly signed on July I, 19901s full of grammatical errors and is an ambiguous and oblique document. Beside the grammatical errors which are patently obvious on the face of the document, the contents thereof are clearly inconsistent with contemporaneous facts, namely as follows:
Before exh P83 was executed BRUG and Tunku Mansur had already agreed that Tunku Mansur would get free shares worth RM5 million if Tunku Mansur could get H&C Plc co sell H&C subsidiaries at RM$50 million.
When the purchase price was finalized at RM32.5 million, BRUG only agreed to proceed with the acquisition after the late Tunku Mansur offered to meet the additional RM2.5 million from the said RM5 million credit.
The sale and purchase agreement for the acquisition of H&C subsidiaries for RM52.5 million was subsequently executed on March 22, 1990 (exh P83), which is more than 3 months before exh D59 was purportedly signed.
It has been established through the evidence of PW1, PW2, PW3, PW4, PW5 and the first defendant himself that Tunku Mansur had good command of the English language and would not sign any document which had grammatical errors. PW1 said in evidence that:
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(i) |
I agree that my late father is well versed in the English language. I believe so that my late father would have no hesitation in expressing his views or opinion in writing. |
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(ii) |
My late father studied overseas from the age of 8 did not come back to Malaysia until he finished his agriculture degree at Cambridge University. He was very particular about grammar and spelling as they were things which irritated him if not done correctly. He would often pencil out grammatical mistakes in letters given to him. |
PW2 in his answer has this to say about Tunku Mansur's command of the English language:
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Tunku Mansur had a good command of the English language. He would always make sure that any documents that he signed, letters or otherwise were grammatically correct. He would not hesitate to correct any grammatical errors in a document that was prepared for him to sign. |
PW3 in her answer has this to say when shown exh D59:
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.... I was surprised that my father would sign something that was poor English. It did not seem his character to have signed such a document, as he was always extremely particular about swelling and grammar. |
PW4 in his answer has this to say about exh D59:
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I was surprised that my father would sign what to me was an extremely ambiguous and oblique understanding. It also struck me that my late father who always took great care in being precise and correct grammatically, had signed a document full of grammatical errors. |
The first defendant (DW1) himself said in evidence that:
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I agree that the late Tunku Mansur had a good command of the English language. I agree that all the letters and documents written to me by the late Tunku Mansur are precise. |
PW5 on the other hand has given evidence that the signature on exh D59 purportedly to be Tunku Mansur's was in fact signed by him imitating Tunku Mansur's signature not long after the death of the late Tunku Mansur. PW5 stated that exh D59 was prepared by the first and third defendants and they requested him to imitate Tunku Mansur's signature thereon. PW$ agreed to imitate the late Tunku Mansur's signature on exh D59 after the first defendant at that time said that he needed something in writing with regard to his participation in the second defendant in order for him to take on BRUG for the late Tunku Mansur's family.
Notwithstanding the evidentiary value of exh D59 and the importance of this document to the first defendant's defence, it is my finding that the first defendant had not only failed to specifically plead exh D39 in his defence filed on October 30, 1998 but has also failed to plead the same in his amended defence which was amended pursuant to an order dated December 1, 1999. It is also noted that the first defendant has never exhibited exh D59 in any of the first defendant's applications to strike out the present action, namely Encl.20 (filed on June 3, 1999) and Encl.41 (filed on December 21, 1999). The first defendant also did not inform the plaintiffs of the existence of exh D59 or showed the same to them before the plaintiffs commenced the present action on November 27, 1998. It was only on September 10, 1999 (i.e. nearly ten months after this action was commenced) that the first defendant showed exh D59 to the second plaintiff (PW4) in Kuching.
Still on the issue of exh D59 it has to be stated here that the first, third, fourth and fifth defendants strenuously opposed the plaintiffs' application at the dose of the defendants' case to refer exh D59 for an expert opinion as to the veracity of the signature purportedly to be Tunku Mansur's [see Encl.192].
This court however dismissed the plaintiffs' application in Encl.192, inter alia, stating that the court at that stage of the proceedings was still in a position to evaluate the evidence of the relevant witnesses whether to believe them or not without the need of the expert evidence of a document examiner relating to exh D59. It is also in evidence that the plaintiffs as administrators of the estate of Tunku Mansur have never seen exh D59 amongst the documents in the possession of the estate of Tunku Mansur.
ENTITLEMENT TO 1/2 SHARE OF THE RM5 MILLION CREDIT GIVEN BY BRUG
In his defence, the first defendant only claims that under the agreement between the late Tunku Mansur and him, any shares given to or acquired by the late Tunku Mansur would be divided equally between them. However when giving his evidence in this action, the first defendant extended his claim and now claims that under his alleged agreement with the late Tunku Mansur, he and the late Tunku Mansur are to share the said RM5 million credit equally. The first defendant also claimed as follows:
He was the one who negotiated with BRUG for the RM5 million credit.
When the price for the H&C subsidiaries was finalized at RM52.5 million by H&C Plc, BRUG before agreeing to the said price of RM32.5 million and signing the sale and purchase agreement in exh P83 required the late Tunku Mansur and the first defendant to agree to pay RM2.5 million from the RM3 million credit. The first defendant said that it was himself, Tunku Mansur and the Bumi Raya Utama Group that made the decision on that purchase price of RM52.5 million.
The written understanding dated September 10, 1990 signed between the late Tunku Mansur and BRUG (exh P4) was "merely a recording of the earlier understanding between" the late Tunku Mansur, himself and BRUG wherein BRUG agree to pay the RM5 million credit to the late Tunku Mansur and himself. In other words, the first defendant is claiming that under the understanding in exh P4, BRUG's obligation to pay the said RM5 million credit was owed jointly to both the first defendant and the late Tunku Mansur.
It is my finding that the first defendant's claim for half of the said RM5 million credit is totally inconsistent with the following reasonings:
If the first defendant is entitled to half of the RM5 million credit and BRUG was to pay the same to the late Tunku Mansur and him, I find there is no reason for the first defendant not to be made a party to the understanding in exh P4.
I also find the first defendant has given evidence that the late Tunku Mansur had to write to him on September 3, 1990 (exh P3) to explain how the late Tunku Mansur obtained his entitlement to the RM5 million credit. This is totally inconsistent with the first defendant's claim that he was the one who negotiated with BRUG for the RM5 million credit. If such was the case, the first defendant would not need the late Tunku Mansur to explain how the RM5 million credit was arrived at.
The first defendant has also given evidence that when he was requested by the late Tunku Mansur to pursue with BRUG for the balance RM2.5 million of the RM5 million credit, the first defendant requested the late Tunku Mansur to give him "something in writing", i.e. a written authority to pursue the matter with BRUG so that BRUG would not call him a "busybody". The late Tunku Mansur was then said to have written exh P89 (handwritten note dated July 4, 1991) to the first defendant. It is my view that the first defendant would not need to ask for such written authority if indeed the first defendant's agreement with the late Tunku Mansur was that he is entitled to half of the said RM5 million credit and BRUG had knowledge of and/or bound to pay the said RM5 million to both the late Tunku Mansur and the first defendant.
It is noted that prior to the commencement of the present action and before the commencement of the trial on September 25, 2000 the first defendant has never claimed that he was entitled to half of the said RM3 million credit as he is maintaining now. In the defamation suit filed by Bapak Adijanto of BRUG and three others against the first defendant in Kuala Lumpur High Court Civil Suit No S4-23-22-1994 (defamation suit), the first defendant has in his defence and evidence maintained that the said RM5 million credit was the entitlement of the late Tunku Mansur. At no time did the first defendant mention that he and the late Tunku Mansur were jointly entitled to the said RM5 million credit.
In fact when giving evidence in the said defamation suit on the issue of the balance of RM2.5 million from the said RM5 million credit, the first defendant said at p 75 of exh P130 as follows:
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The late Tunku was trying to get the money from BRUG, i.e. either from the first plaintiff or fourth plaintiff. When he couldn't get it on a few occasions, he asked me whether I was willing to speak to them. The first, third and fourth plaintiffs gave the impression to the staff that this money is some kind of "under table money" resulting in the late Tunku facing difficulty in raising the issue again. The late Tunku then hinted that since I was the one who brought in the plaintiffs, he tried to convince me that this RM2.5 million was his entitlement as gratuity to be paid. |
It is my view that the late Tunku Mansur would not need to convince the first defendant of his entitlement of the said RM2.5 million if the first defendant's claim that BRUG promised to pay the said RM5 million to him and the late Tunku Mansur is true.
In his police report lodged on April 19, 1995 (exh P92) again the first defendant never mentioned at all about his alleged joint entitlement with the late Tunku Mansur to the said RM5 million credit. It was stated in exh P92, inter alia, as follows:
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.... it was then agreed between Tunku Mansur and Bumi Raya International Holding Co Ltd (BRUG) both shareholders in Jantoco, that Jantoco would pay a maximum ofRM50 million and the excess ofRM2.5 million would be paid by BRUG through Tunku Mansur as per document attached (MOU). Tunku Mansur did not pay the excess sum ofRM2.5 million as he in turn was not paid by BRUG. |
FIRST DEFENDANT CLAIMING TO BE ENTITLED TO THE 1.2 MILLION SHARES FOR FREE
The first defendant in his evidence claimed that the balance of 20% shares, after distribution to Noah Foundation and the MBO would be shared equally between Tunku Mansur and him. I find that this claim for the said 1.2 million shares by the first defendant is totally inconsistent with the evidence in the present action for the following reasons:
The first defendant's allegation that he and Tunku Mansur were to share the said RM5 million credit equally is true and since a sum ofRM2.5 million was used by BRUG to pay on behalf of the late Tunku Mansur for 2.3 million shares in the second defendant, it would appear that the first defendant should be claiming for 1.25 million shares (or 10.42% of the equity in the second defendant) instead of 1.2 million shares.
The first defendant claimed that it was Bapak Adijanto of BRUG and the late Tunku Mansur who requested him to register the 10% share (i.e. the said 1.2 million shares) in the name of the late Tunku Mansur to make up the 30% quota imposed by FIC and this arrangement was also known to Mr. Hew Tze Yee (DW3), Mr. Tan Hong Phang, the son of Bapak Adijanto (DW5), Mr. Chan Poh Kim (the son-in-law of Bapak Adijanto) and Mr. Lim Soon Tham. However this is totally untrue. The first defendant had earlier in his evidence said that the only other person who has knowledge of the arrangement between him and the late Tunku Mansur on the said 1.2 million shares is (DW5). It is noted that Mr. Tan Hong Phang (DW5) clearly has no knowledge of the above arrangement as alleged by the first defendant. In his evidence, DW5 had stated, inter alia, the following relevant facts:
He did not have knowledge whether the first defendant has personal interest in the MBO. He was always given the impression by the first defendant that he was a representative of the late Tunku Mansur.
He has no knowledge whatsoever about the first defendant's alleged entitlement to half of the said RM5 million credit.
It is also my finding that the first defendant's explanation for staring in the transfer form dated January 27, 1992 (exh P5) that consideration for the transfer of the said 1.2 million shares is RM1.2 million is contradicted by contemporaneous documents. In attempting to give an explanation for staring RM1.2 million as the consideration for the transfer of the said 1.2 million shares in the transfer form dated January 27, 1992 (exh P5), the first defendant claims that exh P5 was filled in accordance with what was required by the second defendant's company secretary (PW7) who "insisted that the pre-emption in Article 29 must be followed" for the transfer of the said 1.2 million shares. The first defendant had stated as follows:
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The company secretary named KC Low insisted to the late Tunku Mansur that the pre-emption Article 29 must be followed for the transfer of the shares. This transfer form was then duly filled in accordance with what was required by the company secretary and given to me to sign in order for my own shares of RM1.2 million to be transferred back and registered in my name. |
The above explanation given by the first defendant is totally inconsistent with the evidence in the present action and the contemporaneous documents. It is impossible for the second defendant's company secretary (PW7) to cause the first defendant to state in the transfer form (exh P5) that RM1.2 million was the consideration for the transfer of the said 1.2 million shares as exh P5 was already executed and stamped when it was given to him by the first defendant on February 7, 1992. The first defendant had on January 28, 1990 paid the stamp duty in a sum of RM3,600 and this amount of stamp duty was assessed based on the consideration of RM1.2 million stated in the transfer form (exh P3).
For the above stated reasons I have no hesitation in rejecting the evidence of the second defendant as regards his defence to the claim made by the plaintiffs against him.
Cases
Chua Chee Chor v Chua Kim Yong [1960] MLJ 127, PC; Devi Singh v Mt Phulma AIR 1961 HP 10, HC; Foskett v McKeown [2000] 3 All ER 97, HL; Khoo Kay Hock v EJ Ketting [1978] 2 MLJ 57, PC; Koh Siak Poo v Sayang Plantation Bhd [2002] 1 AMR 1160; [2002] 1 MLJ 65, CA; Kwa Hock Kee v Kwa Kian Seng [1985] 2 MLJ 283, Lever Brothers Ltd v Bell [1931] 1 KB 557, CA; Pathma Naganather v Nivedita Naganather (No 1) (2002] 3 AMR 3309; [2002] 6 MLJ 361, HC; Ramamurthi v Subba Rao AIR 1937 Mad 19, HC
Legislations
Evidence Act 1950: s.32, s.114(g)
Probate and Administration Act 1959: s.59
Evidence Act [India]: s.32
Authors and other references
Halsbury's Laws of England, 4th edn, 2000 Reissue
Perit, Philip H, Equity and Law of Trusts, 7th edn
Sarkar's Law of Evidence, 13th edn
Representations
CW Teo & YB Tan (Khaw & Partners) for plaintiff
Joseph Yeo & Ringo Low (Joseph Yeo) for first defendant
KC Chow (Lee Pereira & Tan) for second defendant
KK Wong & Andrew Chiew (Lee Hishammuddin) for third, fourth and fifth defendants
Notes:-
This decision is also being reported at [2006] 1 AMR 246
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