Sale of Land and Allegations of Fraud

CHONG SONG v. UMA DEVI V KANDIAH
COURT OF APPEAL, PUTRAJAYA
SULAIMAN DAUD JCA
SYED AHMAD HELMY JCA
MOHAMED APANDI ALI JCA
[CIVIL APPEAL NO: N-02-984-2001]
22 NOVEMBER 2010

Brief facts :

The respondent (‘plaintiff’) was the original registered proprietor of
a piece of land in Johor (‘land’). A charge and an irrevocable
Power of Attorney was granted by the plaintiff to the 2nd
defendant in respect thereto. The appellants (‘3rd and 4th
defendants) entered into a sale and purchase Agreement with the
2nd defendant in April 1996 and the land subsequently registered
in the 3rd and 4th defendant’s names. The plaintiff sued the
defendants for a declaration that she still was the registered
proprietor of the land and for an order that the sale and transfer
of the land to the 3rd and 4th defendants had been done
fraudulently, thus rendering it null and void. In the High Court,
the plaintiff’s claim was allowed. The 3rd and 4th defendants thus
brought this appeal.


Plaintiff's case :

1) The plaintiff averred that on or before May
1994 the 1st defendant and the 2nd defendant had through
misrepresentation, deceit and fraud had caused her to execute a
charge and given the Power of Attorney as the chargor of the
land.
2) The plaintiff also averred that it was a friendly loan
transaction whereby the plaintiff had borrowed a sum of
RM75,000 from the 1st and 2nd defendants. The plaintiff further
averred that she had up to October 1994 paid RM13,125 towards
repayment of the loan and had requested for time to pay the
outstanding balance.
3) In respect of the 3rd and 4th defendants, the plaintiff alleged
that they are not bona fide purchasers of the land, as they were
aware that the land was a charged land and thus could only be
transacted in accordance with the provisions of the National Land
Code.
4) The plaintiff further alleged that the 3rd and 4th defendants
had colluded with the 1st and 2nd defendants in the sale
transaction and transfer of land with the intention of denying the
rights of the plaintiff.

The Defence :

1) The 1st and 2nd defendants denied the allegations and
claims of the plaintiff. The 1st and 2nd defendants averred that
the land was bought via a Sales and Purchase Agreement dated
30 May 1994 in consideration of a purchase sum of RM100,000
and the said sum was paid in full on the date of execution of the
Sale and Purchase Agreement, via Bank of Commerce Cheque
No. 658002.

2) The 3rd and 4th defendants also denied any knowledge of
all the allegations by plaintiff and averred that they purchased the
land via a Sale and Purchase Agreement executed on 20
April1996 with the 2nd defendant in her capacity as the donee to
the Power of Attorney given by the plaintiff. The 3rd and 4th
defendants claimed that they have paid the purchase price in full
and are bona fide purchasers of the land, and as such the title as
registered in their names is an indefeasible title.

Appellate Judge's Decision :

Held (allowing the appeal with costs)
Per Mohamed Apandi Ali JCA delivering the judgment of
the court:
(1) The sale and transfer of the land to the 3rd and 4th
defendants could be validly executed by the 1st defendant in
her capacity as an attorney acting on behalf of the chargor,
the plaintiff. The sale and transfer of the land by the chargee
and attorney to the 3rd and 4th defendants was valid,
effective and proper.

(2) There was no issue of a void or insufficient instrument as the
memorandum of transfer had been executed by the 1st
defendant as the donee of an irrevocable Power of Attorney.

(3) The late payment of stamp duty on the Power of Attorney
and the sale and purchase agreement between the plaintiff and
the 1st defendant had not affected the validity and
admissibility of the documents.

(4) There was no evidence to show any inkling of a fraudulent act
or omission by the 3rd and 4th defendants. They had been
innocent purchasers of the land. In any event, mere knowledge
of the existence of a charge could not reasonably be inferred
as part of a fraudulent charge.

(5) At the trial in the High Court, two advocates and solicitors,
SP3 and SP4, had given evidence for the defendants and
confirmed the execution of the relevant documents pertaining
to the transactions over the land and the transfer of the same
to the 3rd and 4th defendants.

(6) The evidence at the trial had clearly shown that the facts of
this case did not fall within the exceptional circumstances
envisaged under s. 340(2) of the National Land Code. In any
event, the 3rd and 4th defendants’ acquisition of the title and
interest to the land had been well protected by the proviso
to s. 340(3) of the NLC. The 3rd and 4th defendants were
purchasers in good faith and for valuable consideration, which
consideration had been paid in full. Thus the 3rd and 4th
defendants had in law, upon being registered as proprietors,
acquired an indefeasible title and interest to the land.

(7) The learned trial judge had erred when he made his decision
based on the wrong standard of proof in the factual matrix of
the case where fraud was specifically pleaded. Such an error
was a serious misdirection and had affected the outcome of
the case.

Building Contract, Joint Venture, Sale and Development of Land

EZZEN HEIGHTS SDN BHD v. IKHLAS ABADI SDN BHD; SOO YUH MIAN (INTERVENER)

COURT OF APPEAL, PUTRAJAYA

LOW HOP BING JCA, SYED AHMAD HELMY JCA, ZAHARAH IBRAHIM JCA

[CIVIL APPEAL NO: J-02-2454-2009]

30 DECEMBER 2010

[1] This appeal was brought by the appellant-company ("the plaintiff") against the decision of the High Court in dismissing with costs the plaintiff's amended originating summons ("the OS") which sought, inter alia, a declaration that the Joint Venture Agreement entered into between the plaintiff as the landowner and the respondent-company ("the defendant") as the developer ("the JVA"), and the Irrevocable Power of Attorney ("the IPA"), both dated 4 January 2007, are null and void, or alternatively a declaration that the IPA is invalid and annulled.

Brief Facts:

The plaintiff and the defendant entered into the JVA to jointly develop the plaintiff's land. However, plaintiff's former solicitors unilaterally declared that the JVA has been terminated which the defendant challenged. The plaintiff then filed the OS seeking, inter alia, to declare the JVA and IPA null and void. Before the High Court could deliver judgment on 3 September 2009, the plaintiff had purportedly sold the defendant's lots to the intervener.

The plaintiff's OS was dismissed by the High Court and the Court of Appeal heard and dismissed the plaintiff's appeal.

The Plaintiff's case :

The plaintiff relied solely on the failure of the plaintiff (as the landowner) to obtain the approval for the amended building plans within the prescribed period of six months under cl. 2(a) and (b) to persuade the High Court, and now the court of Appeal, to declare the JVA and the IPA null and void, in order to repudiate the plaintiff's liabilities under these two documents.

The Defence :

The Defendant asserted that the JVA and the IPA are valid as the defendant is the beneficial owner of the defendant's lots which the plaintiff had no right to sell, and that no title whatsoever could pass to the intervener. In the circumstances, the defendant prayed for consequential orders to remove the intervener's private caveat, to restrain the plaintiff and the intervener from dealing in any manner whatsoever with the defendant's lots, to direct the plaintiff to honour the undertaking to deliver the issue document of title to the defendant, and to deliver the defendant's lots to the defendant, in the interest of justice based on the inherent jurisdiction of the court

The Intervener :

The intervener maintained that the intervener was a bona fide purchaser, and so no consequential orders should be made. The plaintiff's learned counsel associated himself with the intervener's submission.

After considering the Legal Effect Of the JVA And IPA, the Court of Appeal found that eventhough the Plaintiff has clearly breached its fiduciary duties and obligation to obtain approval, the plaintiff is not permitted to rely on its on breach to repudiate its liabilities under the JVA and the IPA.

As the defendant, being the beneficial owner, is entitled to the defendant's lots, the plaintiff had no title to sell the defendant's lots to the intervener. The plaintiff could not pass any title to the intervener. Nemo dat quod non habet (No one can give what he does not have). Hence, the intervener could not have acquired the interest of the defendant's lots and could not legally defeat the defendant'' entitlement under the terms of the valid JVA.

The sale and purchase of the defendant's lots cannot be construed as a bona fide transaction.

Consequential Orders :

Order 92 r. 4 confers on the High Court and, by virtue of r. 4 of the Rules of the Court of Appeal 1994, on this court, inherent powers eg, to make consequential orders to prevent injustice. Order 92 r. 4 merits reproduction as follows:

4. For the removal of doubts it is hereby declared that nothing in these rules shall be deemed to limit or affect the inherent powers of the Court to make any order as may be necessary to prevent injustice or to prevent an abuse of the process of the Court.

Pursuant to O. 92 r. 4, the Court of Appeal made the following consequential orders:

(1) an order that the caveat entered by the intervener vide on the land be removed;

(2) an order restraining the plaintiff and the intervener whether by themselves or their agents or otherwise from dealing in any manner whatsoever with the defendant's lots;

(3) an order directing the plaintiff and/or its solicitors including in possession of the issue document of title of the land, to forthwith deliver and deposit the original issue document of title with the Defendant's soclitors; and

(4) an order directing the plaintiff and the intervener to deliver vacant possession of the defendant's lots to the defendant on or before 27 October 2010 ie, within three months from the date the Court of Appeal made its order on 27 July 2010.

1st Year Anniversary

It's been a year. Tomorrow KL Quah & Associates celebrates its 1st year anniversary. The firm at its infancy has had a sharp learning curve throughout the year 2010-2011. And learning still.

Portfolio in 2010-2011 of KL Quah & Associates includes :

1) Defending the sole proprietor of an engineering consultancy firm against third party proceedings filed against it by previous firm where he was a director by filing application to set aside the said third party notice (counsel work). Filing appeal to the High Court upon receiving judgment against the said application;

2) Claim against partnership for unpaid profit on behalf of one of the partners;

3) Drafting and witnessing execution of a tripartite friendly loan agreement;

4) Drafting and witnessing of wills and testaments;

5) Claim against company for goods sold and delivered, execution of judgment obtained by way of judgement debtor summons (counsel work);

6) Claim against developer company for liquidated damages pursuant to the Housing Developers' Act Schedule H (counsel work);

7) Claim against sub-contractor for goods sold and delivered and services rendered;

8) Defending Originating Summons Foreclosure proceedings against financial institution for Borrower of a housing facility agreement;

9) Defending Creditor's Petition against financial institution for Borrower of a housing facility agreement;

10) Getting up for tenancy matters;

11) Single petition and joint petition divorce matters;

12) Claim against developer and contractor for delay and defect in renovation works;

13) Defending claim by Vendor to enforce a Joint Venture Agreement (counsel work);

14) Defending a claim in trademark matters (counsel work), and etc...

It has been a long and tiring road... looking for clients, accepting referrals, working with instructing solicitors, judges and opponent solicitors, and of course CLIENTS. Billing is one thing, collection is another.

One thing noted in this 1-year journey is the better paymasters are usually the working class, whereas businessmen and entrepreneurs tend to be slower in making payment. Perhaps it is time the lay persons out there realise that we lawyers do not make as much money as everyone thinks. This mentality of "just one signature and a lawyer earns thousands" should certainly be erased, for the "one signature" comes AFTER various phone calls to government offices, clients, opponent parties etc... drafting, researching, preparing, liaising and BEFORE filing, attending court, further researching, phone calls, letters, documents, etc...

As a full time mother and a 'part time' mother as the Managing Partner/Single Proprietor of KL Quah & Associates, I am happy to report that it has been a very fruitful year. Running a one-man (or one woman in this case) show has a lot of challenges, and let's all remember that most lawyers have no ideas of the difference between credit and debit... what more to manage 2 full sets of accounts. Let's hope for another fruitful and exciting year ahead!!!