LAND LAW

Chin Kim Phin v. Director of Lands & Surveys, Sabah & Anor [2020] 7 AMR 271 [High Court]

Brief facts

The plaintiff, Chin Kim Phin (‘CKP’) was the registered owner of a parcel of land which he acquired in 1963 and which was subsequently subdivided into three (3) subdivided lots in 1974 with the same leasehold tenure as that of the original parcel i.e. 999 years from October 13, 1920 to October 12, 2919. In 2002, the said three parcels were amalgamated with six other parcels of land and an application for the subdivision of the nine parcels of land and conversion in their use was made by one Donfon Development Sdn Bhd (‘Donfon’) with whom CKP had an arrangement to develop the lands.

The approval for the conversion, subdivision and amalgamation of the lands was granted by the first defendant, Director of Lands & Surveys, Sabah (‘L&S’) in 2004, subject to the fulfilment of certain conditions inter alia that the original titles for the nine parcels of land be surrendered and that the tenure of the lease of the subdivided lots be reduced from 999 years to 99 years (‘the said condition’). CKP and Donfon accepted the offer and terms stipulated in L&S's letter of offer dated April 28, 2004, by signing the same.

Subsequently, in 2019 CKP commenced the instant proceedings seeking a declaration that the conditions imposed by L&S as aforesaid were ultra vires, unlawful and invalid; and was not barred by any time limitation. CKP also sought an order that the leasehold tenure be restored to 999 years and that L&S do give full and complete effect to the said declaration.

Issues for the determination of the court:

1. Whether in the application for the land development involving the subdivision, amalgamation and conversion in the user of the land, L&S had the power to impose the condition that leasehold tenure for the further subdivided titles to be issued be reduced from 999 years to 99 years; and

   
   

2. Whether CKP's action herein was time barred by s 2(a) of the Public Authorities Protection Act 1948 (‘PAPA’).

High Court’s Decision

Justice Wong Siong Tung held in favour of CKP and granted the declarations sought with costs of action in the sum of RM10,000.00.

Issue 1:

[1] The court was of the view that the conditions imposed by the director or the collector under ss 39 and 40 respectively of the Land Ordinance (Sabah Cap 68) must be fairly related to or connected or to do with town planning or governing the size, shape or area of land.

[2] S.48 of the Land Ordinance (Sabah Cap 68) which provides that every lease shall be for a term not exceeding 99 years cannot be fairly and naturally construed or read as to apply to s 39 of the Land Ordinance (Sabah Cap 68) concerning combined or amalgamated title and/or to s 40 of the Land Ordinance (Sabah Cap 68) concerning subdivision of titles and application thereunder, which fall under Part I.

[3] S.48 of the Land Ordinance (Sabah Cap 68) does not express a clear and unambiguous intention to confer power on the minister or L&S to expropriate the vested right of CKP to an estate of 999 years for the leasehold tenure under the subdivided titles acquired under the laws in operation prior to the coming into force of the Land Ordinance (Sabah Cap 68). Such an interpretation would be inconsistent and repugnant to the provisions in ss 3, 39 and 40 of the Land Ordinance (Sabah Cap 68).

[4] For s.48 of the Land Ordinance (Sabah Cap 68) to operate harmoniously and consistently with ss 3, 39 and 40 of the Land Ordinance (Sabah Cap 68), the court was of the view that the provision under s.48 of the Land Ordinance (Sabah Cap 68) can only apply to new lease for country land newly alienated under Part II of the Land Ordinance (Sabah Cap 68) and not applicable to any titles issued upon combination or amalgamation and subdivision from existing titles under ss 39 and 40 under Part I of the Land Ordinance (Sabah Cap 68).

[5] For such land alienated for agricultural purposes, s 43A of the Land Ordinance (Amendment) 1913, empowered the governor then to permit their use other than for agricultural purposes and "to add or substitute such terms as he may think fit." Section 54 of the Land Ordinance (Sabah Cap 68) in effect substituted "the governor" in s.43A of the Land Ordinance (Amendment) 1913 with "the minister" which gives the minister wide power to the same but not to reduce or shorten the duration of the estate in the leasehold tenure.

[6] Applying the principle of law in Colonial Sugar Refining Co v Melbourne Trust Commissioners [1927] AC 343 at 359, the general wordings in s.54 of the Land Ordinance (Sabah Cap 68) could not be construed as entitling the minister and/or L&S to impose terms and conditions so as to deprive the vested right of CKP to an estate of 999 years leasehold tenure under the subdivided titles acquired before the coming into force of the Land Ordinance (Sabah Cap 68).

[7] In Pengarah Tanah Dan Galian Wilayah Persekutuan v Sri Lempah Enterprise Sdn Bhd [1979] 1 MLJ 135, upon application by the respondent landowner who held the land in perpetuity, for permission for sub-division of the land and conversion of its use for building a hotel thereon, the Land Executive Committee and the Director of Lands and Mines of the Federal Territory imposed a condition for giving permission that on surrendering the land, the respondent landowner was to receive back in respect of part of the land not a title in perpetuity but a lease of only 99 years. The Federal Court held that the appellant had no power to impose the condition requiring the respondent give up its leasehold title and to receive in exchange, a 99-year lease and such condition imposed to be ultra vires.

[8] In the premises, this court found that the said condition imposed by L&S was ultra vires, unlawful, null and void. It was not connected or related to user of land in town planning nor related to the permitted land development under the laws in the State of Sabah and therefore beyond the power of L&S to impose. There are no statutory provisions which gave them the power or capacity to impose such condition in an application for permission by CKP for development of the land concerned.

Issue 2:

[1] To rely on s.2(a) of PAPA, L&S had to bring themselves within the scope of the provision. The imposing of such condition which L&S had no power to do so cannot be said to be such act done in pursuance or execution or intended execution of any written law, of a public duty or authority or in respect of any alleged neglect or default in the execution thereof. Therefore, it could not have come within the provisions of s.2(a) of PAPA.

Malayan Banking Bhd v. Mohd Affandi Ahmad & Anor Appeal [2023] 10 CLJ 406 [Court of Appeal]

Brief Facts

The dispute in the present case related to the sale of the same properties by the first defendant – a company (“the vendor”) to two separate purchasers (i.e.: first purchaser (“the Deceased”) and the second defendant (“second purchaser”). The Plaintiff in this case was the administrator cum beneficiary of the first purchaser. Firstly, the vendor had sold the said two properties to the deceased via sale and purchase agreements (‘the first SPA’) and after 50 years had passed and without even transferring and registering the name of the deceased as the proprietor, the vendor had sold the same properties to the second purchaser via the second sale and purchase agreements (‘the second SPA’). Pursuant to the bank loan that second purchaser obtained, Malayan Banking Berhad (“the bank”) insist on their deferred indefeasibility title as subsequent chargee over the property when the second purchaser charged the property as collateral for the bank’s loan facilities.

One of the core contentions was that the second purchaser was attempting to impugn the validity of the sale and purchase of the property between the deceased and the vendor primarily on the ground of privity of contract. This was purportedly because the sale and purchase agreement were entered into by the deceased with one of the Power of Attonery (“PA”) - Syed Ali. The second purchaser tried to impress the court that the sale between the PA and the deceased should not be considered as a valid sale on the ground that the vendor had not yet even been incorporated at the time the sale and purchase agreements were entered into between 1967 and 1968.

The issues arose in the present appeals were: (a) whether the JC was correct in finding that the SPAs entered into between the deceased and Syed Ali (on behalf of the four individuals and the first defendant) were validly binding on the first defendant (‘issue 1’); (b) whether the JC was correct to decide on the position of the second defendant on the context and basis of deferred indefeasibility as a second layer subsequent purchaser (‘issue 2’); (c) whether the JC was correct to decide on the position of the bank on the basis of the bank being a third layer chargee deriving its rights from the second defendant as second layer purchaser (‘issue 3’); and (d) whether the JC was correct to find that the bank was not a bona fide purchaser for value (‘issue 4’).

High Court’s Decision

The learned Judicial Commissioner (‘JC’) ruled in favour of the estate of the deceased by allowing the claim on the following grounds:

[1] the second purchaser’s position, was of the position of a second buyer, i.e. subsequent purchaser, in the context of deferred indefeasibility;

[2] the second purchaser was not a bona fide purchaser for value as there was no actual proof that the purchase price was paid by the second purchaser to the vendor under the second SPA;

[3] there were dubious and inexplicable features in the second SPA in an attempt to sell the two properties as vacant lands. The second SPA was entered into in bad faith;

[4] the bank, as a chargee, was not a subsequent purchaser in the context of deferred indefeasibility as the bank was not within the category of the second layer of subsequent purchaser under the principle. Instead, the bank, as a chargee, derived its interest from the second defendant who was already found not to be a bona fide purchaser for value;

[5] the bank failed to prove good faith as it failed to do its due diligence to perform simple verification on numerous salient and obvious features of the second SPA which require proper evaluation;

Dissatisfied with the High Court’s decision, the second purchaser and the bank filed two separate appeals, (i) the second purchaser’s appeal to dispute the validity of the contract which deceased and the vendor entered into on grounds of privity of the contract; and (ii) bank’s appeal to defend its position as a bona fide purchaser for value as a subsequent purchaser within the context of deferred indefeasibility.

Issues to be Determined:

Two appeals can both be determined by answering the following issues:

[1] Whether or not the learned JC was correct in finding that the SPAs entered into between the deceased and Syed Ali (“PA”) were validly binding on the vendor;

[2] Whether or not the learned JC was correct to decide on the position of the second purchaser on the context and basis of deferred indefeasibility as a second layer subsequent purchaser;

[3] Whether or not the learned JC was correct to decide on the position of the bank on the basis of the bank being a third layer charge deriving its rights from the second purchaser; and

[4] Whether or not the learned JC was correct to find that the bank was not a bona fide purchaser for value.

Court of Appeal’s Decision

The High Court’s decision was affirmed and the appeals by the second purchaser and the bank were dismissed:

Issue 1:

The timing of the vendor’s incorporation was a non-issue. There was a barrage of facts that would positively indicate that the subsequent incorporation of and ratification by the second purchaser to the two SPAs were within the parties’ anticipation and intention. The vendor had waived its opportunity to participate in the trial and defend against the estate of the deceased’s claim under the two SPAs. Judgment must be given in favour of the estate of the deceased considering that second purchaser and the bank had not even bothered to cross-examine the evidence regarding the validity of the SPAs at trial. Estoppel shall apply to bar the vendor and second purchaser from inequitably denying the validity of the two SPAs. In view of the validity of the two SPAs and the full payment of the purchase price to the vendor by the deceased, the vendor, now continuously held the two properties under constructive trust for the benefit of the deceased’s estate. The first issue on whether or not the HC was correct in finding that the SPAs entered into between the deceased and Syed Ali (PA) were validly binding on the first defendant? Court of Appeal held this issue was answered in the positive.

Issue 2:

Both the deceased and the second purchaser were first layer immediate purchasers who bought the same two properties from the vendor. Although the second purchaser’s purchase was subsequent in time, but was still not a second layer subsequent purchaser within the context of deferred indefeasibility. The facts of the present case were more relatable to the context of competing legal/equitable interests between two purchasers who unfortunately bought the same properties from one singular vendor.

The deceased’s estate was already clothed with right in rem over the two properties when he paid the purchase price for both the properties circa 50 years ago. Even if the second defendant had later paid the full purchase price to the vendor (which there was no proof of such payment being made), the second purchaser still, would only hold a right in personam against the vendor because second purchaser is not the first layer immediate purchaser, hence will not at all enjoy any protection of deferred indefeasibility therefore, title of his would accordingly be vitiated. In a nutshell, on the second issue of whether or not the HC was correct to decide on the position of the second purchaser on the context and basis of deferred indefeasibility as a second layer subsequent purchaser? Court of Appeal answered in the negative. 

Issue 3:

The bank, as a chargee, created the charge from the second purchaser as second layer purchaser, not the vendor, supposed title as immediate purchaser over the two properties. Therefore, the bank’s position as a chargee fell within the classification of the second layer subsequent purchaser within the context of deferred indefeasibility. Hence, HC was wrong to decide on the position of the bank on the basis of the bank being a third layer chargee deriving its rights from the second defendant as second layer subsequent purchaser within the context of deferred indefeasibility. Consequently, pertaining to the third issue on whether or not the HC was correct to decide on the position of the bank on the basis of the bank being a third layer chargee deriving its rights from the second defendant as second layer purchaser? Court of Appeal answered in the negative.

Issue 4:

The bank contended that the face of the title and the second purchaser’s SPA documentations would not reveal any indication of the deceased’s interest vide the sale under the prior two SPAs. But, even if the bank would have no notice of the deceased’s interest, it did not automatically allow the bank to assume the legitimacy and validity of the transaction under the second purchaser’s SPA. It remained incumbent upon the bank to examine the second purchaser’s SPA even if there was no notice at all of the deceased’s interest from the face of the title. It would be gravely unjust to allow the bank to feign innocence in the face of its glaring omissions, failure of enquiry and insufficient due diligence. Therefore, the bank was indeed not a bona fide purchaser for value. The bank, accordingly, ought to be disqualified from relying on its deferred indefeasibility under s. 340(3) of the National Land Code.

Note:

Although the Court of Appeal affirmed the High Court’s ultimate decision to allow the plaintiffs’ claim, the Court found that they similarly reach the same conclusion based on a completely analysis and basis.

Conclusion:

It is trite law that a subsequent purchaser within the context of deferred indefeasibility was entitled to a qualified protection of deferred indefeasibility. A bona fide purchaser for value was bona fide if he could prove that valuable consideration was paid in view of a bona fide transaction. Even equity’s darling could be stripped of its protection if there was evidence of mala fide nature of the transaction. Good faith must be proven in that the subsequent purchaser (or chargee in this appeal) had exercised all due diligence in critically examining the legitimacy of the transaction not just on the face of the register document of title, but on the documents involved in the transaction itself.

PUBLIC BANK BHD v. FUNG SHAW YIEW & ORS AND ANOTHER APPEAL [2024] 2 CLJ 43 [Court of Appeal]

Brief facts

Fung Shaw Yiew @ Jellfer (‘Jellfer’) and Fung Shaw Fa @ Emily (‘Emily’), the respondents, were sisters who initiated a claim in the High Court against another sister of theirs, Fung Lee Mee @ Jellsie (‘Jellsie’) over a property (‘the property’) left by their deceased father, Fung Sing Wah @ Ah Sing (‘late father’). Fung Lee Lee @ Lily Fung (‘Lily’) and Fung Siew Yee @ Suzie Fung (‘Suzie’), their two other sisters, were not parties in the suit. All five sisters were registered as equal co-owners of 1/5th share each of the property by virtue of an order of succession in 1993. Jellsie contended that all five sisters were holding the property on trust (‘the trust’) created by their late father before he passed away for the benefit of their then surviving mother, Wong Nyet Ting (‘mother’).

Jellfer and Emily alleged that the whole property was unlawfully transferred to Jellsie in 2002 and that Jellsie had wrongfully charged the shares on the property including their 1/5th share each to secure a personal loan of RM220,000 (‘the loan’) from Public Bank (‘the Bank’). They also pleaded that they never signed the memorandum of transfer (‘MOT’) transferring their shares to Jellsie and that their signatures on the MOT had been forged. Jellfer and Emily argued that their mother, in a surat akuan’ or statutory declaration (‘SD’) had evinced her intent to not claim registered proprietorship over the property, thus, disproving the existence of the trust.

The five sisters had another three brothers who did not claim any share in the property upon making a promise to their late father. One of the brothers ‘reminded’ Jellfer of the property which prompted her to conduct a land search over the property in 2014. It was then that she allegedly discovered the unlawful transfer. Subsequently, she lodged a police report. Following the police investigation, a chemist report had been prepared but it was not produced during trial because it was part of an ongoing investigation and ‘classified’.

Jellsie pleaded that Jellfer and Emily had in fact signed the MOT in front of the lands and surveys department (‘land office’) clerks, at the direction of their mother. The land office clerks positively identified Jellfer and Emily’s signatures and confirmed that they had signed the MOT before them. Jellsie also asserted that she had credited RM170,000 from the loan into her mother’s bank account jointly held with Lily. She counterclaimed for general damages for malicious prosecution and abuse of legal process.

The Bank on the other hand denied colluding with Jellsie to cover up the alleged forgery and that the transfer of shares were made without the consent or knowledge of Jellfer and Emily. It pleaded that it was a bona fide (genuine) subsequent chargee of the property for valuable consideration.

High Court’s Decision

The High Court dismissed Jellsie’s counterclaim and ruled in favour of Jellfer and Emily, ordering Jellsie and the Bank to pay costs to them.

Although Jellfer and Emily did not call any handwriting expert to support their allegation of forgery, the High Court judge concluded on circumstantial evidence that Jellfer and Emily had proven on the balance of probabilities that (i) their shares in the property were lawfully inherited from their late father’s estate and that property was not held on trust; and (ii) they did not sign the MOT to transfer their shares to Jellsie.

Dissatisfied with the High Court judge’s decision, the Bank and Jellsie filed two separate appeals before the Court of Appeal. The Bank appealed to defend its position as bona fide subsequent chargee for value holding deferred indefeasible title. Jellsie appealed against the High Court judge’s finding that the transfer was unlawful and invalid and that the shares were not held on trust for their mother.

Court of Appeal’s Decision

The Court of Appeal allowed both the appeals and set aside the High Court order, dismissing Jellfer and Emily’s claim against the Bank and Jellsie with costs. Jellfer and Emily were ordered to pay costs of RM70,000 to Jellsie and costs of RM30,000 to the Bank.

[1] No adverse inference can be drawn against a party if an expert opinion had not been obtained. However, this case was not that there was no chemist report to be tendered, it was that it had already been obtained but was deliberately withheld from the court. Having already existed, the chemist report would be the ‘best evidence’ to prove the legitimacy of the signatures. That being so, it was reasonable that the court drew an adverse inference from the fact that Jellfer and Emily had not actively insisted upon the police to produce the chemist report when its existence was admitted.

[2] The High Court judge had unduly focused on the minute circumstantial evidence (evidence that is not direct to the point in issue but closely associated with the fact in issue that taken together, a principal act can be legally inferred or presumed) when direct evidence such as the independent testimonies of the land office clerks who had attested to the MOT proved that Jellfer and Emily’s signatures on the MOT were indeed authentic.

[3] Despite the absence of their late father’s written trust or will, a trust may still exist and may be proven. A secret trust does not require a formally executed will to be proved. The testator of a secret trust need not disclose the intended beneficiary or the terms under which he holds. If that shall be the case, then the entire concept of secret trust would have lost any meaning and significance.

[4] The mother had relinquished her registered interest in the property but that does not automatically negate the existence of a trust. Without their mother’s SD, the order of succession would not have been granted to allow all five daughters to inherit the property to the exclusion of their mother and brothers. Their mother had relinquished her claim over the property in the reliance of and in the belief that her daughters would honour the trust created by her late husband and her children.

[4] As the Court of Appeal considered that there was no forgery or fraud to impugn the MOT and transfer of Jellfer and Emily’s shares to Jellsie, it follows that there was no impediment to the valid creation of the charge with the Bank. It is common for banks to approve loans ahead of the registration of their interest onto the collateral. In fact, in this case, it was prudent for all the siblings to first obtain the approval of a loan so as to have certainty of the loan so that the shares would not be transferred in vain. In any case, it is trite law that a chargee is considered to be a ‘subsequent purchaser’ eligible for deferred indefeasibility of title to a property.

RHB BANK BHD v. PLB LAND SDN BHD [2024] 1 CLJ 429 [Court of Appeal]

Brief facts

This appeal is a case of competing legal interest between two purchasers of the same property. The appellant, RHB Bank Berhad (‘RHB’) was assigned the rights over one commercial unit (‘subject property’) within a property development (‘project’) circa 1998 by the subject property’s purchaser, Tong Ah Ee (‘TAE’). Before the project was completed, the developer, Majestic Heights Sdn Bhd (‘MHSB’), abandoned the project and failed to deliver vacant possession (‘VP). Under the SPA, it was agreed that time was of the essence and that the subject property shall be delivered to TAE (or RHB as assignee) by 23 September 1998. MHSB was compulsorily wound up in 2001. The loan cum full purchase price was never fully disbursed. The project laid dormant for 16 years before it was sold off to the respondent, PLB Land Sdn Bhd (‘PLB’), a white knight company that purchased the abandoned project circa 2014 and completed it. Neither TAE nor RHB had ever paid the full purchase price for the subject property at any given time. In 2018, post-completion and after 20 years of inaction, RHB auctioned off the subject property. RHB filed an originating summon (‘OS’) in the High Court to safeguard its interest as assignee and beneficial owner of the subject property.

High Court’s Decision

The High Court judge dismissed RHB’s OS on the grounds that:

(i) there was no privity of contract between RHB and PLB for RHB to insist its rights against PLB. RHB’s cause of action (if any) should be in personam against MHSB (or the liquidators administrating MHSB);

(ii) RHB has no rights to claim for beneficial rights over the subject property as RHB has never paid the full purchase price for the subject property. A constructive trust can only arise if the purchaser had paid the full purchase price of the subject property;

(iii) RHB’s claim to recover the subject property is barred by Limitation as more than 12 years have passed since MHSB’s breach in failing to deliver title to the subject property either to TAE as assignor or RHB as assignee; and

(iv) RHB ought to be estopped from insisting on its entitlement considering the glaring and inexplicable decades’ worth of delay in prosecuting its interest over the subject property.

Dissatisfied with the decision of the High Court, RHB appealed to the Court of Appeal to determine the following issues:

1.Was it appropriate for the learned judge to dismiss the OS on the basis of privity of contract (or lack thereof);

2.Was it appropriate for the learned judge to deny RHB’s beneficial interest as assignee merely because the loan disbursement cum full purchase price was not paid to MHSB?; and

3.Was it appropriate for the learned judge to prefer PLB’s legal rights over RHB’s beneficial rights over the subject property?

Court of Appeal’s Decision

The Court of Appeal affirmed the decision of the High Court, dismissing the appeal with cost of RM15,000.00 and held as follows:-

[1] There would be no contractual privity between competing purchasers. Equity upholds the interest of the purchaser of a property who has paid full purchase price to prevail over the one who has not. Privity of contract is not relevant in determining the manner of priority the law may determine the competing purchasers’ entitlements and rights. At best, privity of contract may only become relevant in the context of a parties’ rights in personam under the SPA (in that the two purchasers can only claim for damages under the SPA against the vendor). However, a purchaser’s right in rem over the subject property can prevail over the other purchaser regardless of the lack of privity of contract. The court answered Issue 1 in the negative.

[2] Under the principle of competing beneficial interests, equity would have it that the purchaser who first settled the purchase price would attain beneficial interest as he had settled all his contractual obligations to lay his claim over the property. Although the other purchaser would not have a right in rem upon the property, he would still have right in personam under the SPA to sue for damages.

[3] However, the court opined that this equitable principle could not apply in cases as such, where non-payment of the full purchase price was first instigated by the prior breach or non-performance of the developer. The court’s reasoning was that it is the trite principle that none should be allowed to benefit from its own breach or delinquent conduct. It would be gravely unjust to deny RHB’s beneficial interest as assignee merely because of the non-payment when it was due to MHSB’s own failure to fulfil its end of the bargain and complete the development of the project. The court answered Issue 2 in the negative.

[4] Although RHB might have had beneficial interest over the subject property (notwithstanding absence of privity of contract, or its failure to disburse the full purchase price amount to MHSB), this beneficial interest was already barred by statutory limitation. The law requires that parties stay vigilant and not sit on their interest for long periods of time as a long period of inaction and silence can indicate acquiescence and abandonment of an interest. Since RHB was intent on claiming proprietary rights in rem over the subject property, RHB should have abided by s.9(1) of the Limitation Act 1953 (‘LA’), where a party is given 12 years from the accrual of the cause of action over the property to safeguard its interest in the land. Accrual was at the earliest instance of breach of RHB’s rights as assignee and TAE’s rights as assignor, which was the first instance of MHSB’s failure to deliver VP as per the terms of the SPA. RHB or TAE could postpone the accrual in an in personam claim for liquidated ascertained damages (‘LAD’) under the SPA, but it would also be time barred as the applicable limitation period of 6 years as per s.6(1) of the LA had long passed.

[5] By equity, the doctrine of laches would bar RHB from going against its prior 20 years’ worth of inaction to prosecute its interest as assignee. Laches is an equitable defence implying lapse of time and delay in prosecuting a claim. A court would not aid a stale claim where a party has slept on his rights and acquiesced for a great length of time. It would be equally unjust to disregard PLB’s interest who had acted in response to RHB’s and TAE’s 20 years of inaction. The courts answered Issue 3 in the positive.

Wincourt Sdn Bhd v Elvy Binti Adangku & Siau Nyuk Min [2024] MLJU 2823 [High Court]

Brief facts

This case involves a piece of Native land with approximately 14.52 acres (“the Native Land”), where Wincourt Sdn Bhd (Wincourt) used Elvy Binti Adangku (‘Elvy”, the 1st Defendant) as a nominee to acquire Native Land.

Wincourt’s Case:

Wincourt’s case is premised on a wrongful termination of contract. Wincourt, a non-native owned company, sought to acquire a Native Land in Year 2007 to expand its oil palm plantation business in Lahad Datu, Sabah. However, Wincourt was unable to acquire the land and approached a native, Elvy to acquire it and sublease it back for 30 years. Elvy is not a director nor shareholder of Wincourt, but her only link is her personal relationship with Yeh Lip Seng, the younger brother of Yeh Choi Nyuk, who is the wife of Siau Nyuk Minm, the 2nd Defendant.

Elvy then entered into a sale and purchase agreement with the registered owner Sumarman bin Sukaja to purchase the Native Land for RM180,000.00. Wincourt then made three payments towards the purchase price.

On 4th January 2008, Siau Nyuk Min became the new registered owner of the Native Land and entered into a Sublease Agreement with Wincourt to rent the land for 30 years. Wincourt had developed the Native Land into an oil palm plantation without any interruption or objection from Elvy.

In 2022, the relationship between the Siau Nyuk Min and his brothers turned sour, leading to in fighting within the Wincourt’s company. On 25th October 2022, Siau Nyuk Min issued a legal notice of demand for RM276,092.90, failing which he lodged private caveats against 7 parcels of lands that Wincourt had contracted to sell to two purchasers named Wong Tet Loong and Thien Kui Thiam for RM3,494,1800.00. On 14th November 2022, Elvy, through her solicitors LV Partners of Lahad Datu issued a second Notice of Demand to Wincourt.

On 19th December 2022, a third Notice of Demand was issued, terminating the Sublease and demanding the repossession of the Native Land. Siau Nyuk Min also entered private caveats against 7 parcels of lands to prevent Wincourt from performing the sale and purchase agreement with Wong Tet Loon and Thien Kui Thiam.

All the 3 legal notices of demand issued by LV Partners of Lahad Datu alleged non-payment of rent under the Sublease. The 3rd Notice of Demand cited non-payment of rent as the ground for termination of the Sublease.

Elvy & Siau Nyuk Min’s Case: 

Elvy and Siau Nyuk Min’s case is that Wincourt purchased and paid for all the costs and purchase price for the acquisition of the Native Land under Elvy’s name and subleased it from Elvy. Wincourt is now attempting to enforce a lease on a piece of a Native Land, claiming that Elvy executed a Sale and Purchase Agreement, a Memorandum of Sublease, Sublease Agreement and executed a Deed of Power of Attorney appointing Siau Nyuk Ven as her attorney for the Native Land, as well as a Deed of Trust declaring herself as the trustee holding the land for Siau Nyuk Ven.

Elvy and Siau Nyuk Min then raised the defence of illegality, asserting that the arrangement contravened laws governing Native Land ownership. In gist, the essence of Elvy’s and Siau Nyuk Min’s submission is that Wincourt, being a non-native, unlawfully sought to acquire rights in native land through the use of a nominee, in contravention of these statutory provisions. It is Elvy’s submission that any scheme designed to circumvent these prohibitions should render the transaction void ab initio.

Wincourt, on the other hand argues that the sublease agreement between the parties is valid under Section 17(5) of the Sabah Land Ordinance, which permits certain dealings in native land.

Hence, the Court must determine whether this arrangement, long with the subsequent sublease, contravenes statutory law and public policy. If it does, the transactions are illegal and unenforceable, thus nullifying the Wincourt’s claims.

Issue for determination:

From the evidence adduced during the trial, the central question before the Court is whether the Wincourt use of Elvy as a nominee to acquire Native Land and the subsequent sublease contravene statutory law and public policy, thereby rendering the transactions illegal and unenforceable.

Wincourt claims the transactions are valid and enforceable, while the Elvy and Siau Nyuk Min argue that the transactions are void ab initio due to violations of statutory provisions and public policy, as defined in the Contract Act 1950 and the Land Ordinance (Sabah Cap. 68).

In this case, the legal issue is primarily grounded in Article 161A(6)(b) of the Federal Constitution and Sections 17(1) and 64 of the Sabah Land Ordinance. Article 161A(6)(b) of the Federal Constitution and Sections 17(1) and 64 of the Sabah Land Ordinance. Article 161A(6)(b) provides the constitutional definition of a "native," establishing who is recognized under this classification. However, it does not supersede or nullify the statutory restrictions imposed by the Land Ordinance.

Sections 17(1) and 64 of the Sabah Land Ordinance play a crucial role in governing transactions related to native land. Section 17(1) of the Sabah Land Ordinance specifically prohibits any dealings involving native land between natives and non-natives, safeguarding native land ownership. Section 64 of the Sabah Land Ordinance complements this by offering additional legal protection. Exceptions to these restrictions are limited, such as subleases under Section 17(5), which permits certain dealings within clearly defined conditions.

For ease of reference, the relevant provisions as the afore mentioned reproduced as follow: -

1. Section 17 of the Sabah Land Ordinance (Cap.68) explicitly states that native land cannot be transferred or vested in any person who is not a native of Sabah.

2. Section 17 (1) Sabah Land Ordinance (Cap. 68) expressly states that all dealing of native land by a non-native are hereby expressly forbidden and no such dealings shall be valid or shall be recognised in any court of law.

3. Section 64 Sabah Land Ordinance (Cap. 68) prohibits any dealings or transactions concerning native land without approval. The aim is to ensure that native land in Sabah are preserved for native communities only and are not subject to exploitation by non-native like Wincourt and Siau Nyuk Ven through indirect means including by way of deed of trust and deed of power of attorney.

4. Article 161A(6)(b) of the Federal Constitution of Malaysia defines natives of Sabah and Sarawak, ensuring that specific protections are afforded to them under the law. This constitutional recognition underscores the importance of safeguarding native land rights.

High Court’s Decision

Upon reviewing the evidence, High Court found that apparently, Wincourt had used the Elvy solely as a nominee in the acquisition of the Native Land, and later entered into a sublease for the same property. Elvy’s role in the transaction was nominal, as it was Wincourt who provided the purchase price, and its director, Siau Nyuk Ven, became the de facto owner of the land by virtue of a Deed of Trust and a Power of Attorney. These documents clearly establish that Elvy was not the true owner of the Native Land, but was merely a proxy for Wincourt.

The necessity of executing the Deed of Trust and the Power of Attorney underscores the fact that Elvy’s involvement was contrived for the sole purpose of circumventing legal restrictions governing Native Land. Wincourt’s failure to disclose these key documents at the outset, instead relying solely on the Sublease, suggests an effort to obscure the true nature of the transaction. High Court finds that Wincourt intentionally concealed the existence of the Deed of Trust and the Power of Attorney and this concealment in Court’s view appears to be a calculated move to present the sublease as an isolated agreement, when in fact it is part of a larger, unlawful scheme.

The Court find that the entire series of transactions, including the Sale and Purchase Agreement, the Deed of Trust, the Power of Attorney, and the Sublease, were all orchestrated to circumvent the statutory restrictions imposed by the Land Ordinance (Sabah Cap. 68), specifically Section 17(1) which explicitly prohibits dealings in Native Land between natives and non-natives without the written approval of the Minister. By using Elvy as a nominee Wincourt sought to evade the statutory protections designed to preserve Native Land for the benefit of native Sabahans. Wincourt’s actions in this case therefore clearly fall within the scope of prohibited transactions under Section 17(1) of Land Ordinance.

Wincourt’s reliance on Section 17(5) of the Land Ordinance is misplaced. This provision applies to legitimate subleases between natives and non-natives, where the primary transaction – the acquisition of the land - is lawful. However, in the present case, the entire transaction is tainted by illegality from the outset. Wincourt’s actions, including the use of a nominee, are designed to facilitate the acquisition of Native Land by a non-native, which is expressly forbidden under Section 17(1) of the Land Ordinance. As such, Section 17(5) of the Land Ordinance cannot be invoked to validate the Sublease, as the underlying transaction is in itself illegal.

In so deciding, this Court is guided by the decision of the Federal Court in the case of Malayan Banking Bhd. v. Neway Development Sdn. Bhd. & Ors. [2017] 9 CLJ 401, where the Federal Court found that a similar arrangement involving the use of a nominee to acquire Native Land was illegal from the outset. The Court held that any subsequent instruments related to such a transaction were similarly tainted with illegality and, therefore, unenforceable. In that case, the Court refused to grant any relief to the appellant bank, which had sought to enforce a loan agreement related to the illegal acquisition of Native Land. His Lordship Richard Malanjum CJSS (as he then was) emphasized that the bank had not come to the Court with clean hands, as it had knowingly participated in a transaction aimed at acquiring Native Land for a non-native. The same principle applies in the present case: the Sale and Purchase Agreement, Deed of Trust, Power of Attorney, and Sublease are all part of a broader illegal scheme, and therefore, none of these documents can be enforced by the Plaintiff.

Conclusion

In conclusion, the Court finds that the transaction involving the acquisition and sublease of Native Land by Wincourt in this case, using Elvy as a nominee, is illegal and void ab initio. Wincourt’s attempt to rely on Section 17(5) of the Land Ordinance must fail, as the underlying transaction contravenes Section 17(1) and public policy. The Sublease, along with all related documents therefore cannot be enforced. Wincourt’s claims are, therefore, dismissed with cost of RM10,000.00, and the entire transaction is declared null and void. No relief or remedy shall be granted to Wincourt, as the illegality of the transaction taints all subsequent dealings.

In light of the reasons stated above, consequently, Elvy’s counterclaim is also dismissed due to the underlying illegality. Both parties are left without legal recourse as a result of their participation in an illegal transaction.

CHAMPION SCORE SDN BHD v. MOHD SOBRI CHEW ABDULLAH [2025] 6 CLJ 181 (Court of Appeal)

Case Digest :

A donee of a power of attorney must act strictly within the four corners of the power granted and cannot act beyond it. Once a donee exceeds the authority conferred to it, any instrument executed beyond the scope of its power is null and void and has no legal effect.

PENDAFTAR HAKMILIK NEGERI PERAK v. WONG SEW LING & ORS [2025] 5 CLJ 846 (Court of Appeal)

Case Digest :

[1] The State Authority, having approved an application for a proposed conversion of the category of land use and sub-division of land, and in the process of re-alienation of the land, may not reduce the tenure of the original title held in perpetuity to a term not exceeding 99 years. To do so would be ultra vires the provision of s. 204E(3) of the National Land Code and against the prohibition under art. 13(1) of the Federal Constitution.

[2] The case of Chin Kim Phin v. Director Of Lands & Surveys, Sabah & Anor [2020] 6 CLJ 243 was on all fours with the facts of the instant case which held that the appellant in that case had no power to impose the condition requiring the respondent to give up its freehold title and to receive in exchange, a 99-year lease as such condition was ultra vires.

M SHAHOOL HAMEED MOHAMED MEERAH v. PENGARAH TANAH DAN GALIAN [2025] 3 CLJ 343 (Court of Appeal)

Case Digest :

[1] Inaccurate information in the Computerised Land Registration System (CLRS) or inaccurate information records kept with the Land Registrar per se is insufficient in law to attach liability for negligence.

[2] A purchaser could not just rely on evidence of land searches and issue document of title as proof of negligence on the part of the Land Administrator. Negligence on the part of the Land Administrator is not proven ipso facto by mere misinformation in the CLRS and an inaccurate record in the land registry.

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