Tan Hung Sang v Tan Hung Khim PDF

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Tan Hung Sang v Tan Hung Khim & Anor [2008] MLJU 888

Copy Citation Malayan Law Journal Unreported

HIGH COURT (JOHOR BAHRU) AZAHAR BIN MOHAMED, J GUAMAN SIVIL NO 22-186-2001 2 December 2008

Abdul Hamid Menon bin abdullah (RK Menon & Co) for the plantiff Lee Boon How (Kamaruddin & Partners) for the 1st defendant Chia Quek Seng Steven (Tan & Lee) for the 2nd renpondant

Azahar bin Mohamed, J JUDGMENT The plaintiff is and was at all material times the eldest of the male children of one Tan Teck Yeaw (the Plaintiffs late father) and Chee Yen Fang. Chee Yen Fang died on 28-11-1967. The Plaintiff's late father died on 21-1-2001. The defendants herein were appointed, for the purpose of this action, to represent the Estate of the Plaintiff's late father by order of court made on the 14-8-2001 pursuant to the provisions of order 15 Rule 6A of the Rules of the High Court 1980. The 1st defendant is the plaintiff's youngest brother by the same parents. The 2nd defendant is the plaintiff's step-brother. The 2nd defendant's mother is Teoh Joo Hiang (DW 2). The plaintiffs late father married DW 2 after Chee Yen Fang died. It is not disputed that the plaintiff was at all material times and still is the registered proprietor of:



1.All that piece of land situated in the Mukim of Plentong, District of Johor Bahru, State of Johore and comprised in Geran No. Q.T.(R) 2501 for Lot No. MLC 2539 containing an area of 1320 square feet together with the premises erected thereon and known as No. 30, Jala'n Pasir Pelangi, Johor Bahru, Johor. The Plaintiff became the registered owner of the said house with effect from 12-12-1973. 

2.All that piece of land situated in the Mukim of Plentong, District of Johor Bahru, State of Johore and Comprised in Geran No.H.S.(D) 48649 for Lot No. MLO 2564 containing an area of 1920 square feet together with the premises erected thereon and known as Nos 5& 5A, Jalan Pasir Pelangi, Johore Bahru, Johore. The Plaintiff became the registered owner of the said shop-house with effect from 12- 12-1973.

(Both properties hereinafter collectively referred to as "the said properties"].

 From the onset, the said properties were tenanted. At that point in time, the plaintiff had a current account in his own name with Public Bank Berhad, Johor Bahru. The plaintiff operated and utilized this current account. The Plaintiff also had another current account with OCBC Bank (Malaysia) Berhad, Johor Bahru. The plaintiff gave to his late father on 30-9-1983 a personal account mandate in respect of this account. All rentals collected by the plaintiff's late father in respect of the said properties were paid into this account. With effect from 1-1-1984 until 31-12-2000 the plaintiffs late father had collected a sum of RM 344,000.00 as rentals from the tenants of the said •properties. In essence the plaintiff has brought this action against his late father for breach of contract and/ or breach of trust. The plaintiff's case is that prior to 1-10-1981 he had come to an agreement/ arrangement with his late father whereby the properties had been placed under the control and management of his late father by way of trust and confidence so that his late father could collect the rentals generated from these properties and invest the said rentals for and on behalf of the Plaintiff. According to the Plaintiff, his late father had become his agent and trustee. And that it was only after the death of his late father on 21-1-2001, the Plaintiff realized that his rentals had not been invested

by his late father. It is the Plaintiff's case that his late father ought to have invested the rental as had been promised and agreed upon. Since this had not been done, the plaintiff now seeks the return of the rental with interest from the estate of his late father. ▪ In his evidence the plaintiff said that after he became the owner of the properties concerned he had rented them out and that he had collected the rental monies and used the said rental monies for his own purposes. According to the Plaintiff, sometime in September 1981, his late father found out that he had no savings. His late father seemed somewhat annoyed with him because he had not saved up any money. As a result he agreed with his father that he would permit him to save his rental money for him. The plaintiff said that the arrangement with his father was that his father would collect all the rental monies in respect of the properties and his father would then saves and invests the rentals for him. The plaintiff agreed to such an agreement because he was not good at saving money. The plaintiff explained that it was purely for this purpose that he had given a mandate to his late father to operate his current account with OCBC Bank. The plaintiff had also stated that his late father was never allowed to take his rental monies for himself and to do whatever he wanted with it. It is the Plaintiffs contention that if it was his father's intention that the rental monies were meant for him, then there would be no need for the rental monies to go into the plaintiffs account. According to the plaintiff, his father was only permitted to take out the money from the current account and to invest it on his behalf. The plaintiff has also explained that he was very comfortable with this arrangement since he had no reason whatsoever to distrust his father nor be suspicious of his father since it was his father who had at the onset given him the properties concerned as gifts. According to the plaintiff, his father was then a very successful businessman who had made plenty of money. The plaintiff was therefore confident that his rental monies would be duly invested by his father and that investment would indeed grow. The plaintiff fully trusted his father. The plaintiff said during his late father's lifetime, his father did not tell him how he had invested the rental monies. According to the plaintiff after his father's death, on making enquiries from his family members, no one could furnish him with the particulars of any investment that his father had made on his behalf. The plaintiff filed this action so that he could try and get his monies back.

Seow Ai Wah (PW2) is the wife of the plaintiff. According to her, when they got married, the plaintiff was working for his late father. PW2 also goes on to say that about 6 years after her marriage to the plaintiff, she had a discussion with her father-in-law and that in the course of this discussion, the latter had told her that both she and her husband should learn to save money. According to her, the plaintiff's late father was aware that the plaintiff was not good at saving money. She also said that the plaintiffs late father had told her that he would be collecting the rental monies generated from the properties and investing the monies for the plaintiff. According to her, the plaintiff's late father had told her that if he did not do so, the plaintiff would spend all that rental. She also said that the plaintiff's late father had told her that the outcome of investing the plaintiff's rental monies would be that the Plaintiff would one day be a very rich man. She on her part fully agreed that the plaintiff's late father was the right person to invest the plaintiff's rental since she knew that he was a very successful businessman.

The 1st defendant who is PW3 said that his late father had given him 2 properties as gifts. At the same time, his late father had also given to his elder brother, the plaintiff 2 properties as well. According to 1st defendant,, at about that time, his late father had also given to his step-mother Teoh Joo Hiang (DW 2) some properties, also as gifts. According to 1st defendant, all the title deeds were kept in a big safe located at his father's office at No.43, Jalan Segget, Johor Bahru. According to him, all the valuable documents of the members of the family were kept in this safe. The evidence of the 1st defendant also shows that after he had been given these 2 properties, he rented them out and that the rentals belonged to him and as such, he kept the rentals for himself. He confirms that he was the one who had taken all the rental monies generated by these 2 properties of his. According to 1st defendant, there was no arrangement whatsoever between him and his late father. His late father was indeed a very wealthy man. The 1st defendant said that the plaintiff is a person who spends his money very easily. The plaintiff is a very generous person. According to 1st defendant, due to

his generous nature, the plaintiff had been given a nickname by his father. The nickname given to the Plaintiff was "welfare department". This was because the plaintiff was always helping those who

came to him asking for money. Furthermore, according to the 1st defendant, the plaintiff was not good at saving money. According to the 1st defendant, his late father had told him that he wished that the plaintiff would learn to be thrifty and save his money. The 1st defendant also said that having heard the evidence of the plaintiff and PW2, he is now inclined to believe the evidence of the plaintiff. In fact the 1st defendant goes on to say that he believes that the plaintiff had in fact entered into an arrangement with his late father so that the late father could collect the plaintiffs rental monies and invest the rental monies for the Plaintiff.

Now, the Plaintiffs case is that the agreement with his late father was oral in form; no documentary proof was tendered by the plaintiff as to its existence. In my view, in considering whether there was an oral agreement between the plaintiff and his late father the following facts are relevant and significant. In the first place the properties had in fact been given to the plaintiff by his late father. The properties concerned had been given by his late father as gifts inter vivos. This shows a close and affectionate relationship that existed between the plaintiff and his late father. The plaintiffs late father was a very successful and wealthy businessman. The plaintiff was his eldest son. The plaintiff trusted and relied upon his late father. As testified by the 1st defendant, the plaintiff was very generous with his money. I think it would be correct to say that the plaintiff is a person who was not good at saving money. PW 2, the plaintiffs wife said her father-in-law had once told her that both she and the Plaintiff should learn to save money. Against such a backdrop/it would come as to surprise that the plaintiffs late father would want to help the plaintiff by managing and invest the proceeds of rental generated from the properties. That's why, I am of the view that there was more or less a sort of an agreement and understanding between the plaintiff and his late father whereby his late father was to collect and invest the monthly rentals generated from the properties.

With that, the question arises: whether such an agreement was intended to be rigid binding arrangement or was it a mere family arrangement which was devoid of any intention to create legal relation. In this regard the case of Choo Tionq Hin & Ors v Choo Hock Swee [1959] MLJ 67 is instructive. There, the Court of Appeal of Singapore held that an agreement between the plaintiff

and his two adopted sons was not binding, as there was no legal intention for such a family arrangement to be binding.

Whyatt CJ in delivering the judgment of the Court of Appeal stated the issue in that case as follows: "The question remains whether an agreement of this character is one which creates legal relations which the parties have a right to enforce in the Courts. It is, of course, elementary that an agreement is not a contract in the strict sense of the word, unless it is the common intention of the parties that it shall be legally enforceable. Such an intention is normally inferred from the nature of the agreement. For instance, in the case of agreements -. regulating commerce or business, it is obvious that the parties intend legal consequences to follow; per contra, in the case of agreements relating to social engagements, it is inferred as a matter of course that there is no common intention to create legal obligations. Between these two' extremes, there are agreements where it cannot be so readily determined whether they create legal obligations or not. If an agreement is made between members of a family in the course of family, life, as was the case in Balfour v Balfour (1919) 2 KB 571, the law will ordinarily imply, from the circumstances of the case, that the parties did not intend their agreement to have legal consequences". And further down, His Lordship explained the law as follows: "Agreements of this character between adopted sons and their adoptive father may well work satisfactorily so long as a spirit of trust and mutual confidence prevail within the family but if this ceases to exist, then in my opinion, the sanctions of the Courts are no substitute. As Atkin L.J. (as he then was) said, referring to a family arrangement in Balfour v Balfour (1919) 2KB 571 (at 579): "Agreements such as these are outside the realm of contract altogether... The consideration that really obtains for them is that natural love and affection which counts for so little in these cold Courts. The terms may be repudiated, varied or renewed as performance proceeds or as disagreements develop, and the principles of

the common law.... are such as find no place in the domestic code... In respect.of these promises each house is a domain into which the King's writ does not seek to run, and to which his officers do not seek to be admitted". It is true that in that case Lord Atkin was referring to an agreement between a husband and wife but in my judgment these dicta apply with equal force to a family arrangement between a father and his adopted sons of the kind pleaded in this case. It follows, in my view, that the law will not, in this case, imply an intention that the agreement between the adopted sons and the respondent should be attended by legal consequences and therefore the pleas set out in paragraphs 14 and 16 of the amended defence do not constitute a defence in law to the respondent's claim to possession of the farm and of the two motor lorries in these consolidated proceedings". Applying the foregoing principles to the present case, having regards to the facts and circumstances, it is my finding that the agreement between the plaintiff and his late father was made between members of a family in the course of family life, which was not intended to create legal relations. This family arrangement involved a son and his late father. To my mind, this is a case of a caring and generous father who gave to his son 2 properties, that is to say a house and a shop house as gifts inter vivos devoid of any monetary consideration. And for the sole benefit of his son, the father, a successful and wealthy businessman agreed to manage, collect monthly rentals of the properties and invest the proceeds derived therefrom. In this way, in my view, the family arrangement between the plaintiff and his late father was not intended to be a rigid binding arrangement. That family arrangement depends on the good faith of the plaintiff's late father in keeping his promise.

On that note, I shall now deal with the contention of the plaintiff learned counsel that in the light of the arrangement that had been agreed upon, the plaintiffs late father had become his trustee. In other words, the plaintiff in this action seeks to establish a trust against his late father. It is said that

the proceeds of the rentals collected by his father was held on trust for him by his late father qua trustee.

In relation to the above, some very important facts are required-to be kept in mind. Pursuant to a personal account mandate given by the Plaintiff to his late father on 30-9-1983, the plaintiff's late father was authorized to operate the plaintiff's personal current account with OCBC Bank. In spite of this, the plaintiff still maintained control over the said account and could withdraw monies from the said account as and when he pleases. With effect from 1-1-1984 until 31-12-2000 the plaintiffs late father had collected a sum of RM344, 000.00 as rentals from the tenants of the said properties. All rentals collected by the plaintiff's late father in respect of the said properties was paid and deposited into the plaintiffs personal current account with OCBC Bank. Money from the account was also used for the upkeep of the properties, for paying quit rent and assessment payments in respect thereof and for paying the Plaintiffs income tax.

Having stated the above facts, I would like to refer to the written submission of learned counsel for the plaintiff dated 16-8-2007. At paragraph 26 it was argued that the sum of RM344, 000.00 had been admittedly taken up by plaintiffs late father. Against such a contention, learned counsel as a final point said, "The Plaintiff, Tan Hung Sang will not be greedy and ask for any for the damages. He would be more than satisfied if my Lord were to award to him the agreed sum of RM344, 000.00 with costs as prayed from 1-1-1984 until realization." For one thing, the statement of Agreed Facts (as between Plaintiff and 2nd Defendant) dated 5-32003 (Encl.54) does not say that the sum of RM344,000.00 had been taken by the plaintiffs late father from the plaintiffs current account with OCBC Bank. It merely says that the plaintiffs father had collected a sum of RM344, 000.00 as rentals from the tenants of the properties. But most significantly, it also says that all rentals collected by the plaintiffs late father were paid into the plaintiffs account with OCBC account by his late father.

Now, in the context of the submission of learned counsel for the plaintiff which I have alluded to earlier, I agreed with the submission of learned counsel for the 2nd defendant that whether the said

amount of RM344,000.00 claimed by the plaintiff is due to him, three questions arise: First of all whether there was a trust in favour of the plaintiff. Secondly, whether the sum-of RM344, 000.00 was withdrawn from the plaintiff's said current account with OCBC Bank by his late father. And finally, whether the plaintiff's late father had misapplied and used the sum of RM340, 000.00 for his own benefit.

At this point, I shall deal with the issue whether there was a trust in favour of the plaintiff. In this context, the authority that I would like to cite is the case of Lee Phek Choo v Ang Guan Yau & Anor [1975] 2 MLJ 146 The following passage in the judgment of Lee Hun Hoe CJ (Borneo) is of relevance:

"In creating a trust, as laid down by Lord Langdale M.R. in Knight v Knight (1840) 3 Beav 148 at p 173 there must exist the three certainties, that is, certainty of words, certainty of subject-matter and certainty of objects Snell's Principles of Equity, 26th Edition, discusses about the effect of absence of any the certainties at pages 126 to 127 as follows:/ "The paramount certainty is that of subject-matter in ttie first sense; if there is no certainty as to the property to be^field upon trust, the entire transaction is nugatory. Next, if that certainty is present but there is no certainty of words, the person entitled to the trust property holds free from any trust. Finally, if both these certainties are present but there is uncertainty of objects, there is a resulting trust for the settlor, for 'once established that a trust (of definite property) was intended and the legatee cannot take beneficially', the same applies where there is uncertainty of the subject matter as regards the beneficial interest unless one of the beneficiaries can establish a claim to the whole".

Syed Ahmad Helmy JC (as he then was) in the case of Teo Ah Bin (a) Teo Eng Bin v Tan Kheng Guan (para G at page 43 of the Second Defendant's bundle of authorities) also stressed that for a trust to be created, there must be clear intention to create a trust; the usage of the word "trust" per se in the absence of other factors is insufficient to create...