IN THE HIGH COURT OF MALAYA AT KUALA LUMPUR
IN THE STATE OF WILAYAH PERSEKUTUAN, MALAYSIA
CIVIL SUIT NO: S7-22 – 1437-2005
BETWEEN
1. LIEW CHUM WAH
2. LIEW CHOY LAN
3. LIEW CHOY KHENG
4. LIEW CHOY PENG
5. LIEW CHOY HUNG
...
PLAINTIFFS
...
DEFENDANTS
AND
1. LIEW CHEE SENG
2. WONG YEOK SONG
3. YEAP CHENG HOE
4. ESTET LIEW PING @ LIEW PING LAM
GROUNDS OF DECISION
Introduction
1.
This case revolves around a family dispute arising out of the administration of
the estate of the parties’ deceased father , the late Mr Liew Ping @ Liew Ping
Lam (“Mr Liew”). It concerns a trust deed executed by Mr Liew over his
property held under C.T. No 14405, Geran No. 26863, Lot 72, Seksyen 86,
Wilayah Persekutuan bearing postal address of No. 11, Lorong Titiwangsa 2,
53200 Kuala Lumpur (“the Titiwangsa house”). The five plaintiffs are
1
represented by Mr MS Murthi and the 1st and 2nd defendants by Mr Chan Kah
Meng and the 3rd and 4th defendants by Miss Loo Peh Fern.
The Parties
2.
The 1st to the 5th plaintiffs’ are the children of Mr Liew from his first marriage.
3.
The 1st defendant and his sister Liew Pei Shy (“Pei Shy”) (not a party in this
action)
are the children of Mr Liew from his
third marriage to the 2nd
defendant.
4.
The 3rd defendant is the solicitor who on Mr Liew ‘s instructions prepared the
trust deed (“the Trust Deed”) , the subject matter of litigation in this case, and
the memorandum of transfer for the Titiwangsa house from him (Mr Liew) to
the 1st defendant for love and affection.
Background facts
5.
Mr Liew was a wealthy man who owned several movable and immovable
properties in Kuala Lumpur. On 28 July 1989, he
executed his last will
(‘the Will”), to replace an earlier will that he had made some five years
earlier . Under the Will, he bequeathed the bulk of his estate to the 1st
defendant and his sister , and a cash gift of RM100.00 (Ringgit One Hundred
Only) to, inter-alia, each of the 1st to the 5th plaintiffs.
2
6.
On 14 March 1995, some six years later, Mr Liew executed the Trust Deed in
escrow and the same was subsequently dated 12 April 1995. During his
lifetime, he
transferred a property in Bangsar to the 1st plaintiff’s son, one
Liew KoK Wai, and the Titiwangsa house to the 1st defendant.
7.
Mr Liew passed away on 4 May 1995 aged 89.
8.
Grant of probate of the said Will was applied vide Petition for Probate No:
KLHC (S2)S5-32-207-95 in the Kuala Lumpur High Court. The 1st to the 5th
Plaintiffs challenged the validity of the Will in the probate proceedings and
also the transfer of the Titiwangsa house by Mr Liew to the 1st defendant
and entered a private caveat on the said property. They claimed that the
Titiwangsa house was estate property.
9.
The parties to the probate proceedings subsequently arrived at a settlement
and recorded a consent order on 13th November 1997
under the said
Petition. Under the terms of the consent order , the 1st defendant’s and his
sister Liew Pey Shy retained 65% of Mr Liew’s estate and agreed to vest
35% of the said estate in the
plaintiffs subject to inter alia the following
conditions:-
(a)
the withdrawal of the private caveat lodged by the 1st plaintiff under
Presentation No: 4773/97 in respect of the said Property which is the
subject matter of the present suit ; and
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(b)
the distribution of the estate in terms as set out in the said consent
order is a full and final settlement of all claims and disputes between
the plaintiffs and the 1st defendant and that neither of the parties
shall have any claim whatsoever against the other in respect of
any matter whatsoever.
10.
However, sometime in 1998, the plaintiffs commenced the present action in
the Shah Alam High Court for a declaration that the transfer of the Titiwangsa
house by Mr Liew to the 1st defendant was null and void. The statement of
claim was subsequently amended to add a further cause of action for a
declaration that the plaintiffs had a right to occupy the Titiwangsa house
under the terms of the Trust Deed.
11.
The 1st and the 5th plaintiffs were struck out as parties when they decided to
institute a separate action against the defendants and withdrew from this
action. The case then proceeded only between the 2nd , 3rd and 4th plaintiffs
and the defendants.
12.
On the date of the trial, the plaintiffs abandoned the claim for a declaration
that the Titiwangsa house was part of the estate and elected to proceed only
with their claim for a declaration that they had a right to occupy the Titiwangsa
house pursuant to the Trust Deed. In essence, the plaintiffs claimed for the
following reliefs:-
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(a)
A declaration that the 1st defendant holds the Titiwangsa house as a
trustee under the terms of the Trust Deed dated 12 April 1995;
(b)
A Consequential Order that the plaintiffs have a life interest to reside in
the Titiwangsa house so long as they desire; and
(c)
Judgment for damages against the first, second and third defendants
for conspiracy to deprive the plaintiffs of their lawful life interest in the
Titiwangsa House.
The plaintiffs case
13.
The substance of the plaintiffs claim was that they have a right to occupy the
Titiwangsa
house
based
on the Trust Deed.
The Trust Deed clearly
provided that the sisters of the 1st defendant had a right to occupy the house.
The 3rd defendant had concealed the Trust Deed from the plaintiffs knowing
that they had an interest in it ,and thereby had aided and abetted the 1st
defendant to breach the terms of the Trust Deed.
The defendants’ case
14.
The defendants took the position that the consent order operated as an
estoppel and precluded the plaintiffs
from instituting this action.
They
contended that the Trust Deed was a private arrangement between the 1st
defendant and Mr Liew. In the alternative, it was said that even if Mr Liew
had intended it to be a Trust Deed, the same was an incompletely constituted
trust and therefore void and unenforceable.
5
The issues for determination
15.
The main issues which arose for the court’s determination may be stated as
follows :
(a)
Whether the plaintiffs are estopped by or under the consent order
dated 13 November 1997 from maintaining this action;
(b)
Whether the Trust Deed dated 12 April 1995 for the Titiwangsa house
is a completely constituted trust;
(c)
If not, whether the plaintiffs are entitled to enforce it;
(d)
Whether the 1st defendant holds the Titiwangsa house
as trustee
under the Trust Deed dated 12.4.1995; and
(e)
Whether the 2nd to the 4th plaintiffs are beneficiaries of the Trust Deed.
Issue 1 : Consent order
16.
It is common ground that the probate proceedings
were settled and the
parties entered into a consent order on 13 November 1997. Paragraph 6 of
the consent order expressly provided as follows :
“That the foregoing shall be in full and final settlement
of all claims and disputesbetween Liew Chum Wah,
Liew Choy Hung, Liew Choy Lan, Liew Choy Kheng
and Liew Choy Peng and Liew Chee Seng and Liew
Pey Shy and Wong Yeok Song and neither of the
parties shall have any claims whatsoever against the
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other in respect of any matter whatsoever except as
specifically provided in the settlement terms herein”
(emphasis added)
17.
The defendants argued that the term “whatsoever” in the consent order
precluded the plaintiffs’ from commencing this action. The consent order was
intended to be a global settlement on all matters with respect to the estate of
Mr Liew between the first wife’s children and the third wife’s family and for all
assets whether listed in the list of assets to the probate proceedings or by way
of subsequent inter vivos gifts of properties listed in the 1989 Will. In support
of this argument, reliance is placed on the doctrine of estoppel and res
judicata.
18.
The defendants
contended that the language in the consent order
demonstrated that the settlement was intended to cover all issues between
the parties,
regardless of whether they were existing at the time of the
consent order or not. The court’s attention was drawn to a passage by Lord
Nicholls of Birkenhead at paragraph 27 in BCCI v Ali [2001] 1 AC 251 that
was referred to in MBF Holdings Bhd & Anor v Dato’ Loy Teik Ngan & 13
Others [2013] 1 LNS 495:
“Courts are accustomed to deciding how an
agreement should interpret and applied when
unforeseen circumstances arise, for which the
agreement has made no provision. That is not the
problem which typically arises regarding a general
release. The wording of a general release and the
context in which it was given commonly make
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plain that the parties intended that the release
should not be confined to known claims. On the
contrary, part of the object was that the release
should extend to any claims which might later
come to light. The parties wanted to achieve
finality. When therefore, a claim whose existence
was not appreciated does come to light, on the
face of the general words of the release and
consistently with purpose for which the release
was given, the release is applicable. The mere fact
that the parties were unaware of the particular
claims is not a reason for excluding it from the
scope of the release. The risk that further claims
might later emerge was a risk the person giving
the release took upon himself. It was against this
very risk that the release was intended to protect
the person in whose favour the release made.”
(emphasis added)
19.
The defendants also contended that the plaintiffs are estopped from
questioning the consent order as they have by their conduct received the
benefit of the 35 % of RM17.5 million. It would therefore be inequitable to
allow the plaintiffs to take the position that they can accept the settlement
sums but in the same breath insist that they are not bound by the consent
order recorded before a Court of Law.
20.
In response, the plaintiffs contended that they were not bound by the terms of
the consent order as they were not aware of the existence of the Trust Deed
at the material time. It was never disclosed to them and had only surfaced
after they had recorded the consent order. In the circumstances, they are
entitled to bring this action to enforce their rights under the Trust Deed.
8
21.
It is not in dispute that the plaintiffs were not aware of the Trust Deed at the
time the consent order was recorded. The question arises is whether that
give them the right to disregard the clear terms of the consent order. In my
judgment, it does not. The plaintiffs did not reserve the power to bring an
action against the defendants on any grounds. I accept the submission of the
defendants that the plaintiffs are therefore bound by the terms of the consent
order and must apply to set aside, if they wish to proceed with this action.
The law does not allow a party to cannot both “approbate and reprobate”. A
person is said to "approbate and reprobate" when he endeavours to take
advantage of one part of a document and rejects the other.
The plaintiffs
having accepted the monies under the terms of consent order cannot now
contend that they are not bound by it.
The consent order has contractual
force and cannot be disregarded merely on the basis that the plaintiffs were
not aware of the existence of the Trust Deed at the material time.
22.
The plaintiffs’ claim against the defendants must therefore be dismissed.
Issue 2:
23.
Trust Deed
If my conclusion on the legal effect of the consent order is wrong, it remains
to be considered whether the
Trust Deed is a valid trust that can
enforced.
24.
The material portions of the Trust Deed is in these terms:
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be
1)
The Trustee hereby declares that he shall hold the said
Property to allow the Trustee’s own mother and sisters to
reside on the said Property for as long as they should desire
to stay there;
2)
The Trustee shall not during the lifetime of the Beneficiary be
allowed to sell the said Property for redevelopment purposes
or any other purposes unless agreed to by the Beneficiary;
3)
The Trustee undertakes to allow the Beneficiary to stay on
the said Property for the lifetime of the Beneficiary and in the
event the Beneficiary dies, then the funeral is to be held at
the said Property;
4)
The expression “the Trustee” shall include his heirs,
personal
representatives,
executors,
trustees
and
successors-in-title and the trusts herein declared shall be
binding on all or any of such aforesaid persons; and
5)
The expressions “the Beneficiary” shall include his heirs,
personal representatives, executors, trustees, successors-intitle and assigns.
25.
On this issue, the plaintiffs contended that the Trust Deed was a completely
constituted trust and thus enforceable by the plaintiffs. The terms of the
Deed permitted the plaintiffs to occupy the Titiwangsa house for as long as
they wanted.
On the other hand, the defendants alleged
Deed was not a completely constituted trust
and
that the Trust
was void and
unenforceable. They contended that it was void as there was uncertainty of
subject matter and uncertainty of words, in the contents of the Trust Deed ,
which are 2 of the 3 elements that must exist for a declaration of trust to be
10
completely constituted trust. It was also contended that the plaintiffs as
volunteers were not entitled to enforce an incompletely constituted trust.
26. Professor Jill E. Martin explains the distinction between a completely or an
incompletely constituted trust in the following passage from Hanbury & Martin
Modern Equity (16th edn)(2001) at p.69:
“Completely and Incompletely Constituted Trusts.
There cannot be a trust unless the trust is completely
constituted. This heading is therefore irrational; it is
dealing, not with two different types of trust, but with a
rule for distinguishing what is a trust from something
that is void. Nevertheless, it is convenient to make the
point here, and to deal in more detail with the matter
below.
A trust is only valid if the title to the property is in the
trustee and if the trusts have been validly declared. A
declaration that A holds on trust for B is ineffective if
the property is not vested in A. The trust becomes
constituted and valid when the property is vested in A.
The form of transfer to A depends on the nature of the
property — land, chattel, money, shares in a
company, copyrights, patents, debts or other choses
in action — and the appropriate method must of
course be used. In the case of a trust of land there
must also be written evidence of the declaration of
trust. The settlor may of course declare himself
trustee, and there is then an automatic constitution,
because
title
Testamentary
was
trusts
11
in
the
are
settlor
throughout.
always
completely
constituted; for the executors, if not the trustees
themselves, are under a duty to transfer the trust
property to the nominated trustees.
Although no trust is created unless the trust is
completely constituted, there are situations where
intended
beneficiaries
under
an
incompletely
constituted trust may compel the transfer of the
property to the trustees. In general, they can do so if
they have given consideration, but not if they are
volunteers, for there is yet no trust and 'equity will not
assist a volunteer'.
27. In Lee Eng Teh & Ors v Teh Thiang Seong & Anor [1967] 1 MLJ 42, Gill J
held that for a trust to be enforceable, it must be a completely constituted trust.
He said (at 44) :
“The next question to be considered is whether the
promise made by the first defendant constituted a trust
which is enforceable. Whether a trust is enforceable or not
depends upon whether it is completely or an incompletely
constituted trust. A trust is said to be completely
constituted when the trust property has been vested in
trustees for the benefit of the beneficiaries: until that has
been done the trust is incompletely constituted.”
28.
The Supreme Court in Yeong Ah Chee v Lee Chong Hai 7 Anor and other
appeals [1994] 2 MLJ 614 had occasion to consider
the elements that
constituted a valid trust , and explained:
“The three essentials of a valid trust are: (a) certainty of
words; (b) certainty of subject; and (c) certainty of object.
12
Looking at the seven trust deeds except for that in Civil
Appeal No 5, there is certainty of words and also there is
certainty of object, ie the names of beneficiaries, but there
is no certainty of subject, ie trust property, viz the lands,
because the beneficial ownership of the lands passed to the
purchasers of those subsidiary agreements of sale and
purchase in 1969 when the sale of these lands took place,
ie before the trust deeds were executed. The Lee brothers,
named as the trustees of these trust deeds, were also the
settlors of the trusts created by those trust deeds. It is a rule
that a settlor must vest the trust property (subject) in the
trustee completely, please see Milroy v Lord. How could the
settlors (the Lee brothers), vest the lands in themselves as
trustees when, at the time of signing the trust deeds, they
were not owners of the lands both in law and equity as
well?”
29.
The Court of Appeal in Fawziah Holdings Sdn Bhd v Metramac Corp Sdn
Bhd [2006] 1 CLJ 996 reaffirmed the three elements that constitute a valid
trust and put it this way :
“First, there must be certainty of intention. Second
there must be certainty of subject matter: both in
terms of the corpus and the beneficial interest. Third,
there must be in certainty of the objects of the trust. A
trust is void if there is uncertainty in any of these three
elements.”
13
30.
In Parmeshiri Devi v Pure Life Society [1971] 1 MLJ 142, Abdul Hamid J
cited with approval the dictum of Vice-Chancellor Bacon in
Warriner v
Rogers LR 16 Eq 340 (at 384):
"The rule of law upon this subject I take it to be
very clear, and with the exception of two cases
which have been referred to (Richardson v.
Richardson and Morgan v. Malleson), the
decisions are all perfectly consistent with that rule.
The one thing necessary to give validity to a
declaration of trust – the indispensable thing – I
take to be, that the donor, or grantor, or whatever
he may be called, should have absolutely parted
with that interest which had been his up to the
time of the declaration, should have effectually
changed his right in that respect and put the
property out of his power, at least in the way of
interest."
31.
The Court of Appeal in Koperasi Wanita Sarawak Bhd v Robert Sim Teck
Hock [2005] 4 MLJ 493, Abdul Kadir Sulaiman JCA said:
In the case of trusts by transfer, a further step is required to
completely constitute the trust, the classic statement of
which is found in the judgment of Turner LJ in Milroy v Lord
(1862) 4 De GF & J 264 at 274-275; 45 ER 1185 at 118990:
I take the law of this court to be well settled, that in order to render a
voluntary settlement valid and effectual, the settler must have done
everything which, according to the nature of the property comprised in
the settlement, was necessary to be done in order to transfer the
property and render the settlement binding upon him. He may of course
do this by actually transferring the property to the persons for whom he
intends to provide, and the provision will then be effectual, and it will be
equally effectual if he transfers the property to a trustee for the
purposes of the settlement, or declares that he himself holds it in trust
for those purposes; and if the property be personal, the trust may, as I
apprehend, be declared either in writing or by parol; but, in order to
render the settlement binding, one or other of these modes must, as I
understand the law of this court, be resorted to, for there is no equity in
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this court to perfect an imperfect gift. The cases I think go further to this
extent, that if the settlement is intended to be effectuated by one of the
modes to which I have referred, the court will not give effect to it by
applying another of those modes. If it is intended to take effect by
transfer, the court will not hold the intended transfer to operate as a
declaration of trust, for then every imperfect instrument would be made
effectual by being converted into a perfect trust. These are the
principles by which, as I conceive, this case must be tried.
32.
In Chen Kuok King v Jurudaya Construction Sdn Bhd [2007] 4 MLJ 720,
Madam Justice Lau Bee Lan followed and applied the principle laid down in
Koperasi Wanita (supra) . She held that the trust deed in that case was
invalid as the memorandum of transfer in respect of the property was only
registered after the creation of the trust deed. Her Ladyship’s decision has
been upheld by the Court of Appeal. See Chen Kuok King v Jurudaya
Construction Sdn Bhd [2008] MLJU 504.
33.
The authorities discussed above show a trust is only enforceable if it is a
completely constituted trust. There must be certainty of intention, subject
matter and object. The test to be applied to determine whether there is
certainty of subject-matter , is whether the donor has done everything within
his power to irrevocably transfer ownership in the subject matter of the trust
to the donee. Further, where the trust property is immovable property, a
declaration of trust is only valid and can be said to have certainty of subject
matter, if the title to the property is in the name of the trustee on the date of
the creation of the trust, and the trust has been validly declared. This is an
essential requirement. Consequently, where a trustee becomes the legal
owner of the property subsequent to the creation of the trust deed, the trust
15
deed becomes ineffective and void as the title to the property was not vested
completely in the trustee.
34.
This reason for this requirement is clear. The donor can recall the property
at any time before the transfer is perfected. In Re McArdle [1951] Ch 669, it
was held (at 677) per Jerkin:
“the donor has a locus poenitentiae and can change
his mind at any time. No question of conscience
enters into the matter, for there is no consideration,
and there is nothing dishonest on the part of an
intending donor if he chooses to change his mind at
any time before the gift is complete.”
35.
I turn now to consider the arguments of the parties on the issue of whether
there was certainty of subject-matter in the Trust Deed. The undisputed facts
relevant to this issue are:
(a)
the transfer forms and the Trust Deed were signed in
March 1995
and
the Trust Deed was dated
12.4.1995;
(b)
the title was never in the 1st defendant’s possession
but had always been in Mr Liew’s custody and control
until it was only handed over to the 3rd defendant as
the solicitor;
(c)
the transfer of the title to the Titiwangsa house was
only presented and registered in the name of the 1st
defendant on 3.7.1995 ; and
16
36.
Applying the principles discussed earlier to the facts of the present instance, it
is clear that the contents of the Trust Deed do not constitute a valid trust as
there is uncertainty of subject matter. The Trust Deed was signed by Mr
Liew on 14 March 1995 but was only dated subsequently on 12 April 1995.
The transfer of the title to the Titiwangsa house was only presented for
registration at the land office on 3 July 1995 i.e. after his demise on 4 May
1995. The 1st defendant was not the registered owner of the Titiwangsa
house when the Trust Deed was created. He had no legal rights over it. The
original land title remained with Mr Liew on 12 April 1995 when the Trust
Deed was dated and stamped. Mr Liew could have changed his mind by not
depositing the title with the 3rd defendant for the transfer creating uncertainty
of the subject matter of the trust.
37. Consequently, the plaintiffs claim against the defendants based on the Trust
Deed fails as it is an incompletely constituted trust. There is another related
issue that needs to be considered. It is whether the plaintiffs are entitled to
enforce the incompletely constituted trust.
38. In Yeong Ah Chee (supra), the Supreme Court held that a beneficiary who has
not given valuable consideration for the creation of a trust is not entitled to
enforce it. The principle was expressed as follows:
A volunteer is a beneficiary who has not given any
valuable consideration (in the usual sense of the
ordinary law of contract), for the creation of a settlement
or trust.
17
It is a settled rule of equity that a court of equity would
not render assistance to a volunteer in the case of an
incompletely constituted trust.
39. In Lee Eng Teh & Ors(supra) the court observed:
The distinction between completely and incompletely
constituted trusts is of importance principally with regard to
the question of consideration. In other words, the question
to be considered is whether valuable consideration was
given for the creation of the trust. If valuable consideration
is given in exchange for the creation of the trust, it does
not matter whether the trust is completely constituted or
not, for equity regards as done that which ought to be
done and will perfect an imperfect conveyance for value
by treating it as a contract to convey. But there is no equity
to perfect an imperfect voluntary trust. As was said by
Lord Eldon in Ellison v Ellison:
I take the distinction to be, that if you want the assistance
of the court to consitute a cestui que trust, and the
instrument is voluntary, you shall not have that assistance,
for the purpose of constituting a cestui que trust, as upon a
covenant to transfer stock, if it rests in covenant, and is
purely voluntary, this court will not execute that voluntary
covenant, but if the party has completely transferred stock,
though it is voluntary, yet the legal conveyance being
effectually made, the equitable interest will be enforced by
this court.
40. In the present case, there is no evidence that the plaintiffs had given any
consideration whatsoever for the creation of the Trust Deed. They are mere
volunteers and this court cannot
render assistance to a volunteer in the case
of an incompletely constituted trust.
18
41.
My conclusions on the first and second issues, which are determinative of the
case, render the remaining two issues and the numerous other sub-issues that
were raised in the course of arguments otiose.
Conclusion
42. The plaintiffs claim is therefore dismissed with costs. Plaintiffs to pay 1st and 2nd
defendants costs of RM100,000.00 and the 3rd defendant a sum of
RM130,000.00.
Dated: 24 March 2014
t.t.
(S M KOMATHY SUPPIAH)
Judicial Commissioner
High Court of Malaya
Kuala Lumpur
Solicitors :-
For the Plaintiff : Dato’ M.S Murthi ; M/s Chambers of Murthi & Partners
For the 2nd Defendant : K.M Chan ; M/s Lim Kian Leong & Co
For the 3rd Defendant: Loo Peh Fern with Vivian Kuan ; M/s Skrine
19