DI DALAM MAHKAMAH RAYUAN MALAYSIA
(BIDANGKUASA RAYUAN)
MAHKAMAH RAYUAN RAYUAN SIVIL NO. S-02-605 TAHUN 1998
DI ANTARA
BESHARAPAN SDN. BHD. … PERAYU PERTAMA
DATUK HAJI TAULANI BIN HAJI JALALUDDIN … PERAYU KEDUA
HAJI ALI AKBAR BIN HAJI JALALUDDIN … PERAYU KETIGA
DAN
AGROCO PLANTATION SDN. BHD. … RESPONDEN PERTAMA
SHAMSIR BIN GANDIOK … RESPONDEN KEDUA
(DI DALAM MAHKAMAH TINGGI SABAH DAN SARAWAK
DI SANDAKAN SAMAN PEMULA NO. S(24) 39 OF 1995)
DI ANTARA
AGROCO PLANTATION SDN. BHD. … PLAINTIF PERTAMA
SHAMSIR BIN GANDIOK … PLAINTIF KEDUA
DAN
BESHARAPAN SDN. BHD. … DEFENDAN PERTAMA
DATUK HAJI TAULANI BIN HAJI JALALUDDIN … DEFENDAN KEDUA
HAJI ALI AKBAR BIN HAJI JALALUDDIN … DEFENDAN KETIGA
CORAM: HJ. ABDUL KADIR SULAIMAN, JCA
ARIFIN BIN ZAKARIA, JCA
TENGKU BAHARUDIN SHAH BIN TENGKU MAHMUD, JCA
The subject matter of the dispute in this case is a piece of land measuring 997 acres bearing title deed CL 085311075, situated at Sungai Ruku-Ruku, Labuk/Sugut, Sabah (the subject land). The learned Judge had meticulously set out the relevant facts in his judgment which for convenience are reproduced below:
“One set of chronology of events which are not in dispute are as follows:
(a) On 01/02/1989 the 2nd and 3rd Defendants entered into a Sale and Purchase Agreement with the 2nd Plaintiff in respect of the subject land with a consideration of RM100,000.00;
(b) On 01/02/1989 the 2nd and 3rd Defendants also executed a Power of Attorney thereby appointing the 2nd Plaintiff as their attorney;
(c) A supplementary Agreement was also entered into between the 2nd and 3rd Defendants and the 2nd Plaintiff on 06/03/1989;
(d) Pursuant to his appointment as the attorney for the 2nd and 3rd Defendants, the 2nd Plaintiff signed the draft title of the subject land on 14/08/1989;
(e) On 15/01/1993 the 2nd Plaintiff sold the subject land to the 1st Plaintiffs vide a Sale and Purchase Agreement on even date at the price of RM185,630.00;
(f) And on the same date, i.e. 15/01/1993 the 2nd Plaintiff executed a Substitution under a Power of Attorney in favour of the 1st Plaintiffs;
(the foregoing transactions are hereinafter collectively referred to as “the transactions”);
(g) Upon payment of the premium to the relevant authority the title deed for the subject land was issued and registered on 16/09/1994;
(h) Upon issuance of the issued document of title the 1st Plaintiffs took possession of it; and
(i) On 15/05/1997 the 1st Plaintiffs finally managed to transfer the subject land to their name, having earlier on being impeded by the presence of caveat lodged by the 1st Defendants against the title of the subject land. It is also pertinent to note that the 1st Plaintiffs as the substitute attorney for the 2nd and 3rd Defendants signed the Memorandum of Transfer for the transferors.
The other set of events are as follows in chronological order:
(i) On 04/10/1978 a Receiving Order and an Adjudication Order were issued upon the 2nd Defendant;
(ii) But on 21/07/1993 both the Receiving Adjudication Orders were rescinded and annulled; and
(iii) On 23/08/1995 the 2nd and 3rd Defendants entered into a Sale and Purchase Agreement with the 1st Defendants for the sale of the subject land to the latter.
It is also not in issue that on 28/01/1995 amendments were effected on the title deed of the subject land and thereby allowing the planting of oil palm on the subject land instead of rubber and also to bring it under 75% cultivation by January 1993.”
Arising from the above facts the Respondents applied to the High Court by way of Originating Summons seeking among others a declaration that 1st Respondent is by virtue of the Sale and Purchase Agreement dated 15th day of January 1993 between 1st Respondent and the 2nd Respondent, the 2nd Respondent is entitled to register their name on the title deed of the subject land. The Originating Summons was converted to a Writ Action and the parties then filed their respective pleadings. The Appellants in their counter claim sought, inter alia, the declarations that –
(1) the 2nd Respondent did not have the power under the Power of Attorney dated 1.2.1989 to enter into the Sale and Purchase Agreement dated 15.1.1993 with the 1st Respondent; and
(2) a declaration that the Sale and Purchase Agreement between the 2nd and 3rd Appellants on the one part and the 1st Appellant on the other part is valid and subsisting and enforceable.
The Appellants also prayed for other consequential reliefs. The Respondents’ application was allowed and hence the reliefs sought for by the Appellants naturally were dismissed by the learned Judge. We had earlier dismissed this appeal and we now give our reasons for the same.
The main thrust of the appeal is that the Sale and Purchase Agreement dated 1.2.1989 (the 1989 Agreement) between the 2nd and 3rd Appellants on the one part and the Respondents on the other part was invalid and void on three main grounds. Firstly, it is the contention of the Appellants that on the date of execution of the 1989 Agreement and the impugned Power of Attorney the subject land was yet to be registered in the name of 2nd and 3rd Appellants. Based on s 88 of Sabah Land Ordinance (the Ordinance) the Appellants claim that at the material time the 2nd and 3rd Appellants did not have any right or interest over the subject land which is capable of being disposed by to 1st Respondent. S 88 of the Ordinance reads:
“No new title and no dealing with, claim to or interest in any land except land still held under native customary tenure without documentary title shall be valid until it has been registered in accordance with the provisions of this Part.”
This section came for consideration of the Federal Court in Borneo Housing Mortgage Finance Bhd. v Time Engineering Bhd. [1996] 2 MLJ 12. Edgar Joseph Jr FCJ delivering the judgment of the Court, after considering s 88 of the Ordinance stated at pg 25:
“ Part V of the Land Ordinance provides for a modified Torrens system of land registration in Sabah and this section corresponds to the provision necessary in this system to ensure that no title to interests in land shall pass until the dealing has been registered. The language employed is somewhat different from that used in the majority of systems in use in the Commonwealth. The usual provision is to the effect that no instrument shall be effectual to pass any interest in land without registration and that, upon registration, the interest shall pass. See s 27 of the Land Titles Ordinance 1956 of Singapore for an illustration, and also the reference to the number of jurisdictions in which this provision exists set out in p 116 of Hogg’s Registration of Title to Land Throughout the Empire. In nearly all jurisdictions, however, notwithstanding variations in the language used, it has been held that these provisions do not render unenforceable contracts or agreements which would lead up to the execution and registration of instruments. Even the unregistered instrument itself may give a title in equity and an equitable right to enforce the agreement which must have existed between the parties when the instrument was executed. See Abigail v Lapin [1934] AC 491. Section 4 of the Selangor Registration of Titles Regulation 1891 employed what is probably the most sweeping language used in these provisions. That section provided that land comprised in a grant shall not be capable of being dealt with except in accordance with the statutory provisions and that ‘any attempt’ to deal with land except in this manner ‘shall be null and void and of none effect’. Nevertheless, in Haji Abdul Rahman v Mohamed Hassan [1971] AC 209; 1 FMSLR 290, the Judicial Committee of the Privy Council held that an agreement, not in registrable form, to transfer back certain land upon a certain contingency happening, while ‘valueless as a transfer or burdening instrument’ (at p 215) was good as a contract. It was said that it was not an ‘attempt to transfer, but a conditional promise to transfer’ (at p 214).
The language of s 88 is not nearly as sweeping as that of the Selangor provision. Moreover, its effect is confined to a new title or a dealing with, claim to, or interest in land. Following the foregoing authorities, and others too numerous to mention, in my judgment s 88 does not affect contracts or agreements otherwise valid and enforceable. As was pointed out in Abigail’s case (at p 500), the provision for protection of unregistered interests by caveats shows that the legislation does not attempt to render all unregistered interests non-existent. What it does, is to prohibit the acquisition of a legal estate or interest in land except by registration of an instrument in the statutory form. Section 116 of the Land Ordinance of Sabah makes the usual provision for caveats which may be registered ‘by any person claiming to be entitled to any interest’ in any land. Obviously, such a provision is inconsistent with any interpretation of s 88 which involves holding that any agreements or other documents affecting land are of no effect and that only registration of the dealing in the land is to have legal validity at all.
For these reasons, I hold that s 88, notwistanding the variation in language from that used in most jurisdictions, does not render this agreement for a lease invalid or unforceable.”
On the above authority it is our view that even though on the date of execution of the 1989 Agreement the 2nd and 3rd Appellants did not have any registered right or interest in the subject land that does not render the agreement which is otherwise valid and enforceable to be void or invalid. We hold that 2nd and 3rd Appellants at the material time have sufficient interest in the subject land to enter into a binding agreement by which they agreed to transfer the subject land when the title or interest in the subject has been registered in their names. In other words the parties agreed that the agreement will only become enforceable the moment the 2nd and 3rd appellants’ right or interest in the subject land is registered under the Ordinance. We find no difficulty with such an arrangement. For the above reasons we find no merit in the first ground canvassed before us by the Appellants.
The second ground was that at the material time the 2nd Appellant was an undischarged bankrupt and as such the 2nd Appellant had no legal capacity to sell the subject land. This is so because under the Bankruptcy Act 1967 (the Act) all his property, including the subject land, vests on the Official Assignee (OA) upon him being adjudged a bankrupt on 14.10.1978. And as such only the OA has the capacity to enter into the agreement for the benefit of the creditors.
In support of his argument learned counsel for the Appellants relied on s 24(4) of the Act which reads:
“24. Adjudication of Bankruptcy
(4) When a debtor is adjudge bankrupt his property shall become divisible among his creditors and shall vest in the Official Assignee.”
Having considered the grounds relied upon by the learned Judge we agree with the reasons advanced therein. Like the learned Judge we are of the view that s 24(4) has no application in the present case as the subject land at the material time could not qualify as property that is capable of being divisible among the creditors of the 2nd Appellant. For it had not been registered in the name of the 2nd Appellant. Furthermore no premium had been paid in respect of the subject land. In our view it was for all intents and purposes still state land. Under s 88 of the Ordinance, cited earlier, no title to land shall be valid until it is registered in accordance with part V of the Ordinance.
Further s 24(4) of the Act has to be read subject to the Land Ordinance, the law governing the property in question. In Re Chua Tin Hong (Ex-parte Castrol (M) Sdn Bhd [1997] 3 CLJ 174 Augustine Paul JC (as he the was) had correctly stated the position where he observed that:
“ s 24(4) of the Bankruptcy Act 1967 must be interpreted as being qualified by s 349 of the Code (National Land Code) as far as land is concerned. As s 24(4) of the Act is subjected to the specific requirements of s 349 of the Code it follows that the title to or interest in property of the Official Assignee which consists of land will vest and divest only on registration and if the Bankrupt had transferred his interest in land to some person who had registered the transfer before any transmission was registered by the Official Assignee then the bankrupt’s interest would, notwithstanding his bankrupt, have passed to such person (see Messiter v Wollerman & Freeman [1970] 27 NZLR 589.”
In this case the OA had not taken step to intervene or to register his interest in the subject land under the Ordinance. In the circumstances we hold that the 2nd Appellant’s right or interest in the subject land is not in any manner affected by his bankruptcy.
The other issue raised before us is the non payment of the purchase price as agreed in the 1989 Agreement. In his submission learned counsel for the Appellants drew our attention to the evidence of 2nd Respondent with regard to the same. He said during the trial the 2nd Respondent gave evidence that he had in his possession payment vouchers to prove that the purchase price had been paid. However he said these vouchers were never produced or admitted in evidence. In the circumstances, the court ought to have drawn an adverse inference against the Respondents for failure to produce the vouchers.
The learned judge in his judgment dealt with this point both on the evidence and on the pleading and came to his finding that there is no merit in the Appellants’ contention. In his judgment he stated:
“ And in any event the 2nd Plaintiff (PW.1) on one hand gave evidence that he had paid the purchase price. He attempted to show the payment vouchers in Court. On the other hand the 3rd Defendant (DW.4) denied receiving any payment. He also took the position that the sale was only the timber in the subject land.
Having considered these two diametrically opposite testimonies I am inclined to believe PW.1. I find it difficult to accept the evidence of DW.4 as he seemed to deny knowing even the contents of the Sale and Purchase Agreement dated 01/02/89. At the same time he said that he could only read Jawi. However, it is pertinent to note that when DW.4 came to sign the documents in the office of PW.3 the 2nd Defendant was with him. And there was no allegation that the 2nd Defendant was equally illiterate. Incidentally, the averment as to what was the subject of the transaction as between the 2nd Plaintiff and the 2nd and 3rd Defendants was not pursued. In fact the allegation of fraudulent misrepresentation was abandoned.
I am also inclined to agree with the learned counsel for the Plaintiffs that the issue of non-payment of the purchase price was not pleaded by the Defendants in their defence. And litigants are bound by their pleadings. (See: State Government of Perak v Muniandy [1986] 1 MLJ 490; Grimstern Corporation (M) Sdn. Bhd. & Anor. v Global Insurance Co. Sdn. Bhd. [1987] 1 MLJ 302 SC). On this score as well that I am unable to accept the argument of the Defendants on this Issue.”
And he went to hold that there was no merit in the contention of the Appellants.
On this issue it is necessary to go back to the terms of the 1989 Agreement. Clause 1 thereof stipulates as follows:
“ In consideration of the terms and conditions hereinafter mentioned, the Vendors agree to sell and the Purchaser agree to buy the said land at the purchase price of Malaysian Ringgit: One Hundred Thousand (M$100,000.00) only.
The said purchase price shall be paid as follows:
(a) Malaysian Ringgit Two Thousand (M$2,000.00) only on the signing of this Agreement;
(b) The final balance of Malaysian Ringgit Ninety Eight Thousand (M$98,000.00) only within sixty (60) days from the date of signing this Agreement.
Provided that if the Purchaser fail to pay the payment mentioned under Clause 2(b) on the due date, the Vendors shall give two (2) weeks’ written notice to the Purchaser to pay the same and should the Purchaser fail to pay after the expiry of the said notice, the Vendors shall be entitled to cancel this Agreement and forfeit whatever payments made by the Purchaser under this Agreement.”
Under the said Clause it is thus incumbent on the purchaser to pay the balance of purchase price within 60 days from the date of the signing of the Agreement. The proviso to the Agreement sets out what need to be done by the Vendors should the Purchaser fail to pay up within the stated time, that is, to give the Purchaser 2 weeks written notice. In the event the Purchaser fail to comply with the notice then the Vendors are entitled to cancel the Agreement. There is no evidence that such a notice had ever been issued by the Appellants. PW3, the solicitor who attended to the Agreement gave evidence that he never received any complaint from the Appellants that the purchase price for the subject land had not been paid. In the circumstances, we find there is ample evidence to support the finding of the learned trial Judge that, on the balance, the evidence of the 2nd Respondent is to be preferred to that of the Appellants. In any case this is a finding of fact which the appellate court would normally be most reluctant to interfere unless the finding is perverse and not supported by the evidence before the court. (see Leong Huat Sawmill (Pte) v Lee Man See [1985] 1 MLJ 47; Hussaina Rani i/k Naina Mohamed (suing as widow of Naina Mohamed, deceased v Ahmad Nazri Kamaruddin & Anor [1997] 2 MLJ 534.
For the above reasons we dismissed the Appeal herein with costs and further ordered that the deposit be paid to the Respondents to account of costs.
Dated: 31 October 2006
( DATO’ ARIFIN BIN ZAKARIA )
Federal Court Judge
Malaysia
Counsel for Appellant: Hamid Ismail
Solicitors for Appellant: Messrs Sugumar & Co.
Advocates & Solicitors
8th Floor
Bangunan Pejabat Pos Besar
26 Jalan Tun Razak
88000 Kota Kinabalu
Counsel for Respondent: Liew Ting Ting
Solicitors for Respondent: Messrs Chin Lau Wong & Foo
Advocates & Solicitors
8th Floor
Wisma Harbour View, Slipway
P.O. Box No. 898
90710 Sandakan, Sabah