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2022 MarsdenLR 2995
HIGH COURT MALAYA KUALA LUMPUR
DATO PB ASHO PB KRISHNAN PILLAI & ORS – Appellant
Versus
AZRIN FAZRINA JAMRI & ANOR – Respondent
[Suit No: WA-22NCC-357-08/2020]
A trust can arise through the conduct of parties, where the intent to establish beneficial ownership is evident despite inadequate formal documentation; a constructive trust serves to prevent unjust enrichment.
Headnote:(A) Trust Law – Resulting Trust – Constructive Trust – Breach of Trust – The Plaintiffs claimed Azrin breached a trust concerning 1,350,000 shares of Cyberlynx held on their behalf, while Nathan was implicated for fraudulent misrepresentation and breach of agreement. The court found the existence of a Trust Agreement provable on the balance of probabilities, holding that Azrin was obligated as a trustee, failing to pay adequate consideration. Consequently, she was deemed to hold the shares on constructive and resulting trust for the Plaintiffs. (Paras 34-36, 60-86)
(B) Illegality – The issue of the alleged 30% Bumiputura requirement was dismissed as lacking merit, with the court affirming that there was no illegality in the Trust Agreement nor public policy concerns that would bar the Plaintiffs’ claims. (Paras 61-66)
Facts of the case: The dispute arose over the ownership and management of Cyberlynx shares, transferred to Azrin under an implied trust that she denied during litigation. Nathan fraudulently misrepresented the protection of the Plaintiffs' interests in the shares. (Paras 1-37)
Findings of Court: The court ruled that Azrin held the shares on trust for the Plaintiffs and that her actions, along with Nathan’s, constituted breaches of trust. The Plaintiffs were entitled to restitution and damages. (Paras 26-38, 86)
Issues: The main questions included whether a Trust Agreement existed, if Azrin breached it, and if Nathan's actions amounted to fraudulent misrepresentation. (Paras 8-11)
Ratio Decidendi: The court found a trust existed based on the conduct and intent of the parties despite the lack of formal documentation, confirming the principles governing constructive and resulting trusts as applicable. (Paras 26-28)
Result: The court ruled in favor of the Plaintiffs, ordering restitution of the shares and awarding damages. (Para 86)
JUDGMENT
Introduction
[1] In this action, the Plaintiffs' claim against the 1st Defendant ("Azrin") is for breach of trust of 1,350,000 shares in Cyberlynx International Sdn Bhd ("Cyberlynx") transferred to her on trust and as nominee for the Plaintiffs and another 1,350,000 shares in Cyberlynx International Sdn Bhd ("Cyberlynx") allotted to her by capitalising monies owed to the Plaintiffs by Cyberlynx on trust and as nominee for the Plaintiffs whilst the claim against the 2nd Defendant ("Nathan") is for breach of agreement, fraudulent misrepresentation, inducing and dishonestly assisting the 1st Defendant in breach of trust causing loss to the Plaintiffs and depriving them of the Cyberlynx shares.
[2] The Defendants denied the claim.
[3] During trial conducted virtually online by using the Zoom video conferencing platform lasting 9 days, the Plaintiffs called two witnesses - the 1st Plaintiff ("Ashok" interchangeably, "1st Plaintiff") and the 2nd Plaintiff ("Frank" interchangeably, "2nd Plaintiff"), whilst both Defendants testified.
[4] I had on 11 January 2022 allowed the Plaintiffs' claim. This judgment contains the reasons for my decision.
Background
[5] The undisputed facts are:
5.1 Cyberlynx International Sdn Bhd ("Cyberlynx") is a company incorporated pursuant to the laws of Malaysia, and is in the business of providing private higher education services;
5.2 Cyberlynx owns and runs a private higher education institution by the name of Cyberlynx International College based at 27, Jalan RU 7/1, Seksyen 7, 46050 Petaling Jaya, Selangor Darul Ehsan;
5.3 Cyberlynx International College's registration was renewed from 18 March 2018 to 17 March 2023;
As at 30 October 2007, the total issued and paid up capital of Cyberlynx was RM525,000.00 divided in 525,000 shares of RM1.00 each. The shareholding structure of Cyberlynx then was as follows;
i) Mohd Ali bin Che Ramlee: 150,000 shares (28.6%)
ii) Dato' Ashok: 262,500 shares (50%)
iii) Frank: 87,500 shares (16.6%)
iv) Tuck Cheong: 25,000 shares (4.8%)
5.5 In or about 26 December 2007, Ashok transferred 162,500 Cyberlynx shares to Frank;
5.6 On 1 April 2011, Cyberlynx allotted an additional 525,000 shares of RM1.00 each to the existing shareholders, thereby increasing the total paid up shares of Cyberlynx to 1,050,000 shares. The shareholding structure of Cyberlynx as at 1 April 2011 was as follows:
i) Mohd Ali bin Che Ramlee: 300,000 shares (28.6%)
ii) Ashok: 200,000 shares (19%)
iii) Frank: 500,000 shares (47.6%)
iv) Tuck Cheong: 50,000 shares (4.8%)
5.7 On 1 July 2012, Cyberlynx allotted an additional 300,000 shares of RM1.00 each to Ashok, Frank and Tuck Cheong, thereby increasing the total paid up shares of Cyberlynx to 1,350,000 shares. The shareholding structure of Cyberlynx as at 1 July 2012 was as follows:
i) Ashok: 642,857 shares (47.62%)
ii) Frank: 642,857 shares (47.6%)
iii) Tuck Cheong: 50,000 shares (4.8%)
5.8 On 20 July 2016, Ashok transferred the remainder 237,857 (17.62%) Cyberlynx shares to Monisha;
5.9 Nathan is a director Mission Equities Sdn Bhd ("Mission Equities"), and a shareholder holding 90% of the issued and paid up shares in Mission Equities;
5.10 Nathan is the directing and controlling mind of Mission Equities;
5.11 Nathan agreed to invest in Cyberlynx through his company known as Mission Equities;
5.12 The Plaintiffs (with the exception of Ashok), Azrin and Cyberlynx entered into a Shareholder's Agreement with Mission Equities on or about 12 July 2019 ("SHA")
5.13 Pursuant to the terms of the SHA, Mission Equities was meant to invest a sum of RM1.5 million in Cyberlynx as subscription monies for the purchase of 3,150,000 shares in Cyberlynx, equivalent to 70% of the equity of Cyberlynx, in the following manner:
i) A sum of RM750,000.00 on the Close Date of the SHA Agreement;
ii) A sum of RM375,000.00 upon Cyberlynx obtaining the Malaysian Qualifications Agency's approval for the Diploma in Veterinary Technology Programme; and
iii) A sum of RM375,000.00 upon Cyber
