Back
2021 MarsdenLR 2464
COURT OF APPEAL PUTRAJAYA
SO THIAN WAN – Appellant
Versus
TAN SOON TEIK – Respondent
[Civil Appeal No: J-02(NCvC)(W)-49-01/2019]
In cases of shares held on trust, the beneficial owner has the right to recover dividends if the trustee has not paid the purchase price.
Headnote:(A) Companies Act 2016 – Section 20 – Appeal against partial disallowance of reliefs – Claim for repayment of dividends and friendly loans – Plaintiff claimed as beneficial owner of 75,000 shares and sought repayment of dividends totaling RM474,000.00 and additional loans of RM814,360.00 – The Judge dismissed this claim, finding contradictions in the Plaintiff's pleadings but failed to adequately recognize the Defendant's admissions regarding the dividends and loans – Appeals Court found that the Judge misdirected himself and warranted intervention. (Paras 19, 51, 52)
(B) Trust and Unjust Enrichment – Shares held on trust – The Defendant was found to hold shares on trust for the Plaintiff, thereby establishing the Plaintiff's right to recover the dividends paid to the Defendant. (Paras 10, 14)
JUDGMENT
Introduction
[1] This is an appeal by Mr So Thian Wan ("the Plaintiff") against that part of the decision of the learned Judge ("the Judge") dated 9 December 2018 which disallowed some of the reliefs, namely, para 13 (d) and (e) of the Statement of Claim, which the Plaintiff had sought against Mr Tan Soon Teik ("the Defendant") in Suit No JA-23NCVC-7-02/2017 ("Suit 7"). For his part, the Defendant had filed a Counterclaim against the Plaintiff. After a full trial, the Judge allowed prayers 13 (a),(b),(c),(f),(g) and (h) of the Statement of Claim and dismissed the Defendant's Counterclaim. There is no appeal by the Defendant against the dismissal of the Counterclaim, or a cross appeal against that part of the decision and reliefs granted, which were in favour of the Plaintiff. Hence, this judgment will be confined solely to that part of the judgment of the High Court which disallowed part of the Plaintiff's claim.
The Claim
[2] The case concerned 75,000 shares in a company called Branxon Inter Deco Sdn Bhd (No. Syarikat: 829978-W) ("the Company") which were registered in the Defendant's name. According to the Plaintiff, he had paid a sum of RM500,000-00 for the entire paid-up capital of the Company. He was the major shareholder (and a director) in the Company. The Plaintiff offered the Defendant an opportunity to invest up to 15% of the shareholding in the Company. The Defendant had no funds. The Plaintiff gave a friendly loan of RM75,000-00 to the Defendant for the purpose of allotment of 15% shareholding in the Company to the Defendant.
[3] The Plaintiff's case was that the friendly loan of RM75,000-00 was given on the condition that it must be repaid upon demand. In the event the Defendant failed, refused and/or neglected to repay upon demand, then the Defendant shall forthwith retransfer his 15% shareholding to the Plaintiff. Thus, after the Defendant became a shareholder of the Company, the shareholding structure was as follows: Plaintiff (275,000 shares - 55%), So Wee Lim (Plaintiff's son) (75,000 shares - 15%), So Lay Kheng (Plaintiff's daughter) (75,000 shares - 15%), and the Defendant (75,000 shares - 15%). The Plaintiff ("PW1") and his daughter, So Lay Kheng ("PW2") testified during the trial. The Defendant ("DW1") testified on his own behalf.
[4] The Defendant was employed as a project manager in the Company. He was also a director of the Company. It is alleged that he was paid dividends for the financial years from 2013 to 2016. The amount of dividends which was said to have been paid to the Defendant was RM474,000.00.
[5] As a result of the Defendant's breach of his terms of employment as a project manager, the Company had via a letter dated 22 October 2016 forthwith terminated the Defendant's employment with the Company. In the said letter of termination, the Company also gave notice of the Defendant's breach of duty as a director to the Defendant. The Defendant accepted the said letter of termination without objection. The Defendant also resigned voluntarily as a director of the Company via his letter of resignation dated 20 October 2016. Based on the Defendant's termination of employment and resignation as director, the Plaintiff demanded repayment of the friendly loan of RM75,000-00 via his solicitors', Messrs KC Tho & Partners' letter dated 14 November 2016.
[6] However, the Defendant failed refused an/or neglected to repay the friendly loan of RM75,000-00 and to retransfer his 15% shareholding to the Plaintiff. Further, the Company paid the Defendant 15% dividend totalling RM474,000-00 for the financial years 2013, 2014, 2015 and 2016.
[7] The Plaintiff's case is that since the Plaintiff is the beneficial owner of the Defendant's shareholding, the 15% dividend totalling RM474,000-00 must be repaid to the Plaintiff. Further, the Plaintiff also gave the Defendant 15% loan/additional dividend in the sum of RM474,000-00 and friendly cash loan in the sum of RM340,630-00.
[8] The Plaintiff filed S
