JUDGMENT

Lord Brightman:

The issue on this appeal is whether the Federal Court of Malaysia was entitled to reverse the decision of the trial Judge on a question of fact, thereby rejecting the evidence of two witnesses who were accepted by the trial Judge as witnesses of truth. The question of fact was whether the purchaser of shop premises in 1954 (to be more precise, his family company in whose name the purchase was taken) became the beneficial owner thereof in accordance with the ostensible title; or whether the purchaser constituted himself or his family company a trustee for the benefit of himself and his two business associates and the trading company which was formed to take over their business activities. The purchaser died five years after the purchase was made. Thirteen years later the younger of the two surviving business associates, who or whose family had come to own the trading company, with the assistance of the evidence of his former partner, claimed that a trust had been created at the time of the purchase. They gave evidence to the trial Judge of an orally constituted trust. Such evidence was admittedly totally inconsistent with the documentary evidence of a circumstantial nature extending over much of the intervening period. There is no suggestion that the documentary evidence was in any way fabricated or falsified. The trial Judge accepted the oral testimony of the two surviving business associates, despite its inconsistency with the circumstantial documentary evidence. The Federal Court, well conscious of the prima facie difficulty and unwisdom of reversing a trial Judge on a matter of fact deposed to by witnesses whom the trial Judge had seen and heard nevertheless considered that such a course was in the circumstances proper to be taken. The trading company now appeals to this Board in an attempt to restore the order of the trial Judge.

The convenient course will be to refer first to the documentary evidence and other undisputed facts, before turning to the oral evidence of the two surviving business associates by whose testimony the trial Judge was persuaded.

The three business associates were Yap Fook Sen ("Yap"), Tan Phang Nam ("Tan") and Yong Nyee Fan ("Yong"), all of whom lived at Ipoh. They were Chinese businessmen. Yap and Tan carried on business as cloth merchants at 65 Hugh Low Street, Ipoh, under the name of Kim Guan & Co. Yong and his family had interests in property through a family property company known as Yong Nyee Fan & Sons Ltd., now called Yong Nyee Fan Sendirian Berhad. This company is the respondent to the appeal, and will be referred to as the "Property Company".

In 1954 discussions took place between Yap, Tan and Yong as to the possibility of carrying on business at shop premises at 26 Hugh Low Street, Ipoh which were then owned by Chin Thin Voon. The title was registered. The premises were in the occupation of Thong Sang Woh, who paid the registered proprietor a monthly rent of RM220.

On 28 October 1954 the property was transferred by the registered proprietor to the Property Company in consideration of a purchase price of RM35,000 paid by the Property Company.

On 30 November 1954 the tenant Thong Sang Woh wrote a formal letter to the Property Company expressing his desire to surrender the premises to the Property Company to enable them to be let to the Kim Guan Company. This followed an agreement made by Yap and Tan with the tenant under which he would vacate the premises on payment of RM19,000. This sum was paid by Yap and Tan.

Yap and Tan, carrying on business as the Kim Guan Company, went into occupation of the premises at the beginning of January. On 12 February 1955, a company was incorporated with the name Kim Guan & Co. Ltd., now called Kim Guan & Company Sendirian Berhad. This will be called the "New Company". It had a capital of RM500,000 divided into 50,000 shares of RM100 each. The subscribers to the Memorandum of Association were Yong, Tan and Yap, who were also named as the fi