A trust can exist over a company's property if the controller's intention to create it is clear, despite the absence of a written deed, allowing the court to pierce the corporate veil.

Introduction

[1] The appellant, who is the plaintiff in the original suit, claims against the respondent (defendant) that the bungalow known as Lot B11, Garden Villa, Mile 6, North Road, Sandakan, Sabah held under Master Title No.CL 075477584 (bungalow) is held on trust by the respondent for the appellant and for the said bungalow to be transferred to the appellant's name.

[2] It was not disputed that the bungalow is registered under the respondent's name.

[3] The High Court found that no trust can be created over a company's property by a shareholder as the property of a company belongs to the company and not its shareholders or director and dismissed the appellant's claims. Hence, this appeal.

[4] For convenience, parties will be referred to as the plaintiff and the defendant as in the High Court.

Background Facts

[5] The defendant was incorporated on 30 August 1995 under the name of Merlipan Sdn Bhd. The shares of Merlipan Sdn Bhd were bought over by Lee Poh Sin and his wife, Low Nang Hiang and the name was changed to Ladang Merlipan (Sabah) Sdn Bhd on 26 October 1995. On 28 April 2009, Ladang Merlipan (Sabah) Sdn Bhd was changed to Ladang Sri Harapan (Sabah) Sdn Bhd.

[6] The plaintiff was a shareholder of the defendant and was a director of the company from 24 May 2005 until 12 August 2020.

[7] The other shareholder and director of the defendant was the sister of the plaintiff, Lee Yee Wuen, who testified for the defendant as DW2.

[8] Lee Poh Sin and Low Nang Hiang were the parents of the plaintiff and DW2. Lee Poh Sin passed away on 10 September 2018 (the deceased).

[9] The bungalow was purchased by the defendant from the developer on 13 August 2008 when the deceased was alive.

[10] The plaintiff pleaded that the bungalow was bought by the deceased for the plaintiff as a gift for his contribution to the family business as he would be spending more time in Sabah.

[11] It was further pleaded that the defendant was only holding the bungalow on trust for the plaintiff, the particulars of which were:

(i) The full purchase price was to be paid by the defendant;

(ii) All expenditure were to be paid by the defendant;

(iii) The plaintiff and his family had been staying in the bungalow as their matrimonial home since the delivery of its vacant possession;

(iv) No other employee had ever stayed in the bungalow except for his and DW2's parents when they came to Sandakan. There is a bungalow in the defendant's estate for the use of the directors of the defendant;

(v) The plaintiff was not paid any dividends or salary for his service to the defendant and to Kien Yiap Trading Sdn Bhd (Kien Yiap), a related company and a shareholder of the defendant;

(vi) The full purchase price for the bungalow and all expenses were paid by the defendant to be taken as company's expenses as decided by the deceased; and

(vii) The bungalow was bought for the plaintiff after his and DW2's parents considered that they had bought houses for DW2.

[12] The plaintiff alleged that after the deceased passed away, DW2 took control of the defendant and Kien Yiap and launched a series of Court actions against the plaintiff and Low Nang Hiang (PW2) to take complete control of all the business set up by the deceased and PW2.

[13] DW2 as a director of the defendant, ceased to pay for the expenditure of the said bungalow and had by email date