The absence of a valid and registrable memorandum of transfer prevents the operation of a bare trustee doctrine in property transactions.

Richard Malanjum J:

By way of an originating summons dated 30 January 1999 (encl. 1) the plaintiff prays for the following relief, to wit,:

(a) For an Order that the Memoranda of Charge under Memorial Nos. 30195392, 30195391 and 30195393 registered against the title deed numbered CL 105477076 (Parent Title No. CL 10544787) be set aside;

(b) For an Order of Declaration that the Memoranda of Charge under Memorial Nos. 30195392, 30195391 and 30195393 are null and void;

(c) For an Order that the charge under Memorial Nos. 30195392, 30195391 and 30195393 be vacated from the original and the issue copy of the title deed numbered CL105477076;

(d) For an Order that the Registrar of Titles do vacate the charge under Memorial Nos. 30195392, 30195391 and 30195393 from the Register of Charge;

(e) The costs of this application be borne by the 1st Defendant; and

(f) Such other reliefs as this Honourable Court may deem fit.

The application is supported by the affidavit of Hiew Min Chung affirmed on 28 January 1999 (Hiew's 1st affidavit) and a subsequent affidavit in reply of Hiew Min Chung affirmed on 23 March 1999 (Hiew's 2nd affidavit).

The defendants, in particular the 1st defendant, are resisting the application. The 1st defendant filed an affidavit in reply affirmed by Lim Fong Mee on 12 February 1999 (Lim's 1st affidavit) and a further affidavit in reply also affirmed by Lim Fong Mee on 27 March 1999 (Lim's 2nd affidavit).

There is no serious dispute on the background facts of this case. Briefly, the 2nd defendant, namely, Hiew Fook Realty (Holdings) Sdn. Bhd. (HFR) was the property developer of a housing estate known as Taman King Fook (the said Taman) which comprised of terraced shop houses and dwelling houses on a parcel of land with parent title no. CL 105344787 (the said land). By a sale and purchase agreement dated 24 October 1983 one Hiew Min Chu & Sons Sdn. Bhd. (HMC Sdn. Bhd.) purchased from HFR one unit of shop-house in the said Taman described as Lot 7C and otherwise known as No. 1289, Taman King Fook, Jalan Utara, Tawau (the said property). The full purchase price was paid on 24 October 1983. But no memorandum of transfer was executed by HFR in favour of HMC Sdn. Bhd. or its nominee.

Subsequently, HFR proceeded to apply and obtained a bridging loan from the 1st defendant, Borneo Housing Mortgage Finance Berhad (BHMFB) by way of creation of three charges on the said land that were duly registered on 15 February 1986 (the charges).

By a sale and purchase agreement dated 2 July 1991 HMC Sdn. Bhd. sold the said property to the plaintiff for a purchase price of RM80,000.

HFR defaulted in its payment for the bridging loan and in fact went into receivership. As a result thereof BHMFB has proceeded to commence action to enforce the charges duly encumbered on the said land which are now subdivided into various lots. The plaintiff opposed the action and hence this present application.

In advancing the case for the plaintiff learned counsel submitted two points, namely, that the 2nd defendant, HFR, was a bare trustee for HMC Sdn. Bhd. at the time of the creation of the charges and hence had no title, right or interest whatsoever in the said property to create the charges in favour of BHMF; and that BHMF had actual notice of the interest of HMC Sdn. Bhd. the plaintiff's predecessor, on the said property and thus would be unconscionable in equity for it to have taken the said property as part of the security for the charges.

For the defendants, in particular the 1st defendant, it was contended that the principle enunciated in the case of Borneo Housing Mortgage Finance Bhd v. Time Engineering Bhd . should apply. In that case his Lordship Edgar Joseph Jr. FCJ accepted the principle that for the doctrine of bare trustee to set in two conditions must be met, namely, that the full purchase price for the property must have been paid and that the vendor must have given to the purchaser a duly executed valid and registrable memorandu