A company’s assets are distinct from those of its shareholders, thus establishing a trust for property owned by a company on behalf of a shareholder requires clear evidence of intention, which was not demonstrated in this case.

JUDGMENT

Celestina Stuel Galid J:

Introduction

The Subject Matter Of The Dispute

[1] The subject matter of the present dispute was the property known as Lot B11, Garden Villa,Mile 6, North Road, Sandakan ("the Bungalow") which was registered in the defendant's name.

[2] The plaintiff was at all material times, a shareholder of the defendant and was a director of the company from 24 May 2005 until 12 August 2020.

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

[4] By this action, the plaintiff sought for declarations, including that the Bungalow was held in trust by the defendant for the plaintiff and that the plaintiff was the beneficial owner of the Bungalow.

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 the late Lee Poh Sin ("the deceased") and his wife, Low Nang Hiang (PW2). They werethe parents of the plaintiff and DW2. The deceased who passed away in 2018, waspreviously and until his passing, also a shareholder and director of the defendant.

[6] On 26 October 1995, the name of the defendant was changed to Ladang Merlipan (Sabah) Sdn Bhd and subsequently to the present name on 28 April 2009.

[7] The Bungalow was purchased by the defendant from the developer on 13 March 2008 when the deceased was still alive.

The Plaintiff's Claim

[8] 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.

[9] 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 expenditures 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 hadever stayed in the Bungalow except for his and DW2's parents when they visited Sandakan;

(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 share holder 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 theyhad bought houses for DW2.

[10] 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 to take complete control of all the business set up by the deceased and PW2.

[11] DW2 acting as director of the defendant ceased to pay for the expenditures of the Bungalow and in March 2020, demanded for its keys.

The Defendant's Defence

[12] The defendant denied the plaintiff's allegations and pleaded that the Bungalow was bought by the defendant as an investment and for the use of all directors of the defendant including their family members.

[13] As to the allegation that the plaintiff was not paid salary or dividend from the defendant or Kien Yiap, the defendant averred that in 2011,there was an agreement between the deceased, the plaintiff and DW2 that the respective directors would only draw their salary from a specific company even though they may be directors in the other companies. Since then, the plaintiff drew his from Perfect Oil Resources Sdn Bhd and DW2 from the defendant.

Issue/s To Be Tried

[14] The plaintiff has sought for the determination of the sole issue of whether the defendant had purchased and held the Bungalow on trust for the plaintiff.

[15] The defendant had framed the issue to be as whether the Bungalow purchased by the defendant could be treated as property belonging to the deceased.

Analysis And Findings

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