The deed of mutual covenant is enforceable, establishing a trust in favor of the beneficial owner, despite claims of non est factum by the defendants, whose testimonies were deemed unreliable.

Introduction

[1] This court begins by observing that the defence of non est factum, while this doctrine existed at least as early as 1584, now no longer enjoys the same credibility in modern age legal disputes. This doctrine is of limited application mainly because of the uphill task of proving one. It is reserved for truly exceptional circumstances, such as where a party is illiterate, blind, or under a fundamental misapprehension as to the nature of the document signed, typically due to misrepresentation. It applies only in rare cases involving persons of full capacity and will not assist those who fail to take reasonable steps to understand a document's nature. Courts today are rightly cautious, if not outright sceptical, in accepting such a plea, particularly where parties have the ability and opportunity to understand what they are signing.

[2] In this case, the defendants are not wholly inexperienced or ignorant of their rights. The 1st defendant may have been formally educated only up to standard six, but she is not unfamiliar with legal documents. The 2nd defendant is a businessman with pre-university education and experience running a commercial enterprise. In such circumstances, this court is not easily persuaded that they lacked the capacity or understanding to execute a straightforward deed of mutual covenant, which was explained to them by a lawyer.

Background Facts

[3] The plaintiff, an accountant, financed his friends' textile business, but when their business could not sustain and could not repay the plaintiff's debt, it led to the plaintiff allegedly purchasing the disputed property in his sister's name, who is the 1st defendant, to enhance their business credibility. The 2nd defendant is the plaintiff's brother-in-law, who is the 1st defendant's husband. The 1st defendant was at the material time running a small-scale tailoring business, assisted by the 2nd defendant. A deed of mutual covenant was signed on 14 January 2004 to secure the plaintiff's interest, but the defendants now deny its validity.

Plaintiff's Submission

[4] The plaintiff asserts that he is the beneficial owner of the property at No 55, Jalan Sultan Yusuff, Ipoh, despite it being registered in the defendants' names. He argues that the defendants hold the property in trust for him, as established by a deed of mutual covenant signed on 14 January 2004. The plaintiff claims he facilitated the purchase of the property by paying the differential sum, becoming a co-borrower for the loan, and also financing the defendants' business. He alleges that the defendants breached their agreement to pay him rent and share business profits, leading to his claim for RM212,000.00 in unpaid rent and the transfer of the property. The plaintiff contends that the defendants have benefited from all that was provided and still refuse to honour their obligations under the deed of mutual covenant. The plaintiff dismisses the defendants' defence of non-est factum as baseless, emphasising that the document was signed in the presence of a lawyer, making its validity indisputable. He also argues that laches, acquiescence, and the Limitation Act are inapplicable.

Defendant's Submission

[5] The defendants deny the validity of the deed of mutual covenant, claiming they were unaware of its contents and did not sign it knowingly. They co