JUDGMENT

Nihrumala Segara Mk Pillay JCA:

Majority

The respondent (defendant company) is a private registered company principally involved in civil engineering works and general building contracts. It was incorporated in 1979. The defendant company had three shareholders and directors, namely: i) the appellant, Cheu Kuok King (plaintiff), (ii) Datuk Mazelan Bugo and (iii) Chang Yi Ping. Initially, the said three shareholders and directors were jointly running (managing) the defendant company. However, Chang Yi Peng decided to migrate to Australia and the defendant company was then left to run with the plaintiff and Datuk Mazlan Bugo. In doing so, both of them had different opinions in certain matters. The plaintiff felt it was in the best interest of the defendant company that he should talk it over with Chang Yi Peng and Mazlan Bugo. It was then decided that only one director should have full power to run the defendant company. In the circumstances, the plaintiff chose to resign as a director and the three shareholders then entered into a discussion on 9/8/90 as to the distribution of the assets (and liabilities) of the defendant company upon the plaintiff's resignation as a director.

The minutes of this meeting on 9/8/90 recorded, inter alia , that the defendant company would transfer a shop house known as Lot 199 Sect 11 KTLD to the plaintiff upon certain conditions, which would be alluded to later in this judgment. A Trust Deed for Lot 199 was prepared by the plaintiff's lawyers. It was signed and returned by the defendant company's directors in January 1991. A second Trust Deed in almost similar terms was prepared by the plaintiff's lawyers and signed and returned by the defendant company's directors in May 1991.

Wong Han Yong (PW3), the common solicitor acting for the parties at the material time, testified in his witness statement (WSP W3), inter alia :

3. I was previously practicing.............................

On or about 09. 08. 1990, I was invited to the directors and shareholders meeting of the Defendant together with Steven Yong wherein the Plaintiff, Chang Yi Ping and Datuk Haji Mazlan Bugo were all the previous directors and shareholders of the Defendant. I was there as the common solicitor and observer/witness of the meeting together with Steven Yong. The minutes of the meeting was noted by Steven Yong.........

4. The purpose of the meeting was to discuss the distribution of the Defendant's assets in view of the fact that the previous two directors and shareholders, the Plaintiff and Chang Yi Ping were retiring from the Defendant. Being the parties' common solicitor ............knew for a fact the true arrangement amongst the parties at the meeting.

5. In respect of the Plaintiff, the arrangement between himself and Datuk Haji Mazlan Bin Bugo was that the Plaintiff was to transfer all of his shares in the Defendant to Datuk Haji Mazlan Bin Bugo plus the Plaintiff is liable to pay 30.7% of the Old Jurudaya's liabilities in accordance with the proportion of his shareholding in the Defendant and in return the Defendant was to transfer Lot 199 Section 11 KTLD to the Plaintiff. A purpose of the trust deed was to grant the Defendant with a grace period of six months to settle the account with the Bank of Commerce Bhd then in respect of the charge in escrow. Furthermore, the Defendant was not the registered proprietor of Lot 199 yet at the time ..............

6. In discharging my duty as the common solicitor for the parties, I duly prepared the necessary instruments to effect the arrangement between the parties .................

7. I went on to prepare the first Trust Deed ...................

The first Trust Deed was drafted on the basis that Lot 199 had not been transferred to the Defendant from WAB Keluarga Realty Sdn. Bhd............The first Trust Deed was sent to the Defendant for its execution on 28.08.1990 via my previous firm's covering letter. The first Trust Deed was executed without the common seal of the Defendant.

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