[1983] CLJ (Rep) Kheng Chwee Lian v.

Wong Tak Thong 195

KHENG CHWEE LIAN a

v.
WONG TAK THONG
FEDERAL COURT
WAN SULEIMAN FJ
GEORGE SEAH FJ b
HASHIM YEOP SANI FJ
[CIVIL APPEAL NO. 179 OF 1981]
28 JULY 1983

CONTRACT: Agreement regarding sub-division - Whether voidable - Misrepresentation

- Whether fraudulent. c
LAND LAW: Registration of undivided shares in land - Indefeasibility of title.
CIVIL PROCEDURE: Non-joinder of registered transferees - Effect - Jurisdiction against
transferees - Specific performance.
The appeal was from the decision of the High Court declaring the respondent to be the
d
owner of one-half of land in Kuala Trengganu held under KRM 991 and ordering sub-
division of the land so that the respondent would retain one-half and the appellant and
her five sons the other half, their shares to be adjusted accordingly. In 1954, the
appellants and the respondent executed a document called “Surat Perjanjian”, (“the first
agreement”), following which the respondent went into occupation of the front portion
of the land and erected a biscuit factory on it. In 1957, the parties executed another
e
agreement (“the second agreement”), sub-dividing the land, the respondent being given
the front portion measuring 90 x 33 feet, which area was stated to be sufficient to
accommodate the building on it. In fact it was less than the area already occupied by
the biscuit factory. Between 1967 and 1973, the appellant transferred to her five sons
undivided shares amounting to about two-thirds of the total area of the land, which
transfers were registered, and retaining about one-third. In 1973, the respondent lodged
f
a caveat against one-half share of the land. He took out a writ against the appellant.
None of the sons were made co-defendants to the action. At the hearing of the appeal,
leave was given to the sons to intervene pursuant to r. 64, Rules of the Federal Court,
1980.
Held:
[1] The second agreement was voidable at the option of the respondent and had been g
lawfully repudiated. The respondent was induced into signing the second agreement by
the misrepresentation regarding the area granted to him, which misrepresentation was
fraudulent within the meaning of s. 17(a) & (d), Contracts Act, 1950 (Revised 1974). Where
one party induces the other to contract on the faith of representations made to him,
anyone of which is untrue, the whole contract is considered as having been obtained
fraudulently. (ss. 10 & 13, Contracts Act; Pertab Chunder Ghose v. Mohendra Purkait h
[1888-89] 16 IA 233).

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a [2] The order of the trial Judge was wholly irregular insofar as it purported to affect the
registered title, share and interest of the interveners in the land when they had not been
made parties in the proceedings in the Court below. The trial Court had no jurisdiction
over any person other than those properly brought before it. (Ganapathy Chettiar v.
Periakaruppa Chettiar & Anor. [1962] MLJ 207; Brydges v. Brydges & Wood [1909] p.
187; Re Shephared [1890] 43 Ch D 131; Coleman v. Coleman [1920] p. 71).
b
[3] Therefore that part of the order directing that the respondent should be entitled to
one-half of the land should be set aside. Since the appellant was no longer the registered
owner of one-half share of the land, it was not possible for the Court to order specific
performance in accordance with the terms of the first agreement. On the other hand, ss.
13 and 18(3) of the Specific Relief Act, 1950 (Revised 1974) should have been invoked
by the respondent.
c
[4] The appeal of the interveners must be allowed and new order substituted declaring
the respondent beneficial owner of one-half undivided share in the land, and ordering
the appellant to transfer to the respondent all the undivided share registered in her name
and to pay compensation in respect of the deficiency, the Senior Assistant Registrar to
sign the transfer on default by the appellant. (ss. 13 & 18 (3), Specific Relief Act; Loh
d Koon Moy & Anor. v. Zaibun binti Syed Ahmad [1978] 2 MLJ 31).
Cases referred to:
Pertab Chunder Ghose v. Mohendra Purkait [1888-89] 16 IA 233
Ganapathy Chettiar v. Periakaruppan Chettiar & Anor. [1962] MLJ 207
Brydges v. Brydges & Wood [1909] 187
Re Shephared [1890] 43 Ch D 131
e Bhup Narian Singh v. Gokhul Chan Mahton [1933 - 34] 61 IA 115
Ong Chat Pang & Ors. v. Valliappa Chettiar [1971] 1 MLJ 224
Loh Koon Moy & Anor. v. Zaibun binti Syed Ahmad [1978] 2 MLJ 31
Legislation referred to:
Contracts Act 1950, ss. 13, 14, 15, 16, 17, (a), (d), 18, 19, 21, 22, 23
National Land Code 1965, s. 340(1)
f Rules of the Federal Court 1980, r. 64
Rules of the High Court 1980, O. 45 r. 8
Specific Relief Act 1950, ss. 13, 18(3)
Other sources referred to:
Halsbury’s Law of England (4th Edn.,) Vol. 26 p. 237 para. 501, 550
For the appellant - H.S. Lim; M/s. H.S. Lim, Teo & Partners
g For the respondent - To’Puan Mehta; M/s. Mehta & Co.

JUDGMENT
George Seah FJ:
This is an appeal from a decision of the High Court at Kuala Trengganu declaring that
h the plaintiff/respondent is the owner of one-half of the land now known as Lot 2080,
Mukim Chabang Tiga, Kuala Trengganu held under KRM 991 and ordering that the said
land be so sub-divided that the respondent should retain the area he now occupies plus

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[1983] CLJ (Rep) Kheng Chwee Lian v. Wong Tak Thong 197

an additional area so as to make up his total holding to be one-half of the entire area of a
the said land and that the remaining area should go to the defendant/appellant and her
five sons whose shares in the said land should therefore be adjusted accordingly.
At all material times the appellant was the registered owner of a parcel of land described
as AMT 1, Mukim of Kuala Trengganu. It is common ground that the said land is now
known as Lot 2080, Mukim Chabang Tiga, Kuala Trengganu held under KRM 991 and
b
contains an area of 1.533 acres, more or less.
On 12 May 1954 the appellant and the respondent executed a document called “Surat
Perjanjian”. The signature of the appellant was witnessed by her son, Soon Hup Cheng
and that of the respondent by Poh Yin Chun. Following the signing of this agreement
the respondent went into occupation of the front portion of the said land facing the
main road and erected a biscuit factory thereon with the knowledge and consent of the c
appellant. The respondent has had been in occupation of this portion of the said land
ever since.
It was the case of the respondent that by the agreement of 12 May 1954 (hereinafter
referred to as “the first agreement”) the appellant had agreed to sell to the respondent
one-half share in the said land for the sum of RM1,775 (Dollars one thousand seven
hundred and seventy five only) and this amount was duly received by the appellant. d
The appellant’s case was that the transaction was in fact a friendly loan made up of
RM1,500 as principal, RM270 as agreed interest and RM5 as petition-writer’s fee and
that the respondent misrepresented and induced her into signing the agreement on the
representation that the security for the loan should be in the form of a sale agreement.
The learned Judge accepted the version related by the respondent and rightly pointed
out that under the term of the first agreement the transaction was a jual putus and that e
the purchase price of RM1,775 was jelas or settled. There was no appeal by the appellant
against the conclusion reached by the learned Judge.
Next, on 23 October 1957 the appellant and the respondent purported to execute another
document (hereinafter referred to as “the second agreement”) in Bahasa Malaysia and
the relevant parts of the English translation certified by a Court Interpreter read as f
follows:
1. The First Party is the owner of a piece of land known as A.M.T. 1, Mukim of Kuala
Trengganu at around Balek Bukit. On 12 May 1954 the First Party entered into an
agreement with the Second Party selling half (½) share of the said land to the Second
Party.
2. Whereas the Second Party is in need of the land and it was found to be too narrow g
to be subdivided lengthwise and therefore it is not possible for both parties to use
the land to build houses. While both parties were discussing the Second Party chose
the front portion near the road as the Second Party urgently needed the said portion.
3. The Second Party agree to accept the said half share of the land facing the main road
with an area of thirty-three by ninety feet (90 x 33) enough to accommodate the
building only and the Second Party agree to give back to the First party the back h
portion measuring 90 x 33 feet without any reimbursement.

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a 4. The First Party acknowledged the renunciation of the front portion of the land
measuring 90 x 33 feet to the Second Party and the acceptance of the back portion
of the land measuring 90 x 33 feet.
The appellant’s case was that this second agreement cancelled and replaced the first
agreement and that the respondent was only entitled to an area measuring 90 x 33 feet
and not to one-half share of the said land. The case of the respondent was that he was
b induced by fraudulent misrepresentation into signing the second agreement. Alternatively,
it was contended that the second agreement was never intended as a cancellation and/
or replacement of the first agreement.
Having considered the conflicting testimonies given by the appellant and her witnesses
and that of the respondent the learned Judge said:
c In the circumstances I accept that the plaintiff (respondent) was tricked or misled into
signing the second agreement by Soon Hup Cheng (DW3) the defendant (appellant)’s son.
The plaintiff was not aware that he was giving up his bigger share in the land in return
for a ridiculously small area, which is not even enough to accommodate his existing factory.
It is noted that the original size of the factory was 94 x 38 feet, and with the extension
(vide amended plan dated 7 September 1957) its size became enlarged to 102 x 38 feet.
Yet the area purported to have been accepted by the plaintiff was only 90 x 33 feet
d
which means that part of factory is occupying areas not owned by him. I can’t accept
this as a deal which a reasonable man like the plaintiff, a fairly successful businessman,
would accept. Why should he when there was absolutely no rhyme or reason for him to
do so?
The learned Judge rejected the testimony of the petition-writer, Wan Mohd. bin Endut
e (DW1) that he explained the contents of the second agreement to both the appellant
and the respondent and that both signed in his presence, when the petition-writer could
not give a satisfactory explanation how he could remember so vividly this particular
incident which happened about 25 years ago.
Now, two or more persons are said to consent when they agree upon the same thing in
the same sense (s. 13 of the Contracts Act 1950) and consent is said to be free when it
f is not caused by:
(a) coercion, as defined in s. 15;
(b) undue influence, as defined in s. 16;
(c) fraud, as defined in s. 17;
g (d) misrepresentation, as defined in s. 18; and
(e) mistake, subject to s. 21, 22 and 23.
Consent is said to be so caused when it would not have been given but for the existence
of such coercion, undue influence, fraud, misrepresentation, or mistake (s. 14). “Fraud”
includes any of the following acts committed by a party to a contract, or with his
h connivance or by his agent, with intent to deceive another party thereto or his agent, or
to induce him to enter into the contract:
(i) the suggestion, as to a fact, of that which is not true by one who does not believe
it to be true;

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(ii) the active concealment of a fact by one having knowledge of belief of the fact; a
(iii) a promise made without any intention of performing it;
(iv) any other act fitted to deceive; and
(v) any such act or omission as the law specially declares to be fraudulent (s. 17).
“Misrepresentation” includes: b
(i) the positive assertion, in a manner not warranted by the information of the person
making it, of that which is not true, though he believes it to be true;
(ii) any breach of duty which, without an intent to deceive, gives an advantage to the
person committing it, or anyone claiming under him, by misleading another to his
prejudice, or to the prejudice of anyone claiming under him; and c
(iii) causing, however innocently, a party to an agreement to make a mistake as to the
substance of the thing which is the subject of the agreement (s. 18).
In the case of Pertab Chunder Ghose v. Mohendra Purkait [1888-89] 16 IA 233, Sir
Richard Couch in giving the judgment of the Privy Council said at p. 237:
Where one party induces the other to contract on the faith of representations made to d
him, anyone of which is untrue, the whole contract is, in a Court of Equity, considered
as having been obtained fraudulently ...
Under para. 3 of the second agreement there was clear misrepresentation of fact that the
existing biscuit factory was only occupying an area containing 90 x 33 feet when in actual
fact, the area occupied by the respondent at the relevant time was 94 x 38 feet. And on
e
7 September 1957 the respondent had submitted an amended building plan to the Town
Council applying for permission to extend the length of his factory by another 8 feet to
provide for living quarters for his family. In other words, by September 1957 the
respondent knew for a fact that the overall length of his biscuit factory would be 102
feet. Applying the principle enunciated in Pertab Chunder Ghose case to the facts of
this case, we agree with the finding of the learned Judge that the respondent was induced
f
by misrepresentation into signing the second agreement and in our view, the
misrepresentation was fraudulent within the meaning of s. 17(a) and (d) of the Contracts
Act 1950 (Revised 1974). It follows as a collorary that the respondent did not consent
to the execution of the second agreement within the meaning of s. 13 thereof. By virtue
of the provision of s. 19 of the Act the second agreement was voidable at the option of
the respondent, and the learned Judge was right in holding that, on the pleading, it had
g
been lawfully repudiated by the respondent. We are reminded of the principle that the
greatest respect should be paid to the findings of fact of a Judge of first instance, based
on seeing and hearing the witnesses and forming an estimate of their credibility. Since
learned Counsel for the appellant has been unable to show that the learned Judge in the
Court below had erred in any way, we do not wish to disturb his findings on this point.
Having disposed of the second agreement we come now to deal with the main substance h
of this appeal. It was not in dispute that after the execution of the first agreement and
following the issue of the land title of Lot 2080, Mukim Chabang Tiga, Kuala Trengganu

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a held under K.R.M. 991 the appellant had on various dates subsequent thereto transferred
to her five sons undivided shares amounting to about two-thirds of the total area of the
said land, full particulars of which are as follows:
a) On 14 May 1967 to Soon Hup Soon - 924/6677648)
b) On 14 May 1967 to Soon Hup Liam - 924/6677648) RM1,000
b c) On 21 April 1968 to Soon Hup Liong - 1848/6677648) RM2,000
d) On 15 March 1973 to Soon Hup Cheng - 2224651/6677648)
e) On 15 March 1973 to Soon Hup Seng - 2224651/6677648) - RM15,000
As a result of these transfers the appellant is presently the registered owner of 2224560/
c 6677648 undivided shares in the said land. In short, the appellant now owns approximately
one-third undivided share in Lot 2080, Mukim Chabang Tiga, Kuala Trengganu held under
KRM 991. On 25 April 1973 the respondent, having discovered these transfers, lodged a
caveat against one-half share of the said land, and instructed Counsel to take out a writ
against the appellant without making any of the five sons of the appellant as co-
defendants to the action. At the hearing of this appeal leave was given to all the five
d sons to intervene pursuant to r. 64 of the Rules of the Federal Court 1980 and they are
represented by learned Counsel who also appears for the appellant. It was submitted on
behalf of the interveners that the order of the learned Judge clearly affected their
registered title share and interest in the said land and under s. 340(1) of the National
Land Code 1965 their title share and interest shall be deemed to be indefeasible. As
interested parties it was argued that the interveners had been denied a hearing and an
e order so made was held to be wholly irregular (Ganapathy Chettiar v. Periakaruppan
Chettiar & Anor. [1962] MLJ 207).
In our judgment, the Court, below has no jurisdiction inherent or otherwise, over any
person other than those properly brought before it, as parties or as persons treated as
if they were parties under statutory provisions (Brydges v. Brydges & Wood [1909]
p. 187; Re Shephared [1890] 43 Ch D 131 and Coleman v. Coleman [1920] p. 71). The
f terms “judgment” and “order” in the widest sense may be said to include any decision
given by a Court on a question or questions at issue between the parties to a proceeding
properly before the Court [see para. 501 of Halsbury’s Laws of England (4th Edn.,) Vol.,
26 at p. 237]. and at para. 550 the following passage appears:
Subject to appeal and to being amended or set aside, a judgment is conclusive as between
the parties and their privies and is conclusive evidence against all the world of its existence,
g
date and legal consequences.
We are constrained to agree with the submission of learned Counsel for the interveners
that the order of the learned Judge was wholly irregular insofar as it purports to affect
the registered title, share and interest of the said interveners in the said land when
they had not been made parties or given a full opportunity of taking part in the
h proceedings in the Court below. If the respondent had wanted the whole one-half share
in the said land in pursuance of the first agreement after knowledge of the registration
of these transfers by the appellant to her five sons, he ought to have joined the sons

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[1983] CLJ (Rep) Kheng Chwee Lian v. Wong Tak Thong 201

and particularly Soon Hup Cheng as co-defendants in the proceeding. Since all these a
transfers were made by the appellant subsequent to the signing of the first agreement,
the onus of proof would be on them to show that they were bona fide purchasers for
value without notice of the first agreement on the authorities of Bhup Narian Singh v.
Gokhul Chan Mahton [1933-34] 61 IA 115 and Ong Chat Pang & Ors. v. Valliappa
Chettiar [1971] 1 MLJ 224. The respondent, however, did not adopt this course of action.
For the reasons given above we set aside that part of the order of the learned Judge b
directing that the respondent should be entitled to one-half of the entire area of the said
land now known as Lot 2090, Mukim Chabang Tiga, Kuala Trengganu held under K.R.M.
991. Since the appellant was no longer the registered owner of one-half share of the
said land it was not possible for the Court to order specific performance in accordance
with the term of the first agreement. In our opinion, learned Counsel for the respondent
ought to have drawn the attention of the learned Judge to the provisions of s. 13 and c
18(3) of the Specific Relief Act 1950 (Revised 1974). Section 13 reads:
Where a party to a contract is unable to perform the whole of his part of it, but the
part which must be left unperformed bears only a small proportion to the whole in value,
and admits of compensation in money, the Court may at the suit of either party, direct
the specific performance of so much of the contract as can be performed, and award
compensation in money for the deficiency. d
And s. 18(3) is as follows:
If in any such suit the Court decides that specific performance ought to be granted, but
that it is not sufficient to satisfy the justice of the case, and that some compensation for
breach of the contract should also be made to the plaintiff, it shall award him such
compensation accordingly. e
In our judgment, either s. 13 or s. 18(3) may properly be invoked to the facts of this
case. For this reason we allow the appeal of the interveners and substitute the
undermentioned order in place of that made by the learned Judge in the Court below,
viz:
A declaration that the plaintiff/respondent was the beneficial owner of one-half share or f
3338824/6677648 undivided shares in the said land now known as Lot 2080, Mukim
Chabang Tiga, Kuala Trengganu held under KRM 991 containing an area of 1.533 acres,
more or less and ordering the defendant/appellant to transfer to the plaintiff/respondent
all the 2224650/6677648 undivided shares now registered in her name within thirty days
from date hereof and further ordering the defendant/appellant to pay compensation to
the plaintiff/respondent in respect of the deficiency, viz. 1114174/6677648 undivided g
shares. It is further ordered that if the amount of compensation payable cannot be agreed
upon between the parties it is directed it be assessed by a Senior Assistant Registrar.
And if the defendant/appellant defaults in executing a registrable memorandum of transfer
within the specified time it is ordered that the Senior Assistant Registrar attached to the
High Court in Malaya at Kota Bharu, Kelantan, be empowered to sign the transfer on
her behalf (Loh Koon Moy & Anor. v. Zaibun binti Syed Ahmad [1978] 2 MLJ at p. 31 h
and O. 45 r. 8 of the Rules of the High Court 1980).

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a As regards costs it is ordered that the appellant shall pay to the respondent one-half of
the taxed costs here and in the Court below. The Court deposit to be paid to the
respondent on account of taxed costs. We make no order with regard to the costs of
the interveners in this appeal.

Also found at [1983] 2 CLJ 191

b