ONG KWEE LEE v ABLE PERFECT SDN BHD

Case Significance

Illustrates how the court reconciles a beneficiary's interest in shares held on trust with the obligation to pay the agreed share of the acquisition cost, recognising the beneficial interest but releasing the trust property to the beneficiary only net of the balance he still owes with interest.

This Court of Appeal decision concerns a dispute over the beneficial ownership of shares held on trust, and whether a beneficiary who has not paid his full share of the acquisition cost may nonetheless claim the shares and their dividends. The contest was whether the appellant was a beneficiary of 250,000 shares in a company, and whether he had breached a Trust Deed dated 11 April 2016 in the mode of payment towards acquiring those shares, which had been registered in the name of the respondent. A related question was whether the appellant was entitled to enjoy the benefit of the dividends on the shares immediately, despite not having paid the full amount of his portion of the shared acquisition costs to the respondent.

The Court of Appeal analysed the Trust Deed and the parties' respective obligations under it, treating the arrangement as one in which the respondent held the shares for the appellant's benefit subject to the appellant meeting his agreed contribution to the acquisition cost. On that analysis the appellant's beneficial interest was recognised, but his entitlement to the shares and their fruits was conditioned on his discharging the outstanding balance, together with interest, rather than being immediate and unconditional.

The Court of Appeal made orders giving effect to that position: the appellant was liable to pay interest at five per cent per annum on the judgment sum calculated from 22 June 2022 until full settlement; the sum of RM12,485,514.32 held by the respondent's solicitors as stakeholder, together with interest earned, was to be released to the appellant after deducting the payments due to the respondent, with the deducted sums released to the respondent, all within one month; and costs of RM50,000 were awarded to the appellant here and below. The judgment illustrates how the court reconciles a beneficiary's interest in shares held on trust with his obligation to pay his agreed share of the acquisition cost, releasing the trust property to him net of what he still owes.