CHONG MEI LING v 1. ) CHONG SIN WEI 2. ) KETUA PENGARAH JABATAN INSOLVENSI MALAYSIA

Case Significance

Holds that a claimant asserting a resulting or constructive trust over a bankrupt co-owner's half share of a jointly bought house must prove it on the evidence; the claim failed, leaving the Director General of Insolvency free to deal with the share under the Insolvency Act 1967.

This High Court (Johor Bahru) decision concerns an originating summons by which the plaintiff sought relief in respect of an undivided one-half share in a double-storey terrace house held under a stated title in the Tebrau district of Johor. The plaintiff invoked, among other provisions, section 3 of the Civil Law Act 1956, section 3 of the Trustee Act 1949, section 25 of the Courts of Judicature Act 1964, section 41 of the Specific Relief Act 1950 and section 145 of the National Land Code, and Order 7 of the Rules of Court 2012. The matter turned on the plaintiff's contention that one-half of the property, registered in the name of the first defendant, was held by the first defendant on trust for the plaintiff, the plaintiff and the first defendant having bought the house together under a Sale and Purchase Agreement dated 3 April 2007 and having lived together on the property. The second defendant was the Director General of Insolvency, acting as the receiver of the first defendant's estate, the first defendant being a bankrupt.

The dispute engaged sections 8(1)(b) and 60 of the Insolvency Act 1967 and the law of trusts, in particular the distinction between a resulting trust and a constructive trust. The court referred to authorities including Westdeutsche Landesbank Girozentrale v Islington London Borough Council and Ng Hoo Kui v Wendy Tan Lee Peng, and noted the observation that whereas an express trust comes into existence the moment it is expressed, a constructive trust is ignited into existence by the unconscionable behaviour of the trustee.

On the evidence, assessed objectively, the court held that the plaintiff had failed to prove the existence of a resulting trust or a constructive trust between the plaintiff and the first defendant in respect of the first defendant's one-half share of the property. Following that finding, the court held that the Director General of Insolvency was free to exercise his powers under the Insolvency Act 1967 over the one-half share registered in the name of the first defendant, now a bankrupt. The judgment illustrates the evidential burden on a party asserting a resulting or constructive trust over co-owned property against the interests of a bankrupt's estate.