LITA NASYITAH GOH BINTI ABDULLAH v 1. ) ROSLAN BIN A. GHAFFAR 2. ) BIMBINGAN GALAKAN SDN BHD

Case Significance

Illustrates the equitable-compensation measure for a trustee's breach of trust, where damages restore the value of the trust property assessed at arm's-length market price without regard to causation, foreseeability or remoteness, with a substantial general-damages award reflecting the trustee's concealment and prolonged denial.

This High Court decision is an assessment of damages following an earlier judgment, upheld by the Court of Appeal, that the first defendant had committed a breach of trust. The plaintiff had been a director and chief executive of a company running a private international school, and the first defendant, its chairman and a shareholder, had declared by a trust deed that he held 50,000 of his shares on trust for the plaintiff, a trust confirmed by a power of attorney. The breach arose when the first defendant sold and transferred all his shares, including the 50,000 shares held on trust, to the second defendant, then concealed the sale and refused to disclose the consideration he had received. The court's task was to value the 50,000 shares and to assess damages for the breach of trust. It accepted that damages for breach of trust are assessed as equitable compensation, which differs from common-law damages in that considerations of causation, foreseeability and remoteness do not apply, because the trustee's obligation is to restore the trust estate or its value; the defaulting trustee bears the full losses of failing to restore the property. Valuing the shares by reference to market price — the price paid by unrelated parties in an arm's-length transaction, drawing on a transaction with a public-listed purchaser in the public domain — the court fixed the value of the 50,000 shares at RM471,500. Taking into account that the first defendant had denied the trust, acted in blatant breach, and dragged the plaintiff through more than seven years of litigation while still refusing to disclose the sale price, the court awarded general damages of RM1,000,000, with interest at 5% per annum on the total judgment sum of RM1,471,500 from the date of the earlier judgment, and costs of RM20,000. The judgment illustrates the equitable-compensation measure for a trustee's breach of trust.