Chong Mei Ling v Chong Sin Wei & Anor

Appellant(s): Chong Mei Ling

Respondent(s):

• Chong Sin Wei
• Ketua Pengarah Jabatan Insolvensi Malaysia

• YA Dato' Azizul Azmi Bin Adnan
• YA Dato' Ong Chee Kwan
• YA Dato' Sri Mohd Radzi bin Harun

• Two siblings bought a house in 2007 as registered co-proprietors in equal shares, jointly and severally liable for a housing loan; the sister alone serviced the loan and outgoings from 2014 after the brother defaulted, while he continued to occupy the property and was later adjudicated bankrupt in 2016.
• The sister commenced originating summons proceedings seeking declarations that 3/10 of the brother's registered share was held on trust for her (giving her 8/10 beneficial ownership, excluded from his bankruptcy estate), and alternatively for sale of the property with proceeds divided 80:20.
• The High Court dismissed the originating summons in its entirety, rejecting the trust claims and not addressing the alternative claim for sale to terminate the co-proprietorship.

• Whether the sister's disproportionate mortgage payments gave rise to a resulting or constructive trust enlarging her beneficial interest beyond her registered half-share, and whether such a trust (if any) could defeat the vesting of the brother's share in the Director General of Insolvency upon bankruptcy.
• Whether the High Court erred in failing to consider the alternative claim under section 145 of the National Land Code for termination of the co-proprietorship by sale, and whether such relief could be granted despite not being separately pleaded and despite the chargee bank not being a party.
• Whether, upon an order for sale, the doctrine of equitable accounting required the brother's share of the net proceeds to be adjusted to reimburse the sister's excess payments, and whether such adjustment takes priority over the claims of the brother's bankruptcy creditors.

• The Court held that no resulting or constructive trust arose: the parties' common intention at acquisition was equal ownership and equal liability (via joint and several borrowing), and a resulting trust does not fluctuate with later unequal repayments; further, trusts created (if any) after the 2016 bankruptcy vesting could not divest the estate, and no unconscionable conduct was shown to found a constructive trust.
• The Court held that the High Court erred in failing to consider the alternative prayer for sale under section 145 of the National Land Code; a sale was plainly just given the deadlock between the co-owners, and could be ordered notwithstanding the bank's non-joinder, since the sale was expressly made subject to the existing charge and did not affect the chargee's rights.
• Applying the equitable accounting doctrine (as an adjustment in dividing sale proceeds, not an independent cause of action), the Court held the sister was entitled to be reimbursed RM67,191.47 (plus future excess payments) out of the brother's moiety of net sale proceeds before that moiety passed to his bankruptcy estate, as the payments had discharged part of the secured debt attached to his share and did not prejudice his creditors' entitlement under section 43 of the Insolvency Act 1967; the appeal was allowed in part accordingly.