Koperasi Azam Murni Selangor Berhad & Ors v Koperasi Sagemal Berhad

Appellant(s):

• Koperasi Azam Murni Selangor Berhad
• Suhaimi Bin Dato Hj Kamaruddin
• Xxxx

Respondent(s): Koperasi Sagemal Berhad

• YA Datuk Azimah binti Omar
• YA Datuk Wong Kian Kheong
• YA Datuk Ismail Bin Brahim

• The dispute concerned two parcels of land in Setapak registered in the name of the respondent, a co-operative society, which were transferred to the first appellant (a co-operative newly incorporated in 2012) in January 2013 following a Form 14A transfer and Jadual 17 application lodged by the second appellant's law firm, which had acted as the respondent's solicitors and held custody of the original titles.
• The respondent's Board had in 2005/2006 tentatively resolved to transfer the lands to its Selangor branch, but this resolution was revoked in February 2011, after which the law firm's retainer was terminated; the respondent claimed it only discovered the transfer to the first appellant in January 2013 and subsequently lodged a police report and a caveat before commencing the suit.
• The appellants defended on the basis of an alleged "Dichotomy Policy", an oral "Tripartite Agreement", and an alleged trust in favour of the branch co-operative, and counterclaimed; the High Court rejected these defences, found actual fraud and conspiracy, allowed the respondent's claim, and dismissed the counterclaim, prompting this appeal.

• Whether preliminary objections concerning corporate/co-operative governance—including alleged want of mandate to sue certain defendants, quorum defects in the ratifying board resolution, non-specification of capacity in pleadings, and estoppel from disciplinary proceedings—rendered the action void or otherwise barred it.
• Whether the trial judge was plainly wrong in rejecting the appellants' factual case on the Dichotomy Policy, the Tripartite Agreement, and the alleged trust, given the absence of documentary corroboration for these oral arrangements.
• Whether the trial judge was plainly wrong in finding, on the balance of probabilities, that the appellants had committed actual fraud (defeating indefeasibility under section 340(2)(a) of the National Land Code) and were liable in the tort of conspiracy, and whether the counterclaim and consequential account of rental income were correctly dismissed/ordered.

• The Court of Appeal held that the Companies Act principles on ratification of unauthorised proceedings (relied on by the appellants) did not apply to a co-operative society governed by the Co-operative Societies Act 1993, which expressly excludes the Companies Act; in any event, the belated board ratification cured any defect, and the other preliminary objections (AGM quorum, pleading capacity, disciplinary estoppel) were rightly rejected as being without legal or evidential merit.
• Applying the "plainly wrong" appellate standard for findings of fact, the Court held the trial judge was entitled to reject the uncorroborated oral evidence of the Dichotomy Policy and Tripartite Agreement for want of documentary support, and consequently the alleged trust in favour of the branch co-operative also failed.
• The Court affirmed the finding of actual fraud and conspiracy under section 340(2)(a) NLC, based on deliberate alterations to the Form 14A, execution of Jadual 17 without board mandate, use of a defunct address, and a fabricated rubber stamp, holding the first appellant's title defeasible; the dismissal of the counterclaim and the order to account for rental income were upheld as following naturally from the fraud finding, and the appeal was dismissed with costs of RM10,000 per appellant.