Low Yee Meng v Lau Kok Loon @ Lau Say Siok

Appellant(s): Low Yee Meng

Respondent(s): Lau Kok Loon @ Lau Say Siok

• YA Datuk Ravinthran a/l Paramaguru
• YA Dato' Faizah Binti Jamaludin
• YA Dato' Ahmad Shahrir B. Mohd Salleh

• The respondent (uncle) transferred a single share in a company to the appellant (his nephew) in 1995 pursuant to a 1990 Trust Deed declaring the share held in trust for the appellant, shortly before the respondent was adjudged bankrupt arising from guarantees given to a bank.
• The share subsequently gave rise to bonus allotments such that, by the time of the suit filed in 2020 (some 25 years later), the appellant held 238,096 shares (roughly 48% of equity), with the respondent's son holding the majority shareholding.
• The respondent sued for return of the shares on the basis of a resulting trust (having abandoned an initially pleaded express trust), alleging the transfer was effected to shield the share from creditors; the appellant counterclaimed alleging the suit was contrived and an abuse of process, relying on the Trust Deed to assert he was the beneficial owner.

• Whether the High Court erred in finding that a resulting trust arose in favour of the respondent over the share and its accretions, notwithstanding the existence of a fully executed express Trust Deed in the appellant's favour.
• Whether pleadings in the re-amended defence constituted an admission that the Trust Deed was a sham, and the proper approach to construing pleadings holistically.
• Whether, if a resulting trust had arisen, it was unenforceable by reason of illegality (breach of bankruptcy law under section 109 of the Insolvency Act 1967 and section 422 of the Penal Code), and whether the "trio of considerations" from Patel v Mirza (as adapted for Malaysian law via section 66 of the Contracts Act 1950 in Detik Ria Sdn Bhd v Prudential Corporation Holdings Ltd) could be invoked to grant relief despite such illegality.

• The Court of Appeal held that the trial judge erred in finding a resulting trust, as he failed to give due weight to the unequivocal terms of the fully executed Trust Deed, the 25-year delay before the claim was brought, and the fact that the claim was filed only in retaliation to a derivative action accusing the respondent of siphoning company funds; absence of consideration alone was insufficient to displace the Trust Deed since trusts do not require consideration from the beneficiary.
• The Court further held that the alleged admission in the pleadings ("Paragraph 10 is admitted") could not be read in isolation as an admission that the Trust Deed was a sham, as the pleadings read holistically affirmed its validity.
• Even assuming a resulting trust had arisen, the Court held that the illegality involved (an attempt to defeat bankruptcy law and defraud the insolvency process) was central and not merely incidental, distinguishing the English authority of Knight v Knight (where the Official Receiver had investigated and taken no action); accordingly, relief was properly denied on grounds of illegality, the appeal was allowed, and the respondent's claim was dismissed with costs of RM120,000.