770 Malayan Law Journal [1995] 2 MLJ Aik Ming (M) Sdn Bhd & Ors v Chang Ching Chuen & Ors and another appeal COURT OF APPEAL (KUALA LUMPUR) — CIVIL APPEAL NOS J-02-35— 95 AND J-02-34-95 GOPAL SRI RAM, VC GEORGE AND ABU MANSOR JJCA 21 JULY 1995 Civil Procedure — Pleadings — Conspiracy to defraud alleged — Must be properly pleaded and supported by full particulars Civil Procedure — Trial — Cross-examination — Point not raised in cross-examination ~— Whether treated as abandoned — Whether may be raised in argument Companies and Corporations — Meetings — Notice — Convening of board of directors’ meeting — Whether valid — Whether properly served — Even if no proper service whether meeting valid Companies and Corporations — Indoor management rule — When applicable — Whether there are any paramount criteria to be considered by the court — Application of rule in relation to contract for the purchase of land — Working of rule in relation to doctrine of the bona fide purchaser Companies and Corporations — Irregularities in proceedings — Defective notice convening meeting — Meeting and resolutions invalid — Whether Court of Appeal may cure irregularity — Companies Act 1965 s 355(3) (a) Evidence — Standard of proof — Conspiracy to defraud Land Law — Restraints on dealings — Caveats — Caveat lodged before purchase price paid in full — Whether purchaser a bona fide purchaser — Whether subsequent removal of caveat by order of court makes purchaser a bona fide purchaser Land Law — Restraints of dealings — Caveats — Caveatable interest — Whether director of limited company may caveat company’s immovable property Trusts and Trustees — Express trust — Declaration of trust — Deed declaring trust served to defraud public administration — Whether valid Trusts and Trustees — Powers — Power of attorney — Power of attorney intended to defraud public administration — Whether valid Words and Phrases — ‘Purchaser’ ‘The first defendant (‘the company’) was the registered proprietor of six lots of land (‘the land’), The second to the ninth defendants were members of the first plaintiff's family, the second defendant being his first wife and also the secretary of the company, while the third and fourth defendants were their two sons. The second plaintiff was his second wife and a director and shareholder of the company. The second plaintiff held shares in the company on trust in favour of the[1995] 2 MLJ Aik Ming (M) Sdn Bhd v Chang Ching Chuen Ta third and fourth defendants, having executed two deeds of irrevocable power of attorney and two declarations of trust in their favour. On 17 April 1990, at a meeting of the company’s board (‘the meeting’), the second and third defendants, who were the only two directors Present, purported to approve transfers by the third and fourth defendants to the ninth defendant of all the second plaintiff's shares, and to declare that the second plaintiff had ceased to be a director. Ata subsequent board meeting, the first plaintiff was removed as the managing director. On 26 May 1990, the reconstituted board met and resolved that the land be sold to Pekan Nenas Industries Sdn Bhd (‘the intervener’). The first plaintiff, however, entered a private caveat against the land on 6 September 1990 (‘the first caveat’). On 26 October 1990, the second defendant gave an option to Tan, the chairman of the intervener, to purchase the land for RM4.8m. Tan paid RM100,000 in cash to the second defendant in consideration without receiving a receipt, upon which he was given possession of the land. On 3 December 1990, a sale and purchase agreement (‘the agreement’) between the company and the intervener was executed. The balance of the purchase price was to be paid by 1 March 1991. On 29 December 1990, however, the first plaintiff entered another caveat (‘the second caveat’) against the land, alleging that it was to protect his interests as a director of the company over the land. On 25 February 1991, despite knowledge of the caveats, the intervener’s solicitors forwarded the balance purchase price to the company’s solicitors but it was subsequently returned. In March 1991, Tan paid the balance of the purchase price in equivalent Singapore currency to the second defendant and was given the company’s receipt. On 25 May 1991, the plaintiffs issued a writ challenging the propriety of the meeting and the validity of the sale of the land. The High Court nullified the meeting and set aside the sale. [See [1995] 2 ML] 43.] The defendants appealed to the Court of Appeal (‘the first appeal’). The intervener also filed a separate appeal against the plaintiffs and the defendants (‘the second appeal’). In the first appeal, counsel submitted that: (a) the judge was wrong in holding that the notice convening the meeting was invalid and that even if were valid, it had not been served on the first, second and third plaintiffs; (b) even if no proper notice was served, the meeting and all business conducted was valid as the plaintiffs’ attendance would have made no difference; (c) the judge was wrong in holding that the transfer of shares was invalid as it was done in the legitimate exercise of the powers of attorney and deeds of trust; and (d) even if the meeting and proceedings were defective, they could be cured under s 355(3)(a) of the Companies Act 1965 (‘the CA’). In the second appeal, counsel argued that: (a) the intervener was entitled to rely on the rule in Royal British Bank v Turquand [1843- 60] All ER Rep 435 in that it did not have to inquire into the internal affairs of the company; (b) the agreement was a normal transaction which would not have drawn the suspicions of a reasonable man; and772 Malayan Law Journal [1995] 2 MLJ (© the intervener was a bona fide purchaser with no notice of any adverse claim to the land. Held, dismissing both appeals (per Gopal Sri Ram JCA): (1) The determination of ground (a) in the first appeal was a pure question of fact turning upon the credibility of witnesses whom the trial judge had the advantage of visual assessment. The Court of Appeal could not detect any error of reasoning on the part of the judge and was satisfied that the judge had properly appreciated the evidence presented. (2) It could not be said that the attendance of the plaintiffs at the meeting would have made no difference. Prior to that meeting, the first, second and third plaintiffs formed the majority on the board. Thus their votes would have prevailed over those of the second and third defendants and their presence would have made a material difference. (3) Unless the articles of a company provide to the contrary, a meeting of a board of directors is not valid unless reasonable notice of it and the relevant agenda that is to be discussed is given to the directors. In this case, no notice of the meeting was given. It was thus a nullity and all the business conducted was utterly void. It could not be considered a mere irregularity which could be cured because at the date of the meeting, the plaintiffs not only had a majority of voting power on the board but also on the floor of any general meeting that might have been convened. (4) As the business conducted at the subsequent meetings of the company’s board were dependent for their validity upon the propriety of the meeting which had failed to stand up to curial scrutiny, those later meetings were also void. (5) The defendants alleged that the second plaintiff was given shares in trust for the third and fourth defendants because the company needed two Malaysian directors. The defendants’ intention was that the Registrar of Companies should be misled into believing that the second plaintiff was the true beneficial owner of the shares and a director of the company. Thus the deeds of trust and powers of attorney were to perpetrate a fraud upon the administration and were plainly tainted with illegality, void and worthless and ground (c) in the first appeal failed. (6) Section 355(3)(a) of the CA looks to the justice of a particular case and not at whether prejudice will result from the making of a validation order. The section vests the original discretion in the High Court and the initial function of the Court of Appeal is one of review only. Having regard to the findings of fact which the judge made and the way in which he approached the determination of where the justice of the case lay, the defendants had failed to show that the judge had committed an error which[1995] 2 MLJ Aik Ming (M) Sdn Bhd v Chang Ching Chuen 773 ie) (8) @) permitted the Court of Appeal to exercise a discretion of its own. ‘The second appeal by the intervener turned upon the state of Tan’s mind at the relevant time which was a question of fact to be determined from the totality of the circumstances of the case. Whether the rule in Turgquand applies depends upon the particular facts of the case. It is neither possible nor desirable to attempt to state what the paramount criteria are which a court should have in mind when deciding whether an outsider ought to have been put on inquiry. ‘The rule in Turguand when applied to a contract for the purchase of land under the Malaysian Torrens system has to work hand in hand with the doctrine of the bona fide purchaser. One is not a bona fide purchaser until one has paid all one’s money under a contract of sale. It is also well settled that the knowledge of a solicitor is regarded by law as the knowledge of the client except where the solicitor acts fraudulently. (10) The caveats served to give notice to the world at large of the first plaintif?’s adverse claim to the land. Though the second caveat was lodged after the agreement had been entered into, at the time of its entry the intervener was not a bona fide purchaser as ithad yet to pay the full purchase price, The subsequent removal of the caveats did not result in the intervener becoming a bona fide purchaser because its mind had become infected with knowledge of the adverse claim before full payment was made. (11) On the totality of the evidence, including the existence of the caveats, the cash payment for the option without a receipt being given, the giving of physical possession of the land even before the execution of the agreement, the execution of the agreement before the incorporation of the intervener and the payment in cash of the balance purchase price directly to the second defendant, it could not be said that the trial judge had arrived at an incorrect conclusion. The intervener was faced with a set of facts that must have aroused the deepest suspicions in the mind of a reasonable man but chose to proceed notwithstanding the loud and clear warning that they sounded. It could not now say that it was a purchaser for value who acted in good faith. Per curiam: a (2) There are strong policy reasons warranting the conferment upon the director of a limited company of a caveatable interest in his company’s immovable property for the limited purpose of protecting that property from being dealt with contrary to law. A charge of conspiracy to defraud is a serious one. It ought not to be countenanced by a court unless properly taken in a party’s pleadings supported by full particulars and evidence is led in proof of the pleaded case.774 ‘Malayan Law Journal [1995] 2 MLJ (3) The standard of proof where a conspiracy to defraud is alleged is the same as where fraud is alleged and must be proved beyond a reasonable doubt. (4) Itis essential that a party’s case be expressly put to his opponent’s material witnesses when they are under cross-examination. A failure in this respect may be treated as an abandonment of the pleaded case and if a party, without valid reasons, refrains from doing so, then he may be barred from raising it in argument. (5) We should free ourselves of the shackles of English law and develop our own notion of what is meant by a purchaser by drawing on the analogy of decisions under the Specific Relief Act 1950, all of which are unanimous in holding that a man is not to be regarded as a purchaser unless he has paid all his money under the contract of sale. [Bahasa Malaysia summary Defendan pertama (‘syarikat itu’) adalah tuanpunya berdaftar enam Jot tanah (‘tanah tersebut’). Defendan kedua hingga kesembilan merupakan abli keluarga plaintif pertama, iaitu defendan pertama adalah isterinya yang pertama dan juga setiausaha syarikat itu, sementara defendan ketiga dan keempat adalah anak lelaki mereka. Plaintif kedua adalah isteri kedua beliau dan seorang pengarah dan pemegang saham syarikat itu. Plaintif kedua memegang saham dalam syarikat itu atas amanah bagi faedah defendan ketiga dan keempat, selepas melaksanakan dua suratikatan surat kuasa wakil tak boleh batal dan dua deklarasi amanah bagi faedah mereka. Pada 17 April 1990, di suatu mesyuarat lembaga pengarah syarikat itu (‘mesyuarat itu’), defendan kedua dan ketiga, yang merupakan dua orang pengarah tunggal yang menghadiri mesyuarat itu, kononnya telah meluluskan pemindahan oleh defendan ketiga dan keempat kepada defendan kesembilan kesemua saham plaintif kedua, dan mendeklarasikan bahawa plaintif kedua telah berhenti daripada menjadi seorang pengarah. Di suatu mesyuarat lembaga selepas itu, plaintif pertama telah digugurkan daripada jawatan pengarah urusan. Pada 26 Mei 1990, lembaga yang diubah bentuk itu telah bermesyuarat dan membuat resolusi supaya tanah tersebut dijual kepada Pekan Nenas Industries Sdn Bhd (‘pencelah’). Plaintif pertama, walau bagaimanapun, telah memasukkan satu kaveat persendirian terhadap tanah tersebut pada 6 September 1990 (‘kaveat pertama itv’). Pada 26 Oktober 1990, defendan kedua telah memberikan satu opsyen kepada Tan, pengerusi pencelah, untuk membeli tanah itu pada harga RM4.8 juta. Tan telah membayar RM100,000 dalam wang tunai kepada defendan kedua sebagai balasan tanpa menerima satu resit untuk bayaran itu, dan selepas itu beliau telah diberikan pemilikan tanah tersebut. Pada 3 Disember 1990, suatu perjanjian jual beli (‘perjanjian itu’) di antara syarikat itu dan pencelah telah dilaksanakan. Baki harga belian itu dikehendaki dibayar sebelum 1 Mac 1991, Pada 29 Disember 1990, walau bagaimanapun, plaintif[1995] 2 MLJ Aik Ming (M) Sdn Bhd v Chang Ching Chuen 775 pertama telah memasukkan satu lagi kaveat (‘kaveat kedua itu’) terhadap tanah tersebut, dengan mengatakan bahawa kaveat itu adalah untuk menjaga kepentingannya sebagai seorang pengarah syarikat itu atas tanah tersebut. Pada 25 Februari 1991, walaupun mempunyai pengetahuan tentang kaveat-kaveat itu, peguamcara pencelah telah menghantar baki harga belian itu kepada peguamcara syarikat itu tetapi ia kemudiannya dikembalikan. Pada Mac 1991, Tan telah membayar baki harga belian itu dalam matawang Singapura yang bersamaan kepada defendan kedua dan beliau telah diberikan resit syarikat itu. Pada 25 Mei 1991, plaintif telah mengeluarkan satu writ yang mencabar kewajaran mesyuarat itu serta kesahan jualan tanah tersebut. Mahkamah Tinggi telah membatalkan mesyuarat itu dan mengenepikan jualan itu. [Lihat [1995] 2 MLJ 43.] Defendan- defendan membuat rayuan kepada Mahkamah Rayuan (‘rayuan pertama’). Pencelah juga memfailkan satu rayuan berasingan terhadap plaintif-plaintif dan defendan-defendan (‘rayuan kedua’). Dalam rayuan pertama, peguambela telah berhujah bahawa: (a) hakim tersilap apabila memutuskan bahawa notis untuk memanggil mesyuarat itu adalah tidak sah dan biarpun sah, ianya tidak disampaikan kepada plaintif pertama, kedua dan ketiga; (b) meskipun notis yang berpatutan tidak disampaikan, mesyuarat itu dan semua urusan yang dijalankan adalah sah kerana kehadiran plaintif tidak akan membuat apa-apa perbezaan; (c) hakim tersilap apabila memutuskan bahawa pemindahan saham itu adalah tidak sah kerana ia telah dijalankan mengikut penggunaan sah surat kuasa wakil dan suratikatan amanah yang telah dilaksanakan oleh plaintif kedua bagi faedah defendan ketiga dan keempat; dan (d) biarpun jika mesyuarat itu dan prosidingnya tidak teratur, mereka boleh diperbetulkan di bawah s 355(3)(a) Akta Syarikat 1965 (‘Akta itu’). Di dalam rayuan kedua, peguambela telah berhujah bahawa: (a) pencelah berhak bergantung pada rukun di dalam Royal British Bank v Turquand [1843-60] All ER Rep 435 iaitu ia tidak perlu menanya tentang hal ehwal dalaman syarikat itu; (b) perjanjian itu adalah suatu urusan yang biasa yang tidak akan menimbulkan kesangsian seorang yang munasabah; dan (c) pencelah adalah scorang pembeli bona fide selepas tanpa notis tentang tuntutan bertentangan terhadap tanah tersebut. Diputuskan, menolak kedua-dua rayuan itu (oleh Gopal Sri Ram HMR): (1) Penentuan alasan (a) dalam rayuan pertama adalah suatu soalan fakta semata-mata yang tertumpu atas kebolehpercayaan saksi- saksi yang telah diperhatikan oleh hakim perbicaraan. Mahkamah Rayuan tidak dapat mengesan apa-apa kesilapan dalam pemberian alasan oleh hakim itu dan berpuas hati bahawa hakim itu telah memahami dengan sempurna keterangan yang dikemukakan.176 (2) @) (4) 6) (6 M Malayan Law Journal [1995] 2 ML} ‘Tidaklah boleh dikatakan bahawa kehadiran plaintif di mesyuarat itu tidak akan membuat apa-apa perbezaan. Sebelum mesyuarat itu, plaintif pertama, kedua dan ketiga membentuk majori dalam lembaga itu. Oleh itu undi mereka akan mengatasi undi defendan kedua dan ketiga dan kehadiran mereka akan membawa perbezaan yang penting. Melainkan jika perkara-perkara persatuan sesuatu syarikat memperuntukkan sebaliknya, suatu mesyuarat lembaga pengarah adalah tidak sah kecuali jika notis yang munasabah tentangnya dan agenda yang relevan yang bakal dibincangkan diberikan kepada pengarah-pengarah. Di dalam Kes ini, tiada notis tentang mesyuarat itu diberikan. Oleh itu mesyuarat itu adalah tidak sah dan kesemua urusan yang dijalankan adalah terbatal. Ianya tidak boleh dianggap sebagai satu salah aturan semata-mata yang boleh diperbetulkan kerana pada tarikh mesyuarat itu, plaintif- plaintif bukan sahaja mempunyai majoriti kuasa undi di lembaga imu tetapi juga di sebarang mesyuarat agung yang mungkin diadakan. Oleh kerana urusan yang dijalankan di mesyuarat terkemudian lembaga itu bergantung untuk kesahannya pada kewajaran mesyuarat itu yang telah gagal melepasi pemerhatian kehakiman, mesyuarat-mesyuarat terkemudian itu juga terbatal. Defendan mengatakan bahawa plaintif kedua telah diberi saham untuk dipegang atas amanah untuk defendan ketiga dan keempat kerana syarikat itu memerlukan dua orang pengarah warganegara Malaysia. Tujuan defendan adalah supaya Pendaftar Syarikat diperdaya untuk mempercayai bahawa plaintif kedua adalah tuanpunya benefisial sebenar saham itu dan seorang pengarah syarikat itu. Oleh itu suratikatan amanah dan surat kuasa wakil itu adalah untuk melakukan fraud ke atas pentadbiran awam dan jelasnya dinodai dengan kepenyalahan undang-undang, terbatal dan tidak bernilai dan alasan (c) dalam rayuan pertama gagal. Seksyen 355(3)(a) Akta itu memandang kepada keadilan sesuatu kes tertentu dan tidak mengendahkan soalan sama ada kemudaratan akan didatangkan oleh pemberian suatu perintah pengesahan. Seksyen itu meletakhak budi bicara asal di dalam Mahkamah Tinggi dan fungsi awal Mahkamah Rayuan cumalah bersifat kajian semula. Memandangkan pendapat fakta yang dibuat oleh hakim dan kaedah dengan mana beliau menentukan di mana letaknya keadilan di dalam kes ini, defendan gagal menunjukkan bahawa hakim telah melakukan satu kesilapan yang membenarkan Mahkamah Rayuan menggunakan budi bicaranya sendiri. Rayuan kedua oleh pencelah berkisar tertumpu pada keadaan fikiran Tan pada masa yang relevan yang merupakan satu soalan fakta yang ditentukan berasaskan keseluruhan keadaan kes ini.[1995] 2 MLJ Aik Ming (M) Sdn Bhd v Chang Ching Chuen 777 (8) Sama ada aturan dalam kes Turquand terpakai bergantung kepada fakta-fakta setiap kes. Tidaklah boleh mahupun diingini untuk membuat percubaan menyatakan apakah kriteria yang penting yang patut diambil ingat oleh sebuah mahkamah apabila memutuskan sama ada satu pihak luar patut diletakkan di bawah tugas membuat pertanyaan. (9) Rukun dalam kes Turguand apabila digunakan dalam satu kontrak untuk pembelian tanah di bawah sistem Torrens Malaysia mesti bertindak bersama dengan doktrin pembeli bona fide. Seseorang itu bukanlah seorang pembeli bona fide sehingga ia membayar kesemua wang di bawah satu kontrak jualan. Adalah juga mantap bahawa pengetahuan seorang peguamcara dianggap di sisi undang-undang sebagai pengetahuan kliennya kecuali di mana peguamcara itu bertindak secara fraud. (10) Kaveat-kaveat itu berfungsi untuk memberikan notis kepada dunia secara am tentang tuntutan bertentangan plaintif pertama terhadap tanah tersebut. Walaupun kaveat kedua itu dimasukkan selepas perjanjian itu diikat, pada masa kemasukannya pencelah bukanlah seorang pembeli bona fide kerana ianya belum lagi membayar harga belian penuh. Pembatalan terkemudian kaveat- kaveat itu tidak mengakibatkan pencelah menjadi seorang pembeli bona fide kerana fikirannya telah dijangkiti pengetahuan tentang tuntutan bertentangan itu sebelum bayaran penuh dibuat. (11) Atas keseluruhan keterangan, termasuk kewujudan kaveat-kaveat itu, bayaran tunai untuk opsyen itu tanpa satu resit diberikan, pemberian awal pemilikan fizikal tanah tersebut biarpun sebeclum pelaksanaan perjanjian itu, pelaksanaan perjanjian itu sebelum perbadanan pencelah dan bayaran tunai baki harga belian oleh Tan terus kepada defendan kedua, tidaklah boleh dikatakan bahawa hakim perbicaraan telah mencapai satu keputusan yang salah. Pencelah telah dihadapi dengan satu set fakta yang mesti menimbulkan kesangsian yang besar dalam fikiran seorang yang munasabah tetapi memilih untuk meneruskan transaksi itu tidak kira amaran kuat yang diberikan. Ia sekarang ini tidak boleh berkata bahawa ia adalah satu pembeli untuk nilai yang telah bertindak dengan suci hati. Per curiam: (1) Tentunya terdapat sebab polisi yang kuat yang mewajarkan pemberian kepada pengarah sebuah syarikat berhad satu kepentingan boleh kaveat di dalam harta tak alih kepunyaan syarikatnya untuk tujuan terhad mempertahankan harta itu daripada dikendalikan bertentangan dengan undang-undang. (2) Satu pertuduhan persubahatan untuk melakukan fraud adalah satu tuduhan yang serius. Ia tidak patut diterima oleh sebuah mahkamah kecuali jika dibuat dengan teratur di dalam pliding sesuatu pihak itu dengan disokong oleh butiran penuh dan778 Malayan Law Journal [1995] 2 MLJ keterangan dikermakakan untuk membuktikan kes yang dinyatakan im. (3) Takat pembuktian di mana satu persubahatan untuk melakukan fraud didakwa adalah sama seperti apabila fraud didakwa dan mesti dibuktikan melampaui keraguan yang munasabah. (4) Adalah sangat penting supaya kes sesuatu pihak itu dikemukakan secara nyata kepada saksi penting lawannya apabila mereka diperiksa balas. Satu kegagalan dari segi ini boleh diambil sebagai peninggalan kes yang dinyatakan di dalam pliding dan jika sesuatu pihak, tanpa sebab yang sah, menahan diri daripada berbuat demikian, beliau boleh dilarang daripada menimbulkan perkara itu dalam hujahnya. (5) Kita patut membebaskan diri daripada belenggu undang-undang Inggeris dan memajukan pemahaman kita sendiri tentang apakah yang dimaksudkan oleh seorang pembeli dengan mengambil analogi daripada keputusan di bawah Akta Relief Spesifik 1950, yang kesemuanya sebulat suara memutuskan bahawa seseorang itu tidak harus dianggap sebagai seorang pembeli kecuali beliau telah membayar kesemua wangnya di bawah kontrak jualan itu.} [Editorial Note: The intervener has obtained leave to appeal to the Federal Court.) Cases referred to Australian Continental Resources Ltd, Re (1975) 1 ACLR 405 (refd) Bentley-Stevens v Jones [1974] 2 All ER 653; [1974] 1 WLR 638 folld) Bhup Narain Singh v Gokhul Chand Mahton LR 61 IA 115 (refd) Browne v Dunn (1893) 6 R 67 (folld) Carapiet » Derderian AIR 1961 Cal 359 (folld) Chan Choon Ming v Low Poh Choon & Ors [1995] 1 CL] 812 (folld) Chan Chwen Kong » PP [1962] MLJ 307 (fold) Palaniappa Chettiar v Arunasalam Chettiar [1962] ML] 143 (refd) Chew Hock San & Ors v Connaught Housing Development Sdn Bhd [1985] 1 ML 350 (refd) Clarke v Edinburgh Tramways Co (1919) SC (HL) 35 (folld) Doshi v Yeoh Tiong Lay [1975] 1 ML] 85 (folld) Eng Mee Yong & Ors v Leichumanan [1979] 2 ML] 212 (refd) HL Bolton (Engineering) Co Lid v TY Graham & Sons Lid [1957] 1 QB 159; [1956] 3 All ER 624; [1956] 3 WLR 804 (refd) Hew Sook Ying v Hiw Tin Hee [1992] 2 ML] 189 (refd) Idris v PP [1960] ML] 296 (zefd) F & H Fust (Holdings) Pry Lid v Bank of New South Wales (1971) 125 CLR 546 (refd) KL Engineering Sdn Bhd & Anor v Arab Malaysian Finance Bhd [1994] 2 ML] 201 (refd) Kreditbank Cassel GmbH v Schenkers Led [1927] 1 KB 826; [1927] All ER Rep 421 (refd) I[1995] 2 MLJ Aik Ming (M) Sdn Bhd v Chang Ching Chuen 779 A Linggi Plantations Lid v Jagatheesan [1972] 1 MLJ 89 (refd) Luggage Distributors (M) Sdn Bhd v Tan Hor Teng & Anor [1995] 1 ML] 719 (refd) M & § Frozen Food Sdn Bhd & Anor v Siland Sdn Bhd & Anor [1994] 1 ML] 294 (folld) 7 MA Clyde v Wong Ah Mei & Anor [1970] 2 MLJ 183 (ref) Mahadevan & Anor v Patel [1975] 2 ML] 207 (folld) Mahesan, Dr & Ors v Ponnusamy & Ors [1994] 3 MLJ 312 (fold) Meridian Global Funds Management Asia Ltd v Securities Commission (The Times, 29 June 1995) (folld) Mitropolous » Greek Orthodox Church and Community of Marrickville Cc & District Led (1993) 10 ACSR 135 (refd) Morland v Hales and Somerville (1911) 30 NZLR 201 (refd) Morris v Kanssen [1946] AC 459; [1946] 1 All ER 586 (distd) Northside Developments Pty Ltd v Registrar General (1990) 170 CLR 146 (refd) Osmanoski v Rose [1974] VR 523 (refd) D PP v Datuk Hj Harun bin Hj Idris & Ors [1977] 1 ML] 180 (refd) Royal British Bank v Turquand (1843-60] All ER Rep 435 (folld) Seng Heng Electrical v Chua Len Teng [1970] 1 ML] 67 (folld) Sinna Ponnu v Singaru Odayar (1969) 2 Mad LJ 358 (refd) Suntoso Jacob v Kong Kiao Ming & Anor [1986] 2 ML] 170 (folld) E Tajjul Ariffin bin Mustafa v Heng Cheng Hong [1993] 2 ML] 143 (folld) Tesco Supermarket v Nattrass [1972] AC 153; [1971] 2 All ER 127; [1971] 2 WLR 1166 (refd) Vomisetti Paparao v Jonnada Venkataramana (1970) 2 An WR 280 (refd) x Young v Ladies Imperial Club Led [1920] 2 KB 523; [1920] All ER Rep 223 (folld) Legislation referred to Companies Act 1965 s 355(3)(a) G Evidence Act 1950 ss 17, 18, 21, 114(g), 145, 155(c) National Land Code 1965 s 326 Real Property Gains Tax Act 1976 s 21B(1)(a) Specific Relief Act 1950 ss 11(2), 26(b) Companies Regulations 1966 Evidence Act 1872 [Ind] H Merchant Shipping Act (Cap 172) [Sing] Appeal from: Civil Suit No 22-120-1991 (High Court, Johor Bahru) Cyrus Das (Harcharan Singh and K Mohan with him) (Harcharan & I Peters) for the appeliants in Civil Appeal No J-02-34-95. Jeyanthini Kannaperan (Maidzuara Mohammed with her) (Shearn Delamore & Co) for the appellants in Civil Appeal No J-02-35-95. PK Nathan (L Parthiban with him) (L Parthiban & Associates) for the respondents in Civil Appeal Nos J-02-34-95 and J-02-35-95.780 Malayan Law Journal [1995] 2 MLJ Cur Adv Viult Gopal Sri Ram JCA: IntTRopUCTION ‘These appeals were called on for hearing on 9 May 1995, but were not taken in the order in which they appeared in the list of appeals. Both appeals arise out of the same suit. [See [1995] 2 ML] 43.] It was therefore decided, with the concurrence of all counsel, that Civil Appeal No 35/95 (‘the first appeal’) would be taken first, and if it failed then Civil Appeal No 34/95 (‘the second appeal’) would be taken next. This course was resorted to because, it was agreed that if the first appeal succeeded, the second would be deemed to have succeeded as well. For convenience, I shall refer to the parties according to the title assigned to each of them in the court below. The first appeal is by the second to the ninth defendants who are members of the Chang family, consisting of the first plaintiff's wife by his first marriage, the children of that marriage, the spouse of the third defendant, as well as by the first defendant, which is the family company. ‘The appellant in the second appeal is the purchaser of six lots of land owned by the first defendant and situated in Pontian. It intervened in the suit and resisted the claim and was designated ‘intervener’ in the court below. The respondents in both appeals are the first plaintiff, his wife by his second marriage (solemnized according to Muslim law), and his brother and sister, respectively. They succeeded in obtaining from Haidar J certain declarations which had the effect of: (i) nullifying a board meeting of the first defendant held on 17 April 1990, and all things done thereat and subsequent thereto; and Gi) setting aside the sale of the six lots of land by the company to the intervener. At the conclusion of arguments advanced by Cik Jeyanthini Kannaperan of counsel for the appellants in the first appeal, this court dismissed that appeal without calling upon Encik Nathan of counsel for the respondents. ‘Thereafter, Encik Das who appeared for the intervener argued the second appeal and, after hearing Encik Nathan in reply, that appeal was also dismissed. My reasons for both decisions now follow. FACTS AND CHRONOLOGY As I have already said, the first defendant company is the registered proprietor of six lots of Jand. At all material times the issue documents of tile to these lands were in the custody of Messrs Lim, Tan & Heo, a firm of solicitors. The first defendant came to acquire the lands in this way. Initially, these six lots belonged to the first plaintiff. He and his first wife (the second defendant) incorporated the first defendant company in 1962, and were its subscribing shareholders and directors. The firstAik Ming (M) Sdn Bhd v Chang Ching Chuen [1995] 2 MLJ (Gopal Sti Ram JCA) 781 ~ defendant's registered office is in Sibu. In 1973, the first plaintiff transferred the six lots to the first defendant at RM10,000 an acre. As each of his children by the first marriage attained the age of majority, he caused the first defendant company to allot shares in the company to such child. However, almost simultaneously with such allotment, he got each child to execute undated and blank transfers which he held, together with all the relevant share certificates. The children paid nothing for those shares. At all material times, the second plaintiff was a director and shareholder of the first defendant company. She held 11,658 shares of RM100 each in it. Her share certificates are all dated 20 April 1988. She became a director of the first defendant sometime in 1989. By the terms of the articles of the first defendant, ownership of its shares is a pre-requisite to be a member of its board. On 17 April 1988, she executed two deeds of irrevocable power of attorney: one was in favour of third defendant and the other was in favour of the fourth defendant. On the same date, she executed two declarations of trust in favour of the third and fourth defendants respectively. Both the power of attorney and the declaration of trust in the third defendant’s favour declare that she holds 6,400 shares in trust for him, while those in favour of the fourth defendant makes a similar declaration in respect of the balance of 5,258 shares. In March 1988, ie before the execution of these powers of attorney, the first plaintiff caused to be incorporated a company known as Rahimah Dollah Holdings Sdn Bhd. It is not in dispute that although the second plaintiff was shown as its principal shareholder, its business and affairs were entirely under the control of the first plaintiff. From about December 1989 until about May 1990, the first plaintiff transferred funds in excess of RM600,000 from the account of the first defendant to Rahimah Dollah Holdings Sdn Bhd. It would appear that there was no, or no proper, resolution by the board of the first defendant authorizing these transfers. A reading of the printed evidence leaves me with the distinct impression that the first plaintiff was treating both companies as sole proprietorships owned by him. On 17 April 1990, a meeting of the first defendant’s board was held in Singapore. Only two directors attended. They were the second and the third defendants. The second defendant is, and was at all material times, also the secretary of the first defendant company. That meeting purported to approve transfers by the third and fourth defendants to the ninth defendant of all the shares registered in the name of the second plaintiff. The meeting also purported to declare that the second plaintiff had ceased to be a director by reason of her no longer holding shares in the first defendant. It then proceeded to appoint the fourth, fifth and ninth defendants as directors of the first defendant. It is the validity of this meeting that primarily came under challenge in the court below. The meeting of 17 April 1990 was followed by a quick succession of meetings of the first defendant’s board. On 10 May 1990, a meeting was held at which the second, third, fourth, fifth and ninth defendants were present. At that meeting, the first plaintiff was removed as the managing director and the second, third, and fifth defendants were appointed as782 Malayan Law Journal [1995] 2 ML} managing directors. About two weeks later, that is to say, on 26 May 1990, the reconstituted board met and resolved that the six lots of land belonging to the first defendant be sold. Authority was then given to the second, third and fifth defendants to sell the lands either by public auction or by private treaty. These defendants were also authorized to execute under seal all relevant documents to give effect to any such sale. By a coincidence, on the same date, ie 26 May 1990, the first plaintiff married the second plaintiff in Thailand according to Muslim law. In about April or May 1990, there was a quarrel between the first plaintiff, the second defendant and the third defendant as a result of which the first plaintiff was either driven out of (according to his evidence) or left (according to the evidence of the defendants) the family home in Singapore. Under cross-examination, it was put to the first plaintiff that despite the quarrel, he continued to visit the family home, but he denied it. Neither the defendants nor the intervener articulated this before the learned judge who, because of the way in which the case was argued before him, quite rightly refrained from saying anything about it. I refer to this event only because it was relied upon by the intervener, although counsel for the defendants before us did not touch upon it at all. On 6 September 1990, the first plaintiff entered a private caveat (‘the first caveat’) against the register documents of title to the six lots of land. ‘The Form 19B prescribed by the National Land Code 1965, and used to make the entry, refers to the supporting statutory declaration for the grounds on which the caveat rested. That declaration, in material respects, reads as follows: I, Chang Ching Chuen, care of No 22, Tan Sri Road, Sibu, Sarawak, East Malaysia do hereby solemnly and sincerely declare as follows: 1 Lam the chairman and managing director of Aik Ming (Malaysia) Sdn Bhd, a company incorporated and registered in Malaysia under the Companies Act 1965 and having its registered office at No 22, Tan Sri Road, Sibu, Sarawak (hereinafter referred to as ‘the said company’). 2 The said company is the registered proprietor of the lands described in the schedule hereto (hereinafter referred to as ‘the said lands’). 3 The title deeds of the said lands have been lost, or mislaid, or taken away by unauthorized person or persons. 4 In order to prevent unauthorized dealings in the said lands or any part thereof, I pray that a caveat be lodged against the said lands by the said company. The lands adjacent to the six lots in question were at all relevant times owned by Dato Tan Eng Boon, the chairman of the intervener. He had been approached by two brokers, Quek and Lai, who had told him that the first defendant’s six lots were up for sale. Dato Tan was very keen on buying them. According to him, he was told by Quek and Lai that the asking price was RM6m, but he had negotiated this down to RM4.8m. Neither Quek nor Lai were called to give evidence at the trial although they were, Encik Nathan told us without contradiction, physically present in court. This resulted in the learned judge drawing an adverse inference. Whether he was correct in doing so is a matter that I will deal with later.Aik Ming (M) Sdn Bhd v Chang Ching Chuen [1995] 2 MLJ (Gopal Sri Ram JCA) 783 On 26 October 1990, the second defendant, on behalf of the first defendant, gave an option in favour of Dato Tan to purchase the six lots for a sum of RM4.8m. The option was given for valuable consideration. Dato Tan paid a sum of RM100,000 for it. If he failed to exercise the option, this sum was forfeitable, but if he did, then it was to be taken as payment towards the purchase price. According to the evidence led at the trial, this sum of RM100,000 was paid by the intervener to the second defendant in Singapore. It was paid in cash. This money does not appear to have found its way into the bank account of the first defendant. A point was made that despite the payment of such a large sum of money in cash, no receipt was ever given by or asked of the first defendant. I then asked Encik Nathan during the course of his argument whether the option itself did not constitute a good and sufficient receipt. He answered that at best it was a receipt from the second defendant but not from the first defendant. I think that there is merit in the response of counsel. Dato Tan was given physical possession of the six lots upon the grant of the option to him and it would appear that even before he exercised it, he had arranged for improvements to be made to them. It appears that the option was exercised on 8 November 1990, for on that date a firm of solicitors, Messrs KH Choo & Co, acting for the intervener, wrote to Messrs Yeo, Tan, Hoon & Tee, solicitors purportedly acting for the first defendant company as vendor, forwarding to the latter a sum of RM568,000 as part of the purchase price and a draft of the proposed sale and purchase agreement. For convenience, I shall refer to the latter firm as ‘the vendor’s solicitors’. There then followed a short exchange of correspondence between these solicitors settling the terms of the sale and purchase agreement. Meanwhile, on or about 9 November 1990, the intervener’s solicitors entered a private caveat against the register documents of title to the six lots to protect their client’s interest pending completion of the sale. On 1 December 1990, the board of the first defendant met. Only three directors were present. They were the second, the third and the fifth defendants. At that meeting a resolution was passed, which is in the following terms: It was noted that Mdm Yap Poh Eng, Miss Amy Chang and Mr Peter Chang, having been duly authorized by the board of directors on 26 May 1990, to act on their behalf, reported that the company has sold the six (6) pieces of properties held under Geran 16210, Lot 1832, GM 276, Lot 876, GM 272, Lot 877, GM 273, Lot 773, GM 274, Lot 874 and GM 275, Lot 875 all in the Mukim of Jeram Batu comprising a total area of 53A, 2R, 12P or thereabout at the selling price of Malaysian Ringgit four million and eight hundred thousand (RM4,800,000) to Messrs Pekan Nenas Industries Sdn Bhd of Suite 138, ist Floor, Johor Tower, 80100 Johor Bahru, Johore, subject to the terms and conditions set out in the sale and purchase agreement concerned. It was resolved: ‘That any two (2) directors or one director and a secretary be and are hereby authorized to execute all relevant documents on behalf of the company.784 Malayan Law Journal [1995] 2 MLJ ‘That the common seal of the company be affixed to all relevant documents relating to the sale in accordance with the articles of association of the company. Now, there is one matter of some importance that I must make mention of before proceeding any further. It concerns the omission from the foregoing minutes of the receipt of the sum of RM100,000 by the second defendant from the intervener. I will deal with the significance of this later. On 3 December 1990, the formal sale and purchase agreement was executed. It is expressed to have been made between the first defendant and the intervener. In accordance with the well-recognized conveyancing practice that obtains in this country, six memoranda of transfers in Form 14A were executed purportedly by the first defendant as vendor simultaneously with the execution of the sale and purchase agreement. This was done for the purpose of obtaining from the collector of stamp duties, an adjudication of the stamp duty payable upon the instrument of transfer. These transfers were to be held in escrow pending the completion of the sale. The common seal of the first defendant was placed on the instruments of transfer, and was witnessed by the signatures of the second and third defendants. The intervener placed its common seal on the six memoranda of transfer on 8 December 1990. Soon after the execution of the sale and purchase agreement, Dato Tan commenced improvements to the lands in question. Before I continue with the recital of the chronology, it is necessary for me to make a few observations about the sale and purchase agreement and the several memoranda of transfer. Firstly, the intervener’s registered. office is given as its address in the agreement. This is what normally happens. However, in respect of the first defendant, its address is given as care of its solicitors in the matter of the sale and purchase. Now that is something that strikes me as being quite out of the ordinary, since the first defendant is a Malaysian company and has its registered office in Sibu. I will say more about it later when I come to consider the rival contentions. advanced on behalf of the plaintiffs and the intervener, respectively. Secondly, that it was not executed by placing the seal of the first defendant upon it, Instead, a rubber stamp bearing the name of the first defendant company was used with the second and the third defendants signing on its behalf. Thirdly, the agreement refers to the payment of a deposit of RM668,000. That sum is made up of the initial payment of RM100,000 under the option and the sum of RM568,000 sent under cover of the letter dated 8 November 1990, to which I have already referred. Fourthly, that the balance of the purchase price was to be paid not later than 1 March 1991, ie three months from the date of the agreement. Lastly, as has been earlier observed, the intervener had purported to execute the six memoranda of transfer on 8 December 1990, However, it had not come into existence as at that date! It was incorporated on 19 December 1990. On 22 December 1990, the collector of stamp duties assessed the ad valorem stamp duty payable on the six memoranda of transfer at RM5,002,968.75, that is to say about RM200,000 more than the price supposedly agreed upon between the parties. GAik Ming (M) Sdn Bhd v Chang Ching Chuen [1995] 2 MLJ (Gopal Sri Ram JCA) 785 On 29 December 1990, an extraordinary general meeting of the intervener company was held at which was passed the following resolution: Whereas Mr Tan Eng Chia had on 3 December 1989 (sic) signed an agreement on behalf of the company to purchase the following pieces of land situated in the Mukim of Jeram Batu in the State of Johor together with the building erected thereon for a total consideration of Malaysian Ringgit four million eight hundred thousand only (RM4,800,000). There then follows a recital of the particulars of the six lots: It is hereby resolved that the said transaction be and is hereby ratified by the company. It is noteworthy that the foregoing resolution ratifies only the sale and purchase agreement but not the several memoranda of transfer. Nor is there any ratification of the act of placing the seal of the company upon the several instruments of transfer. These are matters that will receive further consideration at the appropriate stage. The next important event also occurred on 29 December 1990. On that date the first plaintiff entered another caveat (‘the second caveat’) against the titles to the six lots. He alleged that the second caveat was to protect his interest as a director of the first defendant over the lands in question. The essential paragraphs of the statutory declaration in support of the second caveat, which contain far more particulars than that lodged in support of the first caveat, read as follows: 1 Tam the managing director of Messrs Aik Ming (Malaysia) Sdn Bhd, having a registered office at No 22, Tan Sri Road, Sibu, Sarawak, East Malaysia (hereinafter referred to as ‘the said company’). 2 By an extraordinary general meeting of the said company held on 11 July 1990, it was resolved that I be reconfirmed/reappointed in the company as the sole managing director of the said company. 3 The other shareholders of the said Company are family members who are holding the majority shares of the said company in trust for me by enjoyment as beneficial owner and who have executed the necessary transfer forms in my favour. 4 The said company owns assets in West Malaysia and these assets include real property in Pontian, namely ... [and there follows a recital of the relevant title numbers}. 5 _ In view of recent disputes between me and other shareholders, I have good reasons to believe that the other shareholders in the said company are making attempts to dispose of the landed assets of the said company without my knowledge, consent and approved (sic). 6 I verily believe that the landed assets of the said company are presently in jeopardy, and this caveat is lodged to protect both the personal and corporate interest of the said company. In early February 1991, an attempt was made by the second and the third defendants to remove the first caveat by way of an application to the land administrator under s 326 of the National Land Code 1965. The application for removal was prepared by the intervener’s solicitors and executed by the786 Malayan Law Journal [1995] 2 MLJ aforesaid defendants. That application proved unsuccessful. There then followed an exchange of correspondence to which I must make some detailed reference. It begins with a letter dated 20 February 1991, from the intervener’s solicitors to the vendor's solicitors in the following terms: KH Choo & Co Advocates and solicitors Johor Bahru 20 February 1991 Our Ref: CKH/W/658/90 Your Ref: Y/dl/3189/90 1.2 Messrs Yeo, Tan, Hoon & Tee Room 704 and 705, 7th Floor Asia Life Building Jalan Segget Johor Bahra Dear Sirs, Re: Geran 16210 Lot 1832; GM 276 Lot 876; GM 272 Lot 877; GM 273 Lot 773; GM 274 Lot 874 and GM 275 Lot 875, Mukim of Jeram Batu We refer to the above-mentioned matter and the sale and purchase agreement dated 3 December 1990, and kindly be informed that our clients have forwarded to us the sum of RM4,132,000 being the balance of the purchase price of the said properties. Further be informed that our search on the titles of the said properties revealed that all the said properties were caveated by our [I think they meant ‘one’] Chang Chin Chuan, a director and shareholder of your clients, Messrs Aik Ming (Malaysia) Sdn Bhd. In such circumstances your clients are unable to deliver to our clients a valid and registrable transfer of all the properties in favour of our clients. Please confirm whether your clients will be able to secure the withdrawal of the said caveat. Your early response hereto is appreciated. Yours faithfully eed I pause to observe that it is unclear from this letter which caveat the intervener’s solicitors were referring to; because as at the date of the letter, the first plaintiff had entered two caveats — one in early September and another in late December of 1990. The intervener’s solicitors apparently did not await a response to their letter of 20 February 1991. Instead they wrote another letter to the vendor’s solicitors on 25 February 1991. It reads as follows: KH Choo & Co Advocates and solicitors Johor Bahru 25 February 1991 Our Ref: CKH/SAG/658/90 Your Ref: Y/di/3199/9011.2Aik Ming (M) Sdn Bhd v Chang Ching Chuen [1995] 2 MLJ (Gopal Sri Ram JCA) 787 Messrs Yeo, Tan, Hoon & Tee Room 704 and 705, 7th Floor Asia Life Building Jalan Segget Johor Bahru Dear Sirs Re: Geran 16210 Lot 1832; GM 276 Lot 876; GM 272 Lot 877; GM 273 Lot 773; GM 274 Lot 874 and GM 275 Lot 875, Mukim of Jeram Batu Further to our letter dated 20 February 1991, we forward herewith our PBB cheque for a sum of RM4,132,000 being the balance of the purchase price of the aforesaid properties on your undertaking to reimburse us your clients’ proportionate share of the current quit rent and assessment which have been paid by our clients. Take Notice that your clients are in breach of cl 4 of the said sale and purchase agreement as all the said properties are caveated by your client’s shareholder/director, and therefore the transfer thereof cannot be effected in favour of our clients. Accordingly, kindly indicate to us whether you will be releasing the balance of the said purchase price to your clients. Yours faithfully ee On 8 March 1991, the vendor’s solicitors replied to the intervener’s solicitors in the following terms: Yeo, Tan, Hoon & Tee Advocates and solicitors Johor Bahru 8 March 1991 Mls KH Choo & Co Advocates and solicitors Johor Bahru Dear Sirs Re: Geran 16210 Lot 18325 GM 276 Lot 876; GM 272 Lot 877; GM 273 Lot 773; GM 274 Lot 874 and GM 275 Lot 875, Mukim of Jeram Batu We refer to the above and the supplementary agreement dated 7 March 1991. As requested, we forward the following for your further action: (@) a copy of our client’s resolution dated 26 May 1990; (b) a copy of our client’s resolution dated 1 December 1990; and (©) our cheque No PB815910 for RM4,132,000 to be held by you as stakeholder and to be dealt with strictly pursuant to the terms of the supplementary agreement. Kindly acknowledge receipt. Yours faithfully encl cc client (Attn: Madam Yap Poh Eng/Mr Peter Chang)788 Malayan Law Journal [1995] 2 ML} It is to be noticed that the letter makes mention of a supplementary agreement dated 7 March 1991, This document never surfaced at the trial. The only agreement that was produced at the trial was the sale and purchase agreement dated 3 December 1990. No explanation appears to have been proffered by either the defendants or the intervener for the non-production of this document. The terms of this supplementary agreement and the purpose for which it was entered into therefore remain a mystery. Yet the letter of 8 March 1991, speaks of the balance of the purchase price being dealt with according to this agreement. I need only add that the RM4,132,000 which was returned by the vendor’s solicitors to the intervener’s solicitors was in turn returned by them to their client. According to Dato Tan, a meeting took place at his office in Singapore in the middle of March 1991. Those present were Dato Tan, the second. defendant and the third defendant. At that meeting, Dato Tan, acting on behalf of the intervener handed over to the second defendant a sum of $2,652,744 being the equivalent of RM4,132,000 in cash. He was given the first defendant’s receipt for the payment. That receipt is dated 15 March 1991. If one were to accept Dato Tan’s evidence as being accurate, then it would follow that he was already in possession of the resolutions sent to his solicitors under cover of the letter dated 8 March 1991. But for reasons that will appear later this could not have happened. Now, the money which the second defendant received from Dato Tan was not deposited into the first defendant’s bank account. Instead, the second defendant placed the cash in a security deposit box at a bank in Singapore, opened and maintained in her name and in the name of herself and the first plaintiff. She then loaned out the money, to use her own words, ‘to all shareholders’. On 25 May 1991, the plaintiffs caused to be issued the writ in these proceedings challenging the propriety of the meeting of the first defendant's board held on 17 April 1990. There was also a challenge taken as to the validity of any sale of the six lots by the defendants, The intervener was not joined as a party to the action although the sale to it was pleaded in the statement of claim. After the issue of the writ, the plaintiffs, on 4 June 1991, obtained an ex parte injunction restraining, inter alia, the second, third, fourth, fifth and ninth defendants from dealing with or disposing of the lands in question. On 10 June 1991, the plaintiffs’ solicitors wrote to solicitors for the intervener giving them notice of the injunction. There was no reply to that letter. Instead, the intervener’s solicitors took out an originating summons for removal of the first and second caveats entered by the plaintiff. On 19 August 1991, the plaintiffs wrote again to the intervener’s solicitors. It is a very long letter. I will not produce it here. In gist, it gave notice of the injunction and alleged that the intervener was not a bona fide purchaser of the six lots.Aik Ming (M) Sdn Bhd v Chang Ching Chuen [1995] 2 MLJ (Gopal Sri Ram JCA) 789 The summons to remove the caveat was heard by Faiza Thamby Chik J, who granted an order in terms of it on 26 August 1991. Although no appeal was lodged against this order and nothing tums upon it, J think that in view of its general importance, it is necessary to digress for a moment and consider the order directing the removal of the caveats. The order of 26 August Having consulted the relevant authorities, in particular the judgment of Suffian LP in Mahadevan & Anor v Patel [1975] 2 MLJ 207, FC, Iam not at all sure that the order directing the removal of the second caveat was correct. I say nothing about the correctness of so much of the order that directed the removal of the first caveat. But my silence upon it must not be taken either as a disapproval or an affirmation of the decision removing it. I merely elect to say nothing about it. Encik Das for the intervener drew our attention to the decision of the Supreme Court in Hew Sook Ying v Hiw Tin Hee [1992] 2 MLJ 189, which he said was authority for the proposition that a director cum shareholder has no caveatable interest in the immovable property of his company. In fairness to counsel, that case may well be read as supporting the proposition advanced by counsel. Mahadevan does not appear to have been cited to the Supreme Court in Hew Sook Ying. I am unable to say what the decision might have been if this had been done. Although the point does not fall for decision in the present appeal, it may become necessary for this court at some future time to determine the circumstances, if any, in which a director or even a shareholder may be recognized as having a caveatable interest in immovable property belonging to the company. There are certainly strong reasons of policy warranting the conferment upon the director of a limited company of a caveatable interest in his company’s immovable property for the limited purpose of protecting that property from being dealt with contrary to law. To state the contrary in absolute terms is to issue a licence to directors who command a majority on the board of a company to strip that company of all its landed assets in breach of their fiduciary duties. In these circumstances, a director who is in the minority on the board will not be able to prevent the defalcating directors from disposing of the company’s lands save by the entry of a caveat. An injunction may not always be as effective in such cases. Similarly, the interests of the company in land belonging to a third party may be protected on the company’s behalf by the entry of a caveat by a director on behalf of his company as was done in Mahadevan. Recognizing that a company director has a caveatable interest in the immovable property of his company will enable him to get across the first of the three steps enumerated in Luggage Distributors (M) Sdn Bhd v Tan Hor Teng & Anor [1995] 1 ML] 719, CA. But that does not mean that a company director’s caveat ought, in all cases, to survive. If such a caveat is unable to surmount the other two steps referred to by this court in Luggage Distributors, then, of course, it will no doubt be removed. Viewed from this perspective, the decision in Hew Sook Ying is entirely justifiable790 Malayan Law Journal [1995] 2 MLJ on its own peculiar facts. If I am driven to resolve the apparent conflict, which Encik Das says, exists between the Federal Court in Mahadevan and the Supreme Court in Hew Sook Ying, then I must, with all the humility at my command, express my preference for the former. The narrative continued I now return to the factual narrative. On 2 October 1991, the Director of Lands and Mines rejected the six memoranda of transfers presented to him by the intervener for registration. The intervener therefore found itself in the position that it was unable to effect a registration of the six titles in its favour despite the removal of the first plaintiff's caveats. It therefore applied to intervene and to set aside the injunction granted on 4 June 1991. It was granted leave to intervene, but failed to have the injunction dissolved. Later, the action then proceeded to trial and produced the result which I adverted to earlier in this judgment. Now, I realize that I have dealt with the chronology of events in this case at some length despite a cogent summary of the facts by the learned judge in his judgment. This has been necessitated by two factors. First, the case is one which, by its very nature, requires, if not demands, a meticulous examination of its facts. The second is the manner in which the intervener’s case was presented in this appeal. And this will become obvious when I come to deal with the submissions made on its behalf. However, before 1 do that there is one matter of importance which calls for comment. It has to do with the way in which the plaintiffs conducted their case against the intervener. ‘THE CONSPIRACY CHARGE ‘The statement of claim contains a direct challenge as to the validity of the sale of the six lots in question to the intervener. That challenge appears as a charge of conspiracy against the defendants but not — and I emphasize this — against the intervener. In respect of the latter, the averment is that it is not a bona fide purchaser. These allegations appear in paras 60, 61 and 64 of the statement of claim which read as follows: 60 The defendants subsequently becoming aware of the first, third and fourth plaintiffs” legitimate rights to the said company, and becoming aware of their non-existent powers as shareholders and directors, the defendants wrongfully and with intent to injure the first, third and fourth plaintifis and each of them, conspired and agreed together by illegal and unlawful means commenced engaging lawyers, property brokers, and represented to the third parties that they had power, authority to sell, deal, transfer in any manner all the said lands enumerated in para 6 of the statement of claim belonging to the said company. 61 In pursuance of the said conspiracy, the second, third, fourth, fifth and ninth defendants as purported directors had wrongly without legal authority entered into a certain sale and purchase agreement to sell all the lands enumerated at para 6 of the statement of claim to 2 certain third party by the name of one Tan Eng Boon and Pekan NenasAik Ming (M) Sdn Bhd v Chang Ching Chuen {1995] 2 MLJ (Gopal Sri Ram JCA) 791 Industry Sdn Bhd at a ridiculously low price in total disregard of the said company’s interest and without the knowledge, consent and permission of the first plaintiff, third plaintiff and fourth plaintiff who are legally directors of the said company. 64 The plaintiff contends that the purported sale of the landed properties by the second, third, fourth, fifth and ninth defendants is unlawful void and is not binding on the said company and the attempt by the third parties to purchase the property is not bona fide and therefore not binding on the said company and plaintifis. Notwithstanding all this, the intervener was not joined as a party to the action. Even when the intervention took place for the limited purpose of setting aside the injunction, no steps were taken by the plaintiff to add the intervener as a co-defendant to the action. Neither did the intervener apply to have itself added as a party. There was no pleading delivered by the plaintiffs against the intervener. Neither was there any pleading delivered by the intervener. All that was placed on record was the affidavit of Dato Tan filed in support of the application to set aside the injunction. In short, every fundamental rule of practice and procedure had been flouted. What ought to have been done is this. When the intervener was given notice of the suit and of the injunction obtained therein, its solicitors ought to have written to the plaintiffs’ solicitors putting them to their election: that they either add their client as a co-defendant to the action and amend their statement of claim to raise a case against the intervener or that an application in that behalf would be made by the intervener. If the plaintiffs had demurred upon that request, then the application for intervention could and should have been made. In any event, when the application came to be made, there ought to have been a prayer in the summons asking for an order that the intervener be added as a co-defendant and for directions on the delivery of pleadings by the parties, including a direction requiring the plaintiffs to plead their case against the added co-defendant. No difficulty on this last requirement would have been encountered because there were the necessary averments in paras 60, 61 and 64 of the statement of claim. As far as the law governing the subject at hand is concerned, all the learning upon it is to be found in the judgment of Edgar Joseph Jr SCJ in Tajjul Ariffin bin Mustafa v Heng Cheng Hong [1993] 2 MLJ 143, and it is sufficient for me to refer to the following passage at p 151 of the report: To revert to the question of law posed at the outset, we consider that the following general principles as to parties may be distilled from the rules of court and the authorities thereon. (1) The principle of overriding importance is that all necessary and proper parties, but no others, should be before the court at the same time to enable the effectual and complete determination and adjudication to be made by the court of all questions and issues between the parties which arise for decision. (See O 15 rr 4 and 6 of the RHC.) (2) To this end, no action will be defeated by reason of mere misjoinder or non-joinder of any party which is capable of being remedied and is no defence. (See Aboniaff v Oppenheimer (1882) 30 WR 430.)792 Malayan Law Journal [1995] 2 MLJ The joinder of parties is permitted as of right in a wide area of circumstances or otherwise with the leave of the court. (See O 15 r 4 of the RHC.) (3) Additionally, the court has extensive discretionary powers — to add, substitute or strike out parties who are not proper or necessary, and for these purposes the court may even act of its own motion. (See O 15 r 6 of the RHC.) Generally, in common law and chancery matters, a plaintiff who considers that he has a cause of action against a defendant is entitled to pursue his remedy against that defendant alone and he cannot be forced to pursue his remedy against other persons whom he has no wish to sue. (See per Wynn-Parry J in Dollfus Mieg et Compagnie SA v Bank of England (1951} 1 Ch 33.) (5) Nevertheless, a person who is not a party may be added as a defendant over the objections of the plaintiff on his own intervention or upon the application of the defendant or in some cases by the court of its own motion. (See 1 Supreme Court Practice (1991) at p 193 para 15/6/71.) (6) But, a defendant against whom no relief is sought by the plaintiff will generally not be added against the wishes of the latter. (See Hood-Bars v Frampton & Co [1924] WN 287.) A third party notice is in such a case usually the proper procedure to adopt though such a defendant can be added in a proper case. (See Dolifus Mieg et Compagnie SA v Bank of England.) (4) I need say no more than this. In my judgment, the present case is covered by principles 1 and 5, while it falls outside the ambit of principle 6, because of the direct challenge upon the validity of the sale to the intervener. The intervener’s complaint of the lack of a properly pleaded case against it does not appear to have come, until it put in its written argument. In my judgment, it came too late. The judge dealt with it in the following passage in his judgment ([1995] 2 MLJ 43 at p 52E-H): ‘The intervener, in what I would say trying to resist the prayer sought by the plaintiffs for a declaration that the sale and purchase agreement between it and the first defendant company be declared null and void and of no effect relied on the doctrine that it is a bona fide purchaser for value and had no notice of the dispute between the shareholders/directors of the first defendant company, and even if it had notice, it is not bound to inquire into the internal affairs of the first defendant company. Further, the counsel for the intervener contended that the issue of the conspiracy of the intervener with the second to ninth defendants and the contention that the intervener was not a bona fide purchaser could not be relied on by the plaintiffs as they were not so pleaded by the plaintiffs. As the intervener was not ordered to be made a party, such contention cannot in the circumstances be accepted as no consequential action was taken under O 15 r 8 of the RHC. Hence, it is just and proper that all evidence available should be considered by the court in determining the claim of the intervener that it is a bona fide purchaser and that it had no notice of the dispute between the shareholdersidirectors of first defendant company. (Emphasis added.) It is clear as can be from this passage that the judge took the proper course, and indeed, the only course open to him at that stage. It would have been IAik Ming (M) Sdn Bhd v Chang Ching Chuen [1995] 2 ML} (Gopal Sri Ram JCA) 793 too much to have expected of him to reopen the whole case and direct the proper addition of the intervener as a co-defendant, and for the service of the process and pleadings upon it. It was for the intervener to have taken the point at the earliest available opportunity. But its legal advisers did not think it necessary to do so. In these circumstances, the learned judge adopted the course best suited to the attainment of justice and no criticism may be properly directed against him on that score. I have already emphasized the absence of any allegation in the pleaded case that the intervener was a party to the conspiracy formed between the defendants. The only allegation against the intervener, as pleaded in para 64 of the statement of claim, was that it was not a bona fide purchaser of the lands in question. However, as the trial progressed, the case against the intervener was enlarged to include a charge of conspiracy. Let me illustrate. When concluding his evidence-in-chief, Dato Tan was asked a question to which he made the following response: ‘There was no conspiracy between myself and the defendants in respect of the purchase of the lands.’ So, it would appear that at the close of the plaintiffs’ and defendants’ cases, respectively, the intervener perceived that the case against him as including a charge of conspiracy. But throughout the long and searching cross-examination of Dato Tan, there was not the slightest suggestion that he had joined in the conspiratorial agreement reached among the defendants. Indeed, the entire cross-examination of this witness would seem to have proceeded on the basis that he had acted imprudently. The following extracts from the judge’s note of the evidence confirm this: I agree that it is more prudent to use account payee cheque in dealing with a limited company’ — an answer given in the context of the payment for the option; “Before I signed the sale and purchase agreement, the second defendant had not removed the caveat but promised to do so. In spite of this I executed the sale and purchase agreement.’ Put: ‘You and your solicitors did not make proper inquiry in respect of the caveat’. Answer: ‘I did not make a proper inquiry.’ Yet, when it came to the stage of argument, the plaintiffs, in their written submission, suggested for the very first time that the intervener had been a co-conspirator. This is what they said: ‘The interveners contend that they are bona fide purchasers for value and they had no notice of the dispute as to the shareholders and directors of Aik ‘Ming (M) Sdn Bhd, and even if they had notice of the internal affairs and the disputes, they are not bound to inquire and not affected as they are third parties entering into a contract in good faith with the Aik Ming (M) Sdn Bhd. The interveners contend they had legally and lawfully entered into a sale and purchase agreement with Aik Ming (M) Sdn Bhd dated on 3 December 1990, and they are entitled to register the six pieces of land in their names as they have become beneficial owners of the properties.794 Malayan Law Journal [1995] 2 ML] In response to the interveners’ contentions, we humbly submit that the interveners’ contention is misconceived in law, wrong, unlawful and should be completely rejected by this honourable court. We submit that the interveners were not bona fide purchasers for value of the properties and in fact all their conduct and action before their execution of the sale and purchase agreement and after the sale and purchase agreement is a clear and an extreme case of mala fides to defraud the plaintiffs and the company, Aik Ming (M) Sdn Bhd. The plaintiffs further contend that the interveners and the defendants, especially the second and third defendants, conspired together to defraud all the plaintiffs and Aik Ming (M) Sdn Bhd of the landed properties which formed the substantial assets of Aik Ming (M) Sdn Bhd for the following reasons. (Emphasis added.) Now, ali this is contrary to two fundamental rules of procedural fairness that operate in the environment of private law. The first of these rules relate to the pleaded case, while the second has to do with the cross-examination of witnesses. It cannot be gainsaid that procedural law is extremely strict in cases such as this. And rightly so. For a charge of conspiracy to defraud is a serious one to make. It ought not to be countenanced by a court unless properly taken in a party’s pleadings. Such a charge must be supported by full particulars. The evidence led must be in proof of the pleaded case. The standard of proof where a conspiracy to defraud is alleged (as opposed to where, eg a conspiracy to induce the breach of a contract is alleged) is the same as where fraud is alleged. A plaintiff must prove his case beyond a reasonable doubt. Imprudence is not and ought never to be equated with dishonesty. This, then, is the first rule. The content of the second rule may be stated thus. It is essential that a party’s case be expressly put to his opponent’s material witnesses when they are under cross-examination. A failure in this respect may be treated as an abandonment of the pleaded case and if a party, in the absence of valid reasons, refrains from doing so, then he may be barred from raising it in argument. It is quite wrong to think that this rule is confined to the trial of criminal causes. It applies with equal force in the trial of civil causes as well. This rule as to cross-examination to which I have just adverted derives its name from the case in which it was expressed. It is the decision of the House of Lords in Browne v Dunn (1893) 6 R 67 where Lord Herschell LC stated the principle in this way (at p 70): Now, my Lords, I cannot help saying that it seems to me to be absolutely essential to the proper conduct of a cause where it is intended to suggest that a witness is not speaking the truth on a particular point, to direct his attention to the fact, by some questions put in cross-examination showing that that imputation is intended to be made, and not to take his evidence and pass it by as a matter altogether unchallenged and then, when it is impossible for him to explain, as perhaps he might have been able to do if such questions had been put to him, the circumstances which it is suggested indicate that the story he tells ought not to be believed, to argue that he isB D Aik Ming (M) Sdn Bhd v Chang Ching Chuen [1995] 2 MLJ (Gopal Sri Ram JCA) 795 a witness unworthy of credit. My Lords, I have always understood that if you intend to impeach a witness you are bound, whilst he is in the box, to give him an opportunity of making any explanation which is open to him; and, as it seems to me, that is not only a rule of professional practice in the conduct of a case, but is essential to fair play and fair dealing with witnesses. In the same case, Lord Halsbury had this to say (at p 76): My Lords, with regard to the manner in which the evidence was given in this case, I cannot too heartily express my concurrence with the Lord Chancellor as to the mode in which a trial should be conducted. To my mind nothing would be more absolutely unjust than not to cross examine witnesses upon evidence which they have given, so as to give them notice, and to give them an opportunity of explanation, and an opportunity very often to defend their own character, and, not having given them such an opportunity, to ask the jury afterwards to disbelieve what they have said, although not one question has been directed either to their credit or to the accuracy of the facts they have deposed to. Having dealt with the evidence in that case, Lord Halsbury continued (at p77): My Lords, it seems to me that it would be a perfect outrage and violation of the proper conduct of 2 case at misi prius if, after the learned counsel had declined to cross-examine the witness upon that evidence, it is not to be taken as a fact that that witness did complain of the plaintifi’s proceedings, that he did receive advice, that he went round to Mr Dunn as a solicitor, and that he did sign that retainer, the whole case on the other side being that the retainer was a mere counterfeit proceeding and not a genuine retainer at all. The rule in Browne v Dunn has been applied by Indian courts in the context of the Indian Evidence Act 1872, on which is based our Evidence Act 1950. I need only refer to the decision in Carapiet v Derderian AIR 1961 Cal 359, where Mukharji J, at p 362 of the report, expressed the principle in the following words: The law is clear on the subject. Wherever the opponent has declined to avail himself of the opportunity to put his essential and material case in cross- examination, it must follow that he believed that the testimony given could not be disputed at all. It is wrong to think that this is merely a technical rule of evidence. It is a rule of essential justice. It serves to prevent surprise at trial and miscarriage of justice, because it gives notice to the other side of the actual case that is going to be made when the turn of the party on whose behalf the cross-examination is being made comes to give and lead evidence by producing witnesses. It has been stated on high authority of the House of Lords that this much a counsel is bound to do when cross-examining that he must put to each of his opponent’s witnesses in turn, so much of his own case as concerns that particular witness or in which that witness had any share. If he asks no question with regard to this, then he must be taken to accept the plaintiff's account in its entirety. Such failure leads to miscarriage of justice, first by springing surprise upon the party when he has finished the evidence of his witnesses and when he has no further chance to meet the new case made which was never put and secondly, because such subsequent testimony has no chance of being tested and corroborated.796 Malayan Law Journal [1995] 2 MLJ ‘Now, the principle of law laid down in these passages is to be applied to the facts of the instant appeal in the following fashion. First, we have the firm denial by Dato Tan in his evidence-in-chief of any participation in the conspiracy formed amongst the second to the ninth defendants. Then we see no challenge in his cross-examination of that firm denial. That must be taken as an acceptance by the plaintiffs of the refutation by Dato Tan in his evidence of any part in the conspiracy. Later, when it came to the stage of making submissions, the plaintiffs were not entitled to argue that Dato Tan was a co-conspirator. It appears that the learned judge was very much aware of the futility in so much of the plaintiffs’ submission that suggested the implication of Dato Tan in the conspiracy. For, apart from mentioning it en passant, in the passage I have reproduced earlier, he kept to the safe course of determining whether the intervener was a bona fide purchaser for value and whether it could take advantage of the indoor management rule established by the decision in Royal British Bank v.Turquand [1843-60] All ER Rep 435, This comes across from a reading of his judgment as a whole and from that part in the passage of his judgment upon which I have placed emphasis. The approach taken by the learned judge is common to the plaintiffs and the intervener. Indeed, it was made by each of them in their respective written submissions. Accordingly, at a very early stage of the hearing, we informed Encik Das that we were not inclined to accept any suggestion that the intervener was a party to the conspiracy. Encik Nathan, then upon our invitation, with his customary frankness, accepted that the only issue upon which liability attracted to the intervener was its ability to show that it was a bona fide purchaser and came within the protective cover of the indoor management rule. With one qualification, both parties therefore stood on common ground in respect of the issues that fell for decision in this appeal. The qualification I mentioned appeared in Encik Das’ submission to the effect that the mind of the learned judge had, by reason of his reference to the charge of conspiracy in the passage in his judgment to which I have referred, been influenced by the allegation of conspiracy against the intervener. In other words, says Encik Das, the allegation that the intervener was a co-conspirator was very much in the learned judge’s mind when he came to set aside the sale of the six lots. I would respond to counsel’s submission by stating that in fairness to the learned judge, when his judgment is read as a whole, there is nothing in it to even remotely suggest that he had allowed his mind to be affected in any way by the suggestion that Dato Tan was a party to the conspiracy between the defendants. It is clear that he found the sale to the intervener to be unsustainable purely on the basis of its inability to take advantage of the indoor management rule, because it was not a bona fide purchaser. Consequently, there is no merit in this part of Encik Das’ argument and I have no hesitation in rejecting it. I must now turn to deal with the submissions made in the first appeal and the other submissions made on the intervener’s behalf in the second appeal.Aik Ming (M) Sdn Bhd v Chang Ching Chuen [1995] 2 ML} (Gopal Sri Ram JCA) ‘797 ‘THE SUBMISSIONS IN THE FIRST APPEAL Cik Kannaperan made the following submissions in support of the first appeal: (1) the learned judge was wrong in holding that the notice convening the board meeting of 17 April 1990 was invalid, and that even if it was valid, it had not been served on the first, second and third plaintiffs; (2) even if no or no proper notice of that meeting had been served, the meeting and all business conducted thereat were valid since the ultimate result would have been no different, even if the plaintiffs had attended the meeting; (3) the judge was wrong in holding that the transfers of shares that were approved at the meeting of 17 April 1990, were invalid. He had overlooked the two declarations of trust and powers of attorney executed by the second plaintiff in favour of the third and fourth defendants when he made this finding. These transfers were done in the legitimate exercise of the powers of attorney and the deeds of trust and were therefore valid; and (4) even if the meeting of 17 April 1990 and the proceedings thereat were defective, they could and should be cured under s 355(3)(a) of the Companies Act 1965. I now turn to consider each of these submissions. Submission (1): Service of notice Iwill, for a moment, put aside the complaint regarding the judge’s finding that the notice was invalid, and consider the argument directed upon the issue of service. It is not in dispute that the validity of all that transpired at the meeting of 17 April 1990, depends upon whether proper notice of that meeting had been served — I use the word ‘served’ deliberately — upon the other members of the board by the second defendant as the secretary of the first defendant. Upon this issue, the leamed judge had before him two conflicting versions: the defendants contending that there had been service of the notice, and the first to the third plaintiffs contending that they had not received it. He resolved this issue in the plaintiffs’ favour in the following passage in his judgment ([1995] 2 ML] 43 at pp 50C-51C): The second defendant, who is also the secretary, claimed that a notice of the meeting of the board to be held on 17 April 1990 (see p 1 of D1), was issued to all the directors. However, the first plaintiff (PW1), second plaintiff (PW2) and third plaintiff (PW3) gave evidence that each of them had not received the notice referred to. According to art 89, the secretary shall summon a meeting of the directors by notice served upon the several directors. Article 107 states: ‘Any notice sent by post shall be deemed to have been served on the day after the envelope or wrapper containing the same is posted and in798 Malayan Law Journal [1995] 2 ML} proving such service it shall be sufficient to prove that the envelope or wrapper containing the notice was properly addressed and put in the post office box.’ PW1, PW2 and PW3 who were the directors at the material time, in their evidence denied receipt of the notice and the agenda (see p 2 of D1) whereas DW2 gave evidence that he did receive the notice and the agenda (pp 1 and 2 of Di). DW2 stopped there without producing the relevant documents to show that the notice and the agenda were in fact issued and sent to the directors for the meeting on 17 April 1990. If the notice and the agenda had been sent to all the directors, I am of the view that there could be no reason for PW1, PW2 and PW3 not to attend the board meeting in view of the agenda to be discussed and passed at the board’s meeting. In fact, it is the more reason for PW1, PW2 and PW3 to attend the said board meeting as they could very well defeat the resolutions proposed thereat in view of their majority shareholding in the first defendant company at the material time. In view of the denial of the receipt of the notice and the agenda by PW1, PW2 and PW3, and I do not see any good reason to disbelieve them, it is for the defendants to show that such notice and agenda were served on PW1, PW2 and PW3. In fact the defendants failed to so prove and, interestingly enough, their counsel did not press hard on this issue when cross-examining PW1, PW2 and PW3. With respect to counsel, I am unable to detect any error of reasoning in the foregoing passage. It cannot be gainsaid that the persons who were to be most affected in an adverse fashion by the business that was intended to be transacted at the board meeting in question were the first, second and third plaintiffs. It was entirely in their interest to attend that meeting. Had they done so, there is no doubt that the intended resolutions would have never carried because they formed, as the board was then constituted, the majority. I am unable to believe that, in the circumstances that existed in April 1990, the first plaintiff would have thrown his hands up in abject surrender on receipt of the notice and the agenda. As I have said, he was a man who treated the first defendant company as a firm of which he was the sole proprietor, and I am certain that it would have been in his nature to ward off any attempt to unseat him from the control he wielded. Therefore, I am, quite apart from the judge’s own belief of the plaintiffs’ witnesses and independent of his own reasoning, inclined to believe their testimony as it appears in the printed record. I find their evidence to entirely accord with the probabilities of the case. It must not be forgotten that the determination of the issue now under consideration is a pure question of fact turning upon the credibility of witnesses whom the trial judge had had the advantage of visual assessment. The approach of an appellate court upon such a matter is well settled and has been expressed in a number of decisions, and I think that it is appropriate to quote from two of them. The first is the decision of the House of Lords in Clarke v Edinburgh Tramways Co (1919) SC (HL) 35, where, at p 36, Lord Shaw had this to say: When a judge hears and sees witnesses and makes a conclusion or inference with regard to what on balance is the weight of their evidence, that judgment is entitledAik Ming (M) Sdn Bhd v Chang Ching Chuen [1995] 2 ML (Gopal Sri Ram JCA) 799 to great respect, and that quite irrespective of whether the judge makes any observations with regard to credibility or not, I can of course quite understand a Court of Appeal that says that it will not interfere in a case in which the judge has announced as part of his judgment that he believes one set of witnesses, having seen them and heard them, and does not believe another. But that is not the ordinary case of a cause in a court of justice. In courts of justice in the ordinary case things are much more evenly divided; witnesses without any conscious bias towards a conclusion may have in their demeanour, in their manner, in their hesitation, in the nuance of their expressions, in even the turns of the eyelid, left an impression upon the man who saw and heard them which can never be reproduced in the printed page. What in such circumstances, thus psychologically put, is the duty of an appellate court? In my opinion, the duty of an appellate court in those circumstances is for each judge of it to put to himself, as I now do in this case, the question, am I — who sit here without those advantages, sometimes broad and sometimes subtle, which are the privilege of the judge who heard and tried the case — in a position, not having those privileges, to come to a clear conclusion that the judge who had them was plainly wrong? If I cannot be satisfied in my own mind that the judge with those privileges was plainly wrong, then it appears to me to be my duty to defer to his judgment. (Emphasis added.) The second case from which it is, I think, appropriate to quote is Seng Heng Electrical v Chua Len Teng [1970] 1 ML] 67 where Ong Hock Thye CJ (Malaya), when dealing with a case in which the High Court had reversed a magistrate on appeal, said this (at p 68): «.. In the result, after considering the conflict of evidence regarding certain documents, the judge came to the conclusion that ‘on the preponderance of evidence the learned magistrate was wrong in coming to the conclusion that there was an oral agreement between the respondents and the appellant’. With respect, we do not think that he was justified in substituting his own opinion for that of the magistrate ‘where the credibility or reliability of one or more witnesses has been in dispute, and where a decision on these matters has led the trial judge to come to his decision as a whole,’: see Benmax v Austin Motor Co Lid [1955] AC 370, per Lord Reid. Citing Thomas v Thomas [1947] AC 484 his Lordship recalled this passage from the speech of Lord Thankerton: “Where a question of fact has been tried by a judge without a jury, and there is no question of misdirection of himself by the judge, an appellate court which is disposed to come to a different conclusion on the printed evidence, should not do so unless it is satisfied that any advantage enjoyed by the trial judge by reason of having seen and heard the witnesses, could not be sufficient to explain or justify the trial judge’s conclusion’. In reliance of these authorities and for the reasons which I have given, I have no difficulty in rejecting this part of the first submission of Cik Kannaperan. I now turn to deal with complaint that is directed against the finding by the judge that the notice convening the meeting of 17 April 1990, was invalid. This is what the learned judge said about it ([1995] 2 MLJ 43 at p 50D-G):800 Malayan Law Journal [1995] 2 MLJ Quite apart from the non-receipt of the said notice by PW1, PW2 and PW3, a look at the notice as on p 1 of DI clearly showed that the notice was not dated and signed by the secretary (ie DW3). Neither was the signature even printed as provided by art 110. According to DW3, she did sign and put a date on the said notice and the notice as in p 1 of D1 was a file copy only and it was not signed and dated or even printed. Apart from her oral explanation, she did not adduce any other evidence to support her oral explanation about the notice (p 1 of D1) that was undated and unsigned. Now the question for me to consider is whether her explanation can be accepted by the court. Itis clear by art 110 (p 10 of P3) that the signature to any notice to be given by the first defendant company may be written or printed. I am of the view that it is rather difficult to accept her oral explanation as it would appear to be rather odd for her to sign on all the copies except the file copy! In fact, she needed only to print her name on the file copy of the notice to meet the requirement of art 110. In the circumstances the notice at p 1 of D1 could not, in my view, constitute a proper notice. However, even assuming that the notice was duly dated and signed as claimed by DW3, the next issue I have to consider is whether the notice had been duly served on all the directors. Counsel submits that the learned judge’s evaluation of the evidence is wrong, because it is perfectly natural for the second defendant not to have signed the file copy. I am neither able to agree with the submission of counsel nor am I able to find any fault in the reasoning of the learned judge on this point. As to the second defendant’s explanation for the absence of her signature on the file copy, this is again a matter which is dependent upon the impression made upon the mind of the judge who saw and heard the witness. I am satisfied that his rejection of the second defendant’s explanation to be an entirely proper judicial appreciation of her evidence. As such, I find the submission of counsel on this point to be devoid of any merit and I unhesitatingly reject it. Submission (2): Validity of the meeting The essence of Cik Kannaperan’s second submission is that the meeting of directors on 17 April 1990, was not invalidated by the failure to give a proper notice of it. She says that it would have made no difference even if no notice was given. Let me take the second of these points as the first. To say that no difference would have been occasioned by a failure to notify the first, second and third plaintiffs of that all-important meeting is to imitate Nelson at Trafalgar. To recall, prior to the changes made to the constitution of the first defendant’s board, the first, second, and third plaintiffs formed the majority on the board, The other two directors were the second and third defendants. It does not require much imagination to realize the fate the proposed resolutions would have met had they attended the meeting. There can be no doubt that the votes of the plaintiffs would have, without difficulty, prevailed over those of the defendants and that therefore there would have been a material difference in the event that the plaintiffs had been notified of the meeting. Accordingly, there is no merit in this argument of the defendants.= Aik Ming (M) Sdn Bhd v Chang Ching Chuen [1995] 2 ML} (Gopal Sri Ram JCA) 801 I now tum to consider the more formidable argument that the defendants’ failure to give notice did not have the effect of invalidating the board meeting. In support of her argument, Cik Kannaperan cited two decisions, namely, Bentley-Stevens v Jones [1974] 2 All ER 653; [1974] 1 WLR 638, and Dr Mahesan & Ors v Ponnusamy & Ors [1994] 3 MLJ 312. In the former, the following passage in the judgment of Plowman J, [1974] 2 All ER 653 at p 655; [1974] 1 WLR 638 at p 640, was read to this court: The plaintiff's case is first of all that proper notice of the board meeting of Holdings on Monday, 28 January 1974, was not given, with the consequence that the proceedings of that meeting, and everything that flowed from them, were invalid. Secondly, it was submitted on behalf of the plaintiff that even if sufficient notice of the meeting was given, a board meeting of the defendant company was necessary before an extraordinary general meeting of that company could be validly convened, and no such meeting was ever held, with the consequence that the extraordinary general meeting was not properly convened and its proceedings were therefore a nullity. Alternatively, Mr Heyman, on behalf of the plaintiff, submitted that this was what is popularly known as a ‘quasi-partnership’ case and that on the principles enunciated by the House of Lords in Re Westbourne Galleries Lid [1973] AC 360 the court should restrain the first and second defendants, as two of the three partners in the quasi-partnership, from expelling the third partner, namely, the plaintiff. I will deal with the first and second submissions together. In my judgment, even assuming that the plaintifPs complaint of irregularities is correct, this is not a case in whicb an interlocutory injunction ought to be granted. I say that for the reason that the irregularities can all be cured by going through the proper processes and the ultimate result would inevitably be the same. In Browne v La Trinidad (1887) 37 Ch D 1 at p 17, Lindley LJ said: ‘ think it is most important that the court should hold fast to the rule upon which it has always acted, not to interfere for the purpose of forcing companies to conduct their business according to the strictest rules, where the irregularity complained of can be set right at any moment.’ It seems to me that the motion which is before me falls within the principle stated by Lindley LJ. (Emphasis added.) In the latter case, Zakaria Yatim J (as he then was) undertook a careful review of several authorities upon the subject. I shall therefore quote from his judgment at length ([1994] 3 MLJ 312 at pp 318C-320H): Mr Thangaraj submitted that the notice of the board meeting dated 14 April 1994 did not give sufficient time to Dr Mahesan and Dr Ampikai to attend the meeting. He said that the law requires that sufficient time be given for notice of meeting of board of directors. He cited a number of, authorities in support of his submission. Mr CK Ong, counsel for the defendants submitted that on the question of the notice of the board meeting dated 14 April 1994, the court had to802 Malayan Law Journal [1995] 2 MLJ decide: (a) whether the notice was given to the plaintiffs; (b) if the notice was given to the plaintiffs, whether it provided sufficient time for the plaintiffs to attend the meeting; (c) whether the notice provided details as to the nature of the business to be transacted; and (d) whether a written agenda is necessary in law to be given to the directors. He too cited a number of authorities. I shall now examine the position in law whether the plaintiffs were given sufficient time to attend the board meeting on 25 April 1994. The memorandum and articles of the company are silent on the issue of notice of meeting of directors. The Companies Act 1965, too is silent on this point. It is therefore necessary to examine the position at common law. According to RR Pennington, Company Law (6th Ed) at p 575: ‘Notice of board meetings should be given to all the directors in sufficient time to enable them to attend. What is sufficient notice depends on the facts at the time ...” In Re Homer District Consolidated Gold Mines (1888) 39 Ch D 546, the meeting of board of directors was held at 2 o’clock, two of the directors were given a few hours’ notice and they did not attend. One of them received the notice the next day. The other gave notice that he could not attend till three o’clock. The fifth director was abroad and no notice was sent to him. The court decided that the service of the notice of the meeting was bad and the decisions of the board in the absence of the directors were void. In Browne v La Trinidad (1888) 37 Ch D 1, the facts as stated in the headnotes are as follows: ‘A meeting of directors passed a resolution to summon an extraordinary general meeting at which were to be proposed special resolutions for removing B from the office of director, and for increasing the capital. The articles gave power to remove directors by special resolution. The only notice B had of the board meeting was a notice given less than ten minutes before the time of holding it, and not stating the nature of the business. The notices for the general meeting were issued, and four days before the time for the meeting B, who up to that time had made no complaint of the short notice, brought his action to restrain the company from holding the meeting, on the ground that the board which summoned it was not duly constituted, as B had not received proper notice and could not attend. The general meeting was held and passed the resolutions. Charles J ... granted an injunction restraining the company from confirming the resolution to remove B.” The Court of Appeal decided that the injunction ought not to have been granted. In his judgment at pp 16-18, Lindley LJ said: “The power of the board to convene a meeting of the shareholders is contained in cl 56 of the articles, and runs thus: “The directors may, whenever they think fit, call an extraordinary meeting” and then it provides that they shall be bound to do so upon such requisition as therein mentioned. ‘The directors may whenever they think fit.’ That means, I apprehend, that the directors may do it at a meeting properly convened. I do not think it means that any directors may without consulting the others call an extraordinary meeting. I think that, so far, Mr Marten’s argument is right, and if the plaintiff had complained thatAik Ming (M) Sdn Bhd v Chang Ching Chuen [1995] 2 MLJ (Gopal Sri Ram JCA) 803 the meeting of directors convened at such a short notice was not duly convened, and had sought the interference of the court to prevent the directors from acting on a resolution passed at it, I can understand that he would have had a plausible case. But he did nothing of the kind. He took no notice of the matter, He did not say that it was inconvenient for him to atend, and he did not ask the directors to adjourn it. He does nothing at all until this notice convening the extraordinary meeting has been issued and circulated, nor until four days before the meeting. His contention now is that what he calls this irregularity in serving the notice upon him, renders it incompetent for the shareholders to pass the resolution to consider which they have had notice to meet. It appears to me that, if we gave effect to such an argument as this, we should be paralyzing the whole course of business of these companies, It is competent for directors to call meetings, it is competent for shareholders to pass resolutions, and the most that can be said here is that there is or may be some irregularity, but an irregularity (if such it be) which can be cured at any moment. In such cases the court never interferes. I think it is most important that the court should hold fast to the rule upon which it has always acted, not to interfere for the purpose of forcing companies to conduct their business according to the strictest rules, where the irregularity complained of can be set right at any moment. I am not at all sure, having regard to the mode in which, and the short notice upon which, those meetings of directors were held, that this gentleman could have complained of this meeting of directors as irregular, but I will assume that he could. If, at the time of receiving the notice of the board meeting, he had said to the secretary that he could not attend as the notice was 100 short, he might have had some case. 1 am not prepared, however, to say that in consequence of the shortness of that notice the shareholders were incompetent to pass the special resolution they were convened to consider, If they confirm it tomorrow it appears to me that their doing so will be entirely valid and I am of opinion that this injunction ought not to have been granted.” (Emphasis added.) It is to be noted that in Browne v La Trinidad, the plaintiff did not complain that the meeting was convened at such a short notice, he did not even say that it was inconvenient for him to attend the meeting neither did he ask that the meeting be adjourned. The Court of Appeal decided that the meeting was not irregular and set aside the injunction granted by Charles J. In Bentley-Stevens v Jones & Ors [1974] 2 All ER 653; [1974] 1 WLR 638, the facts were that the plaintiff happened to be away from home for the weekend and did not receive the notice of meeting until 9 o’clock on the Monday evening when he got back. Nor did he receive a telephone call which the first defendant made to him or tried to make to him on the Sunday because there was nobody there to answer the telephone. By Monday evening when the plaintiff received the notice, the meeting was already held at 9.30 in the morning and a resolution was passed to remove him as a director. Plowman J decided that this was only an irregularity which could be cured. He relied on Browne » La Trinidad (1888) 37 Ch D 1. In Re Portuguese Consolidated Copper Mines Ltd (1889) 42 Ch 160, the directors had no notice of the meeting and the court decided that the meeting was invalid. In La Compagnie de Mayville v Whitley [1896] 1 Ch 788, the facts were that S received a notice that a board meeting would be held on 24 February.804 Malayan Law Journal [1995] 2 MLJ On 24 February, S did not attend. $ then sought a declaration that the resolutions of 24 February were void but the Court of Appeal held that the resolutions of 24 February were valid. From the cases cited above, it is clear that where a few hours’ notice is given for a board meeting and two of the directors are not able to attend the meeting due to the short notice, or where no notice is given because the director is abroad, a meeting held pursuant to that notice is void. But if the directors who receive the short notice of meeting make no objections to the short notice or make no request that the meeting be adjourned to another date, such meeting is valid. Where the notice of meeting does not reach the directors because they are abroad, the meeting is only an irregularity which can be set right at any moment. In order to determine whether sufficient notice is given to directors, the court has to examine the previous practice of the board of directors in calling the meeting. In Homer’s case (1888) 39 Ch D 546, the few hours’ notice had never been previously given in the history of the company. Where the memorandum and articles expressly specify the duration of the notice of meeting of the board of directors, the board must strictly comply with that rule, Non-compliance with that rule will render the meeting ineffective, and the resolutions passed at the meeting invalid. See First Nominee (Pte) Lid v New Kok Ann Realty Sdn Bhd & Anor [1983] 2 MLJ 76. I apprehend that the answer to the defendants’ submission is to be found in those passages in the judgments of Plowman and Zakaria Yatim JJ and Lindley LJ upon which I have placed emphasis. In summary, the proposition contended for does not apply because, first, this is not a case where insufficient notice of a meeting was given. It is a case in which no notice whatsoever was given. This is not a case of a mere irregularity but of a nullity. I must add that if I had been asked to read the judgment of Lindley LJ in Browne v» La Trinidad, which was relied upon in both cases cited by counsel, as classifying a case such as the present as a mere irregularity, then I would have reluctantly, and with all the respect that is due to that most leamed judge, expressed my dissent upon the proposition advanced. How can it ever be said that a director’s removal at a meeting of which notice to him is withheld is a mere irregularity? When the question is put in this way, it seems clear to me that the proposition contended for falls so short of our own standards and concepts of corporate fairness, that I find it entirely unacceptable. However, I am relieved to realize that I need not place myself on a collision course with Lindley LJ, since all that one needs to do is to recognize that relief to Browne was Principally denied at an interlocutory level on the ground that his conduct amounted to an acquiescence of the wrong done to him; and secondly, this is a case in which the plaintiffs, as at the date of the impugned meeting, not only had a preponderance of voting power on the board but also on the floor of any general meeting that may have been convened at the material time. Whilst particular cases may be distinguished upon their special facts, I take the proposition to be well settled that, unless the articles of a company provide to the contrary, no meeting of a board is valid, unlessAik Ming (M) Sdn Bhd v Chang Ching Chuen [1995] 2 MLJ (Gopal Sri Ram JCA) 805 reasonable notice of it and the relevant agenda that is to be discussed at it is given to the directors. Young v Ladies Imperial Club Ltd [1920] 2 KB 523; [1920] All ER Rep 223 is authority for that proposition. In that case, jt was held that, ‘where a special meeting of a committee or any other body has to be specially convened for a particular purpose, every member of that body ought to have notice of and a summons to the meeting, and accordingly the omission to summon one member of a committee and the fact that the notice did not state the object of the meeting with sufficient particularity vitiated the proceedings of that body’ (per Abdoolcader J in PP v Datuk Hj Harun bin Hj Idris & Ors [1977] 1 ML] 180 at p 189). Although all three members of the English Court of Appeal (comprising Lord Sterndale MR, Warrington and Scrutton LJJ) delivered separate judgments, I think it sufficient if I quote from the judgment of the Master of the Rolls [1920] 2 KB 523 at pp 527-528; [1920] All ER Rep 223 at pp 226-227. This is what he said: I cannot entertain any doubt that, with certain very limited exceptions where a special meeting of a committee or any other body has to be specially convened for a particular purpose, every member of that body ought to have notice of and a summons to the meeting. It seems to me that is quite clearly laid down in Smyzh v Darley 2 HLC 789 at p 803, where Lord Campbell says: “The election’ [and you may read ‘expulsion’ for ‘election’; exactly the same principle applies] ‘being by a definite body on a day of which, till summons, the electors had no notice, they were all entitled to be specially summoned, and, if there was any omission to summon any of them, unless they all happened to be present, or unless those not summoned were beyond summoning distance — as, for instance, abroad — there could not be a good electoral assembly.” And in the same way in Portuguese Consolidated Copper Mines 42 Ch D 160 at p 167 Lord Esher says this: ‘I will assume that every point taken by Mr Rigby and Mr Buckley ought to be decided in their favour except one. That one is this, that according to their own argument it is necessary that all the directors should have had notice of the meeting of the 24th.’ ‘That was on general principles I think, and not any special provision in the articles that notice should be sent to every member. “If they had not, then the meeting of the 24th was no valid meeting, and being an invalid meeting could not adjourn itself to the 26th.” ‘Therefore as to the general principle, I think, there can be no question. If the absent member of the body is at such a distance that it is physically impossible for him to attend in obedience to a summons, then the convener of the meeting is excused from sending the notice to that member, and without any such notice to him the meeting of the body will be properly convened. I incline to think, but I do not express any very definite opinion, that the same exception would probably be held good where it was undoubted that a member of the body was so dangerously ill that it was impossible for him to be moved, even although he might not be at a distance; and in806 Malayan Law Journal [1995] 2 MLJ Re Portuguese Consolidated Copper Mines, it is also, I think, decided that a person who ought to be summoned cannot dispense the convener of the meeting from summoning him by saying, ‘I shall not be able to come; you need not summon me.’ There the director had gone to Ireland, and said he should be in Ireland. It was pointed out that Ireland is not inaccessible by post, nor is England inaccessible from Ireland if the director thought fit to come back from Ireland and attend the meeting. I do not know of any other exception. I pause to note that the decision in Young does not appear to have been brought to the attention of Plowman J in Bentley-Stevens nor to Zakaria Yatim J in Dr Makesan. It is difficult, if not impossible, to predict what the decisions in these two cases may have been if that had been done. In arriving at my conclusions upon the matter at hand I have derived considerable support from the judgment of my learned brother VC George JCA in Chan Choon Ming v Low Poh Choon & Ors [1995] 1 CLJ 812 at p 814 where he said: ‘The directors are the primary organ of a company. They have powers conferred on them to manage the company. These powers are conferred upon the directors collectively as a board. Prima facie, they can be exercised only at a board meeting of which due notice has been given and at which a quorum is present. And although majority decision prevails, it is trite that a meeting of the majority without notice to the minority is ineffective — Re Portuguese Copper Mines (1889) 42 Ch D 160; Young v Ladies Imperial Club [1920] 2 KB 523. The exception to this, not relevant here, is that if all the directors are present and consciously make a decision, that decision will not be ineffective simply because formal notice was not given — Swiss Screens (Australia) Pry Led v Borges (1987) 11 ACLR 756 at p 758. Useful reference may also be had to Mitropolous v Greek Orthodox Church and Community of Marrickville & District Ltd (1993) 10 ACSR 135. Given the finding of fact by the learned judge that the notice convening the meeting of 17 April 1990 was not served on the plaintiffs — a finding that I accept as being entirely proper — and having regard to the tue principle of law that is to be applied, I am satisfied that the conclusion reached by the learned judge, namely, that the meeting and all the business conducted thereat were utterly void, is correct. It follows that the submission by counsel on this point is unacceptable. The business conducted at the subsequent meetings of the first defendant’s board are dependent for their validity upon the propriety of the meeting of 17 April 1990. That meeting having failed to stand up to curial scrutiny, these later meetings are also void and useless, and the learned judge was right in so holding. I now turn to consider the third submission made by the defendants. Submission (3): The trust point As noted earlier, Cik Kannaperan’s argument here is based upon the two powers of attorney and the even dated deeds of trust, all of which I have referred to when reciting the facts.Aik Ming (M) Sdn Bhd v Chang Ching Chuen [1995] 2 MLJ (Gopal Sri Ram JCA) 807 Now, it emerged at the trial, as part of the defendants’ case, that the 11,658 shares of which the second plaintiff was the registered owner were never intended to be her property. Neither was her directorship of the first defendant meant to amount to anything at all. This is how the third defendant described it in the course of his evidence-in-chieft ‘The second plaintiff held the shares in trust for me and my brother as we needed two Malaysian directors and she would be considered as one, and the other reason is, being a Malaysian company owning properties in Malaysia, I was led to believe that the majority of the shares would be belonging to Malaysians. The second plaintiff got involved in the company as she was a labourer earning RM20 per day. Additionally, when the second plaintiff was under cross-examination, it was specifically put to her that she had been elected as a director by virtue of she being a Malaysian. Now, I say with all due respect that those having conduct of this matter for the defendants did not sufficiently address their minds to the serious implications consequent upon the stand taken by their clients. In fairness to them, the matter does not appear to have had any impact upon the minds of those having conduct of the plaintiffs’ case either; for otherwise they would no doubt have pursued it to its natural and logical conclusion. The point is this. It was intended by the defendants that the Registrar of Companies should be misled into believing, on the face of the statutory documents lodged with him, that the second plaintiff was the true beneficial owner of the shares in question and a director of the first defendant. So too would members of the public who made a search at the office of the registrar be misled. The truth, of course lay elsewhere. Since the truth lay elsewhere, the question, then, is whether these deeds of trust and powers of attorney are worth the paper on which they are written. I think that they are not. They were part of a scheme or device to perpetrate a fraud upon the public administration. For that reason, they are plainly tainted with illegality, void and worthless. The law has come across such arrangements before, and it has almost always struck them down. In Suntoso Jacob v Kong Kiao Ming & Anor [1986] 2 MLJ 170, which I drew to the attention of counsel during her argument, the plaintiff, an Indonesian national, brought an action, inter alia, for a declaration that the defendant, a Singaporean, was not entitled to certain shares in a company of which he was the registered shareholder. The plaintiff claimed that these shares were held by the defendant in trust and were to be transferred and dealt with in accordance with the former’s directions. The defendant denied a trust and pleaded that the shares had been sold to him. ‘The company in which these shares were held owned a vessel which had been registered with the Registrar of Ships according to whose guidelines, as they then were, ships owned by companies controlled by foreigners could not be registered. The plaintiff, who had initially owned the shares in question, had transferred them to the defendant to create an impression808 Malayan Law Journal [1995] 2 ML} in the mind of the registrar that the vessel was owned by a company, the shares of which were predominantly owned by Singaporeans. The High Court dismissed the suit. The plaintiff appealed and, argued, inter alia, that the registrar’s guidelines were ultra vires the Merchant Shipping Act (Cap 172). The Court of Appeal of Singapore dismissed the appeal. Among the authorities referred to by Thean J (as he then was) in the course of his judgment is the following passage in the opinion of Lord Denning in Palaniappa Chettiar v Arunasalam Chettiar (1962] MLJ 143 at p 145: In these circumstances it was essential for the father to put forward a convincing explanation why the transfer took the form it did: and the explanation that he gave disclosed that he made the transfer for a fraudulent purpose, namely, to deceive the public administration into thinking that he only held 99 acres of land and his son 40 acres, whereas in truth he himself meant to hold the whole 139 acres. Once this disclosure was made by the father, the courts were bound to take notice of it, even though the son had not pleaded it: see Scott » Brown, Doering, McNab & Co [1892] 2 QB 724. Of the argument that the registrar’s guidelines were ultra vires the statute, Thean J said: ‘The short answer to this is that even if the guidelines were ultra vires, the appellant was nevertheless not justified in resorting to a deception to achieve his end. We agree entirely with the view of the learned judge that in such an event he ought to have pursued his legal remedies by an appropriate procedure. For the reasons thus far expressed, I am of the opinion that Cik Kannaperan’s criticism of the leamed judge, namely, that he failed to have any regard whatsoever to the trust issue and the powers of attorney when he came to consider the validity of the acts done at the impugned meeting of the board of the first defendant held on 17 April 1990, is without merit. In my judgment, the learned judge committed no error in giving these issues a wide berth because the documents relied upon by the defendants are, in any event, nothing more than useless pieces of paper and the trust was, as I have already pointed out, utterly illegal and void. Submission (4): The application for validation The fourth submission of Cik Kannaperan rests on the judge’s refusal to act under s 355(3)(a) of the Companies Act 1965 and to validate the business that was transacted at the board meeting of 17 April 1990. Section 355 in its entirety reads as follows: (1) No proceeding under this Act shall be invalidated by any defect irregularity or deficiency of notice or time unless the Court is of opinion that substantial injustice has been or may be caused thereby which cannot be remedied by any order of the Court. (2) The Court may ifit thinks fit make an order declaring that the proceeding is valid notwithstanding any such defect irregularity or deficiency.Aik Ming (M) Sdn Bhd v Chang Ching Chuen [1995] 2 MLJ (Gopal Sri Ram JCA) 809 (3) Without affecting the generality of subsection (1) and subsection (2) or of any other provision of this Act, where any omission defect error or irregularity (including the absence of a quorum at any meeting of the company or of the directors) has occurred in the management or administration of a company whereby any breach of this Act has occurred, or whereby there has been default in the observance of the memorandum or articles of the company or whereby any proceedings at or in connection with any meeting of the company or of the directors thereof or any assemblage purporting to be such a meeting have been rendered ineffective including the failure to make or lodge any declaration of solvency pursuant to section 257, the Court — (a) may, either of its own motion or on the application of any interested person, make such order as it thinks fit to rectify or cause to be rectified or to negative or modify or cause to be modified the consequences in law of any such omission defect error or irregularity, or to validate any act matter or thing rendered or alleged to have been rendered invalid by or as a result of any such omission defect error or irregularity; (b) shall before making any such order satisfy itself that such an order would not do injustice to the company or to any member or creditor thereof; (c) where any such order is made, may give such ancillary or consequential directions as it thinks fit; and (a) may determine what notice or summons is to be given to other persons of the intention to make any such application or of the intention to make such an order, and whether and how it should be given or served and whether it should be advertised in any newspaper. (4) The Court (whether the company is in process of being wound up or not) may enlarge or abridge any time for doing any act or taking any proceeding allowed or limited by this Act upon such terms (if any) as the justice of the case may require and any such enlargement may be ordered although the application for the same is not made until after the time originally allowed or limited. The learned judge declined to exercise the discretion conferred upon him by s 355(3)(a) and gave the following reasons for his refusal [1995] 2 MLJ 43 atp 51: ‘As I am of the view that the notice was undated and unsigned and for that matter not even printed, it cannot therefore constitute a valid notice and further hold that the notice and the agenda were not received by PW1, PW2 and PW3, it follows therefore that the board of directors meeting on 17 April 1990 was ineffective and the resolutions passed were invalid. However, power is given to the court to make a validating order in respect of such irregularities under s 355 of the Companies Act 1965, either on the application of the defendants or on its own motion. There has been no such application by the defendants. The next question is whether the court on its ‘own motion should exercise such power. The absence of proper notice and in any event the non-receipt of it by PW1, PW2 and PWS in this case that resulted in the passing of resolutions to the prejudice of PW1, PW2 and310 Malayan Law Journal [1995] 2 MLJ PW3 to my mind caused injustice to them and in the circumstances it is not proper for the court to make a validating order and hence I decline to make such an order. (See First Nominee (Pte) Ltd v New Kok Ann Realty Sdn Bhd & Anor [1983] 2 MLJ 76.) Now it is clear that the section looks to the justice of a particular case: it is not concerned with the question whether prejudice would result in the making of a validation order. (See Re Australian Continental Resources Ltd (1975) 1 ACLR 405). Where the justice of the instant case lay and how discretion should be exercised is a matter eminently within the province of the learned judge. For it must not be forgotten that the section vests the original discretion in the High Court and that the initial function of this court is one of review only. An appellant must therefore demonstrate that a judge has committed one or more of those errors which permits the Court of Appeal to exercise a discretion of its own. Having regard to the findings of fact the judge made, and having regard to the way in which he approached the determination as to where the justice of the case lay, I am convinced that the defendants have failed to discharge this onus. CONCLUSION ON FIRST APPEAL It is for the foregoing reasons that the first appeal fails and was dismissed with costs. I now tum to address my mind to the submissions made by the intervener in support of the second appeal. SUBMISSIONS IN THE SECOND APPEAL Encik Das began by reminding this court that his appeal was much different from the first appeal. He said that the failure of the first appeal causes the defendants no loss, because the lands continue to remain in the first defendant of which the second to the ninth defendants are shareholders. However, in the case of his client, substantial loss would result because it had paid RM4.8m in full for the purchase of the land. Although I am grateful for the reminder, I think that Encik Das ought not to have troubled himself, as this court is very conscious about the difference alluded to. I think that no injustice is done to the intervener, if the submissions made in support of the second appeal are summarized as follows: (1) The intervener as an outsider vis-a-vis the first defendant is entitled to the benefit of the rule in Turquand. In particular, the intervener dealt with those persons in the first defendant who were its principal and most important directors as disclosed in the first defendant's public documents, including the return in Form 49 prescribed by the Companies Regulations 1966. It was not concerned with the internal squabbles within the first defendant’s corporate structure. The cases in which the benefit or protection of the rule in Turguand is withheld from an outsider (‘the first category’), are those in which the company or its assets are put at risk in a transaction in which the company has