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DALAM MAHKAMAH RAYUAN DI MALAYSIA (BINDANG KUASA RAYUAN)

RAYUAN SIVIL NO: M-02(NCVC)(W)-1142-06/2016

1. SHA KANNAN 2. KAMBARAMAN SHANMUKHAM ...PERAYU – PERAYU DAN 1. ARUNACHALAM A/L VENKATACHALAM 2. VENKATACHALAM @ VENGA A/L KUPPAN juga dikenali

sebagai RM. KP. Venkatachalam (K/P No 290620-71-5233) …RESPONDENT – RESPONDENT

(DALAM MAHKAMAH TINGGI MALAYA DI MELAKA, GUAMAN NO: 22NCVC -10-02/2015)

1. SHA KANNAN 2. KAMBARAMAN SHANMUKHAM ...PLAINTIF-PLAINTIF

DAN

1. ARUNACHALAM A/L VENKATACHALAM 2. VENKATACHALAM @ VENGA A/L KUPPAN juga dikenali

sebagai RM. KP. Venkatachalam (K/P No 290620-71-5233) ... DEFENDAN – DEFENDAN

HEARD TOGETHER WITH

RAYUAN SIVIL NO. M-02(NCVC)(W)-1143-06/2016

BETWEEN

SANKARANARAYANAN PALANIAYAPPA CHETTIAR …PERAYU

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AND

1. ARUNACHALAM A/L VENKATACHALAM

2. VENKATACHALAM @ VENGA A/L KUPPAN

JUGA DIKENALI SEBAGAI RM. KP. VENKATACHALAM

(K/P NO 290620-71-5233) …RESPONDEN – RESPONDEN

(DALAM MAHKAMAH TINGGI DI MAHKAMAH TINGGI MALAYA

DI MELAKA GUAMAN NO: 22NCVC -11-02/2015)

ANTARA

SANKARANARAYANAN PALANIYAPPA CHETTIAR …PLAINTIF

DAN

1. ARUNACHALAM A/L VENKATACHALAM

2. VENKATACHALAM @ VENGA A/L KUPPAN

JUGA DIKENALI SEBAGAI RM. KP. VENKATACHALAM (K/P

NO 290620-71-5233) …DEFENDAN - DEFENDAN

CORAM:

DAVID WONG DAK WAH, JCA

UMI KALTHUM BINTI ABDUL MAJID, JCA HASNAH BINTI DATO’ MOHAMMED HASHIM, JCA

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JUDGMENT OF THE COURT

Introduction: 1. Before us are two appeals, namely Rayuan Sivil NO: M-

02(NCVC)(W)-1142-06/2016 (Appeal 1142) and Rayuan Sivil NO.

M-02(NCVC)(W)-1143-06/2016 (Appeal 1143).

2. In both appeals, the genesis of the disputes was two Tamil

documents executed by various parties. For the Plaintiffs/

Appellants their main contention was that they can launch their

causes of action premised on the coercion and misrepresentation

exerted on the signatories of the aforesaid Tamil documents. For

the Defendants/Respondents their defence, inter alia, in

substance was that the causes of action (if any) accrued in 1998

and since the suits were commenced only in 2015, the suits were

blantantly caught by the Limitation Act 1953.

3. The learned trial Judge heard both cases together and sustained

the contentions of the Respondents and accordingly dismissed the

claims of the Appellants resulting in the two appeals before us.

4. We heard the appeals and after due consideration to respective

submissions of counsel, we dismissed the appeals and now give

our reasons.

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Background facts:

5. The Appellants (Sha Kannan and Kambaraman) in Appeal 1142

are the executors of the estate of PL Shanmukham who was their

father and all are Indian nationals. PL Shanmukham (the late

father) is the son of the deceased Palaniappa Chettiar.

6. The Appellant (Sankaranarayanan Palaniayappa Chettiar) in

Appeal 1143 is the surviving son of the deceased Palaniappa

Chettier (the late grandfather) and the executor of the estate of the

aforesaid.

7. The late grandfather owned properties in Malaysia with some

owned as co proprietors with his sons.

8. The 1st Respondent is an Advocate and Solicitor practising under

the name and style of Sault & Co in Melaka while the 2nd

Respondent (since deceased) was the father of the 1st Respondent

and was actively involved in the day to day running of the aforesaid

firm.

9. The 2nd Respondent was a good friend of the late father and hence

the firm of Sault & Co was engaged to handle the estate of the late

grandfather.

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10. It is undisputed that the beneficiaries of the estate of the late father

and grandfather had borrowed monies from the Respondents and

these borrowings are evidenced in two Tamil documents. In

respect of Appeal 1142, the translated English Version is in Ikatan

Teras Perayu – page 16 – 23. As for Appeal 1143, the translated

English Version is in Ikatan Teras Perayu – page 16 – 23. There is

no dispute as to the correctness or accuracy of the translations.

11. In Appeal 1142, the Tamil document is typewritten document and

signed by the late father and witnessed by the Appellants

themselves. In Appeal 1143, the Tamil document is a handwritten

document authored by the Appellant himself.

12. The two Tamil documents contain details of adjustments of monies

and how those owed monies are to be repaid by the beneficiaries.

It was the contention of the Respondents that the monies owed

were to be offset by the properties listed in the two Tamil

documents.

13. Opposing the stand of the Respondents, the Appellants contended

that the two Tamil documents were merely loan documents and

the properties were merely securities to the loans which did not

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give any right to the Respondents to transfer those properties to

themselves.

Pleadings:

14. The Appellants’ claims in Appeal 1142 are set out in paragraph 21

of their statement of claim (Appeal 1142 appeal record – Jilid 1

Bahagian A page 20) as follows:

(a) An order that the 1st Respondent return all the original

titles of all the immovable assets of the deceased of the

Appellants.

(b) An order that the 1st Respondent return all the blank

transfer forms executed in escrow by the deceased and in

his possession to the Appellants.

(c) A declaration that the transfer of the property comprised

Geran Nos 21562, 21563, 21564, 21565, 21566 and

42436 bagi Lot No 932, 933, 934, 935, 936 and 1150

situated in Seksyen 3, Bandar George Town, Negeri

Pulau Pinang (Ayer Hitam Property) to the extent of 1/14

share of the deceased is void and illegal and an order

directing the Pendaftar Hakmilik Tanah Pulau Pinang or

any relevant authorised authority to effect the said

cancellation and restore the deceased as the rightful

owner.

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15. The Appellant’s claims in Appeal 1143 are set out in paragraph 19

of the statement of claim (Appeal 1143 appeal record – Jilid 1

Bahagian A page 24) as follows:

(a) An order that the 1st Respondent return all the original

titles of all the immovable assets of the deceased of

the Appellants.

(b) An order that the 1st Respondent return all the blank

transfer forms executed in escrow by the deceased

and in his possession to the Appellants.

(c) A declaration that the transfer of the property

comprised Geran Nos 21562, 21563, 21564, 21565,

21566 and 42436 bagi Lot No 932, 933, 934, 935, 936

and 1150 situated in Seksyen 3, Bandar George Town,

Negeri Pulau Pinang (Ayer Hitam Property) to the

extent of 1/14 share of the deceased is void and illegal

and an order directing the Pendaftar Hakmilik Tanah

Pulau Pinang or any relevant authorised authority to

effect the said cancellation and restore the deceased

as the rightful owner.

16. One can note here the claims in both appeals are identical.

17. The substance of the defence of the Respondents for Appeal

1142 are as set out in paragraphs 10 (1) to 10(16) (Appeal 1142

appeal record – Jilid 1 Bahagian A page 53) and the relevant

paragraphs state as follows:

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9

10

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18. The Respondents’ defence for Appeal 1143 are as set out

paragraph 9 (Appeal 1143 appeal record – Jilid 1 Bahagian A

page 45) and the relevant sub paragraphs state as follows:

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13

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19. The Appellants in Appeal 1142 in their reply set out in paragraph

15 (Appeal 1142 appeal record – Jilid 1 Bahagian A page 67)

states as follows:

The Plaintiffs refer to paragraph 10(14) and verily

believe and state that the document in Tamil was

obtained by coercion and misrepresentation that it

was only a security document for the loan and as such

cannot be treated as an valid agreement/admission for

sale.

20. The Appellants in Appeal 1143 in their reply set out in paragraph

15 (Appeal 1143 appeal record – Jilid 1 Bahagian A page 58)

states as follows:

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The Plaintiff refers to paragraph 9(14) and verily

believes that the said document in Tamil was obtained

by coercion and misrepresentation and that the said

document was only a security document for the loans

and the said document cannot be construed as a valid

sale agreement/admission.

High Court decision:

21. This was how the learned Judge dealt with the allegation of fraud

and misrepresentation:

6. Setelah mempertimbangkan keterangan yang

dikemukakan, lisan dan dokumentar serta fakta-fakta yang

dipersetujui, dan penghujahan kedua-dua pihak, saya

memutuskan bahawa plaintif-plaintif telah gagal, atas

imbangan kebarangkalian, untuk membuktikan dakwaan dan

tuntutan mereka terhadap defendan-defendan. Saya dapati

plaintif-plaintif, dalam kedua-dua kes, telah gagal untuk

membuktikan, atas imbangan kebarangkalian, adanya

penipuan dan frod dilakukan oleh defendan-defendan

sepertimana yang didakwa. Saya catatkan bahawa semua

dokumen bertulisan Tamil dan surat cara yang berkaitan

dengannya telah dibuat dan disaksikan oleh pihak plaintif

sendiri terutamanya si mati bapa. Kesemua saksi plaintif

yang dipanggil di mahkamah tidak mempunyai pengetahuan

terus atau dapat menunjukkan bagaimana dan di mana

perlakuan frod, penipuan atau pengaruh tidak wajar tersebut.

Kebanyakan keterangan yang diberikan merupakan

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keterangan dengar cakap dan secara am sahaja. Fakta

perlantikan seorang yang bernama Aliman Musri, dalam kes

yang berlainan, dan penafian perlantikan peguam Yap Koon

Roy semata, tidak mencukupi untuk membawa ke satu

kesimpulan kemungkinan adanya frod dilakukan. Hakikat

adanya dokumen bertulisan Tamil (oleh pihak plaintif sendiri)

dan perjanjian jual beli bertarikh 3.11.1997 berkenaan

hartanah Ayer Hitam serta disokong oleh fakta persetujuan

(sepertimana dinyatakan di atas) bahawa adanya pinjaman

daripada dan melalui defendan-defendan dan pindah milik

hartanah Ayer Hitam tersebut (ms 117: Ikatan B), dengan

tersendirinya mematahkan dakwaan ini. Dalam hal ini, saya

bersetuju dengan penghujahan peguam defendan.

22. On the issue of limitation pleaded by the Respondents, the learned

Judge found as follows:

8. Saya juga berpendapat pembelaan berkenaan dengan

tindakan plaintif-plaintif dalam kedua-dua guaman tersebut

telah dihalang oleh had masa (setelah lebih 17 tahun

berlalu); dan, mereka juga diestop daripada mengambil

tindakan ini sepertimana yang dihujahkan oleh peguam

defendan. Saya dapati transaksi yang dicabar berlaku pada

tahun 1997 dan 1998 terutama inter alia yang berkaitan

dengan perjanjian jual beli bertarikh 3.11.1997 (ms 98:

Ikatan B), dan urus niaga yang berkaitan dengan dokumen

bertulisan Tamil serta surat-menyurat yang berkaitan

dengannya (seperti ms 111 et seq: Ikatan B), seharusnya

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diambil tindakan dalam masa yang dibenarkan dalam Akta

Had Masa 1985 setelah plaintif meminta berkali-kali

penjelasan daripada defendan berkenaan urus niaga

tersebut dan tidak mendapat apa-apa respons daripada

mereka. Mereka seharusnya mengambil tindakan dalam

masa yang dibenarkan daripada tarikh timbulnya kausa

tindakan atas kegagalan memberi respons tersebut dan

bukan menunggu sehingga 17/18 tahun berlalu. Dalam

keadaan ini, saya berpendapat tindakan mereka telah

terhalang oleh had masa.

Our grounds of decision:

23. After having heard submissions from respective counsel and

perused the pleadings of respective parties we formed the view

that the determinative issues before us were these:

1. Whether the Appellants had proved their case premised

on fraud and misrepresentation?

2. Whether the causes of action of the Appellants were

timed barred by the Limitation Act 1953?

3. What were the intentions of the parties when they

executed the two Tamil documents?

Issue 1 – Have the Appellants discharged their burden of proof?

24. The burden of proof is always on the party who asserts the

affirmative. Terrel Ag CJ in the much-quoted case of Selvaduray v

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Chinniah [1939] MLJ 253, at page 254, said as follows:

“The burden of proof under section 102 of the Evidence

Enactment is upon the person who would fail if no

evidence at all were given on either side, and

accordingly the Plaintiff must establish his case. If he

fails to do so it will not avail him to turn around and say

that the Defendant has not established his. The

Defendant can say ‘it is wholly immaterial whether I

prove my case or not. You have not proved yours’ (

see the Judgment of the Privy Council in Raja

Chandranath Roy v Ramjai Mazumdar 6 bengal Law

Reports, page 303).”

25. In the recent case of U Television Sdn Bhd and Tan Sri Dato

Seri Vincent Tan Chee Yioun v Comintel Sdn Bhd Civil Appeal

No: 02(f)-12-03/2016 (W), the Federal Court made the following

observations on what the “burden of proof” entails:

35. On the meaning and application of the term “burden

of proof” section 101 of the Evidence Act 1950 [“the Act”]

states that it is the burden to establish a case which rests

throughout on the party who assert the affirmative of the

issue. The “burden of proof” in section 102 of the Act is

the burden to adduce evidence, to make out or rebut the

claim. The “burden of proof” in section 102 of the Act

shifts from one side to the other according to the weight

of the evidence.

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26. With the aforesaid principle of law at the foremost of our minds, we

examined what had transpired at the trial. In Appeal 1142, it was

not disputed that both the Appellants were present at the trial and

only the 1st Appellant took the stand and gave testimony. When

cross-examined, the 1st Appellant conceded that he had no

personal knowledge of the transactions fashioned out by his late

father and it was only his late father who knew what really

transpired. By this very concession, the law is quite clear and that

is those evidence were at best hearsay evidence which in law has

no evidential value. Lord Normand in Teper v Are [1952] AC 480,

486 explained the value of hearsay evidence in this way:

“The rule against the admission of hearsay evidence is

fundamental. It is not the best evidence, and it is not

delivered on oath. The truthfulness and accuracy of

the person whose words are spoken by another

witness cannot be tested by cross-examination and

the light which his demeanour would throw on his

testimony is lost.”

27. In Appeal 1143, it was also not disputed that the Appellant did not

take the stand but instead sent his grandson to tender a statement

sworn before a notary public in India. His reason for his absence

was that he had a medical issue but no evidence was produced to

prove that medical impediment. Again, when cross-examined, the

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grandson witness conceded that he had no personal knowledge of

the transactions fashioned by his grandfather. Again, that

concession in fact did not enhance the case for the Appellant. On

the contrary, the Appellant had failed miserably in discharging his

burden of proof.

28. In the circumstances, we were in full agreement with the learned

Judge when he found that the Appellants had failed badly in

discharging their burden of proof.

Issue 2 – Limitation:

29. The relevant factual matrix here is this. The two Tamil documents

and the memorandum of transfers were signed in 1997 and 1998

respectively. The Limitation Act 1953 prescribes that a period of

six years to commence any legal suit to challenge the validity of

the aforesaid documents. In the cases at hand, the legal actions

were commenced some 17 to 18 years later.

30. The response of the Appellants to this plea of limitation was that

they did not discover the fraudulent transfers until recently. Here

the claims were premised on coercion and misrepresentation on

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the signatories of the two Tamil documents. In respect of Appeal

1142, the signatory was the late father, PL Shanmukham while in

Appeal 1143, the signatory was the Appellant himself. The acts of

coercion and misrepresentation must have been exerted on those

two persons who signed the two Tamil documents and allegedly by

the 2nd Respondent. In both cases, there was not one iota of

evidence to show such coercion or misrepresentation. Nor was

there any evidence in writing that there were compliants by the late

father and the Appellant in Appeal 1143. Even if there were verbal

complaints as alleged in the pleadings, no action was taken by the

late father and the Appellant in Appeal 1143. This inaction can

only lead to one irrefutable conclusion and that is they knew what

they had signed and they had no complaints on the two Tamil

documents.

31. Further, it should be noted that if there were causes for complaints,

they were personal to the people privy to the two Tamil

documents. And when they did not take out any legal suit,

limitation sets in and in this case there had been a delay of 17 to

18 years and no explanation by anyone privy to the transactions to

explain why there was inaction.

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32. Further we also found that the doctrine of laches to be applicable

in view of the unexplained delay in launching the two legal actions.

The doctrine of laches is based on the maxim that "equity aids the

vigilant and not those who slumber on their rights." This is

succinctly explained by Lord Selborne in the landmark case of

Lindsay Petroleum Co v. Hurd 874 LRPC 221:

But in every case if an argument against relief which

otherwise would be just is founded on mere delay, that

delay of course not amounting to a bar by any Statute

of Limitations, the validity of that defence must be tried

upon principles substantially equitable. Two

circumstances always important in such cases are the

length of the delay, and the nature of the acts done

during the interval, which might affect either party and

cause a balance of justice or injustice in taking the one

course or the other so far as relates to the remedy.

33. In the Malaysian context, we have the case of Alfred Templeton

& Ors v. Low Yat Holdings Bhd & Anor [1989] 2 MLJ 202 where

Edgar Joseph Jr. J of the High Court of Penang held as follows:

Laches is an equitable defence implying lapse of time and

delay in prosecuting a claim. A court of equity refuses its

aid to a stale demand where the plaintiff has slept upon

his rights and acquiesced for a great length of time. He is

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then said to be barred by laches. In determining whether

there has been such a delay as to amount to laches the

court considers whether there has been acquiescence on

the plaintiff's part and any change of position that has

occurred on the part of the defendant. The doctrine of

laches rests on the consideration that it is unjust to give a

plaintiff a remedy where he has by his conduct done that

which might fairly be regarded as equivalent to a waiver of

it or where by his conduct and neglect he has, though not

waiving the remedy, put the other party in a position in

which it would not be reasonable to place him if the

remedy were afterwards to be asserted: 14 Halsbury's

Laws of England (3rd Ed) paras 1181, 1182. Laches has

been succinctly described as 'inaction with one eye's

open'.

34. In the present case, in our view there can be little doubt that the

delay had highly prejudiced the Respondents’ position in properly

defending the claim. A span of 18 years is a long time to say the

least. Equity demands that litigants on both sides are not put in a

position where one side is put in a unfavourable position by the

delay of the other side. The Courts must ensure that the playing

field is fair to all.

35. Finally on this aspect of the appeal, we agreed with the learned

counsel for the Respondents where it was submitted that if there

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were in fact coercions or misrepresentations, they would be

exerting coercions and misrepresentations on themselves as the

signatories were witnessed by the Appellants themselves in

Appeal 1142 while in Appeal 1143, the Appellant himself had

written the Tamil document himself and signed the same. In

anyone’s view, the contentions of the Appellants were without

merits.

Issue 3: Intentions of the two Tamil documents

36. The complaint here by the Appellants was that the two Tamil

documents were only loan documents with the properties used as

securities and cannot be treated as a licence to convey the

relevant properties.

37. In constructing any contract, it is settled law that the Courts must

give it a meaning reflective of the words employed by the

contracting parties. The contract must also be read as a whole and

interpreted in a manner consistent to the commercial reality.

38. Having perused the two Tamil documents in their entirety, we

formed the view that they were much more than mere loan

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agreements. They contain in detail terms as to how the loan

amounts were to be repaid to the lenders plus terms giving the

Respondents the requisite powers to implement the terms

contained therein. The intentions of the parties were amplified in

two common clauses of the documents which read as follows:

(9) In order to carry out the matters mentioned in this

document, I agree to sign in and give all required document

and otherwise render all co-operation.

(10) As per the above accounts, all my credits and debits

with you have been settled, I confirm that I have no claims,

demands whatsoever now or in the future against you.

39. Giving the plain and natural meaning to the above two clauses in

the context of the entirety of the two Tamil documents, there can

be only one meaning ascribed to them and that is that the parties

had intended to allow the Respondents to do what had been and

being done to implement the terms of the two Tamil documents. To

sustain the meaning ascribed to by the Appellants would be bluntly

rewriting the terms of a written contract by this Court which

obviously cannot be done under any circumstances.

40. Further we agreed with learned counsel for the Respondent in

submitting that the defence of settled account should be sustained.

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The case of Bishun Chand v Girdhari Lal and another [1934]

AIR PC 147 states, at page 151, left side, the nature of an account

stated in the following manner:

…

“ the essence of an account stated is not the character of the

items on one side or the other but the fact that there are

cross items of account and that the parties mutually agree

the several amounts of each and, by treating the items so

agreed on the other side as discharging the items on the

other side pro tanto, go on to agree that the balance is only

payable. Such a transaction in truth bilateral, and creates a

new debt and a new cause of action. There are mutual

promises, the one side agreeing to accept the amount of the

balance of the debt as true … and to pay it, the other side

agreeing the entire debt as at a certain figure and then

agreeing it has been discharged to such and such an extent,

so that there will be complete satisfaction on payment of the

agreed balance.. The account stated is accordingly binding,

save that it may be reopened on any ground – for instance,

fraud or mistake – which would justify setting aside any other

agreement.”

41. The two Tamil documents read as a whole in our view equated to

an account stated and the law is clear in that an account stated

can only be reopened on the ground of fraud which in this case

had not been proved at all.

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Conclusion:

42. This was a case where the Limitation Act 1953 had also applied

with its full force. Not only that, the factual matrix also demanded

us to apply the doctrine of laches for the simple reason that a long-

time span had elapsed and to allow the Appellants to ventilate their

grievances would be wholly unjust on the Respondents in

defending the claims. And finally, the intentions of the parties were

also clearly set out in writing and the Courts had no choice but to

give effect to those clear intentions.

43. For reasons set out above, we dismissed the two appeals with

costs in the sum of RM10,000.00 each subject to payment of

allocatur fees. We also ordered that the respective deposits to be

refunded to the Appellants.

Dated: 6 October 2017

(DAVID WONG DAK WAH) Judge

Court of Appeal Malaysia

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For the Appellants : C. Megalai

With her KM. Nachammai

Messrs. Meg, Nacha, ahir & Co.

For the Respondents : Krishna Dallumah

With him YH. Yong & Farhan Mirza

Messrs. Sault Scott & Co.

Notice: This copy of the Court's Reasons for Judgment is subject

to formal revision.