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Legal Update 1 of 2021

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    Legal Update 1 of 2021

    By jhj admin | Legal Updates | 0 comment | 14 January, 2021 | 0

    Can a person who has given a property by way of a gift claim caveatable interest over the said property subsequently?

    Case:

    HANNAH KAM ZHEN YI v. TAN SRI DATO’ KAM WOON WAH & ANOR AND ANOTHER APPEAL [2020] 1 LNS 926

    Brief Facts:

    • A property held under Grant No. 36830 for in Lot 4837 Mukim Batu, Daerah Kuala Lumpur with a bungalow addressed at No. 1, Persiaran Bukit Tunku, Bukit Tunku, 50480 Kuala Lumpur originally belonged to Akay Holdings Sdn Bhd (“Said Property”).

     

    • The Said Property was subsequently sold and transferred to Lead Enterprises Sdn Bhd (“Lead”) for the consideration of RM12,000,000-00.

     

    • Tan Sri Dato’ Kam Woon Wah (“Grandfather”) and his son, Dato’ Sri Andrew Kam Tai Yeow (“Father”) were the only shareholders and directors of Lead.

     

    • It is undisputed that Lead was indebted to the Grandfather.

     

    • At the request of the Grandfather, Lead was agreeable to settle the debt by transferring the Said Property to the Grandfather and/or his nominee.

     

    • The Grandfather nominated Hannah Kam Zhen Yi (“Granddaughter”), who is the daughter of Father, as the recipient of the Said Property, in full and final settlement of the debt owing to him by Lead.

     

    • This was made possible pursuant to a Deed of Gift dated 31 May 2017 (“Deed of Gift”) and a Settlement Agreement signed between the Grandfather and Lead on the even date.

     

    • Pursuant to the Deed of Gift, the Grandfather declares that he wilfully and voluntarily makes a gift of the Said Property to the Granddaughter in consideration of the love and affection between a grandfather and a granddaughter.

     

    • Apparently, the gift was conditional on the Granddaughter not using the Said Property or allowing the Said Property to be used to help Father (due to the acrimonious relationship between the Grandfather and Father).

     

    • Subsequently on 6 July 2017, the Granddaughter became the sole registered proprietor of the Said Property.

     

    • On or around 26 January 2018, the Granddaughter entered into a sale and purchase agreement with Ong Yue Guan (“Ong”) and sold the Said Property to him for valuable consideration. In order to protect his interest, Ong entered a private caveat against the Said Property sometime or around 20 January 2018.

     

    • Ong subsequently discovered that the Grandfather had entered a caveat (“Affected Caveat”) against the Said Property on or around 9 February 2018.

     

    • Ong then filed an application to the land office to remove the Affected Caveat. A notice was issued by the land office to the Grandfather (“Notice”) to inform that the Affected Caveat would lapse within 2 months from the date of service of the Notice or until such further period as the court ordered.

     

    • Subsequently on 21 March 2018, the Grandfather filed the present suit against the Granddaughter and Ong, seeking for a retransfer of the Said Property back to him on grounds that the Granddaughter breached the condition of the gift.

     

    • The Granddaughter filed a counterclaim for damages for inter alia, the tort of abuse of process which is pending in the lower court.

     

    • Pending trial, the Grandfather filed an application for the extension of the Affected Caveat.

     

    • The High Court Judge allowed the extension and Ong and the Granddaughter appealed to the Court of Appeal.

    COURT OF APPEAL DECISION – APPEAL DISMISSED!

    The Court of Appeal dismissed the appeal and affirmed the decision of the High Court on the following basis:

     

    • Once the conditions of the gift have failed or are unfulfilled, no matter if the condition is one to be performed before the gift takes effect or after the gift has taken effect, the gift will be put to an end.

     

    • When the Granddaughter breaches the said condition, the gift will come to an end and the Granddaughter will hold the property on trust for the Grandfather.

     

    • Therefore, the Grandfather can place a caveat over the Said Property as envisaged under section 323 (1)(a) of the NLC and has the right to apply for an extension of the Affected Caveat.
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