Which takes precedence? Is it the contents of an agreement which state who owns the property or the contents of the register document of title?

LEONG WAI CHOONG & ORS v. MAH GUAT ENG & ANOR [2020] 1 LNS 1142

• A property held under an individual title in Kuala Lumpur (“Property”) was originally registered in the name of the late Thong Ah Chan as a sole proprietor (“Mother”).

• However, before her passing, Mother had transferred her share in the Property to her 4 sons, Leong Kuen Hong @ Leong Kuen Ho (“Son 1”), Leong Kuan Tan @ Leong Ah Koon (“Son 2”), Leong Keng Fook (“Son 3”) and Leong Kuen Wai (“Son 4”).

• The 4 siblings had in 1977 decided to construct a 4-storey building with a mezzanine floor on the Property.

• Later, on 10 June 1980, the 4 siblings entered into an agreement (“1980 Agreement”) in which they acknowledged that they were the registered proprietors of the Property and that each of them shall be the registered owner of the building as follows:

(a) Ground floor and mezzanine floor – Son 1;

(b) 1st Floor – Son 4;

(c) 2^nd Floor – Son 3; and

(d) 3^rd Floor – Son 2.

• The 1980 Agreement also provides that all of them agreed to pay whatever monies due to the government in terms of quit rent, assessment and other out going in respect of the said building on the Property “according to their value of shares”.

• However, the 1980 Agreement was not reflected on the register document of title.

• Sons 1, 2 and 3 had all passed on except Son 4. Following their demise, the administrators for the estate of Sons 2 and 3 together with Son 4 (“Majority”) and the widow and executor of Son 1 (and their child) (“Minority”) became co-proprietors of the Property.

• The Majority had proposed to the Minority to sell the Property or alternatively, the Minority to purchase their share of the Property at a price to be mutually agreed but there was no response from the Minority.

• Therefore, the Majority initiated a suit at the High Court seeking for, amongst others, a declaration that the parties’ co-proprietorship is terminated and the Property be sold at market value with the proceeds divided according to the shares held under the title by the parties.

• The High Court dismissed the case on the basis that the Minority acquired an “indefeasible right” to the ground and mezzanine floors of the Property based on the 1980 Agreement.

• The Majority thus appealed to the Court of Appeal.

• The Court of Appeal allowed the appeal and found in favour of the Majority on the basis that the 1980 Agreement was merely a contractual arrangement to regulate outgoings and income derived from the Property.

• To hold that the Minority acquired an “indefeasible right” to the ground and mezzanine floors of the Property from the 1980 Agreement contradicts the register document of title.

• The register document of title and the issue document of title show that the Property remains as undivided shares and the parties hold them as co-proprietors.

• The Majority and Minority are registered as co-proprietors holding undivided share in the Property and not designated floors of the Property.