The Judicial Committee of the Privy Council Decisions

Privy Council Appeal No. 21 of 1998

 

Jamahat Bin Hj Liman Appellant

v.

Ang Swee Chuan Respondent

 

FROM

 

THE COURT OF APPEAL OF

BRUNEI DARUSSALAM

 

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JUDGMENT OF THE LORDS OF THE JUDICIAL

COMMITTEE OF THE PRIVY COUNCIL,

Delivered the 22nd June 1998

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Present at the hearing:-

Lord Slynn of Hadley

Lord Lloyd of Berwick

Lord Steyn

Lord Hutton

Sir Christopher Slade

  ·[Delivered by Sir Christopher Slade]

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This appeal raises questions  concerning the title to a parcel of land known as Lot No. 3711, situate at Kampong Jangsak, Kilanas, in the District of Brunei/Muara.  For present purposes the material facts may be shortly summarised.

 

1. The appellant, Jamahat Bin Hj Liman, has at all material times been the registered proprietor of Lot No. 3711, registered pursuant to the Land Code of Brunei, which is a Torrens System of title by registration.  On 12th April 1994 he entered into a written Development Agreement with Malai Taufik Bin Hj Malai Mashor (“Malai”).  The Development Agreement recited that the appellant was the registered proprietor of Lot No. 3711 and another Lot situate in the same district.  It recited that he owed B$20,000 to the Treasury Department, Ministry of Finance, Brunei Darussalam and that he was agreeable to Malai carrying out the development of that other Lot and two further Lots belonging to other persons “on a barter bargaining basis” in accordance with the terms and conditions thereinafter appearing.  By Clause 2 Malai agreed to construct eight houses on those three Lots. Clause 19.1, headed “CONSIDERATION”, provided:-

 

“In consideration of the Developer agreeing to construct the said houses … for the Landowner as mentioned in Clause 2 above … and in consideration of the Developer paying JUMAHAT’s debt with the Treasury Department, the Landowner hereby agrees and covenants with the Developer to give him all that parcel of land together with the buildings thereon and appurtenances thereof described as Lot 3711 …”

 

2. Clause 19.4 provided:-

 

“The Landowner shall, upon signing this Agreement, create a Trust Deed and an Irrevocable Power of Attorney in favour of the Developer, giving him, amongst other things, the power to manage, sell or mortgage Lot 3711.”

 

3. On 15th April 1994 the appellant (therein defined as “the Trustee”) and Malai (defined as “the Beneficiary”) executed a Trust Deed, of which Clause 1 provided:-

 

“The Trustee hereby declares that he holds the said land in trust for the Beneficiary from the date of the signing of this Deed and hereby agrees that he will at the request and cost of the Beneficiary transfer the said land to such person or persons at such time or times and in such manner or otherwise deal with the same as the Beneficiary shall direct or appoint including creating another or subsequent trust in favour of the Beneficiary or his nominee and make such applications to the Land Office, … and execute and do all such documents acts and things as may be necessary to procure the appropriate registration or entry in the register of the said land to the Beneficiary or his nominee and to give effect to any such transfer or dealing or if so required to enable the interest of the Beneficiary to be protected.”

 

4. Also on 15th April 1994 the appellant executed an irrevocable Power of  Attorney in favour of Malai relating to Lot No. 3711 (therein defined as “my said land”). Clauses 1 and 2 empowered him to enter and develop the Lot.  Clause 3 empowered him:-

 

“To sell (either by public auctions or privately) or exchange all or any part of my said land for such consideration and subject to such covenants as my attorney may think fit and to give receipts for all or any part of the purchase money or other consideration with like powers to mortgage charge or pledge or otherwise deal with my said land or any part thereof as my attorney may think fit …”

 

5. Negotiations were subsequently entered into between Malai and the respondent, Ang Swee Chuan, for the proposed sale and purchase of Lot No. 3711.  The respondent had already concluded a tenancy agreement with the appellant for the lease of the Lot for ten years from 1st July 1991 and by the time that the sale agreement was ultimately concluded the respondent had spent about B$210,000 in erecting buildings on the Lot.  During the course of these negotiations, the respondent’s solicitor, Mrs. Chai, prepared the draft of a trust deed intended to be executed by the appellant, by which he would agree that he held the Lot in trust for the respondent.  (Clause 19.4 of the Development Agreement of 12th April 1994 had contemplated that there might be a second trust deed of this nature).  Her evidence was that the appellant came three times to her office and that she invited him to sign the trust deed to protect the respondent’s interests because the Lot was still registered in the appellant’s name.  He did not, however, execute this trust deed.

 

6. On 12th July 1994, in reliance on the power of attorney, Malai entered into a written Sale and Purchase Agreement with the respondent by which he agreed to sell Lot No. 3711 to the respondent for B$500,000.

 

7. Under cover of a letter of 18th August 1994, Mrs. Chai’s firm sent to Malai a cheque in full and final payment of the purchase price.  They asked Malai to note that the appellant had not signed the proposed trust deed, adding:-

“Our client will therefore look to you in case of any problems on registration etc.”

 

8. This trust deed was never executed, but the Power of Attorney had not been revoked before the Sale and Purchase Agreement was signed.

 

9. Subsequently, Malai disappeared with the money, having failed to build any of the eight houses which he had undertaken to build for the appellant.  The appellant lodged an objection to the respondent registering title to Lot No. 3711.  The respondent then issued proceedings seeking to compel him to withdraw that objection and to execute all necessary documents to complete his title.  Malai and the appellant were joined respectively as first and second defendants to the action, but Malai did not appear at the trial.

 

10. This took place in the High Court of Brunei Darussalam before Sir Denys Roberts C.J., who by his judgment dated 18th January 1997 declared that the respondent was the lawful and beneficial owner of Lot No. 3711 and granted further consequential relief.  An allegation of conspiracy between Malai and the respondent made in the appellant’s defence was not pursued at the trial.  His principal contention was that, on the proper construction of the Development Agreement and the Power of Attorney, Malai’s power to sell the Lot was conditional on his having fulfilled his obligations under the Development Agreement.  It was further contended that the respondent knew or ought to have known that the power was so conditional and that the appellant did not consent to the sale.

 

11. The Chief Justice rejected all these contentions.  Having held that the power to sell was not conditional on the building of the eight houses by Malai, he said he did not think it made any difference whether or not the appellant consented to the sale, as the power of attorney authorised Malai to sell Lot No. 3711 in any event.  Nevertheless, he proceeded to make certain findings of fact, in the light of a conflict of evidence on the question of consent.  While the appellant had testified that, at a meeting at Mrs. Chai’s office, he had indicated he would not agree to any sale until Malai had completed the building of the eight houses,  Mrs. Chai did not recall any such suggestion.  The Chief Justice accepted the evidence of Mrs. Chai where it conflicted with that of the appellant and found inter alia that (1) the appellant did not object to the sale of the Lot to the respondent by Malai; (2) the respondent dealt in good faith with Malai who was acting within the apparent scope of his authority; (3) the respondent was “a bona fida purchaser for value without notice that [the appellant] did not consent to the sale”; (4) the appellant did not sign the trust deed presented to him for signature “because he could not be bothered and not because he objected to the sale”.

 

12. The Court of Appeal of Brunei Darussalam by its judgment of 25th November 1997 dismissed an appeal from the Chief Justice’s judgment.  It rejected the appellant’s main contention that on the proper construction of the power of attorney, the power to sell the land was conditional upon Malai having fulfilled his obligations under the Development Agreement.  In the circumstances it found it unnecessary to deal with the appellant’s further contention that the Chief Justice was wrong in holding that the appellant was a bona fide purchaser for value without notice of the alleged limitation on the power of sale.

 

13. On this appeal to their Lordships’ Board, the primary issue is again the true construction of the power of attorney.  In this context the essence of the argument of Mr. Sackar Q.C. on behalf of the appellant is, again, that it is inconceivable that the appellant would have agreed to give Malai the power to sell Lot No. 3711 before he had completed the building of the eight houses which by the Development Agreement he had agreed to build.  He submitted that the Power of Attorney should be construed having regard to its commercial purpose and the background against which it was made, including the Development Agreement and the Trust Deed.  The recitals to the Development Agreement had set out the commercial basis upon which rights in connection with Lot No. 3711 had been conferred on Malai:-

 

“… the Landowner is agreeable to the Developer carrying out the development of the said lands on a barter bargaining basis …”

 

14. The recitals to the Power of Attorney itself had described the commercial basis in similar terms:-

“In consideration of MALAI agreeing to develop all that [sic] parcels of land and to construct the said houses thereon as mentioned in the Development Agreement, I have agreed to give to MALAI my said land.”

 

15. Mr. Sackar submitted that, when the Development Agreement, the Power of Attorney and the Trust Deed are construed together, having regard to all their terms and the undisputed commercial purpose of the overall transaction, it is clear that consideration was only to pass upon the completion by Malai of the development.  To interpret the agreement as did the courts below is, in his submission, to attribute to the transaction no readily determinable commercial purpose and to leave the appellant with no security for the performance of Malai’s obligations under the Development Agreement.

 

16. Their Lordships cannot accept these submissions.  The intentions of the two parties to the transactions have to be ascertained with due regard to the words which they used to express them in the three relevant documents.  There is nothing in the recitals to any of the documents which suggests that the granting of the power of sale to Malai is to be conditional upon the completion by him of the eight houses.  The recitals to the Power of Attorney itself refer merely to Malai’s promise to do this work as consideration for the appellant’s promise to give him Lot No. 3711.  The body of the three documents, so far from suggesting that Malai’s power to sell the land is to be conditional in any respect, suggests quite the contrary.  The wording of Clauses 19.1 and 19.4 of the Development Agreement and Clause 1 of the Trust Deed has been quoted above.  Clause 3 of the Power of Attorney, also quoted above, on its face gave Malai the immediate powers to sell, exchange or mortgage Lot No. 3711.  Before the Court of Appeal it was conceded by counsel for the appellant that the powers to mortgage and to exchange were to be available immediately.  Their Lordships agree with the Court of Appeal that there is no basis for distinguishing between these two powers and the power to sell.

 

17. More generally, their Lordships entirely agree with the following passage in the leading judgment of Huggins J.A.:-

 

“No doubt it would have been in the interests of the Second Defendant if power to dispose finally of Lot 3711 had been postponed until, say, an occupation permit had been issued in respect of the last of the houses which the First Defendant was required to build.  The Second Defendant could have asked that such a restriction be included in the contract, but it is by no means certain that the First Defendant would have agreed.  The main purpose for him was to enable him to do whatever he thought necessary for the fulfilment of  his obligations under the Development Agreement.  There was evidence from the Second Defendant himself that ‘it is usual for developers to have a right to charge or sell land belonging to the landowner to finance the building on the land’.  The fact that the Second Defendant said he believed the First Defendant had funds to carry out the development without selling Lot 3711 is irrelevant.…

 

     I respectfully agree with the learned Chief Justice that the language used by the parties is clear.  The Second Defendant’s present predicament stems not from any difficulty in construction but from the default of the First Defendant.  We must give effect to the words used by the parties and cannot read in or disregard words if, by so doing, we think a result would be achieved which would produce a more equitable balance between the rights of the parties. That would be to re-write the contract.  There is still some (if diminished) force in the old admonition ‘Say what you mean and mean what you say’.  Attention may properly be given to commercial common sense where the language of a contract is ambiguous, but where it is plain it must be construed according to its ordinary meaning.”

 

18. Subject to what is said below, their Lordships therefore conclude that (1) the Power of Attorney conferred on Malai the immediate power to sell Lot No. 3711; (2) since it had not previously been revoked, the respondent was entitled to rely on it when entering into the Sale and Purchase Agreement with Malai, it being immaterial whether or not the appellant consented to the sale; and (3) the respondent, who has paid the full purchase price due under the Sale and Purchase Agreement has thereby become the owner in equity of Lot No. 3711 and is entitled to the relief granted by the Chief Justice on this basis.

 

19. Mr. Sackar, however, indicated that if his argument on the construction of the documents is not accepted, he would seek to rely on an argument which was presented neither to the court of first instance nor to the Court of Appeal in Brunei.  Paragraphs 11 and 12 of the case for the appellant read as follows:-

 

"11.       However, it was the uncontested evidence below that Malai represented and undertook to Jamahat, so as to induce him to sign the Trust Deed, the Power of Attorney and the Development Agreement, that Malai would not attempt to sell the Land prior to completing the construction of the houses contemplated by the Development Agreement.

 

12.         The above representation was … fraudulent …”

Mr. Sackar sought to argue that, on the unchallenged evidence or evidence which could not be challenged, a representation of this nature had been made and that, prior to paying under the Sale Agreement and certainly prior to 18th August 1994, the respondent by his solicitor and agent, Mrs. Chai, was in possession of factual material sufficient to put them on notice that the appellant had been induced to execute the three relevant documents by a representation of this nature.  He submitted that this asserted oral restriction on the Power of Attorney imposed, by way of estoppel, a fetter on the equitable interest in Lot No. 3711 which Malai had the power to transfer pursuant to the Power of Attorney and that the respondent, through Mrs. Chai, must be treated as having had constructive notice of this fetter.

 

Mr. Guthrie Q.C. on behalf of the respondent strongly objected to the introduction of these new issues and their Lordships are satisfied that his objections were justified.  It was not the uncontested evidence below that Malai made any such  oral representation as alleged.  No representation of this nature was referred to in the pleadings or relied on in argument.  No such representation was explicitly alleged in the oral evidence.  The respondent has not hitherto had the opportunity to address these new unpleaded issues by calling evidence or cross-examining in respect of them or by addressing arguments to the courts below.  There have been no findings by those courts on them.  In the circumstances their Lordships are of the opinion that, in justice to the respondent, these new issues ought not to be entertained and they do not propose to deal with them.

 

Their Lordships, however, would add these observations.  Even if the new issues were to be entertained, the furthest relief for which the appellant could reasonably hope would be an order for a new trial.  Their Lordships would recommend the order of a new trial only if they considered that the appellant had some real prospect of success in such event.  On the information before them, they would see no such prospect, not only because of the absence of any explicit evidence as to the alleged misrepresentation, but also because of the improbability of the appellant being able to prove that the respondent or his agent, Mrs. Chai, knew or ought to have known of any oral restriction on Malai’s power of sale under the Power of Attorney.  Mrs. Chai’s requests to the appellant to execute a trust deed, culminating in the letter of 18th August 1994 referred to above, though heavily relied on in this context in argument for the appellant, in their Lordships’ judgment prove nothing.  They do not prove that she had doubts as to the extent of Malai’s powers of sale under the Power of Attorney; they are entirely consistent with a concern on her part merely to render the respondent’s position more secure when he wished to register his title in the Land Office. Accordingly their Lordships, had they seen fit to entertain the new issues, would not have been disposed to recommend the order of a new trial.

 

For the reasons stated, their Lordships will report to His Majesty the Sultan and Yang di-Pertuan their opinion that the appeal should be dismissed.  The appellant must pay the respondent’s costs before their Lordships’ Board.

 

© CROWN COPYRIGHT as at the date of judgment.