Lim Oo Tong V Tan Kah Cheng&4lagi


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1. TAN KAH CHENG (menyaman sebagai Pentadbir Estet Lim See Tong, simati)










(Dalam perkara Guaman Sivil NO: 22-326 tahun 2001 dalam Mahkamah Tinggi (1) Malaya di Pulau Pinang




1. TAN KAH CHENG (menyaman sebagai Pentadbir Estet Lim See Tong, simati)






4. LIM KOK JIN . Plaintif-Plaintif






LIM OO TONG . Defendan)












1. The Plaintiffs, the beneficiary of the estate of one Lim See Tong brought an action against the Defendant for an account in respect of the sales, profits and benefits derived from the sales of soil and rock materials excavated from the lands jointly owned by the Defendant and the deceased.


2. When the matter came up for hearing on 14.10.2003, both parties agreed to a consent Judgment. The High Court recorded a consent judgment in the following terms:


i. That the Defendant gives an account of all sales, profits and benefits derived from the sale of the soil and rock materials excavated from the properties.


ii. That the Defendant pay to the Plaintiff 50% of the sales proceeds to be assessed by the Deputy/ Senior Assistant Registrar.


iii. That the Defendant is liable for the costs of the proceedings.


3. After hearing the witnesses and submissions of the parties, on 21.06.2007 the Deputy Registrar assessed the 50% sales, profits and benefits derived from the sale of soil and rock materials excavated from the properties at RM702,650.00. The




Defendant’s appeal to the Judge in chamber was dismissed, hence the appeal herein.




1. The Defendant and Lim See Tong, the deceased were the registered proprietors of one half share each in the lands known as Lot 2176 held under Geran Mukim 634 and Lot 1542, Section 68 KTN both situated in Mukim Bukit Meriam, Kuala Muda Kedah (the properties).


2. The Defendant is the younger brother of the deceased. The 1st Plaintiff is the lawful widow of the deceased and the 2nd to 5th Plaintiffs are the children of the deceased.


3. The deceased died on 30.10.1983. On 27.05.1986, about 3 years after the deceased’s death, the Defendant submitted to the Land Administrator of Kuala Muda, an application on behalf of himself and the deceased for a license to excavate and remove rock materials from the properties. The application was subsequently granted by the Land Administrator on 30.07.1988.


4. The excavation works were not carried out until sometime in 1994. The Defendant had sub-let the permit for excavation to third party contractors, namely Kedai Papan Adik Beradik Chong Heng from 1997 to 1998 and subsequently to Ooi Bah Seng & Sons Sdn Bhd (OBS) from 1999 to 2000.


5. The Plaintiffs claimed that they had no knowledge about the excavation works carried out in the properties until the 4th




Plaintiff visited the properties somewhere in March 2000. The permit for excavation of soil was subsequently terminated by the Land office on 04.07.2000 due to the Defendant’s failure to observe the conditions stipulated in the permit.


6. The issue in this case is on the account of the 50% of the sales proceeds from the excavation of the soil and rocks from the properties. Before the Deputy Registrar, both parties led evidence as to the calculation of the 50% profits.


Plaintiff’s case


7. The Plaintiffs’ calculation was based on how much soil was extracted from the properties and the sales that took place having regard to the number of lorry loads transporting the soil out from the properties. The Plaintiffs relied heavily on the evidence of PW1 and PW2, who were both employed by OBS to work at the properties from Nov 1999 to May 2000.


8. PW1 was the clerk in charge of the excavation works. She testified that her duty was to write down the number of lorry loads of soil sold by the Defendant in a notebook and to issue receipts for the sales. The total number of sales in a day would then be filled up in a notation card of OBS. Her evidence was supported by exhibit P1 i.e. the photocopies of the notebook of which she explained the original was destroyed by flood.


9. PW2 was the supervisor in charge of the excavation works. PW2 confirmed the above evidence given by PW1. PW2 also testified on the price of a lorry load of soil. According to PW2,




he was informed by one Ooi Boon Chuan, his boss in OBS that the Defendant sold a lorry load of soil for RM20 to OBS and RM50-RM55 to the nearby villagers.


10. PW3, the Assistant Land Administrator of Kuala Muda was also called as a witness for the Plaintiffs. PW3 testified that the value of each lorry load was RM45-RM50 and that the Defendant had to pay royalties to the land office based on each lorry load. The breakdown for the royalties paid each year can be seen in exhibit P11 i.e. a reply letter dated 20.08.2000 from the Land office of Kuala Muda to the Plaintiffs’ solicitors stating the amount of royalties paid by the Defendant based on the sales of soils extracted from the properties for the period 1994-2000.


11. From the above evidence, the Plaintiff came out with a calculation for the profits derived from the sale of excavated soil as set out in exhibit P23A:


i. The average number of lorries per month over the 6 month period from November 1999 to April 2000 was


1.081 lorries per month. At the conservative net sale price of RM20 per lorry, the monthly average sales is


1.081 lorries x RM20= RM21,620.00.


ii. For the whole excavation period from January 1994 to May 2000, the number of months is 65. Accordingly the total sales would be 65 months x RM21,620= RM1,405,300.




iii. Accordingly the Plaintiffs’ 50% share of RM1,405,300.00 is RM1,405,300.00 – 2 =




Defendant’s case


12. On the other hand, the Defendant (DW2) testified that the Plaintiffs at all material times were aware of the excavation works. In fact, the Plaintiff had received shares from the profits made from the excavation works from 1995 to 1999 in the amount of RM29,595.20. This was evident from exhibit D22 i.e. the profit and loss account of the estate of the deceased. Exhibit D22 was prepared by DW1, an accounting clerk in YGL Tax Services Sdn Bhd under the Defendant’s instruction for tax purposes. It shows that annual profits derived from the excavation works had been allocated to the deceased’s estate.


13. The Defendant testified that the price for a lorry load of soil was only RM5.The Defendant also averred that the sales of soil and the profits received were very much less than what had been claimed by the Plaintiffs. This was reflected from the amount of royalties paid by the Defendant to the Land Office for the sales of soil excavated from the properties. On this, the Defendant relied on the figures set out in exhibit P11.


The Defendant’s appeal to the Court of Appeal


14. The Defendant’s appeal is based on the following grounds:


i. The Defendant disputed the admissibility of exhibit P1 the photocopies of the notebook tendered by the




Plaintiffs through SP1. The evidence of SP2 on the price of a lorry load of soil was also claimed to be hearsay.


ii. Damages should not have been entertained as it was tainted with illegality. The Defendant referred to section 73 of the National Land Code which states that:


“a permit to extract, remove and transport rock material shall not be capable of assignment; and every such permit shall,…terminate on the death of the person”.


It follows that the Defendant’s conduct in assigning the excavation works to third party contractors was illegal and that the rights of the deceased under the permit were not assignable to the Plaintiffs.


iii. The best evidence to calculate the amount of profits received from the sales of the soil was exhibit P11 in which the High Court failed to take into consideration.




15. This is an action for an account by the beneficiaries of the estate of the deceased who are relying on their equitable rights claiming for the income and profits derived from a half share in the properties of the deceased estate.


16. Order 43 of the Rules of the High Court 1980 (RHC 1980) deals with account and inquiries. A plaintiff who seeks the remedy of an account must prove that the defendant is an accounting




party, and that the plaintiff is entitled to some sum from the defendant. (See in Alcatel-Lucent (M) Sdn Bhd (formerly known as Alcatel Network Systems (M) Sdn Bhd) v Solid Investments Ltd and another appeal – [2012] 4 MLJ 72.


17. The nature of the remedy of an account was explained by the House of Lords in Regal (Hastings) Ltd v Gulliver [1942] 1 All ER 378 AC 134. At page 386 where Lord Russell of Killowen observed that:


“The rule of equity which insists on those, who by use of a fiduciary position make a profit, being liable to account for that profit, in no way depends on fraud, or absence of bona fides; or upon such questions or considerations as whether the profit would or should otherwise have gone to the plaintiff, or whether the profiteer was under a duty to obtain the source of the profit for the plaintiff, or whether he took a risk or acted as he did for the benefit of the plaintiff, or whether the plaintiff has in fact been damaged or benefited by his action. The liability arises from the mere fact of a profit having, in the stated circumstances, been made. The profiteer, however honest and well-intentioned, cannot escape the risk of being called upon to account.”


18. The Defendant is an accounting party. By the Consent Judgment, the Defendant was ordered to give an account of all sales, profits and benefits derived from the sale of the soil and rock materials excavated from the properties and thereby to pay to the Plaintiffs 50% of the sales proceeds which was to be assessed by the Deputy/ Senior Assistant Registrar.


19. Based on O43 r4 RHC 1980, where an account has been ordered to be taken, unless the court otherwise directs, the




Defendant must make out his account and file the same in the court registry.


O43 r4 states as follows:


(1) Where an account has been ordered to be taken, the accounting party must make out his account and unless the Court otherwise directs, verify it by an affidavit to which the account must be exhibited.


(2) The items on each side of the account must be numbered consecutively.


(3) Unless the order taking the account otherwise directs, the accounting party must lodge the account with the Registry and must at the same time notify the other parties that he has done so and of the filing of any affidavit verifying the account and of any supporting affidavit.


20. However in this case, it was the Plaintiff who had acted in pursuant to the Consent Judgment dated 14.10.2003 by filing notice for assessment of damages dated 12.12.2003 before the Deputy Registrar. Such action was wrong in law. Not only it was against the prescribed rules in O43 RHC 1980 but it is also trite law that there can be no assessment of damages unless there is an order awarding damages. The Court of Appeal in Parkson Corp Sdn Bhd v Fazaruddin Bin Ibrahim (T/A Perniagaan Fatama) – [2002] 4 MLJ 122 and Lai Yoke Ngan & Anor v Chin Teck Kwee & Anor[1997] 2 MLJ 565.


21. It must also be emphasised that the right to an account of profits is entirely distinct from the right to damages. Unlike an award of




damages, an account of profits is restitutionary because the plaintiff need not have suffered any loss. What the Plaintiff needs to prove is that the Defendant is the accounting party and that the latter is owing the Plaintiff certain sums though the quantum is uncertain, for it is subject to inquiries before the court. A claim for damages and an account of profits are alternative and inconsistent remedies between which the plaintiff must elect.


22. The High Court of Australia in Colbeam Palmer Ltd v Stock Affliates Pty Ltd (1968) 122 CLR 25 at 32 held that:


The distinction between an account of profits and damages is that by the former the infringer is required to give up his ill-gotten gains to the party whose rights he has infringed; by the latter he is required to compensate the party wronged for the loss he has suffered. The two computations can obviously yield different results, for a plaintiff’s loss is not to be measured by the defendant’s gain, nor a defendant’s gain by the plaintiff’s loss. Either may be greater,or less, than the other”.


23. What transpired in this case is that, the parties had undergone a proceeding on assessment of damages. An awkward situation arose when a duty was imposed on the Plaintiff to prove the profits derived by the Defendant from the excavation works carried out in the properties when clearly the relevant records must have been within the possession of the Defendant.


24. The 1st and 3rd limb of the Defendant’s grounds of appeal on points of admissibility of evidence were propounded based on the burden of proof in a claim for damages. Needless to say, the Plaintiff’s action is not for damages and that there was no order




of damages made by the High Court Judge. The Plaintiffs had no duty to substantiate and prove any damages. Accordingly, the 1st and 3rd grounds of appeal must be dismissed.


25. In the present case, the Plaintiffs had vast interest in the income accruing from the deceased’s estate but they had little or no knowledge of accounting of the sales and profits derived. Hence it is absolutely essential that the defendant was made accountable for monies from the excavation works which came into his possession.


26. Nevertheless, the Defendant did not make out any account for the profits derived from the sales of soil excavated from the properties. Exhibit D22 was merely profit and loss account of the estate of the deceased prepared for tax purposes. The Defendant was trying to prove that a certain sum from the profits derived from the excavation works carried out in the properties had been allocated to the estate of the deceased but the basis of its calculation was never disclosed. More so, exhibit D22 was neither a business account nor loss and profit account in respect of the sales. Exhibit P11, was also no more than a letter confirming the amount of royalties that had been paid to the Land office. To conclude, the Defendant did not come out with any figure as to the total profits derived from the sales. The fact that the price of a lorry load of soil was RM5 was also unsupported by any evidence.




27. The law imposes a duty on the Defendant to verify his account with regard to all sales, profits and benefits derived from the sale of the soil and rock materials excavated from the properties. Had the Defendant acted to the rules and had the Plaintiffs found that the sum presented was erroneous, O43 r5 of the RHC 1980 entitles the Plaintiff to dispute the account by giving a notice to the Defendant.


28. Based on the facts and circumstances of the case, in the absence of any account being presented by the Defendant, the Court is entitled to admit the evidence and documents presented by PW1 and PW2 on the calculation of the profits derived from the sales of soil extracted from the properties. Here, both witnesses had been cross-examined by the Defendant.


Order 43 r3(2) states as follows:


Without prejudice to the generality of paragraph (1), the Court may direct that in taking the account the relevant books of account shall be evidence of the matters contained therein with liberty to the parties interested to take such objections thereto as they think fit.


29. Next, the issue of illegality of the excavation works is of no relevance. Here, the Defendant’s liability to pay to the Plaintiffs the 50% profit sales was procured by consent of the parties. This brought to the recording of the consent judgment. Therefore the sole issue left was merely on quantum which was subject to inquiries before the Deputy Registrar. The Federal




Court in Ganapathy Chettiar v Lum Kum Chum & Ors. Meenachi v Lum Kum Chum & Ors_ [1981] 2 MLJ 145, held that:


“…an order by consent is evidence of the contract between the parties and is binding on all parties to the order.”


30. The doctrine of estoppel is applicable to defeat the attempt made by the Defendant to reopen any issues on liability. Once the parties had taken the matter beyond contract and recorded a consent order then they must accept all the implications of a court judgment or order. See the decision of the Court of Appeal in Mayban Allied Bhd v Kenneth Godfrey Gomez & Anor & Another Appeal [2010] 9 CLJ 702.


31. In view of the above reasons, the Defendant’s appeal is dismissed with costs of RM15,000.00. Deposit to the Plaintiff to account of costs.


Dated: 9th October, 2013.






Court of Appeal Malaysia


Hearing Date: 15.3.2012




Counsel For the Appellant: Jag Jit Singh


Solicitors For the Appellant: Messrs J.J. Singh & Associates


Counsel For the Respondent: Daphne Choy


Solicitors For the Respondent: Messrs Choy & Associates



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