This case illustrates the situation where the first defendant had failed to prove that the he was under plaintiff’s undue influence.
Facts of the Case
The plaintiff who neither reads or writes English is a fortune teller. The first defendant is a retired English school teacher. The second defendant is the son of the first defendant. he is a clerk attached to the Lembaga Letrik Negara and in 1964 attached to the City Council. Third defendant is the daughter of the first defendant and she is a teacher. Both second and third defendant are unmarried and have lived with the first defendant. they were a closely-knit middle-class Chinese family.
According to the plaintiff, she first came to know the defendants few years prior to 1964 when they called at her house and consulted her to have their fortunes read. The defendants had visited her on numerous occasions which lead to the agreement. Sometime in March 1964, plaintiff said that the first defendant visited her at home and suggested her to buy a house in the town area. Plaintiff replied that she has no money but first defendant offered to sell her a house in Taman Perak for RM22,000 and she could pay slowly and anytime if she can.
On 2 April 1964, first defendant called her and said that he wished to sell the property and suggested that she come to his house later on the same day with an initial payment of RM1,700. Plaintiff agreed with the appointment. She brought the initial payment of RM1,700 and her friend (DW2) accompanied her. The first defendant gave her an acknowledgement recorded in his own handwriting in an exercise book being the agreement after he received the payment. Plaintiff said that at this meeting, the second and third defendants were also present. Four of them were seated at a table and discussed the mode of payment of the balance. The purchase price was RM22,000 as agreed earlier and it was agreed that the balance should be paid by monthly payment of such sums as plaintiff could afford. After the agreement was signed by the first defendant and DW2 explained the contents to the plaintiff.
Later in the first week of May 1964, first defendant met the plaintiff at the property to hand the keys to her. The plaintiff moved in to the property after few days. On 21 May 1964, plaintiff made a further payment of RM300 and thereafter 27 separate payments amounting to RM3193.90 was made. The first defendant had acknowledged in the exercise book (P2) in his personal handwriting for each payment and also made corresponding entries in his own exercise book which the plaintiff thumb-printed. Plaintiff also paid the quit rents and assessment rates of the property and the instalments towards principal and interest due under the charge executed over the property. She had paid Rm12,751.80 in total and she had the receipts for the payments above.
In mid-1972, the plaintiff wished to settle the balance of the purchase price. At this time, she discovered that the property was registered in the names of the second and third defendants. She asked first defendant about it and he replied that the second and third defendant would do as instructed by him to transfer the property. However, the second and third defendants refuse to execute a transfer of the property to the plaintiff. After the plaintiff consulted her solicitors, a letter dated 11 January 1976 was sent to the first defendant calling upon him to nominate a date for execution of the transfer. Unfortunately, there was no satisfactory responses. Thus, plaintiff had issued a writ on 8 December 1978 to sue for specific performance of an agreement of sale and purchase.
There is some variation to the facts claimed by the defendants. According to the first defendant, he was a devout and superstitions Buddhist. In 1963, he consulted the plaintiff about his and his son’s health problems. The plaintiff gave the first defendant and his son a glass of ‘holy water’ and a talisman to be burnt and its ashes to be dissolved in water and drunk. They felt their conditions had improved after they drunk it. This led the first defendant to seek spiritual advice and guidance from the plaintiff regularly. Toward the end of 1963, he consulted the plaintiff about the geomancy of a property that his children intended to purchase. The plaintiff said that the property was good.
A few moments later, first defendant alleged that the plaintiff wished to acquire the property for herself. He alleged that plaintiff urged him to persuade the second and third defendant to sell the property to her and if he succeeded, his family will be blessed with good health and prosperity. If not, he would suffer dire consequences. First defendant said that he told the plaintiff he was not the owner therefore could not sell but plaintiff threatened him. Therefore, he did as request and signed on one of the exercise books (P2). First defendant claimed that he signed the exercise book at the plaintiff’s house and only the plaintiff was present. He had not told anyone when he returned home. First defendant said that since the plaintiff could not pay the balance sum as promised and she needed more time, he alleged that the plaintiff asked him to rent out the property to her. The first defendant replied that he would have to consult his children and it was agreed that the rental was fixed at RM128.10 per month and plaintiff was to pay the quit rent and assessment rates.
Issues of the Case
Whether the first defendant was under undue influence and thus render the transaction void?
Whether the writ issued was time barred?
Judgment of the court
First issue: Whether the first defendant was under undue influence?
The Court started by evaluating the evidence. The court are in the view that the defendants is a closely-knit family and also lived under the same roof for many years. They should have confided in each other regarding matter of importance and of common interest. Thus, the assertion that the first defendant had signed the agreement without the express or implied authority of the second and third defendant is false and untrue. The Court found some unsatisfactory statements made by the defendants.
First, the first defendant claimed that his children first came to know the agreement only when the writ was served upon them in December 1978. When he was cross-examined, he claimed that they first know of it as early as 5 January 1972 when the police picked the three defendants for questioning because plaintiff’s police report.
Secondly, first defendant claimed that he receives Rm1,700 from the plaintiff is for safe keeping and the agreement he signed was intended as a receipt. However, the agreement did not show that the money received is for safekeeping.
Thirdly, first defendant testified that when the plaintiff did not come up with the large sum of money as promised, he urged her to pay. Plaintiff then asked for more time to sell off her family estate. First defendant claimed that plaintiff asked him to let the house to her and he told her that he has to consult his children. Hence, the Court found that his conduct is not correspond to a victim under undue influence.
Fourthly, the first defendant claimed that the subsequent payments received was for rental but it was not mentioned in the agreement of this fact. The court held that the first defendant is an educated person and the agreement was in his personal handwriting. Thus, his explanation is false. Furthermore, second and third defendant would disclose in their Income Tax Returns if the payments was intended as rental.
Fifthly, first defendant had claimed that he had written the agreement under the pressure of the plaintiff and he merely copied out the writing on a piece of paper handled to him by the plaintiff. The Court held that first defendant clear handwriting would suggest otherwise.
Sixthly, the first defendant would have taken steps to repudiate the agreement if he was the victim of undue influence. The instalment payments were made continuously for more than six years and no action were taken.
Seventhly, when the defendant’s solicitor received the plaintiff’s solicitor letter calling for a date for completion. However, plaintiff had not mentioned about the first defendant having signed the agreement. The defendant’s solicitor in his reply, deny the allegations relating to the agreement and contending that the property had merely been rented to the plaintiff. thus, it can be inferred that this is an admission of the existence of the agreement.
From the above evidence, the Court is satisfied with the plaintiff’s evidence that the agreement was signed at first defendant’s home, in the presence of PW2, second defendant and third defendant. agreement was signed after the defendants discussed its terms. Thus, the agreement is binding on second and third defendant and it was signed by first defendant acting as their authorised agent.
Section 16 of the Contracts Act 1950 states that:
“(1) A contract is said to be induced by 'undue influence' where the relations subsisting between the parties are such that one of the parties is in a position to dominate the will of the other and uses that position to obtain an unfair advantage over the other.
(2) In particular and without prejudice to the generality of the foregoing principle, a person is deemed to be in a position to dominate the will of another
(a) where he holds a real or apparent authority over the other, or where he stands in a fiduciary relation to the other; and
(b) where he makes a contract with a person whose mental capacity is temporarily or permanently affected by reason of age, illness, or mental or bodily distress.
(3) Where a person who is in a position to dominate the will of another, enters into a contract with him, and the transaction appears, on the face of it or on the evidence adduced, to be unconscionable, the burden of proving that such contract was not induced by undue influence shall lie upon the person in a position to dominate the will of the other.”
The High Court referred to the case of National Westminster Bank v Morgan [1985] 1 All ER 821 where the House of Lords interpreted the doctrine of undue influence from Allcard v Skinner [1887] 36 Ch D 145, Bank of Montreal v Stuart [1911] AC 120 and Poosathurai v Kannappa Chettiar [1919] LR 47. The High Court summarise the legal position of the Common law and held that it is only in exceptional circumstances that the equitable remedy of setting a transaction on grounds of undue influence will be granted. So, even if a bargain may appear to be harsh, courts are not inclined to intervene unless it can also be demonstrated that the transaction was to the manifest disadvantage of the person subjected to the dominating influence. The foundation of the principle to grant equitable relief of this kind is not inequality of bargaining power but the prevention of victimization by one party of another. Lastly, the doctrine is not limited in its application to gifts but extends to commercial transactions as well.
Applying the principles to the facts, the Court finds that the transaction concerned was not unfair to the defendants. There was no evidence that the transaction itself was 'wrongful in that an advantage was taken from person subjected to influence’. The defendants have failed to prove that undue influence had been exercised to obtain the transaction.
Second issue: Whether the writ issued was time barred?
From the facts, the agreement was silent as to the date by which the balance of
the purchase price had to be paid but, as at 7 December 1971 the plaintiff had paid a total sum of $12,751.80 leaving a balance of $9,248.20. On that date, a last instalment payment of $128 had been made to the MBBS. Moreover, the plaintiff had been given vacant possession of the disputed property. The plaintiff's then solicitors, by a letter dated 11 January 1972 with copies to the second and third defendants, called upon the first defendant to give an early date when the balance of the purchase price could be paid and a transfer, free of the charge in favour of the MBBS executed. However, the second and the third defendants refused to do so.
Upon these facts, counsel for the first defendant had argued, relying upon Nadefinco Ltd v Kevin Corporation Sdn Bhd [1978] 2 MLJ 59 and Loh Wai Lian v Sea Housing Corporation Sdn Bhd [1984] 2 MLJ 280, that the plaintiff's cause of action accrued on 7 January 1972, which is one month after the due date of the last instalment to the MBBS, that being a reasonable time allowed for successive instalment payments by the plaintiffs. Accordingly, as the writ herein was issued on 1 December 1978, and the period of limitation being six years by reason of s 6 of the Limitation Act, the plaintiff's claim was barred.
The Court found that the defendant’s argument is unacceptable because both of the case can be distinguished from the current facts. The first case was an action to recover tribute money under a lease whereas the second case was an action to recover liquidated damage for delay in completion of a shophouse under the sale and purchase agreement.
The Court held that in an action for specific performance of an agreement or for a declaration of title of land, it is essentially that an action to recover land and for purposes of limitation time runs from the date of any infringement or at least a clear and unequivocal threat to infringe that right (see Nasri v Mesah [1971] I MLJ 32; Ahmad bin Hussin v Hajjah Mek bte Haji Hussain [1973] 1 MLJ 18).
In the present case, the plaintiff had paid a substantial part of the purchase price and had gone into possession. However, the second and third defendants replied by the letter dated 28 January 1972 refusing the plaintiff’s demand by stating that their clients were registered proprietors of the property and that they never authorised first defendant to sell it. The Court are of the opinion that the cause of action accrued from the date of service of this refusal letter which constituted evidence of the first clear unequivocal threat to infringe the plaintiff’s title. The writ in this case was issued on 9 December 1978 and the period of limitation applicable is 12 years by reason of section 9 of the Limitation Act 1953. Therefore, the action was commenced within time.
In these circumstances, the Court enter judgment for the plaintiff as follows:
Agreement made between plaintiff and first defendant constituted an agreement binding upon the second and third defendants
Upon payment of the balance purchase price, less rpgt (if any) into the Court within 14 days from date hereof by the plaintiff, the agreement be specifically performed and carried into execution by the second and third defendants to executing a valid and registrable transfer of the property free from all encumbrances to the plaintiff.
Upon payment of balance purchase price, the second and third defendants deliver the property’s issue document of title to the plaintiff
Cost of this action paid by the defendants to the plaintiff