The document discusses the concepts of bare trust and stakeholder under Malaysian law. It begins by explaining that a solicitor stakeholder temporarily holds money or property while its owner is still being determined, such as money paid by a purchaser pending registration of a property transfer. It then summarizes two key Malaysian cases on stakeholders. The document also discusses the English common law position on bare trusts, where the vendor becomes a bare trustee once a valid sale contract exists. However, under Malaysian law bare trustee status only arises after full payment and execution of a valid transfer, as established in another case summarized. The key differences between the common law and Malaysian positions on bare trusts are also outlined.

1. 1) Explain the doctrine of bare trust
and meaning of solicitor stakeholder
by referring to decided cases.
2) What is the position in Malaysia
regarding bare trust and
stakeholder.

2. SOLICITOR STAKEHOLDER
• The one who undertakes to hold the money paid over by
the purchaser pending the outcome of a future event
upon which he would pay it over to the vendor.
• They temporarily holds money or property while its
owner is still being determined. In case anything
happened, the money is secured with the stake holder.
• Toh Theam Hock v Kemajuan Perwira Management
Corp Sdn. Bhd
– word ‘stake’ is used to refer to any money to be disposed of
in accordance with what may happen in the future, and
whoever is in possession of that money is the stakeholder.

3. • Kuldip Singh & Anor v Lembaga Letrik Negara &
Anor
– if the stakeholder run away, then the loss should be on
the person who, under the terms of the contract, had a
claim to the money at that time.
• Tat Suan Sim v Chang Fook Shen
– It is an inevitable necessary requirement in any
agreement of sale under Torrens system to appoint a
stakeholder, who, need not be the solicitor for the
vendor. He needs to hold the money which would be
paid over by the purchaser upon the execution of the
relevant transfer until the registration of the transfer. If
the registration is not affected or proceeded with, then
his undertaking would be to return the money to the
contending purchaser to secure the repayment of the
loan.

4. Kuldip Singh & Anor v Lembaga Letrik
Negara &Anor
P wanted to buy a
house from 2nd
D. She
then took the 2nd
D to
see her solicitor.
P instructed the
Brar to draw a S & P
agreement.
P planned to finance
the purchase partly
by means of loan
from their employer,
LLN (1st
D).
Procedure: appoint a
solicitor. P required
to submit the name
of that solicitor to the
1st
D.
After June 14, 1976 Brar
disappeared. The 1st
D
has been making
monthly deductions from
the P’s salaries to
recover the loan of
$46,000
Brar received the cheque as a
stakeholder until a specific events
occurred:
1.Signing of the transfer form by
the second D and P
2.The solicitor feeling certain that
the transfer could be registered
free fro encumbrances.

5. Stakeholder in Malaysia

6. Cases on Stakeholder
• OCBC Bank (M) v Lee Lee Fah & OrsOCBC Bank (M) v Lee Lee Fah & Ors
HELD: that the purchaser, who introduced the errant solicitor to the
vendor, was liable to meet the vendor’s loss arising from the
misappropriation by the solicitor as stakeholder but it was
distinguished on its own peculiar facts, namely, the lack of any
express appointment of any stakeholder, the limited period during
which the solicitor held the money received as a stakeholder, and
the happening of the events ending the stakeholding.
• Tok Theam Hock v Kemajuan Perwira Management CorporationTok Theam Hock v Kemajuan Perwira Management Corporation
Sdn BhdSdn Bhd
HELD: a solicitor-stakeholder was entitled to keep any interest
earned on the stake money, he was not accountable to any of the
parties for the interest earned. The money held by the stakeholder
did not belong to any specific client until the happening of any
event and hence the money could not be considered to be ‘client
money’ within the meaning of the Solicitors’ Accounts Rules.

7. The concept of Bare Trust
The English Position
SALE
AGREEMENT
The Pf
(purchaser)
: equitable
owner
The vendor:
bare or
constructive
trustees

8. Position of Bare Trust in MalaysiaPosition of Bare Trust in Malaysia
4 circumstances where the doctrine can be applied:
(1) existence of a valid contract
(2) the purchaser has carried out and fulfilled all obligations under
contract (full payment is paid)
(3) the vendor must have the title of the land
(4) vendor has no duty to perform other than those of executing the
transfer and perfecting the transfer document
Cases where the doctrine applied:
• Temenggung Securities Ltd v Register of Titles Johor & Ors
Full payment and surrender of the possession, the vendor becomes
the bare trustee with the beneficial ownership pass
•Ong Chat Pang v Valiappa Chettiar
When the vendor has done all that is necessarily to direct himself of
the legal estate by executing a valid transfer of the land=> bare trustee

9. Cases where it rejected the doctrineCases where it rejected the doctrine
• Macon Engineering Sdn Bhd v Goh Hooi Yin and uphold by the
court in Chin Choy & Ors v Collector of Stamp Duties.
• Court held that the true relationship of the vendor and purchaser
in a sale and purchase transaction is contractual in nature as the
Code only recognizes only one estate, the registered estate of a
person.
• NLC only recognizes contractual right which is provides in the
S206(3) of NLC, a right to ensure the purchaser under the contract
is not deprived of his right to the property because of non-
registration.

10. Differences between the common law and Malaysian position of bare
trust.
COMMON LAW
The moment when there is
a valid contract for sale
•Lysaght v Edwards
MALAYSIA
Then moment when there is a receipt
upon full purchase price, timeously paid
and when the vendor has given the
purchaser a duly executed, valid and
registrable transfer of the land.
•Ong Chat Pang v Valliappa Chettiar
Q: When does the vendor becomes a bare trustee?