The Api-Api Constructive Trust Test: Coming Out of the Murky Into Dangerous Waters?

Abstract

In Malaysia, the doctrine of constructive trusts has always been accepted as a doctrine firmly grounded on principles of Equity and Trusts in England and Wales. A constructive trust must be imposed based on clear principles as opposed to being imposed on an arbitrary basis. Recently in July 2017, the Federal Court in Perbadanan Kemajuan Pertanian Selangor v JW Properties Sdn Bhd (2017) MLJU 1107 has laid down a somewhat “three pronged test” for the workings of constructive trust. This decision seems to now suggest that the Malaysian position is that constructive trusts are to be imposed as a ‘remedial device’ on the basis of ‘unjust enrichment’ i.e. as a remedial constructive trust. Whilst this may be argued as one of the clearer pronouncements of the apex court in Malaysia on the point of constructive trusts, the question that needs to be addressed is, has the apex court provided clarity or caused further trepidation amongst those who could be possibly affected by the application of the law pronounced in this case. The papers primary contribution is the finding that whilst the decision provides a relief from the past plethora of uncertainty as seen in the list of cases discussed, the elements laid down also seem to lack force and clarity of basis which may cause some far reaching implications.