Wednesday, June 24, 2009

Selangor Turf Club's Vincent Tan faction suffers loss in the Federal Court;Implications for Berjaya's Turf Club project

I have previously written about the rather premature inclusion of the Selangor Turf Club(STC) land in the virtual vault of Berjaya Land Bhd's bankable assets (see
That deal rests on a promise that Berjaya will provide each Turf Club member a bungalow from its proposed development on that land. The enticement appears to be based on the principle that an unincorporated association is not a legal entity and is thus one in which assets, rights and liabilities accrue to its members.

However, on 28 May 2009 the Federal Court in a matter brought against the STC's Committee by two of its members , decided that the STC , being a registered society pursuant to section 7 of the Societies Act 1966 (the Act) is in fact a legal entity that can own and dispose of property.

In handing down the judgement of the Court ABDUL AZIZ MOHAMAD, FCJ said:
As far as concerns the vesting aspect of the funds and property of
the Club, Rule 24(a) of the Rules(of the STC) is consistent with section 9(a) and (b) of the Act. But where the rule speaks of the Committee “as Trustees for
the Ordinary Members of the Club”, and when rule 3 speaks of ordinary
members having the right “to share with other Ordinary Members in the
property and assets of the Club”, I am of opinion that those rules are
looking to the day when the registered society that the Club is, is
dissolved, or when its registration is cancelled. When a registered
society is dissolved, section 9(h) requires that “all necessary steps shall
be taken for the disposal and settlement of the property of such society,
its claims and liabilities, according to the rules (if any) of the said society
applicable thereto”. When the registration of a registered society is
cancelled, section 17(1)(a)(b) provides, inter alia, that the property of
the society shall vest in the Director General of Insolvency who “shall
proceed to wind up the affairs of the society, and after satisfying and
providing for all debts and liabilities of the society and the costs of the
winding up shall pay the surplus assets, if any, of the society … to
members of the society according to the rules of the society …”. I
should think that, in the case of dissolution, that is also what happens to
the surplus assets of a society, in consequence of the steps that section
9(h) requires to be taken."

It would appear then that the proposal to hand each and every member a bungalow lot as part compensation for the land may well be invalid. In light of the judgement above, STC members have limited, if any, rights to the particular assets that constitute the property of the STC but rather to the surplus of assets over liabilities in the event of deregistration. If the Berjaya Land proposal is deemed valid members will in fact be sharing in the proceeds from the sale of an asset of the STC.