Article 2013 1 CLJ i
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Transcript of Article 2013 1 CLJ i
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Caveats, Prohibitory Orders And Injunctions
Under The National Land Code 1965*
by
Datuk Dr. Wong Kim Fatt**
Introduction
The Malaysian National Land Code 1965 (the NLC), modelled
on the Australian Torrens System, came into force on 1 January
1966 and applies to the eleven states of Peninsular Malaysia, the
Federal Territory of Kuala Lumpur (with effect from 1 February
1974 P.U. (A) 56 of 1974), and the Federal Territory of
Putrajaya (with effect from 1 February 2001, see Federal Territory
of Putrajaya (Modification of National Land Code) Order 2001).
Before the NLC came into force in 1966, there were seven
separate land laws in Peninsular Malaysia, ie, (a) the National
Land Code (Penang and Malacca Titles) Act 1963 codifying the
land laws of Penang and Malacca, (b) the Federated Malay States
Land Code of 1926 (Cap 138) applicable to the four federated
states of Negeri Sembilan, Pahang, Perak and Selangor, (c) the
five land laws of each of the states of Johor, Kedah, Kelantan,
Perlis and Terengganu. As for the State of Johor, its land laws
were codified as the Land Enactment No. 1 (2 of 1910). It was
in operation for over 50 years until it was replaced by the NLC
in 1966. It is interesting to note that under s. 2 of the repealed
Johore Land Enactment, the court means the Supreme Court of
Johore, and only one form of caveat in Schedule L is provided
under s. 55 of this Enactment, where the person whose title is
bound by the caveat is called the caveatee, an expression not
* This article is based on a talk given by the writer on Day 1 in a 3-day
seminar on Land Development Issues held on 27 November 2012 in
Mutiara Hotel, Johor Bahru, organised by Uni-Link Smart Venture Sdn
Bhd. I wish to thank Mr. Wong Boon Lee, Mr. Wong Boon Chong and
Miss Kelly Yeo Hui Yain for the valuable discussions I had with them on
the relevant subjects and authorities. I am solely responsible for the
shortcomings of this article which discusses restraints of dealings,
injunctions, and the appeal procedures in the Malaysian Courts.
** Advocate & Solicitor Co-founder & Partner, Gulam & Wong
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used in the NLC. To meet modern requirements and for
uniformity, it was necessary to have a single Land Code to
replace these seven out-moded separate land laws in the States of
Malaya before they achieved independence on 31 August 1957.
Clause 1 of the Introduction to the Explanatory Statement of the
National Land Code Bill published in the Federal Government
Gazette on 1 July 1965 reads:
Under the present law of the States of Malaya two quite different
systems of land tenure exist side by side:
(a) The States of Penang and Malacca retain a system peculiar
to the pre-war Straits Settlements (modelled on the
English laws of property and conveyancing) whereby
privately executed deeds are the basis of title to land;
(b) The nine Malay States, by contrast, employ a system based
on the principle that private rights in land can derive only
from express grant by the State or secondarily from State
registration of subsequent statutory dealings.
The purpose of the Bill is stated in cl. 4 of the Explanatory
Statement:
The purpose of the present Bill is to remedy this state of affairs
to replace the complex of seven separate and out-moded laws
by a single statute of general application throughout all eleven
States and so establish a uniform system of land tenure and
dealing appropriate to the present day.
For such a unified system there can be only one model that is
already in existence in the majority of the States as described in
(b) above. In itself it is entirely acceptable; it is efficient, well tried
and familiar and can without difficulty be modified to suit modern
requirements. In nine States its introduction will mean no break
in continuity and in Penang and Malacca the way for its
introduction has already been prepared by the National Land Code
(Penang and Malacca Titles) Act 1963 which, when brought into
force, will abolish the existing system described in (a).
Caveat Under The NLC
Under s. 5 of the NLC on interpretation, a caveat means a
registered caveat. This shows that a caveat is not effective unless
registered under the provisions of the NLC. A caveat, when
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registered, will have the particulars of registration, the serial or
presentation number, with the date and time of entry, and signed
under his seal by the Registrar of Titles in respect of a registry
title or the Land Administrator in respect of a Land Office title.
Thus a caveat entered under the NLC is an entry or an
endorsement on the register document of title under the hand and
seal of the Registrar of Titles or the Land Administrator, as the
case may be. Unless the caveator gives his consent in writing
under s. 322(5)(b) of the NLC, a caveat shall prohibit dealings by
the registered proprietor in the land or interest affected. A caveat
gives notice on the register document of titles to the world at large
as well as protects the existing interests or claims to such interest
of the caveator in the land or particular interest affected. A
caveat, often described as a temporary or interlocutory statutory
injunction, is not an instrument of dealing and it creates no new
interest in land. However, when determining the priority of
competing claims or equities between the claimants in any dispute
concerning the land or interest bound by the caveat, it is material
to note that, everything being equal, the first in time prevails.
The New Rules Of Court 2012
Effective From 1 August 2012
It should be noted that, with effect from 1 August 2012, the new
Rules of Court 2012 (P.U. (A) 205/2012) came into operation,
repealing, under O. 94 r. 1, the Rules of the High Court 1980
and the Subordinate Courts Rules 1980.
Language Of The Courts
Under the National Language Acts 1963/1967, in Peninsular
Malaysia, the language of the courts is the national language
(bahasa kebangsaan), ie, the Malay language. However, currently
the language of the courts in the two East Malaysian states of
Sabah and Sarawak is the English language. Writs, pleadings,
cause papers, orders, and legal documents in the courts in these
two states are filed in English and proceedings are still conducted
in English. In Peninsular Malaysia, all writs pleadings, cause
papers, orders and legal documents filed in the courts, and
correspondence with the courts, government ministries and
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departments, shall be in the national language (bahasa
kebangsaan), other than the giving of evidence by witnesses.
However, all these documents filed in the courts in the national
language may be accompanied by their English translations. In
practice court proceedings in chambers or in open court are very
often conducted in English in the High Court, the Court of
Appeal, and the Federal Court in Peninsular Malaysia, and written
and oral submissions are frequently made in English in the interest
of justice. In these superior courts counsel and judges more often
conduct the proceedings in English, unlike in the Subordinate
Courts, ie, the Magistrates Court and the Sessions Court where
proceedings are virtually conducted in the national language,
except the giving of evidence by witnesses. Section 8 of the
National Language Act reads:
8. All proceedings (other than giving of evidence by a witness) in
the Federal Court, the Court of Appeal, the High Court or any
Subordinate Court shall be in the national language:
Provided that the Court may either of its own motion or on the
application of any party to any proceedings and after considering
the interests of justice in those proceedings, order that the
proceedings (other than the giving of evidence by a witness) shall
be partly in the national language and partly in the English
language.
In this connection, it is relevant to refer to art. 152 of the Federal
Constitution which reads:
152 National language
(1) The national language shall be the Malay language and shall
be in such script as Parliament may by law provide:
Provided that
(a) no person shall be prohibited or prevented from using
(otherwise than for official purposes), or from teaching or
learning, any other language; and
(b) nothing in this Clause shall prejudice the right of the
Federal Government or of any State Government to
preserve and sustain the use and study of the language
of any other community in the Federation.
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.
(4) Notwithstanding the provisions of Clause (1), for a period
of ten years after Merdeka Day, and thereafter until
Parliament otherwise provides, all proceedings in the Federal
Court, the Court of Appeal or a High Court shall be in the
English language:
Provided that, if the Court and counsel on both sides agree,
evidence taken in language spoken by the witness need not
be translated into or recorded in English.
(5) Notwithstanding the provision of Clause (1), until Parliament
otherwise provides, all proceedings in subordinate courts,
other than the taking of evidence, shall be in the English
language.
Grounds Of Judgment In English Are Lawful
The crucial national language issue concerning the grounds of
judgment written in the English language came up for adjudication
by the Federal Court in a criminal case in Harcharan Singh Piara
Singh v. PP [2011] 6 CLJ 625 in which the Federal Court
unanimously held that the grounds of judgment in the English
language do not contravene the National Language Act and the
court has a wide discretion to conduct proceedings in English or
in the national language. Delivering the judgment of the Federal
Court, Richard Malanjum CJ (Sabah and Sarawak) said at p. 636:
[30] Accordingly, on the authority of Dato Seri Anwar Ibrahim v.
Tun Dr. Mahathir (supra) which we accept as good law, we hold
that grounds of judgments do not fall within s. 8 of the Act, and
the court has a wide discretion whether to conduct proceedings in
the English language or in the national language, be it on the
courts own motion or on application by the parties. Further,
judges have the discretion to provide their grounds of judgment
in either in the national language or the English language. The
choice of language adopted by the respective judge is not open
for challenge as long as it is in the national language or the
English language.
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In the 1991 issue of the Singapore Journal of Legal Studies, I had
the opportunity at pp. 611 and 612 to make the following
observations on the language issue:
For over a century, English has been the language, both spoken
and written, of the courts in Peninsular Malaysia. The change
came when s. 8 of the National Language Act was amended by
the National Language (Amendment) Act 1990 which took effect
from 30 March 1990 and administratively from 1 June 1990 by
Practice Direction of the Chief Justice (Malaya).
...
The Bench and the Bar in Peninsular Malaysia are doing
reasonably well in the conduct of cases in the National language,
especially in the Subordinate Courts. Judges of the High court and
Supreme Court are encouraged to write their judgments in the
National Language. Some of these judgments and their English
translations, have found their way into the law journals. However,
it is respectfully urged that Malaysian judges should continue to
write their judgments in English so that these may be read and
studied in other parts of the world interested in Malaysian laws
because their published judgments in the Malay language will
hardly be read or understood in the English-speaking world. As
long term objective, English should continue to be used, alongside
Malay, where justice requires it in the superior courts of the
country. The best of post-independence judgments written in the
English language by judges of the Malaysian High Court, the
Federal Court and its successor, the Supreme Court [now the
Federal Court with the Court of Appeal below it] are of
comparable standard and quality with those of their counterparts
in the Commonwealth.
National Language Not Threatened
Now looking back the last 55 years since Merdeka Day on 31
August 1957, I am of the view that the secure constitutional
position of the Malay language as the national language of
Malaysia has never been threatened, and will never be, by the
continued use of English in the Malaysian Courts. Malaysians of
different races accept the Malay language as the national language
of the country. Mastery and use of the English language will be
to the benefit of Malaysia and her citizens in the international and
domestic scenes, now and in the future.
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Application Of The New Rules
Order 1 r. 2 of the Rules of Court 2012 provides as follows:
2(1) Subject to paragraph (2), these Rules apply to all proceedings
in
(a) the Magistrates Court;
(b) the Sessions Court; and
(c) the High Court.
(2) These Rules do not have effect in relation to proceedings in
respect of which rules have been or may be made under any
written law for the specific purpose of such proceedings or
in relation to any criminal proceeding.
Overriding Objective Of The Rules: Justice
It should be borne in mind at all times that the overriding
objective of these Rules is justice, as provided in O. 1A reading
as follows:
In administering these Rules, the Court or a Judge shall have
regard to the overriding interest of justice and not only to the
technical non-compliance with these Rules.
Non-Compliance With The Rules
Under O. 2 r. 1(1) mere non-compliance of the Rules of 2012
does not nullify the proceedings. It is significant to note that
under O. 2 r. 1(2), the parties must now assist the court to
achieve the overriding objective of dealing with the cases justly.
Commence By Writ, Or Originating Summons, Or Notice Of Application
We should take note that O. 5 of the Rules of 2012 makes
provisions for the mode of commencement of civil proceedings by
writ or originating summons (rr. 3 and 4). Order 32 r. 1 of these
Rules provides that every application in chambers shall be made
by notice of application in the new Form 57, replacing, but
practically in the same format of, the old familiar summons-in-
chambers, except the new Form 57 is headed Notice of
Application.
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Cases In Which The Rules Of Court 2012 Are Inapplicable
Currently, in Peninsular Malaysia, proceedings relating to company
winding-up matters may still be filed in the English language.
Under the Appendix C (O. 94 r. 2), the Rules of Court 2012 do
not apply to the following proceedings under the following laws:
Appendix C
List Of Exempted Laws
1. Bankruptcy proceedings Bankruptcy Act 1967
2. Proceedings relating to Companies Act 1965
the winding up of
companies and capital
reduction
3. Criminal proceedings Criminal Procedure Code
[Act 593]
4. Proceedings under the Elections Offences Act
Elections Offences Act 1954 [Act 5]
1954
5. Matrimonial proceedings Law Reform (Marriage and
Divorce) Act 1976 [Act 164]
6. Land reference Land Acquisition Act 1960
[Act 486]
7. Admission to the Bar Legal Profession Act 1976
[Act 166], Advocates
Ordinance of Sabah
[Sabah Cap. 2], Advocates
Ordinance of Sarawak
[Sarawak Cap. 110]
8. Proceedings under the Income Tax Act 1967 [Act 53]
Income Tax Act 1967
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Proceedings Under The New Rules
Proceedings relating to caveats under the caveat system,
prohibitory orders, and injunctions relating to the NLC should now
be taken under the Rules of Court 2012, with effect from
1 August 2012. On the caveat system, there are four types of
caveats provided under Part Nineteen on Restraints on Dealing in
the NLC. These caveats are the Registrars caveat, private caveat,
lien-holders caveats, and trust caveat. Over the last 46 years since
the coming into force of the NLC in 1966, there have been many
amendments made to the NLC. In the future, there will many
more arising under the NLC amendments in order to update the
NLC to meet future requirements. Our courts have adjudicated on
many disputes and have had many cases decided and reported in
the law reports for guidance of the legal profession.
The Registrars Caveat
Form Of Registrars Caveat
The Registrars caveat is now entered by the Registrar in Form
19F (previously Form 7) on the register document of title to any
land under specified circumstances. Form 19F provides as follows:
[Form 19F]
(Section 320)
ENTRY OF REGISTRARS CAVEAT
By virtue of the power conferred on me by section 320 of the
National Land Code, I have entered a Registrars Caveat on the
land held under Title No. ..................... for Lot No.
.....*Town/Village/Mukim ...
District .. for the following reason:
.........
2. This caveat shall, so long as it continues in force, prohibit
the registration, endorsement or entry on that document, of any
instrument of dealing, any claim to the benefit of a tenancy
exempt from registration and any lien-holders caveat. This
prohibition shall apply to any such instrument, claim or application
notwithstanding that it was received before this caveat was
entered.
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Dated the day of .., 20 .
..
Registrar/Land Administrator
Definitions
Note the following definitions under s. 5 of the NLC:
Court means the High Court in Malaya.
Dealing means any transaction with respect to alienated land
effected under the powers conferred by Division IV, and any like
transaction effected under the provisions of any previous land law,
but does not include any caveat or prohibitory order.
Registrar means
(a) in relation to land held or to be held under Registry title, or
under the form of qualified title corresponding to Registry
title, or under subsidiary title dependent on a Registry title,
a Registrar of Titles or Deputy Registrar of Titles appointed
under section 12;
(b) in relation to land held or to be held under Land Office title,
or under the form of qualified title corresponding thereto, or
under subsidiary title dependent on a Land Office title, the
Land Administrator.
Registry title means title evidenced by a grant or a State lease,
or by any document of title registered in a Registry under the
provisions of any previous land law.
Land Office title means title evidenced by a Mukim grant or
Mukim lease, or by any document of title registered in a Land
Office under the provisions of any previous land law.
Land Administrator means a Land Administrator appointed
under section 12, and includes an Assistant Land Administrator
appointed thereunder; and, in relation to any land, references to
the Land Administrator shall be construed as references to the
Land Administrator, or any Assistant Land Administrator, having
jurisdiction in the district or sub-district in which the land is
situated.
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Prohibitive Effect Of Registrars Caveat
Under s. 319(b) of the NLC, so long as the Registrars caveat
remains in force, it shall prohibit the registration, endorsement or
entry of:
(i) any instrument of dealing;
(ii) any claim to the benefit of a tenancy exempt from
registration; and
(iii) any lien-holders caveat.
The Registrars caveat is more powerful than a private caveat in
that it can operate backward to prevent registration of an
instrument of dealing under s. 319(b) (i) above like a transfer of
land in Form 14A, or the tenancy claim under (ii) above or a lien-
holders caveat under (iii) above, notwithstanding these documents
were presented, but had not been registered or endorsed, prior to
the entry of the Registrars caveat. Under s. 319(3), the Registrar
has the discretion to waive the prohibition.
Circumstances For Entry Of The Registrars Caveat
Section 320 of the NLC, as amended in 1979 by Act A444 by
the insertion of subsection (1)(ba), now reads as follows:
320 Circumstances in which Registrars caveats may be entered
(1) Subject to sub-section (2), a Registrars caveat may be
entered in respect of any land wherever such appears to the
Registrar to be necessary or desirable
(a) for the prevention of fraud or improper dealing; or
(b) for protecting the interests of
(i) the Federation or the State Authority; or
(ii) any person who is in his opinion under the disability
of minority, mental disorder or unsoundness of mind,
or is shown to his satisfaction to be absent from the
Federation; or
(ba) for securing that the land will be available to satisfy the
whole or part of any debt due to the Federation or the
State Authority, whether such debt is secured or
unsecured and whether or not judgment thereon has been
obtained; or
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(c) by reason of some error appearing to him to have been
made in the register or issue document of title to the
land or any other instrument relating thereto.
(2) Knowledge by the Registrar of the fact that any land or
interest therein has been acquired, or is to be held, by any
person or body in a fiduciary capacity shall not of itself
constitute a ground for entering a Registrars caveat in
respect of that land.
Cancellation Of The Registrars Caveat
Section 321(3) of the NLC provides as follows:
(3) A Registrars caveat shall continue in force until it is
cancelled by the Registrar
(a) of his own motion; or
(b) on an application in that behalf by the proprietor of the
land affected; or
(c) pursuant to any order of the Court made on an appeal
under section 418 against his decision to enter the
caveat, or his refusal of any application for its cancellation
under paragraph (b).
Authority Of The High Court
The decision, including any act, omission, refusal, direction or
order, of the Registrar or the Land Administrator is subject to the
control and order of the High Court in proceedings relating to
land. It is the duty of the Registrar or the Land Administrator to
comply forthwith with the order of the court under s. 417(1) of
the NLC.
Appeals To The High Court
It is important to note that under s. 418(1) of the NLC, any
person or body aggrieved by the decision of the Registrar or Land
Administrator has the right of appeal to the High Court within the
period of three months beginning from the date of communication
of the decision. Unlike O. 3 r. 5 of the Rules of Court 2012
where the High Court has the discretion to extend time, the court
has no jurisdiction to extend this statutory period of three months
under s. 418(1) of the NLC. See the Federal Court case of Land
Executive Committee of Federal Territory v. Syarikat Harper Gilfillan
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Bhd [1980] 1 LNS 150; [1981] 1 MLJ 234, where Raja Azlan
Shah AG LP (as he then was) said at p. 237:
Reading section 418 of the Code, we are satisfied that the latter
is the correct interpretation. Having regard to the special provision
for limiting the time within which to enforce the right, the
indications are that Parliament has by using plain and
unambiguous language intended the right to be exclusive of any
other mode of enforcing it. The time-limit is the foundation of the
right given in the section. It is in the highest degree improbable
that the period of three months as a limitation would have been
inserted if an indefinite period were intended to be given. The
period of the three months is obviously for the purpose of
preventing stale claims.
In Public Bank Bhd v. Pengarah Tanah & Galian & Anor [1989] 1
LNS 159; [1990] 2 MLJ 510, Mohtar Abdullah JC (as he then
was), without referring to the above earlier case of Land Executive
Committee of Federal Territory, held that the three-month period
runs from the date of communication. His Lordship said at p. 510:
By virtue of s. 418, the time limited for appeal against the order
of the registrar is three months from the date of communication
of the decision of the registrar. The decision of the registrar in
this case is the decision to enter the caveat and not the decision
to refuse the application for cancellation of the said caveat since
para (b) and the second limb of para (c) of s. 321 are not
relevant in the present case. Therefore, for the purpose of
computation of time under s. 418, it is crystal clear that time runs
from the date of communication of the decision of the registrar to
enter the caveat, ie, 20 October 1988. The plaintiffs appeal under
s. 418 was entered on 29 January 1989. Therefore, I hold that
the Plaintiffs appeal was filed out of time and consequently time
barred.
Appeal Procedure
The appeal procedure was, before the commencement of the Rules
of Court 2012 on 1 August 2012, by originating motion. Under
the new Rules of 2012, I am of the opinion that the appeal will
be by originating summons under O. 5 r. 4. Section 418 of the
NLC reads:
418(1) Any person or body aggrieved by any decision under this
Act of the State Director, the Registrar or any Land
Administrator may, at any time within the period of three
months beginning with the date on which it was
communicated to him, appeal therefrom to the Court.
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(2) Any such appeal shall be made in accordance with the
provisions of any written law for the time bring in force
relating to civil procedure; and the Court shall make such
order thereon as it considers just.
(3) In this section decision includes any act, omission,
refusal, direction or order.
Person Aggrieved
In a nutshell, a person aggrieved is one whose legal right or
interest is affected by the wrongful act or conduct of another
person. Following the Privy Council case of AG of Gambia v. Pierre
Sarr Njie [1961] AC 617, Mokhtar Sidin JCA, in delivering the
judgment of the Court of Appeal in Wu Shu Chen & Anor v. Raja
Zainal Abidin Raja Hussin [1997] 3 CLJ 854, said of an aggrieved
person at p. 868:
The Code contains no definition on who is an aggrieved person.
To my mind, the word aggrieved must be given its ordinary
meaning. To be aggrieved means one is dissatisfied with or
adversely affected by a wrongful act of someone. An aggrieved
person is therefore a person whose legal right or interest is
adversely affected by the wrongful act or conduct of another
person or body. The category of aggrieved persons is never
closed.
Cases On Registrars Caveat
There are relatively a few cases reported in the law reports on the
Registrars caveat. One of the leading cases under s. 418 against
the decision of the Registrar to enter his caveat under the NLC
is Temenggong Securities Ltd and Tumbuk Estate Sdn Bhd v. Registrar
of Titles, Johore which was commenced by originating motion No.
4 of 1973 by the two applicants in the Muar High Court as
persons aggrieved. In this High Court case (unreported), the
Malaysian Inland Revenue Department requested the Registrar of
Titles to enter a Registrars caveat over certain lands sold by the
registered proprietor Li-Ta Company (Pte) Ltd as vendor to the
first applicant Temenggong Securities Ltd which had paid the full
purchase, and had received the transfers and the issue documents
of title and possession of the lands on completion of the
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transaction on 22 September 1972. The Registrars caveat was
entered on 11 October 1972 to protect the interest of the Federal
Government for recovery of income tax due from the vendor. The
Registrar rejected the transfers and other documents presented,
after adjudication for stamp duty payment, for registration on
14 December 1972, and informed on 15 March 1973 the
applicants that a Registrars caveat had been entered. The
applicants lost their case before Pawan Ahmad bin Ibrahim Rashid
J, who erroneously held in his judgment (reproduced from p. 32
of the appeal record in Privy Council Appeal No. 38 of 1975):
I am of the view that the legislature clearly had in view the
protection of the interests of the Federation or the State authority
and because of this, gave the Registrar specific powers under
Section 320 to enter a caveat in respect of any land when he
deemed it necessary or desirable to do so in the protection of
such interests. It might also be mentioned here that the word
interests is plural in number and in my view it can be
interpreted to include interests other than registrable interests,
whereas in Section 323 the word interest is singular in number
and includes only a registrable interest. For this reason I am of
the opinion that interests such as vested or contingent are also
within the purview of Section 320 of the National Land Code, as
far as it pertains to the Federation or the State authority.
In The Federal Court
The applicants appealed to the Federal Court in Temenggong
Securities Ltd & Anor v. Registrar of Titles, Johore & Ors [1974] 1
LNS 175; [1974] 2 MLJ 45. In allowing the appeal and reversing
the decision of the learned High Court Judge, Ong Hock Sim FJ,
in delivering the unanimous judgment of the Federal Court, said
at p. 47:
We are of the view that the vendor, having parted with their
interest in the lands to the appellants, are bare trustees and have
no interest in the land over which a valid caveat can be lodged.
Respondents counsel tried to make much of clause 1 of the
Agreement of August 30, 1972 that the vendor shall sell and
purchaser shall purchase and that therefore no rights passed as
the agreement was non-registrable and a non-statutory instrument
capable of passing title to the appellants. He glossed over the fact
that the vendors had done everything that was required of them
to transfer the title and had thereby constituted themselves bare
trustees for the appellants and had no other or further interest in
the lands.
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In The Privy Council
The Registrar of Titles appealed to the Privy Council against the
judgment of the Federal Court. The Privy Council dismissed with
costs the appeal by the Registrar in Registrar of Titles, Johore v.
Temenggong Securities Ltd [1976] 1 LNS 135; [1976] 2 MLJ 44,
[1976] 2 WLR 951, [1977] AC 302. In delivering the judgment
of the Privy Council, Lord Diplock said of the Registrars caveat
at [1976] 2 MLJ 44, at p. 46:
A registrars caveat has substantially the same prohibitory effect
as a private caveat expressed to bind the land itself. It is entered
by the registrar of his own motion by endorsing the register
document of title to the land with the words Registrars Caveat
Entered and the time of entry. In one respect its effect is more
severe than that of a private caveat: it operates to prohibit the
registration, endorsement or entry of instruments, claims to
exempt tenancies and lien-holders caveats which were received at
the registry before the time of entry of the registrars caveat if
they have not been already entered on the register document of
title by then. On the other hand the registrar may waive the
prohibition in any case where he is satisfied that this would not
be inconsistent with the purpose for which the caveat was entered.
Note the learned Law Lords concluding opinion on s. 320(1)(b)
(ii) that the Registrar was not entitled to enter a Registrars for
unpaid income tax at p. 48:
The characteristic which is common to the three categories of
persons specified in sub-paragraph (ii) is that they are handicapped
in their ability to search for themselves the entries in the register
relating to land in which they are entitled to an interest or to learn
of any threatened dealing with the land which might have the
effect of overriding their interest and which accordingly would
justify an application for a private caveat. So far as these three
categories of persons are concerned, in their Lordships view the
clear intention of Parliament in including paragraph (b) in
s. 320(1) was to enable the registrar of his own initiative to do
for persons in any of these categories what could have been done
upon an application made by them for private caveat; and to do
no more than that. As a public servant appointed by the state,
the registrar is an appropriate officer himself to do on behalf of
the Federation and the State Authority what in the case of private
individuals he could be required to do by a formal application on
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their part for the entry of a private caveat. Their Lordship
accordingly conclude that the interests which the registrar is
empowered to protect under s. 320(1)(b) are confined to interests
in the land that are recognised by the Code as being either
registrable or otherwise entitled to protection. An unsecured
creditor of the proprietor of land has no such interest in the land.
Even if no contract of sale by Li-Ta to Temenggong had been in
existence at the time, the registrar would not have been
empowered by s. 320(1) to enter any registrars caveat in respect
of Li-Tas land, upon the information which their Lordship have
assumed was available to him. Upon this ground they would
dismiss the appeal.
If the Registrar were entitled to enter the Registrars caveat for
unpaid income tax, then many individual and corporate tax payers
will run the risk of having their lands caveated by the Registrar.
Amendment To s. 320
After the decision in the Privy Council was made against the
Registrar of Titles, amendment was made to s. 320 of the NLC
by the insertion of (ba) to s. 320(1) by Act A444, gazetted on
15 February 1979 (see my article Registrars Caveat Amended
[1980] 1 MLJ, vii, and judgment of Mohamed Dzaiddin J (as he
then was) in Lim Ah Hun v. Pendaftar Hakmilik Tanah, Pulau
Pinang & Anor [1990] 2 CLJ 640; [1990] 2 CLJ (Rep) 369,
cancelling the Registrars caveat). The amendment to s. 320 does
not appear to assist the Government in tax collection where the
land in question has been charged. But the situation may well be
different where the tax payers land is not charged and is free
from encumbrances. In Oversea-Chinese Banking Corp Ltd v.
Pendaftar Hakmilik, Negeri Kedah [1990] 2 CLJ 275; [1990] 2 CLJ
(Rep) 594, KC Vohrah J (as he then was) did not support the
entry of the Registrars caveat. He said at p. 598:
It seems to me that once there is a charge registered in respect
of the land, a Registrars caveat is incapable of being entered in
respect of the land for it cannot possibly appear necessary or
desirable to him for securing that the land will be available to
satisfy the whole or any part of the debt due the Federation
since the caveat will not transform an unsecured debt into a
secured debt let alone give the debt a priority over other
registered interest in the land; instead the caveat serves to interfere
with the legitimate right of the chargee to sell the land under the
provision of the code to recoup losses secured by the charge.
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In Public Bank Bhd v. Pengarah Tanah & Galian & Anor [1989] 1
LNS 159 referred to earlier, a Registrars caveat was entered also
at the request of the Inland Revenue Department. In this case,
the plaintiff bank as registered charge applied by letter to the
Registrar to remove his caveat but the Registrar rejected the
chargees application to cancel the caveat. The proprietors of the
land affected, however, had not made the application for
cancellation of the caveat under s. 321(3)(b) of the NLC. Mohtar
Abdullah JC (as he then was), accepting the submissions of the
then Johor State Legal Adviser Zulkefli bin Ahmad Makinudin
(now CJ (Malaya)) for the first defendant, and Senior Federal
Counsel Balia Yusof bin Wahi (now JCA) for the second
defendant, correctly dismissed the appeal of the plaintiff
represented by Tan Kiah Teck on the ground that the appeal was
filed out of the three-month statutory period. A lesson to be
learned from this case is that whether or not a person or body
aggrieved requests the Registrar to cancel his caveat, it is always
prudent to file the appeal in the High Court within the three-
month period.
Private Caveat
Sections 322 to 329 of the NLC make provisions relating to
private caveats. Private caveats are practically entered every day
throughout Peninsular Malaysia in transactions involving sales and
purchases of land of various categories of uses (including industrial
land, houses and strata title units like condominiums), and loan
transactions to finance the purchases of various immovable
property. A basic working knowledge of private caveats is therefore
important to the practice of advocates and solicitors in advising or
acting for their clients whether in conveyancing or litigation.
Nature And Effect
Section 322 of the NLC as amended now reads as follows:
322 Nature and effect of private caveats.
(1) A caveat under this section shall be known as a private
caveat, and
(a) may be entered by the Registrar on the register
document of title to any land at the instance of any of
the persons or bodies specified in section 323;
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(b) shall have the effect specific in sub-section (2) or (3),
according as it is expressed to bind the land itself or an
undivided share in the land or merely a particular interest
therein.
(2) The effect of any private caveat expressed to bind the land
itself or an undivided share in the land shall, subject to sub-
sections (4) and (5), be to prohibit so long as it continues
in force the registration, endorsement or entry on the register
document of title thereto of
(a) any instrument of dealing executed by or on behalf of the
proprietor thereof, and any certificate of sale relating
thereto;
(b) any claim to the benefit of any tenancy exempt from
registration granted by the said proprietor; and
(c) any lien-holders caveat in respect thereof;
Provided that where the claim is in respect of a part of the land
the caveat bind the whole land and where the claim is in respect
of an undivided share in the land, the caveat binds the whole of
undivided share in the land. [Inserted by Act A1104].
(3) The effect of any private caveat expressed to bind a
particular interest only shall, subject to sub-sections (4) and
(5), be to prohibit the registration, endorsement or entry on
the register document of title of
(a) any instrument of dealing directly affecting that interest
(including any certificate of sale relating thereto); and
(b) where that interest is a lease or sub-lease -
(i) any claim to the benefit of any tenancy exempt from
registration granted directly thereout, and
(ii) any lien-holders caveat in respect thereof.
(4) A private caveat shall not prohibit the registration
endorsement or entry of any instrument, claim or lien-
holders caveat where the instrument was presented, or the
application for endorsement or entry received, prior to the
time from which the private caveat takes effect.
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(5) A private caveat shall not prohibit the registration or
endorsement of any instrument or claim where
(a) the instrument was presented or the application for
endorsement made by the person or body at whose
instance the caveat was entered; or
(b) the said instrument or application was accompanied by
the consent in writing of that person or body to its
registration or, as the case may be, to the making of the
endorsement.
(5A) No consent of the person or body at whose instance a
private caveat has been entered on a part of the land, an
undivided share in the land or a particular interest therein is
necessary to effect any registration, endorsement or entry of
any instrument on the register document of title not affecting
the claim relating to the part of the land, undivided share in
the land or interest therein. [Inserted by Act A1104].
Cases On Purpose And Effects Of Caveats
As early as 1917, in the well-known Australian High Court case
of Butler v. Fairclough [1917] 23 CLR 78 Griffith CJ was
considering the nature and effect of a caveat. The learned Chief
Justice said at p. 84:
The effect of these provisions is not to enlarge or add to the
existing proprietary rights of the caveator upon which the caveat
is founded, but to protect those rights, if he has any.
In 1976 in Registrar of Titles, Johore v. Temenggong Securities Ltd
[1976] 1 LNS 135; [1976] 2 MLJ 44 Lord Diplock said at p. 46
(also at [1976] 2 WLR 951, and [1977] AC 302 at p. 308) on
the purpose of a private caveat:
The purpose of a private caveat is to preserve the status quo
pending the taking of timeous steps by the applicant to enforce
his claim to an interest in the land by proceedings in the courts.
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In 1979 in an appeal from the Federal Court of Malaysia, the
Privy Council in the often-quoted case of Eng Mee Yong & Ors v.
Letchumanan [1979] 1 LNS 18; [1979] 2 MLJ 212, Lord Diplock
has the opportunity to make useful observations on private caveats
under the NLC at p. 214:
The system of private caveats is substituted for the equitable
doctrine of notice in English land law. By s. 322(2) the effect of
entry of a caveat expressed to bind the land itself is to prevent
any registered disposition of the land except with the caveators
consent until the caveat is removed By s. 324 the Registrar is
required to act in an administrative capacity only; he is not
concerned with the validity of the claim on which the caveat
purports to be based. The caveat under the Torrens System has
often been likened to a statutory injunction of an interlocutory
nature restraining the caveatee from dealing with the land pending
the determination by the court of the caveators claim to title to
the land, in an ordinary action brought by the caveator against the
caveatee for that purpose. Their Lordship accept this as an apt
analogy with its corollary that caveats are available, in appropriate
cases, for the interim protection of rights to title to land or
registrable interests in land that are alleged by the caveator but
not yet proved.
Caveatable Interest
It is important to note that not everyone is entitled to enter a
private caveat and that before a person applies in Form 19B of
the NLC for the entry of a private caveat, he must make sure that
he has a caveatable interest in the land concerned under
s. 323(1) of the NLC.
In AKB Airconditioning & Electrical Sdn Bhd v. Hew Foo Onn &
Anor [2002] 1 LNS 26; [2002] 5 MLJ 391, Abdul Malik Ishak J
(as he then was) succinctly stated the law at p. 401 as follows:
It is wrong to presume that every person has a right to enter a
private caveat. Section 323 of the NLC envisages the situation
that only a person having a caveatable interest may enter a private
caveat. It is essential that a person who enters a private caveat
must claim title to the land or any registrable interest in the land
or any right to such title or interest to the land. Under s. 324(1)
of the NLC, it is not the duty nor the function of the registrar
to enquire into whether the application for the entry of a private
caveat is validly made. It is the domain of the High Court to
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exercise its judicial function to adjudicate on the validity of the
entry of the private caveat. According to the long line of
authorities, the registrars duty in respect of an application for
entry of a private caveat is purely administrative or ministerial.
In the Court of Appeal case of Luggage Distributors (M) Sdn Bhd
v. Tan Hor Teng @ Tan Tien Chi & Anor [1995] 3 CLJ 520, Gopal
Sri Ram JCA had paraphrased s. 323(1)(a) at p. 547 as follows:
To paraphrase sec. 323(1) (a) of the Code, a private caveat may
be entered at the instance of any person or body who claim
either:
(1) the title to land; or
(2) any registrable interest in Land.
The parameters of caveatability under s. 323(1) (a) are therefore
circumscribed by these words: title and registrable interest. It
is only one who makes a claim to either of these in land may
enter a private caveat.
In the case of Megapillars Sdn Bhd v. Loke Kwok Four [1996] 4
CLJ 82, Kang Hwee Gee J (as he then was) made the following
observations on caveatable interest at p. 90:
It is trite law that a caveator must have a caveatable interest in
the land and not merely a pecuniary interest in it before he can
lodge a caveat under s. 323 of the National Land Code (Registrar
of Titles, Johore v. Temenggong Securities Ltd. [1976] 2 MLJ 44).
Thus, in Wong Kuan Tan v. Gambut Development Sdn. Bhd. [1984]
2 MLJ 113, a contractual right to an unpaid balance of the
purchase price of the sale of land was held by the Federal Court
to be incapable of creating a caveatable interest in land which
would entitle the caveator to continue to maintain his caveat.
Likewise, in the Supreme Court case of Abdul Rahim v. Vallapai
Shaik (a case cited by defendants Counsel), an agreement entered
into by the three beneficiaries of the estate of the deceased to sell
land which was conditional upon consent being given by the four
other beneficiaries and upon the purchaser making the monthly
instalments towards the discharge of charge of that land to the
bank, was held to confer no caveatable interest on the purchaser.
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Further, where that interest is claimed through a contract for the
sale of land, the contract must be enforceable by the caveator and
negotiations for a contract no matter how advanced is not capable
of creating a caveatable interest in his favour (Ayer Hitam Tin
Dredging Malaysia Bhd v. Y.C. Chin Enterprises Sdn. Bhd. [1994] 3
CLJ 133). The point is well illustrated by the following passage in
the Court of Appeal case of Murugappa Chettiar Lakshmanan (Wasi
Tunggal Harta Pesaka M.R.L. Murugappa Chettiar, Simati) v. Lee
Teck Mook [1995] 2 CLJ 545 at p. 551:
Until and unless a purchaser has an enforceable contract for the
sale of land, he can lay no claim to the title to registered land. A
fortiori, he has no interest that is capable of protection by the
entry of a caveat (per Gopal Sri Ram JCA).
No Caveatable Interest
The courts have held that in the following cases the following
persons have no caveatable interest. A creditor or judgment
creditor of a proprietor of land is not entitled in law to enter a
private caveat against the debtors land to secure or realize a debt
for the reason that a mere debt, whether under a judgment or not,
is not an interest relating to land. A judgment creditor for a
monetary debt may take out execution proceedings against the
land of the judgment debtor made by way of a prohibitory order
under ss. 334 to 339 of the NLC. In Hiap Yiak Trading Sdn Bhd
& Ors v. Gim Hin & Co (M) Sdn Bhd [1989] 1 LNS 32 in which
the applicants had paid the full purchase price, the private caveat
and prohibitory order were removed because they were not
interested in the land as they sought only the refund of the
deposit and other expenses. In United Malayan Banking Corp Bhd
v. Development & Commercial Bank Ltd [1983] 1 CLJ 82; [1983]
CLJ (Rep) 421, the Federal Court held that failure to obtain the
consent of the first chargee meant that the appellant bank did not
have a caveatable interest in the land. The claimant for a mere
chose in action arising out of or incidental to a contract for the
sale of land is not entitled to enter a private caveat (see Mawar
Biru Sdn Bhd v. Lim Kai Chew And Another Application [1990] 1
LNS 123). The caveators appeals to the then Supreme Court
were dismissed on 11 June 1991. A tenant for a tenancy for two
years with an option for having it renewed for a further two years
has no caveatable interest (see Luggage Distributors (M) Sdn Bhd
v. Tan Hor Teng @ Tan Tien Chi & Anor [1995] 3 CLJ 520). A
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purchaser of shares in a company has also no caveatable interest
in the land of the company (see Pembangunan Wang Kita Sdn Bhd
v. Fry-Fry Marketing Services Sdn Bhd [1998] 2 CLJ Supp 96). A
shareholder or officer of a company does not have a caveatable
interest in the land sold by his company, as was held in Hew Sook
Ying v. Hiw Tin Hee [1992] 3 CLJ 1325; [1992] 1 CLJ (Rep) 120
where Mohd Azmi SCJ said at p. 127:
Further, once the company has executed the instrument of
transfer in Form 14A in favour of the purchaser, and handed over
the original document of title, the managing director either as an
officer of the company or in his personal capacity as a shareholder
has no fiduciary duty to challenge the conduct of the company by
means of private caveat for the alleged purpose of protecting his
own interest or the interest of other shareholders.
In my article entitled Private Caveats, Entry, Extension and
Removal published in INSAF, the Journal of the Malaysian Bar,
(2006) XXXV No. 2, at p. 87, I wrote:
Having determined that the applicant has a caveatable interest
under s. 323(1) of the Code in the land in question, you may
then apply for the entry of a private caveat in Form 19B in
accordance with the provisions of s. 323 of the Code. The
following points and procedure should be observed:
(a) Apply in the prescribed Form 19B, which may be printed or
typed. The relevant particulars must be properly completed.
(b) Under para 2 of Form 19B, state concisely the grounds of
the claim to the title in the land or undivided share in the
land or interest therein, and/or further as stated in the
supporting statutory declaration. It is important to bear in
mind that what the applicant affirms in the statutory
declaration may be used against him in any subsequent
litigation concerning the caveat. Although the statutory
declaration can be affirmed by the advocate and solicitor
under para 3(b) of Form 19B, it is advisable for his client
to affirm it in order to maintain detachedness on the part of
the solicitor.
(c) Note the supplementary provisions as to forms and
procedure are provided under the Tenth Schedule of the
Code. Under para 11 thereof, the signatures of the caveat
applicant and the attesting witness should be in permanent
black or blue-black ink. Signatures in ball point pens are not
accepted. Roller point pens are accepted. It is important to
know the practice of the relevant land registry or land office.
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(d) Form 19B, if executed by a natural person, i.e. the caveator
or his attorney or the attorney of a company (typically an
attorney of a chargee bank whose power of attorney has
been registered with the Registrar of Titles or the Land
Administrator) requires attestation by one of the qualified
person stipulated in the Fifth Schedule, typically an advocate
and solicitor in Peninsular Malaysia. Execution of Form 19B
by a limited company under its common seal requires no
attestation but Form 19B must be accompanied by such
documents as the Memorandum and Articles of Association
of the Company, its board resolution, its Form 49 and the
supporting statutory declaration which may be affirmed by
one of its directors. If Form 19B is executed by a director
on behalf of the company (see Mahadevan & Anor v. Patel
[1975] 2 MLJ 207), the signature of the director requires
attestation.
(e) Identify the share of the land in column 4 of the Schedule
in Form 13A. In most cases, the caveat is to bind the whole
(semua in Malay) of the land itself. Sometimes, where the
land is registered in the name of more than one proprietor,
an undivided share like 1/2 or 1/3, caveat only the undivided
share of the particular proprietor involved.
(f) Caveating a part of land or a strata title unit requires greater
care. Note the new proviso to s. 322(2) of the NLC stating
that where the claim is in respect of a part of the land the
caveat binds the whole land. Note also para 3(c) of Form
19B. In my experience, I would, while indicating the whole
land, state and limit the caveat to the particular interest
claimed in column 4 of the Schedule like limited to the X
sq. ft. or limited to the Y unit (in Malay: Semua. Terhad
kepada X kaki persegi or Terhad kepada unit Y). The
details of the interest claimed in the agreement or a plan of
the land affected can be disclosed in the supporting statutory
declaration. Note the provisions in the new s. 322(5A) on
the question concerning the consent of the caveator. (See the
judgment of Suffian LP in the Federal Court case of N.
Vengedaselam v. Mahadevan & Anor. [1976] 2 MLJ 161.)
(g) Pay the appropriate registration fees, which vary from state
to state [and time to time]. For example,
(i) under the Federal Territory of Kuala Lumpur Land
Rules 1995, the fee for entry of a private caveat in Form
19B is RM300 per title (item 32),
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(ii) under the Federal Territory of Putrajaya Land Rules
2002 (P.U. (A) 76), the fee for entry of a private caveat
under item 29 of Schedule 4 is RM50 per title.
(iii) under the Selangor Land Rules 2003, the fee is RM300
per title (item 40), and
(iv) under the Johore Land (Amendment) Rules 2002, item
15 (XXVI), the registration fee is RM150 per title.
However, where Form 19B contains more than one title
the fee for each title after the first title is RM30 per title.
As for the solicitors legal costs relating to caveats, these are
slightly increased and are provided under the Fifth Schedule to the
Solicitors Remuneration Order 2005, which came into operation
on 1 January 2006. The remuneration for a solicitor for entry of
a caveat is now RM200 for the first title and RM50 for each
subsequent title. For the withdrawal of a caveat, it is RM150 for
the first title and RM50 for each subsequent title. Please observe
the no discount rule of the Bar Council.
Caveator Bound By His Grounds
A caveator should remind himself that he is bound by what he has
stated in his grounds for the entry of his private caveat, as these
grounds may later be used against him. In Teck Hong Development
Sdn Bhd v. Toh Chin Ann [2008] 4 CLJ 756, Gopal Sri Ram JCA
(as he then was) said at p. 761 in delivering the judgment of the
Court of Appeal:
The caveat is not grounded on the fact that the order for sale is
invalid. In Luggage Distributors Sdn Bhd v. Tan Hor Teng [1995] 2
CLJ 713, this court held that a caveator is bound by the grounds
he or she sets out in the application in Form 19B for the entry
of the caveat. It was also held if the grounds disclosed in Form
19B do not disclose a caveatable interest, then cadit quaestio.
Further Caveat After Lapsing
The statutory lifespan of a private caveat under s. 328(1) is six
years, unless extended by order of the High Court, or earlier
withdrawn or removed. Section 328(1) reads:
A private caveat shall, if not sooner withdrawn under s. 325 or
lapsing pursuant to sub-section (1B) of s. 326 or removed by the
Registrar pursuant to an order of the Court under s. 327, lapse
at the expiry of six years from the time from which it took effect,
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and the entry thereof may be cancelled accordingly by the
Registrar, either of his own motion or on an application in that
behalf by any interested person or body.
Can a further caveat be entered after lapsing? I am inclined to
think that the caveator should be allowed to enter a further caveat
to protect the same interest based on the same ground, provided
his claim or interest is still subsisting and not barred by limitation.
(See Wong: Restraints of Dealings in Land. in The Centenary of
the Torrens System in Malaysia. (Malayan Law Journal (1989), and
Teo: Further Thoughts on Second Caveats [1990] 3 MLJ cxvi.)
That question was answered in the positive by LC Vohrah J in
Thevathason s/o Pakianathan v. Kwong Joon [1990] 2 CLJ 308;
[1990] 3 CLJ (Rep) 248, where he said at p. 251:
I did not think that both these authorities which were cited in
Damodaran v. Vasudeva to support the proposition that a second
caveat may not be entered at the instance of the same applicant
in respect of the same land and precisely the same grounds under
the National Land Code in any way prohibited the entering of
fresh caveat even after the lapse of the first caveat based on a
different ground or even on the same grounds if it is for the bona
fide purpose of protecting the caveators interest in respect of the
same land. It was my judgment that if a contrary view was taken
there would be no way in which caveator like the defendant who
had already filed his action could protect his existing interest
pending resolution of his dispute by the Court. It seemed to me
that s. 328(1) merely provided for the normal longevity of a
private caveat and envisaged a time frame within which the
caveator should take action to realize his existing interest; it did
not exist to extinguish his right to further protection of that
interest if he had taken positive action, as was done in the present
case, to realize it.
Failure To Enter Caveat
As a rule of prudence, a solicitor should advise the client to enter
the private caveat immediately after execution of the sale and
purchase agreement. However, failure to enter a private caveat or
enter one later in time does not necessarily mean that a purchaser
of land or a chargee will lose his equitable interest in the land,
which eventually will be converted to a legal interest upon
registration of the transfer or charge. In Haroon bin Guriaman v.
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Nik Mah binte Nik Mat & Another [1951] 1 LNS 24, Briggs J held
that the caveat of Haroon cannot prevail over the prior equities
of Nik Mah. In the Temenggong Securities case, I was involved as a
solicitor in the sale and purchase of the relevant lands in the early
1970s, just a few years after the NLC had come into force. At
that time I did not know of the Registrars caveat. The purchaser
had paid the full purchase price and had received the transfers and
other relevant documents. The purchaser and its nominee did not
enter any private caveat. The Inland Revenue Department had
caused a Registrars caveat to be entered against the lands. The
High Court refused to remove the caveat. On appeal, the
Registrars caveat was ordered to be removed by the Federal
Court, which was affirmed by the Privy Council. Much to my
relief, Temenggongs nominee eventually became the registered
proprietor of the land free from encumbrances. In the Court of
Appeal case of Tsoi Ping Kwan v. Medan Juta Sdn Bhd & Ors
[1996] 4 CLJ 553, the second respondent company did not
appear to have entered a private caveat and its knowledge of the
appellants caveats did not affect its interest adversely. Gopal Sri
Ram JCA (as he then was), finding the balance of convenience
favours the second respondent, said at p. 567:
In our judgment, it would be wholly unjust and inequitable to
permit the appellant to contend that the caveats should remain as
against the second respondent which, in the light of the
circumstances adumbrated by Raja Aziz in the course of his
address to us, is entirely innocent.
The Federal Court applied the Australian case of Butler v.
Fairclough in United Malayan Banking Corporation Bhd v. Goh Tuan
Laye & Ors. [1975] 1 LNS 187 in which, in the absence of
caveats and registrations, the Federal Court found in favour of the
appellant bank which had possession of the documents of title.
In Ng Kheng Yeow v. Chiah Ah Foo & Ors [1987] 2 CLJ 108;
[1987] CLJ (Rep) 254, the Supreme Court held that the entry
of a private caveat by one party does not necessarily mean that
he has better priority against another who has not as yet lodged
one. The court found in favour of the 4th respondent although
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his caveat was later in time than that of the appellant. In
delivering the judgment of the court, Lee Hun Hoe CJ (Borneo)
said:
The submission of the 4th respondent that he has better equity is
well founded. He entered into the sale agreement with the vendor
first. He had paid the full purchase price. The vendors had
executed the Memorandum of Transfer in favour. Also, most
importantly the title deed is in his possession. He had become the
beneficial owner. The only thing against him is that he entered
the caveat later than the appellant. However, we are satisfied that
on the facts he has the better equity.
In Bank of Tokyo Ltd v. Mohd Zaini Arshad & Anor [1991] 2 CLJ
989; [1991] 2 CLJ (Rep) 341, Lim Beng Choon J held that the
plaintiff bank, as financier and absolute assignee, had the better
equity. The learned judge said at p. 349:
On principle and authority I cannot, therefore, accept the
proposition that just because the intervenor had caveated the land
in question in 1984 the priority of the plaintiff should be reduced
and be subservient to the equity of the intervenor.
Withdrawal Of Private Caveats
Withdrawal of private caveats poses no difficulty under s. 325 of
the NLC. A caveator may withdraw his caveat at any time by
presenting to the Registry or Land Office a notice in Form 19G
duly completed and accompanied by the prescribed fees.
Removal Of Private Caveats
There are two ways of removing a private caveat under the NLC
by the caveatee, ie, the person or body whose land or interest is
bound by a caveat. One way is by application under s. 326 in
Form 19H to the Registrar or the Land Administrator as the case
may be and paying the prescribed fee. A registered proprietor or
registered chargee under the NLC may proceed to remove the
caveat under s. 326 by virtue of his registered interest. The other
way is by application to the High Court as an aggrieved person
under s. 327(1) of the NLC to cover any one whose land or
interest therein is adversely affected by the caveat. See the well-
considered judgment of Abdul Malik Ishak J (as he then was) in
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AKB Airconditioning & Electrical Sdn Bhd v. Hew Foo Onn & Anor
[2002] 1 LNS 26; [2002] 5 MLJ 391 at 403 on an aggrieved
person, where he said:
If you are acting for the caveatee, you will have to decide and
advise clients as to which one of the two ways is the more
expedient in the circumstances of the case, bearing in mind (a)
the workload and the hearing time of the High Court concerned
and (b) the duration for removal by the Registrar or Land
Administrator is two months under s. 326(1B) after service, when
the burden is on the caveator to obtain an order for extension of
his caveat from the High Court.
Removal Under s. 326
Removal, in my experience, it is often faster for the registered
proprietor to remove the private caveat through the Registrar
under s. 326. As the applicant is the registered proprietor of the
land, the burden shifts to the caveator to show that his caveat
should not be removed. See Eng Mee Yong & Ors v. Letchumanan
[1979] 1 LNS 18, PC, Hew Sook Ying v. Hiw Tee Hee [1992] 2
MLJ 189, at 194, SC and Pembangunan Wang Kita Sdn. Bhd. v.
Fry-Fry Marketing Services Sdn. Bhd. [1998] 5 MLJ 709 at 716. A
recent case in point of removal under s. 326 is Urethane Systems
Sdn Bhd v. Quek Yak Kang [2006] 6 CLJ 81. In this case, the
caveator failed to get an order to extend its private caveat before
Helmy J (as he then was) and the caveat was accordingly removed
by the Land Administrator.
Removal Under s. 327
Section 327 of the NLC provides for any person or body
aggrieved by the existence of a private caveat to apply to the
High Court for an order for its removal. In normal circumstances
the caveator must be served with the application for removal. The
procedure for removal of a private caveat is regulated by the rules
relating to civil procedure, now the Rules of Court 2012 which
came into force on 1 August 2012, repealing the Rules of the
High Court 1980 which repealed the Rules of the Supreme Court
1957.
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In 1991 in Kumpulan Sua Betong Sdn Bhd v. Dataran Segar Sdn Bhd
[1992] 1 CLJ 20; [1992] 1 CLJ (Rep) 150, the Federal Court by
a 2:1 majority held that there were serious questions to be tried
and that the balance of convenience was in favour of allowing the
caveat to remain. Jemuri Serjan CJ (Borneo) said for the majority
at p. 158:
The crucial issue for our determination is whether in order to
support the caveat to remain in force, the appellant has succeeded
in satisfying us that it is a body at whose instance a caveat may
be entered under s. 323(1)(a). This seems to be the logical
approach to the issue. Be that as it may, the approach that is
common in Malaysia before the case of Eng Mee Yong & Ors v.
Letchumanan [1979] 1 LNS 18 was decided by the Privy Council,
is to ask the question whether the caveator has a caveatable
interest which terms are not defined in the National Land Code
1965, by applying to him para. (a) of sub-s (1) of s. 323 of the
Code. The relevant question which the court should address itself
to is: Is the appellant a person claiming title to, or registrable
interest in any alienated land, or any right to such title or interest?
If it is not, that ends the matter and the caveat cannot be allowed
to remain. The factual matrix of the claim to be a person or body
within the purview of para (a) of the subsection must be minutely
considered by evidence to establish that the claim is not frivolous
or vexatious. This approach can be best illustrated by reference
to the judgments of all the three Federal Court judges in the
Federal Court case of Macon Engineers Sdn Bhd v. Goh Hooi Yin
[1976] 1 LNS 67 where reference was made to s. 323(1)(a) of
the Code in the course of the judgments. At p. 54 Gill CJ
(Malaya), in dealing with s. 323(1)(a) of the NLC, says: As
regards the first questions, s. 323(1)(a) of the National Land
Code 1965 provides that a private caveat may be entered at the
instance of any person or body claiming title to, or any
registrable interest in, any alienated land or may right to such title
or interest. It would seem clear that the respondent cannot claim
title to or any registrable interest in the property in question
merely on the strength of the sale agreement which is a non-
statutory and non-registrable instrument, but it cannot be denied
that has a right under that agreement to such title or interest by
bringing an action for specific performance of the agreement,
which in fact he has already done.
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In the Court of Appeal case of Luggage Distributors (M) Sdn Bhd
v. Tan Hor Teng @ Tan Tien Chi & Anor [1995] 3 CLJ 520, the
court held that as exempted tenants the respondents private
caveats were not available to them. In a claim to a caveatable
interest, Gopal Sri Ram JCA (as he then was) at p. 535 stated
there are three stages involved. The first stage is the examination
of the grounds expressed in the application for the caveat. If it
appears that the grounds stated therein are insufficient in law to
support a caveat, then cadit quaestio, and the caveat must be
removed without the necessity of going any further. In the
second stage, the caveator must show his claim discloses a
serious question meriting a trial. The third stage is to determine
where the balance of convenience or justice lies. The caveator
must satisfy the three stages before his caveat is permitted to
remain.
In 1996 in Kho Ah Soon v. Duniaga Sdn Bhd [1996] 2 CLJ 218,
the Federal Court ordered the caveat which was removed by the
High Court to be restored as there are indeed serious questions
for trial. On the onus of the caveator, Peh Swee Chin FCJ, in
delivering the judgment of the court, said at p. 223:
It is settled that in a matter of removal of a caveat as between a
caveator and caveatee, as in the instance appeal, the onus is on
the caveator to satisfy the court that his evidence does raise a
serious question to be tried as regards his claim to an interest in
the land in question, and having done his claim so he must show
that, on a balance of convenience, it would be better to maintain
the status quo until the trial of the action by preventing the caveatee
from disposing of his land, as laid down by Lord Diplock in Eng
Mee Yong & Ors. v. Letchumanan [1979] 2 MLJ 212, and by
analogy indirectly to American Cyanamid Co v. Ethicon [1975] AC
396 as indicated by Lord Diplock, the serious question for trial
referred to above could mean a question not being vexatious or
frivolous.
In a pending suit, where the caveator and the caveatee are
parties, the removal application was previously made by summons-
in-chambers (Woo Yok Wan v. Loo Pek Chee [1974] 1 LNS 192),
which should now be made by an application under the Rules of
Court 2012.
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For an application to remove a private caveat made by originating
summons, see Chi Liung & Son Sdn Bhd v. Chong Fah & Sons Sdn
Bhd & Anor [1974] 1 LNS 21; Chiew Sze Sun v. Muthiah Chettiar
[1982] CLJ 39; [1982] CLJ (Rep) 423; and Bank Utama
(Malaysia) Bhd v. Periamma Vellasamy [2003] 1 CLJ 142 where
Azmel J (as he then was) refused to remove the caveat. As the
originating summons is retained by the new Rules of Court 2012,
this procedure may, in an appropriate case where there is no
serious dispute on facts, be used in removing a private caveat.
No Further Caveat On Removal
A caveator is prohibited from entering further caveats on like
claims after removal by the court or the Registrar, as provided
under s. 329(2) of the NLC:
(2) where the Court has ordered the removal of any private
caveat under s. 327, or has refused an application under sub-
section (2) of s. 326 for an extension of time with respect to any
such caveat, or where the Registrar has removed any caveat
pursuant to sub-section (3) of s. 326, the Registrar shall not
entertain any application for the entry of a further caveat in respect
of the land or interest in question it is based on the like claim as
that on which the former one was based.
Caveating Own Land
The provisions in s. 323(1) or any other section in the NLC is
silent on the question whether a registered proprietor can or
cannot caveat his own land or his interest therein to block a
chargees sale or a dealing affecting his land or interest. In the first
local case, the question was answered in the negative by LC
Vohrah J when he removed the caveat in Eu Finance Bhd v. Siland
Sdn Bhd (M & J Frozen Food Sdn Bhd, Intervenor) [1988] 1 LNS
200, following Richmond J in the case of Re An Application by
Haupiri Courts Ltd (No. 2) [1969] NZLR 353, at p. 357:
He must go further and establish some set of circumstances over
and above his status as registered proprietor which affirmatively
gives rise to a distinct interest in the land. In such circumstances
it would seem that the fact that he is the registered proprietor of
an estate or interest under the Act may not prevent him lodging
a caveat.
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In Hiap Yiak Trading Sdn Bhd & Ors v. Hong Soon Seng Sdn Bhd
[1990] 1 CLJ 912; [1990] 2 CLJ (Rep) 117, Richard Talalla JC
(as he then was) held that the registered proprietor could caveat
its own land, and the caveat in question should remain as the
nature of the agreements and the compensation issue should be
tried.
Damages For Wrongful Caveats
An intended caveator must first ensure he has a caveatable
interest in the land before entering a private caveat, as a caveator
is liable to pay compensation for his wrongful caveat under
s. 329(1) of the NLC. In Luggage Distributors (M) Sdn Bhd v. Tan
Hor Teng @ Tan Tien Chi & Anor [1995] 3 CLJ 520 Gopal Sri
Ram JCA (as he then was) gave the following caution at p. 537:
It is a serious matter to caveat a persons property, and unless a
case is properly made out, caveat ought not to be permitted to
remain on the register a moment longer than is absolutely
necessary.
In the Court of Appeal case of Trans-Summit Sdn Bhd v. Chun
Nyook Lin (P) [1996] 3 CLJ 502 Siti Norma Yaakob JCA (as she
then was), with whom Shaik Daud JCA and Abu Mansor JCA
concurred, in ordering payment of damages, said at p. 506:
On that conclusion, we allow this appeal with costs here and
below and order that the deposit be refunded to the appellant.
Consequentially, there will also be an order to assess damages by
the Registrar of the High Court, Melaka, to be paid by the
respondent to the appellant under s. 329(1) of the National Land
Code 1965. The private caveat Jilid 75 Folio 99 entered by the
respondent against Lot 1915 is to be removed forthwith and ex
parte order for extension of the caveat is set aside.
In Pembangunan Wang Kita Sdn Bhd v. Fry-Fry Marketing Services
Sdn Bhd [1998] 2 CLJ Supp 96 Low Hop Bing J (as he then
was) ordered removal of the caveat and damages to be paid by
the wrongful caveator. The learned judge said at p. 106:
By reason of above, I hold that the defendants entry of the
private caveat is wrongful as the defendant had not disclosed a
caveatable interest in its application (Form 19B) under s. 323(1)
of the National Land Code. Hence the defendant is unable to
cross the first hurdle. I order that the private caveat be hereby
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removed forthwith, without the necessity of going further. I also
make a consequential order that damages be awarded to the
plaintiff, to be assessed by the Registrar of this Court. Costs to
be taxed and paid by the defendant to the plaintiff.
Burden To Prove Damages
To recover damages, the burden of proving loss or damage rests
on the caveatee, ie, the person or body whose land or interest is
bound by the private caveat. In practice, the task of proving loss
or damage suffered is not always easy. For example, in Mawar
Biru Sdn Bhd v. Lim Kai Chew [1992] 1 LNS 22, the defendant
land proprietor did not recover any damages as he had failed to
prove any loss for the wrongful entry of the private caveat by the
plaintiff purchaser. In Plenitude Holdings Sdn Bhd v. Tan Sri Khoo
Teck Puat & Anor [1994] 2 CLJ 796, a case concerning wrongful
termination of contract for purchase of land, the High Court had
awarded a total sum of about RM16 million in damages. On
appeal, in Tan Sri Khoo Teck Puat & Anor v. Plenitude Holdings Sdn
Bhd [1995] 1 CLJ 15, the Federal Court set aside the judgment
of PS Gill J (as he then was) and reduced the huge damages of
some RM16 million to a mere RM10 as nominal damages mainly
because the land had appreciated in value. In the course of his
judgment Edgar Joseph Jr. FCJ said at p. 31:
At the end of the day, the purchaser got the land worth
approximately RM120,000,000, for which they had paid only
RM47,939,958.
No Extension If Caveat Cancelled
In Manian Kandasamy v. Pentadbir Tanah Daerah Raub & Anor
[2011] 7 CLJ 583, the Court of Appeal refused to extend the
caveat which had been cancelled by the Land Administrator.
Zaleha Zahari JCA, in delivering the judgment of the Court of
Appeal, said at p. 591:
[15] The popular meaning attributed to the word extend in
s. 326(2) of the Code is that it enlarges or gives further duration
to any existing right rather than re-vests an expired right. We are
in agreement with the judicial commissioner that the courts power
to extend a caveat under s. 326(2) of the Code was only
exercisable where a caveat is still alive and was no longer
exercisable after a caveat had been cancelled.
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[16] On the facts of this case the Land Administrator had clearly
acted within the powers conferred upon him by s. 326(1B) of the
Code in removing the appellants 4th private caveat for failure to
furnish a court order within the time specified. The judicial
commissioner was right in ruling that once a private caveat has
been removed, the Code does not give the court power to revive,
renew/continue a private caveat which has been cancelled. It is not
within the inherent jurisdiction of the court to make orders which
go beyond the limit of the powers expressly given to it by statute.
Restoration Of Caveat
If a private caveat had been wrongly removed, the court has the
power to restore it. In Palaniappa Chettiar v. Letchumanan Chettiar
[1981] 1 LNS 83; [1981] 2 MLJ 127, the caveat was removed
by the High Court, but on appeal the Federal Court ordered the
caveat to be restored on the ground at p. 129 that:
There are many factors concerning the caveat which were not
considered and from the evidence that is available the
considerations in favour of maintaining the caveat outweigh any
consideration that has so far been shown to be in favour of
removing it. We therefore restored it.
In Syed Ibrahim bin Syed Abdul Rahman v. Liew Su Chin (F) [1983]
1 LNS 45; [1984] 1 MLJ 160, the Federal Court refused to
restore the caveat of the appellant ordered to be removed by Wan
Hamzah J Lee Hun Hoe CJ (Borneo) said at p. 163:
The learned Judge rejected the contention of the appellant that he
was entitled in law to have the caveat imposed. He cited the
principle laid down in Karuppiah Chettiar v. Subramaniam and
followed in Temenggong Securities Ltd. & Anor. v. Registrar of Titles,
Johore & Ors. that once the owner by a sale had wholly disposed
of the land he divested himself of all interest therein and he
becomes thereby merely a bare trustee for the purchaser. There
was therefore no interest remaining against which a third partys
caveat can lie. He distinguished Macon v. Goh Hooi Yin from the
case before him where the respondent had paid the full purchase
price. But in Macons case the earlier of the two sales was not
completed as only part payment was made. The later sale was
completed by full payment of the purchase price. Also, there was
a pending suit whereas there is none in the instant case. The
question of notice on the part of the appellant becomes important
as both sales were unregistered and subject to the approval of the
State. On the evidence the learned Judge held that the appellant
had notice of the earlier sale.
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In affirming the judgment of the High Court, the learned Chief
Justice said at p. 164:
In the circumstances is it just for the learned Judge to restore the
caveat? The answer must depend on the facts and merits of each
particular case. On payment of the full purchase price on April 1,
1978 the purchaser obtained the document of Title to the land
from the vendor. By paragraph 9 of the affidavit the respondent
stated that the issue document of title to the said land has been
and is presently in my possession. True no caveat was lodged.
It may be that she thought that her interest was sufficiently
protected by taking possession of the document of Title and also
that her husband was then building the house on the land.
Further, the registered proprietor had executed a Memorandum of
Transfer as mentioned earlier. The evidence that the appellant had
prior notice is overwhelming. We do not think the learned Judge
was wrong to refuse restoring the caveat.
Joint-Venture Cases
In the Court of Appeal case of Trans-Summit Sdn Bhd v. Chun
Nyook Lin (P) [1996] 3 CLJ 502, at p. 506, Siti Norma Yaakob
JCA (as she then was), in refusing to extend the private caveat
entered in consequence of a joint venture agreement, said:
In the proceedings before us, what interest does the respondent
possess? It is not in the land. That has already been validly sold.
Her interest really lies in the profits that her company hopes to
gain from the joint venture agreement with the appellant, which is
being challenged by the appellant. The civil suit testifies to this.
As her interest is only monetary in nature, she has therefore no
caveatable interest over the land. She cannot continue to have the
private caveat lodged by her extended until after the disposal of
the civil suit.
The above Trans-Summit case, Hew Sook Ying v. Hiw Tin Hee
[1992] 3 CLJ 1352; [1992] 1 CLJ (Rep) 120, and Perbadanan
Setiausaha Kerajaan Selangor & Ors. v. Metroway Sdn Bhd & Anor
& Another Appeal [2003] 3 CLJ 339 were referred to and followed
by the Court of Appeal (Mokhtar Sidin JCA, Mohd Ghazali
Yusoff JCA (as he then was), and Zulkefli Makinudin JCA (as he
then was)) in Tan Geok Teck & Yang Lain lwn. Upaya Kelana (M)
Sdn Bhd [2007] 3 CLJ 312, a case on joint-venture to develop a
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piece of land caveated by the defendant. The application of the
appellants (plaintiffs in the High Court) to remove the caveat
entered by the defendant based on monetary interest in the joint-
venture agreement (see also Wong Kuan Tan v. Gambut Development
Sdn Bhd [1984] 2 CLJ 26; [1984] 1 CLJ (Rep) 441) was dismissed
by the High Court and hence the appeal to the Court of Appeal
which allowed the appeal and ordered the removal of the caveat.
Mokhtar Sidin JCA delivered in the National Language the
judgment of the Court of Appeal.
File Action Timeously
After the entry of the private caveat it is important to note that
the caveator must take civil action, in the word of Lord Diplock
in the Privy Council case of Eng Mee Yong & Ors v. Letchumanan
[1979] 1 LNS 18; [1979] 2 MLJ 212 at p. 215 timeously for
specific performance of t