Equity and land law (Topic 2)

EQUITY AND LAND LAW

2/25/2015 1EQUITY & LAND LAW

Equity Under the Land law.

• Nature of Legal Right to Land under the Malaysian Torrens System.

• “It is registration that vests and divests title.” (Justice Raja Azlan Shah in PJTV Denson’s case)

• “Under the Torrens system, the register is everything” (Justice Ajaib Singh in Teh Bee v K. Maruthamutu)

• S.340 NLC: Registration confers an indefeasible title.


Contracts v. Dealings

• Contracts relating to land can create many types of land transactions, i.e. sale of land, mortgage of land, lease of land.

• Under the Malaysian Torrens system, in order that a land transaction can be recognised as a legal right, it must be registered at the land office.

• Registered land transactions are called ‘dealings’.


Dealings under the NLC:

• Only 4 types of dealings can be registered under the NLC: (s.205(1)):

• 1) Transfers

• 2) Charges

• 3) Leases

• 4) Easements• Note: A lien is also a type of dealing but it is

protected by way of lodging a lien-holder’s caveat.


s.205(1) NLC:

• “The dealings capable of being effected under this Act with respect to alienated lands and interests therein shall be those specified in

Parts 14 to 17, and NO OTHERS”

• The words , ‘no others’ means that land transactions outside of the NLC are not recognised under the statutory system.


What could constitute ‘NO OTHERS’?

• Dealings that have been executed but not registered.

• Executed contracts creating land transactions.

• Quare: Does statutory non-recognition strike the validity of the contracts that created these land transactions?


s.206 NLC

• Sub-section 1 requires all dealings to be registered.

• S.206(3):

• “Nothing in sub-section (1) shall effect the contractual operation of any transaction relating to alienated land or any interest therein.”


Significance of s.206(3) NLC?

• It saves ‘in personam’ claims between parties to a land transaction that is not registered under the NLC.

• It UPHOLDS contractual rights.

• It allows the court to enforce contractual rights between the parties notwithstanding the fact that the land transaction is not recognised under the NLC.


Nature of equitable rights to land

• Equitable rights are ‘in personam’ in nature.

• Thus, once parties sign a contract relating to land, equitable rights to land are also created as parties have ‘in personam’ claims against each other in respect of obligations under the said contract.

• The court may exercise equitable jurisdiction to enforce such contracts by granting a decree of specific performance. The court may also grant a host of other equitable remedies in respect of such contract.


Thus:

• Contractual rights gives rise to

equitable rights in land.


The view that equity has no place under the Malaysian Torrens System.

• Although s.3(1) Civil Law Act ` 1956 allows the application of English law and equitable principles in Malaysia, s.6 prohibits the

application of English law to land matters.


Section 6, Civil Law Act:

• “Nothing in this Part shall be taken to introduce into Malaysia …any part of the law of England relating to the tenure or conveyance or assurance or succession to any immoveable property or any estate, right or

interest therein.”

• Issue: Does the above provision prohibit the importation of equity into land

matters?


Datin Siti Hajar v Murugasu [1970] 2 MLJ 153

• Obiter:

• “…the effect of s.6 seems to be to oust the application of common-law and rules of equity relating to land tenure, transfer or transmission of immoveable property…”


UMBC v Pemungut Hasil Tanah Kota Tinggi [1984] 2 MLJ 87

• The appellant’s land had been forfeited by the State Authority for non-payment of rent.

• Appellant tried to invoke the equitable relief against forfeiture.

• Privy Council (held):

• S.6 Civil Law Act prohibits the application of English rules of equity relating to tenure of which the equitable rules relating to relief against forfeiture are a part.


UMBC v Pemungut Hasil Tanah Kota Tinggi [1984] 2 MLJ 87

• Lord Keith of Kinkel:

• “The NLC is a complete and comprehensive code of law governing the tenure of land in Malaysia and the

incidents of it, as well as other important matters affecting land there, and there is no room for the

importation of any rules of English law in that field except so far as the Code itself may expressly provide

for this.”


Hj. Abdul Rahman v Mohamed Hassan[1917] AC 209

• Before the NLC, s.4(i) of the Selangor Registration of Titles Regulation 1891 had declared ‘null and void’ any dealings outside of the statute.

• This resulted in the rejection of the rule of equity ‘once a mortgage, always a mortgage’ by the Privy Council in the famous ‘jual-janji’ case of Hj. Abdul Rahman v Mohamed Hassan [1917] AC 209


The View Accepting Equity Into Malaysian Land Law

1) The court has an inherent jurisdiction to do justice between the parties and thus apply equity.

– (See: Motor Emporium v Arumugam [1933-34] FMSLR

2) By virtue of section 206(3) NLC, the courts may still enforce ‘in personam’ claims relating to unregistered dealings.(See: Karuppiah Chettiar v Subramaniam(1971) 2 MLJ 116)


More on views accepting equity:

• 3) In some cases, courts have disagreed that s.6 of the Civil Law Act prohibits the application of equitable rules to land matters.

• (See: Devi v Francis [1969] 2 MLJ 169 where Justice Chang Min Tat said:

• “The land law in England is one thing and equity another mattter.”


View that s.6 Civil Law Act does not prohibit equity:

• The opinion of the Privy Council in UMBC’scase should be confined only to its issue of applying equitable rules on relief against forfeiture. (See Templeton v Low Yat Holdings S/B [1993] 1 MLJ 443


More views favouring equity:

• 4) Recognition of the ‘trust’ concept in Malaysia. The creation of a trust over land

is recognised under the Trustee Act, 1949 and the NLC. The trust concept accepts the concept of legal and equitable ownership of land.


Types of Equitable Land Transactions and Concepts Recognised in Malaysia

• 1) Equitable Ownership

• Munah v Fatimah [1968] MLJ 54

• - Beneficiaries of an estate who had contracted to sell the land to the plaintiffs but failed to transfer the land legally to the plaintiff was ordered by the court to effect the transfer.

• - Court recognised that the plaintiff was the equitable owner of the land after signing the contract and going into possession.


Equitable Land Transactions and Concepts

• 2) The ‘Bare-Trust’ Concept

• “The moment you have a valid contract for sale, the vendor becomes in equity, a trustee for the purchaser.”

• (Applied by the courts in Ong Chat Pang & Anor. v Valliappa Chettiar[1971] MLJ 224 and other cases. Confirmed by the Supreme Court in Dr. Michael Atun Wee’s case [1994] 3 MLJ 594)


More Equitable Land Transactions

• 3) Equitable Lease

• See: Margaret Chua v Ho Swee Kiew (1961) 27 MLJ 173

• The court held that an unregistered lease is still good as an agreement for a lease.

• 4) Equitable Estoppel/ Proprietary Estoppel

• See: Devi v Francis , Perumahan Farlim’s case, Holee Holdings Case.


Equitable Land Transactions

• 3) Equitable Security Transactions:

• A) Equitable charge: Mahadevan v Manilal & Sons [1984] 1 MLJ 266, Federal Court held –

• “There is no provision in the NLC which prohibits the creation of equitable charges.

Such a charge gives rise to an equitable right in favour of the creditor.”


Equitable Security Transactions

• B) Equitable Lien

• (See: Mercantile Bank v The Official Assignee of How Han Teh [1969] 2 MLJ 196, Standard Chartered Bank v Yap Sing Yoke [1989] 1 CLJ 530

• C) Jual Janji

• Yaacob b Lebai Jusoh v Hamisah [1950] MLJ 255- ‘time not of essence’


Equity and land law (Topic 2)

Law

Transcript of Equity and land law (Topic 2)