PRIVATE CAVEAT

PROCEDUREs. 324 NLC provides that:Any person intending to lodge a private caveat must make a formal application to the Registrar, or Land Administrator as the case may be, (a) in Form 19B, stating expressly whether

to bind the land itself or a particular interest only

(b) support with a statutory declaration verifying the claim

(c) enclosed prescribed fee.

Upon receiving the application the Registrar must note the time at which it was received , subject to s. 329 (2), as soon as may (d) enter the caveat by endorsing in RDT

by his hand and seal the words “Private Caveat”, whether it binds land or interest , the detail of the caveator and from which time the caveat takes effect.

(e) He must notify the registered proprietor by serving notification in Form 19A.

s. 324 (1) states that the Registrar is not required to inquire the validity of the claim on which it is based. The court decided that the function of the Registrar here is purely administrative in nature.Nanyang Development v How Swee Poh Sufian FJ: “when the land authority receives the application it exercises a purely administrative function, ( 324(1))”.

Ong Chat Pang & Anor v Valliappa Chettiar Gill FJ: “so long as all the formalities laid down in..(the Code) are complied with, the R or Collector has no power to reject a caveat.”

Chng Sin Poey v Quek Lian Mengs. 324 (1) “does not mean that the R cannot reject an application for an entry of a private caveat when it does not comply with the substance of the form, or as in the instant case, when the application does not specify whether the caveat is to bind the land or a particular interest only. R must make inquire to clear doubt”.

Khoo Teng Seong v Khoo Teng Peng [1990] a private caveat may be entered by a beneficiary under any trust of which the land or interest in the land is trust property.Lim Beng Chhon J held that in order to entitle a caveat under sec. 323(1)(b) of the Code, the beneficiary must show that he is a person entitled to or beneficially interested in the land held on trust for him.

Mawar Biru Sdn.Bhd v Lim Kai Chew [1991]Sale and purchase agreement whereby the purchaser failed to fulfil certain condition agreed upon. Held since the failure was caused by the purchaser he could not enter into caveat.Goo Hee Sing v Will Raja Perumal & Anor [1993] A land which is subject to restriction in interest i.e. cannot be sold, charge or transferred, was sold to the P w/out P`s knowledge. Whether P has caveatble interest.Held P has no cavetable interest until the consent of the SA is obtained.Luggage Distributors (M) Sdn.Bhd. v Tan Hor Teng[1995] Whether a tenant (occupying a property under a tenancy of 2 years), after having exercised his option to renew for another 2 years had a caveatble interest u/s/323(1). Held that exempted tenants have no caveatable interest in the land.

DURATION OF PRIVATE CAVEAT

(1) In law, a private caveat can remain in force continuously for 6 years before it expires: s. 328(1).But in reality , its duration may be shorter that that in the following situations:

(a)Withdrawal By Caveators. 325 – the caveator may withdraw it at any time by way of notice in Form 19G.It is presented to the R with fee. R shall cancel the entry of the caveat noting the reason for cancellation and notify the registered proprietor: s. 325(2)

(b)Removal by the Registrars. 326(1) – the Registrar upon receiving an application received by him from the caveatee (registered proprietor) in Form 19H with fee is required:

(i) serve a notice in F 19C to the caveator unless caveat has been extended by the court, (ii) remove the caveat at the expiry of two months from the date specified in that notice : s. 326(1B) The Removal by the Registrar by cancelling the entry on the RDT.

(c) Removal By The Courts. 327 (1) -The removal by court is due the an application made to it by any person or body “aggrieved by the existence” of the caveat. Thus anybody are “aggrieved” can apply .s. 327(2)- after hearing the court will make an order “as it may think just”. If it decided to removed the caveat, an order will be served to the R to removed it and R must act accordingly.Eng Mee Yong & Ors v LetchumananIf caveatee apply to remove the caveat the onus of proof is on the caveator that there is a serious case to be tried and balance of convenient it is better to maintain status quo of the land or interest.Trans-Summit Sdn.Bhd. v Chun Nyook Lin SC:It is settled law that if caveatee apply to remove the caveat u/s 327 the onus is on the caveator that he has caveatable interest on the land and if the application is by someone other than caveatee, it is for he who must satisfy the ct that he had been aggrieved by the existence of the caveat.

(2) s. 329 (2) Refusal by Registrar to Estent Caveat On Same Ground

(a) Where the court has so ordered to remove the private caveat u/s. 327, or

(b) where the court has refused the caveator`s application for its extension u/s. 326 (2) or

(a) where the Registrar has removed the caveat u/s. 326 (3)

The Registrar shall not entertain any application for the entry of a further caveat in respect of the same land or interest which is based on the like claim as the previous claim . Damodaran v Vasudeva (1974)The issue was whether it is proper for two private caveats to be issued at the instance of the same applicant on the same land and on the same grounds.Held:Once a caveat has lapsed and a memorial thereof is made by the registering autority, it is extinguished forever and the court has no power to revive, renew or continue a caveat after it lapse. But the s. 329(2) does not prevent entry of another caveat if based on different grounds from former after the former caveat has ceased to exist.Lourdenadin v Ratnavale & AnorIf the caveatee applied for removal and he did not served the notice of removal to caveator then second caveat can be entered.

Thevathason v Kwong Joon (1990)Whether after the exoiry of 6 years the caveator can apply for extention. It was held that the caveator can entere the second caveat provided he had taken positive action to protect his interest on the land.

DAMAGES AND COMPENSATION

s. 329(1) Damages and CompensationWhere the caveat has been entered “ wrongfully or w/out reasonable cause” or where the caveator has likewise failed to withdraw the caveat, he shall be liable for damages or compensation to any person who thereby suffers any damages or loss resulting from such wrongful entry or refusal. Mawar Biru Sdb.Bhd. v Lim Kai Chew [1992] l MLJ 336In order to ascertain damages payable under this section, it must be shown there is a real damages. Burden is on the person who suffered actual damages as a result of wrongful entry.

SAFEGUARD PRIORITYIn Haroon v Nik Mah illustrate that it is vital for a purchaser to act quickly in entering a caveat against the land which he has purchsed. Such entery of caveat will safeguard his priority. But if the purchaser had paid full purchase price and he had entered in possession then failure to enter private caveat will have no effect.Karrupiah Chettiar v Subramaniam Purchaser had paid full price of the land and he had entered caveat. The vendor hold the IDT . Here the purchaser had the priority over the creditor judgement who subsequently entered a prohibitory order.Kredit Tanjaya Sdn.Bhd. v Kanagaratnam Vellian [1990]R was the owner of 3/5th share of a piece of land. He had entered a joint venture agreement with TKE to develop the land and share the profits. The land was then registered under TKE. TKE then took loan from a Money lender and the land was put as a security. M/lender did a search and found the land is free. After granting the loan and while he wants to register the charge he found that R had entered a private caveat. Held: The money lender has the priority over the R because priority will be granted to one who has priority in time of creation of interest.

EFFECTS OF PRIVATE CAVEAT(s. 322 (2) )

Private Caveat will prohibits for as long as it continues in force, the registration, endorsement or entry on the RDT thereto:(a) any instrument of dealing

executed by or on behalf of the registered proprietor

(b) any certificate of sale relating thereto

(c) any claim to the benefit of any tenancy granted by the said proprietor, and any lien-holder`s caveat in respect thereof.

ISSUES ON PRIVATE CAVEAT

(1) CAVEATING ONE`S OWN LAND

Eu Finance Bhd. V Siland Sdn.Bhd. the cort was of the view that the registered owner could not do so because a registered owner must necessarily be a person already possessing title or interest and not merely a person claiming such title or interest.

Lee Kim Guan v Malaysian Produce Co.Sdn.Bhd. D had charged its land to Malayan Borneo Finance. The chargee had obtained an order for sale of the land and it was sold at a public auction to the plaintiff. A week after the sale D entered a private caveat on the land as a result the land cannot be transferred to P.Held: D has no caveatble interest on the land .Followed Eu Finance`s case.

Saw Cheng Boon v Mohd Farook b. Shaik Mohaidin (1995) followed the above decision.

(2) PARTIAL CAVEAT

N Vangedaselam v Mahadevan & Anor [1976] FC App ha interest in a portion of the said land and brought an action for specific performance. He also entered a caveat against the land. When the registered owner died his representative applied to court to have the caveat removed. Trial judge allowed. On appeal to FC, the appeal was allow. It was held thatIssue, whether a person who is interested in only a specific portion of the land has a caveatable interest to support a private caveat. HELD: a person who claims an interest in a specific portion of another person`s land may caveat the whole land provided the effect of his caveat is to cover only the particular interest claimed. The caveat in this case should be restored.

Then s. 322 (1) was amended to read: “Provided that such a caveat shall not be capable of being entered in respect of a part of the land”

Tan Heng Poh v Tan Boon Thong & Ors [1992] the App was the beneficiary of 1/6Share in the estate of his late father. His father has 6 sons and the estate was divided into 6 portion. Disputes arose. While waiting the pending of the resolution of the disputes App applied private caveat of all the estate. R applied to removed it. The trial judge granted the removal. On appeal Azmi SCJ HELD: By virtue of the amended s. 322(1) no caveat could be entered by the Registrar against any land where the caveator was interested in a specific portion of it even though the effect was expressly intended to be limited only to that specific portion.

Finally in Chor Phaik Har v Farlim Properties Sdn.Bhd. [1994] 3 AMR.FC held that s. 322 (1) have two intepretations . One in support of Vangedaselam and the other is that it nullify Vangedaselam. The court was of theview that s. 322 (1) is purely in support of Vangedaselam`s case.

CAVEATABLE INTEREST

The private caveat is aimed at protecting the interest of any person who claims to have any TITLE or any registrable INTEREST in the land of the registered proprietor of the caveatee.

Section 323 (1) of the NLC describes persons or bodies who can enter a private caveat:

(a) any person or body claiming title to or any registrable interest in, any alienated land or any right to such title or interest.

(b) (b) Any person or body claiming to be beneficially entitle under any trust effecting and such land or interest; and (c) The guardian or next friend of any minor claiming to be entitle as mentioned in paragraph (b) above.

In the following cases the court decided what amounts to caveatable interest and what not:Kumpulan Sua Betong Sdn. Bhd v Dataran Segar Sdn.Bhd. the court decided that the relevant question which the court should asked itself to is as follow:Is the appellant a person claiming title to, or registrable interest in any alienated land, or any right to such title or interest? If the answer is No then caveat must be removed. It is not always the caveator must ultimately succeed but that he has a prima facie case.Karuppiah Chettiar v SubramaniamThe purchaser had paid the full purchase price of the land to the vendor who had then executed a transfer in the statutory form but had not surrendered the IDT to the purchaser. Purchaser later enter private caveat to protect his interest in the land. FC held that the purchaser having private caveat has priority over a claim of a judgement creditor who subsequently had entered a prohibitory order against the same land.

Pok Kew Chai v Yeoh Thian SengFailure to obtain the chargee`s consent for the creation of a lease will render the lease agreement void, but there is still caveatable interest under equity.

Macon Engineering Sdn.Bhd. v Goh Hooi Yin [1976] R had paid deposit to purchase a property from the vendor and agreed to pay the balance at a stipulated time. He entered private caveat. Meanwhile disputes arose and vendor regarded the agreement determined and forfeit the deposit. Vendor sold to the Appellant. Since App cannot register the property he seek to removed the caveat but dismissed. On appeal the court upheld the trial judge decision: “so long as there is a valid agreement exist for the sale of the land, the purchaser is entitled to lodge to protect his interest.”Krishna Kumar v UMBC [1983] App had agreed to create a second charge over his land in favour of the bank provided the first chargee gives his consent. Consent initially was given but later withdrawn. The bank then lodged a caveat. Held: the bank is entitled to enter the caveat.Million Group Credit Sdn.Bhd. v Lee Shoo Khoon & Ors.[1986] the prospective purchaser still negotiating the terms of purchase with vendor when he lodged caveat on the said land. Held since there was no concluded contract yet, he had no caveatable interest on it.