Land Law II Tutorial - Week 13

Caveat Part 2

Faisal and Farid are twin brothers. They are both the co-proprietors with undivided equal shares of a
piece of land in Sungai Buloh worth RM 100 million (“the Land”). In July 2018, F&J Resources Sdn
Bhd, a company which Faisal is the majority shareholder, entered into a loan agreement with
Kesatuan Ladang for a sum of RM30 million to expand its business. To secure the loan, a 3rd party
charge over Faisal’s undivided share in the Land was created.

The said charge was duly executed. However, the registration of the charge was rejected by the
Registrar of Titles. This was because the original quit rent receipt for the year of 2018 had not been
presented together with the charge document. The returned documents were kept in a drawer by a
clerk of the legal firm that handled the loan documentation and the related process. The said clerk
subsequently forgot to inform the solicitors concerned about the return of the said documents.

Since February 2020, F&J Resources Sdn Bhd started to default in making the loan repayments.
Kesatuan Ladang just recently discovered that the 3rd party charge had never been registered.
Kesatuan Ladang is currently in possession of the Land’s issue document of title.

Based on the above facts:

a. Kesatuan Ladang seeks your advice on their legal position as well as the best and fastest way
for them to recover the money owed by F&J Resources Sdn Bhd. You are required to explain
how they can proceed and the relevant procedures that will apply under the National Land
Code.

Only charge his undivided share and not the whole land - S241 - can a charge be created for
undivided share?
Unregistered charge - possession of IDT

- Legal position of unregistered charge - mention the requirement of registration s243

(only enforceable upon registration) - all instrument must be registered - enjoy
indefeasibility and remedy
Unfortunately, unregistered - s206(3) - equitable charge - cannot enforce remedy under
NLC
What is the available remedy? Right in personam
Feasible to register - but it will take longer time
PARAMOO V ZENO LTD & STANDARD CHARTERED BANK - by virtue of an
unregistered charge, the plaintiff had acquired a title in equity in the land.
- Alternative - Lien - in possession of the IDT - s281
1) Deposit of IDT or duplicate lease
2) The IDT was deposited as security for a loan
Even if the loan is in favour of third party, no problem - HL Bank & Staghorn
3) Entry of a lien-holder’s caveat
Non existence of a lien-holder’s caveat
- Advice: Go for lien, enter a lien-holder’s caveat - Form 19D, obtain judgement of due,
then proceed to the procedures
- *For lien, cannot take possession but only order for sale - s281(2)
- No time limitation - for entry of lien-holder caveat

Consider what is the legal position first if unregistered - equitable charge

- one option is enforce it and have it registered
- got case law recognise equitable chargee under rules of court to get an order of sale (actually faster
than registration)
- other options: look at facts, here Kesatuan Ladang IDT was in custody, so may be equitable lien by
using case law standard chartered bank (right to entere lien holder caveat at any time then will have
legal lien but pre-requisite is to obtain judgement against the borrow then can proceed to NLC) -
shall give a few options and see which one is the fastest way for Kesatuan Ladang to recover the
money

Issue: Whether Kesatuan Ladang can lodge a private caveat over the land?

Law: To lodge a private caveat, Kesatuan Ladang must first have caveatable interest.

Application:
S323(1)(a)
The persons and bodies at whose instance a private caveat may be entered are- (a) any person or body
claiming title to, or any registrable interest in, any alienated land or undivided share in any
alienated land or any right to such title or interest.

In this case, Kesatuan Ladang can belong to the category that claiming registrable interest and
claiming right to such title or interest.
Claiming registrable interest
Score Options Sdn Bhd v Mexaland Development Sdn Bhd
Facts:
- The appellant is the registered proprietor of a piece of land
- The appellant had entered into a joint venture agreement with the respondent to develop part of the land into a housing
estate. The remaining part of the land had been sold to and was developed by another company - To part finance the
project, the appellant and the developer had secured loans from Malayan Banking Bhd and had encumbered 4 charges over
the land
- Under the agreement, the respondent is to launch the development of the project by 1 June 2006. - The respondent is also
given the right to enter a private caveat on the land but confined only to the project land (part of the land, not whole).
- Accordingly, the respondent had aentered a private caveat against the land, which was registered on 10 January 2007 ('the
caveat') but the caveat was registered against the whole land instead of just the project land. - A dispute then arose
between the parties over the project where the appellant sought to terminate the agreement upon the alleged breach of
respondent in failing to launch the project within the time agreed. The respondent had then commenced action against the
parties under the ground of wrongful termination
- In between the lawsuits filed between the parties, the appellant had applied to the Registrar of Titles Selangor to remove
the caveat.
- Following this, the respondent received a notice of the intended removal of the caveat in Form 19C issued by the
Registrar of Titles.
- After receiving such notice, the respondent made an interlocutory application to the High Court under s 326(2) of the
NLC to extend the caveat until the final determination of the suit.
Held:
- Emphasis should be given to the words 'registrable interest' in s 323(1)(a) of the NLC.
- To be caveatable, the interest must be an interest in the land and that interest must be capable of registration. - In short, it
must represent a transaction that can ultimately lead to its registration on the register. - Although the appellant has
conferred numerous rights on the respondent under the agreement and the powers
of attorney, all these rights are merely rights to develop the land that would give rise only to a monetary interest
- Such rights conferred to the respondent are only rights in personam against the appellant and such does not create any
interest in the land.
- Under the NLC, these rights are not capable of registration. They do not fall under any scheme of dealings in alienated
lands as provided under Division IV of the NLC.
- In the present case, this court found that the respondent had failed to discharge the burden that he had a caveatable
interest in the land under s323 of the NLC. Accordingly, the caveat was liable to be removed

The said charge was duly executed. However, the registration of the charge was rejected by the
Registrar of Titles. This was because the original quit rent receipt for the year of 2018 had not been
presented together with the charge document. - they can re-present the duly executed charge together
with the original quit rent receipt, so it is still considered as registrable interest

S323(1)(a) – right to such title or interest

Macon Engineers Sdn Bhd v Goh Hooi Yin
- So long as there is in existence a valid agreement for the sale of land, the purchaser is entitled to lodge a caveat to
protect his rights under the contract
Murugappa Chettiar Lakshmanan v Lee Teck Mook
- In the absence of a concluded contract for the sale and purchase of the land, it could not be said that the respondent had a
claim to the title to the land.
- 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. Here, they have loan agreement, actually
tried to register the charge before and Kesatuan Ladang is currently in possession of the land’s IDT

Procedure for application of private caveat

S323(2)
Any such person or body wishing to apply for the entry of such a caveat shall do so in Form 19B and such application shall
be attested in accordance with the provisions of section 211 and shall state therein the nature of the claim on which his
application is based, and whether the caveat is to be expressed to bind the land itself or an undivided share in the land or a
particular interest only
S323(3)
Any application under this section shall be accompanied by-
(a) the prescribed fee;
(b) the grounds giving rise to the claim thereto, verified by a statutory declaration by the applicant or his advocate and
solicitor; and
(c) if relating to a part of the land, a description or a plan of the land affected, and if relating to an undivided share in the
land or a part thereof, a description, which is sufficient for identification.

Goh Keng How v Raja Zainal Abidin bin Raja Hussin & Anor
Facts:
- Long Yoke Wee by a sale and purchase agreement sold three pieces of land to Raja Zainal Abidin and the sum was paid
in cash to Long.
- Long then handed the three original issue documents of title of the lands together with the instruments of transfer in Form
14A duly executed by Long in favour of Raja Zainal Abidin.
- Before signing the SPA, Long assured Raja Zainal Abidin that the three pieces of land were free from encumbrances and
though there was a private caveat lodged by Goh Keng How on the said land, Long still gave an assurance that he
would apply to the Registrar of Titles to remove that private caveat.
- In fact this was done but immediately after that Goh applied and obtained an order from the High Court for the extension
of private caveat.
- In the ex parte application, Goh had claimed that to be a partner of Mingshu Syndicate and that Long only held the said
land under a trust deed for Mingshu Syndicate.
Held:
- It is clear that s 323(2) of the NLC stipulates the requirement that the nature of the claim shall be stated and s 323(3) of
the NLC requires the same to be verified.
- Court held that Goh's statutory declaration did not describe the interest claimed capable of being caveated and neither did
he produce evidence of the facts which have given rise to the existence of the interest as alleged by him
- Thus, Goh's statutory declaration clearly did not state 'the nature of the claim on which his application was based' and,
consequently, he has failed to verify the same.
- Here there was no explanation at all as to why Goh failed to disclose the existence of the trust deed in his statutory
declaration. All parties seem to have overlooked this vital point. The absence of any explanation on the part of Goh
must be held adversely against him.

Conclusion:
Kesatuan Ladang has caveatable interest under S.323(1)(a) and shall apply for an entry of a private
caveat in compliance with the procedure under S.323(2) and (3) to preserve the status quo of the land.

b. Assume that the instrument in (a) above was subsequently presented before the Registrar of
Titles for its entry on 14th June 2020. When the Registrar wanted to enter his endorsement, he
found that:

First part
Affected - cannot register anymore - because under s322 - when there is a private caveat, cannot
enter lien-holder caveat anymore
3 ways to remove - usually JGH caveater would not remove - But Faisal possible - s326 - s327 (any
aggrieved person) - Hoo Soo Qian case - s327 may not be applicable (can apply any time, no time
limitation) - burden of proof - aggrieved person - Luggage case - shifted to JGH to prove their
caveatable interest - under s323(1)(a)
Caveatable interest - if you rely on the JV agreement, no caveatable interest - but if you rely on the
S&P - there will be a caveatable interest
Serious case to be tried - to make sure Farid would sell off the land effectively
Balance of convenience - should be removed or remained? - S322(1)(b) & s322(2) - it should only
bind the whole undivided share - should bind the whole land but only has effect that binds certain
portion - s324
Advice: Ought to be removed. It is suggested to enter a new caveat but only binds Farid caveat, so
Fariz would not be affected. Lien-holder caveat - s330 - argue the value of the land - better to enter

Second part
Retrospective effect
Removal of private caveat - s321(3) - s418 - court to remove - 3 months period - never registered -
s417
Argument to convince the removal - amount due - would be recovered or not?
s319(3) - The Registrar may waive the said prohibition in any case where he is satisfied that to do so
would not be inconsistent with the purpose for which the caveat was entered, but, in any other case,
shall reject the instrument or, as the case may be, the application for endorsement or entry.
Convince that it would not affect the benefit of Inland Revenue Board

*Caveatable interest & how? S322-324 & issue of removal - 3 ways - ada x yang bound under
certain time/procedure - removal by proprietor - procedure - by court - focus on burden of proof

- what instrument: most likely charge

- two agreements here but question silent what ground JGH Holdings Bhd relies on, so need to
discuss what is the possible ground
- clause 8: physical possession, exclusive right.
1st possible: claim right under joint venture agreement. After grounds, you need to think whether
JGH has any caveatable interest (s.323 - fundamental + case law - illustration). {some purchaser no
longer interest in claiming title of the land but they want money - so no caveatable interest. Cannot
see S&P and}

*claiming title (eg S&P)

*claiming REGISTRABLE interest (so only registrable dealings like lease, charge, transfer; so
tenant[need to use endorsement] and lien holder [need to use lien-holder caveat] no caveatable
interest)
*claiming right to such title (alienated land or undivided share) or interest (still refer to registrable
interest), second limb - paid full purchase price got memorandum of transfer = claiming title; paid
part money = right, got agreements but parties are not intending to create a dealing but only some
proprietary = right.

~S.323(1) but not agreement

~examine clause 8 &10, no

Conclusion: no caveatable interest

i. a private caveat that binds the whole Land was entered by JGH Holdings Bhd on 4 th August 2019.
Initially, JGH Holdings Bhd and Farid had entered a joint venture agreement in July 2018 (“JV
agreement”). Pursuant to Clause 8 of the JV agreement, JGH Holdings Bhd was granted the physical
possession of a certain part of the Land to be developed by them and the exclusive right to manage
the development (“the project”). Clause 10 of the JV agreement further conferred the right on JGH
Holdings Bhd to enter a private caveat on the Land. In the following year, Farid experienced serious
financial problems. The parties agreed to terminate the JV agreement. To mitigate their losses, the
parties agreed that Farid could sell and transfer the whole of his undivided share in the Land to JGH
Holdings Bhd for a sum minus the costs spent on the project. The sale and purchase agreement
between Farid and JGH Holdings Bhd was executed on 3rd August 2019 and a deposit of RM5
million paid by JGH Holdings Bhd to Farid on the same day.

ii. A Registrar’s caveat had been entered on the whole Land effective from 15th June 2020 pursuant
to a request by the Inland Revenue Board as both Faisal and Farid owed an arrears of income tax
over a few years.

- Registrar’s caveat got retrospective effect

- whether it is rightly entered, S.320
- whether Registrar rightly enter the Registrar’s caveat“appear necesary and desireable, discretion
but not unfettered discretion”
- land worth RM100 m, debt RM30 m, got surplus for Inland Revenue Board, still necessary to enter
Registrar’s caveat for the benefit of Inland Revenue Board

Does private caveat bar the entry of other private caveat?

- look into NLC

Will the above caveats in b(i) and (ii) affect your earlier advice in (a)?

Advise Kesatuan Ladang on the best solution to recover its debts.

Apply for removal of caveat first and then apply for entry of a private caveat.

1. Removal by the Court

⮚ Any person/body aggrieved by the caveat can apply to court
S327(1)
Any person or body aggrieved by the existence of a private caveat may at any time apply to the Court for an order for its
removal, and the Court may make such order on the application as it may think just.
S327(2)
The Registrar shall, on being duly served with any order under this section for the removal of a caveat, cancel the entry
thereof on the register document of title, and note thereon the reason for cancellation and the date thereof.
❖ Definition of aggrieved person
Wu Shu Chen (sole executrix of the Estate of Goh Keng How, deceased) & Anor v Raja Zainal Abidin bin Raja Hussin
- 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

❖ Burden of proof upon the applicant

Eng Mee Yong & Ors v Letchumanan
- It is for him to begin by satisfying the court that there are sufficient grounds in fact and law for treating him as a person
claiming such an interest in the land as would, if it were established, make him aggrieved by the existence of the
caveat.
RAP Nathan v Haji Abdul Rahman bin Haji Yusoff & Ors
 - The next point is whether the third defendant is a person aggrieved by the existence of the caveat as provided under s
327(1).
- A pertinent question that arises is whether he will suffer loss if the caveat lodged by the plaintiff is not removed.

❖ Burden of proof upon the respondent

⮚ Show he has caveatable interest.

⮚ Show the claim discloses serious question meriting trial.

⮚ Show the balance of convenience lies in favour of him.

Luggage Distributor (M) Sdn. Bhd v Tan Hor Tang @ Tan Tien Chi & Anor
- In considering an application for the removal of a caveat, the procedure to be adopted should be a simple and summary
one.
- At the first stage, the Court will examine the grounds expressed in the application for the caveat to see whether they
show a caveatable interest. - S.323(1)
- Once the Court is satisfied that the caveator’s claim amounts in law to a caveatable interest, it must then go on to consider
whether the claim discloses a serious question meriting a trial.
- After these two stages have been crossed, the Court must decide where the balance of convenience lies

Agatha Foo Tet Sin & Anor v Ultimate Essence Sdn Bhd
Facts:
- Serendah Golf Resort was built on several pieces of land including the land where M.K. Associates is the registered
proprietor.
- The said Land has not been subdivided and individual titles have not been issued but MKA had sold several hundred lots
to various purchasers including the lots sold to the defendants.
- The defendants paid the full purchase price for the said lots and MKA had delivered vacant possession of the said Lots to
each of the defendants in the early 1990s.
- In March 2011, each of the defendants lodged a private caveat on their respective lots to protect their interest, rights and
title in the said Lots pending issuance of the individual title
- Soon after that, MKA went into liquidation and had entered into a Sale and Purchase Agreement to sell the said land and
8 other pieces of land to the plaintiff
- The Plaintiff then applied for the removal of the private caveats or alternatively for the defendants to issue a letter of
consent allowing for the transfer of the said land into the plaintiff’s name.
- The issue to decide is whether the plaintiff is entitled to apply for the court to remove the caveat entered by defendants.
Held:
- The court had followed the procedure set up by the case of Luggage Distributors and held that accordingly, to resist an
application to remove a caveat, the caveator must show on the evidence (a) the caveator has “caveatable interest” in
the land; (b) a serious question to be tried in the “interest” claimed; and (c) that the balance of convenience favours the
continuation of the caveat.
- Further, the onus is the caveator to show why the caveat should not be removed. The caveator must show that the caveat
has not been lodged frivolously or for an improper purpose.
- Court found that there was more than ample evidence to conclude that the defendants have caveatable interest in the said
land.
- Court further held that the balance of convenience is an independent criterion in assessing an application for removal
of a caveat. As such, the balance of convenience may justify a court to order the removal a caveat notwithstanding the
existence of a “serious question” to be tried.
- The defendants must show that the balance of convenience favours the caveats to remain. To do this, the defendants
should show the detriment they would suffer, preferably irreparable, if the caveats were removed - With this the court
found that since the removal of the caveats would not lead to the extinguishing of the defendants’ interests in the said
land,1 the balance of convenience favoured the removal of the caveats. - So, the appeal made by defendants were
dismissed.

In regard to the burden of proof upon the applicant, I would like to add on two cases. Firstly, the case of
Luggage Distributor (M) Sdn. Bhd v Tan Hor Tang @ Tan Tien Chi & Anor. It was held that besides the
caveatable interest, the court will also consider whether the claim discloses a serious question meriting a trial.
After these two stages have been crossed, the Court must decide where the balance of convenience lies. This
principle is also followed in Agatha Foo Tet Sin & Anor v Ultimate Essence Sdn Bhd. In this case, the
court decided that the defendants must show that the balance of convenience favours the caveats to remain. To
do this, the defendants should show the detriment they would suffer, preferably irreparable, if the caveats were
removed. If the court found that the removal of the caveats would not lead to the extinguishing of the
defendants’ interests in the said land, the balance of convenience will favour the removal of the caveats.
Therefore, if JGH Holdings Bhd is able to prove they will suffer irrepable detriment, then the Registrar may
reject the Kesatuan Ladang’s application of the removal of the caveat.

i. a private caveat that binds the whole Land was entered by JGH Holdings Bhd on 4 th August 2019.
Initially, JGH Holdings Bhd and Farid had entered a jointventure agreement in July 2018 (“JV
agreement”). Pursuant to Clause 8 of the JV agreement, JGH Holdings Bhd was granted the physical
possession of a certain part of the Land to be developed by them and the exclusive right to manage
the development (“the project”). Clause 10 of the JV agreement further conferred the right on JGH
Holdings Bhd to enter a private caveat on the Land. In the following year, Farid experienced serious
financial problems. The parties agreed to terminate the JV agreement. To mitigate their losses, the
parties agreed that Farid could sell and transfer the whole of his undivided share in the Land to JGH
Holdings Bhd for a sum minus the costs spent on the project. The sale and purchase agreement
between Farid and JGH Holdings Bhd was executed on 3rd August 2019 and a deposit of RM5
million paid by JGH Holdings Bhd to Farid on the same day.

Caveat Part 1
4. Explain the circumstances where a person has caveatable interest in the land. Support your
discussion with the relevant provisions and decided cases.
- refer to note start from page 3

1
Court had held that the plaintiff should have applied under 322 (5A) because the caveats lodged by the defendants over their
respective Bungalow Lots did not affect any other part of the land. Therefore, there was no necessity to remove the private
caveats or for the defendants to give consent for the purpose of transfer of the said Land (excluding the bungalow lot) to the
plaintiff or for the subdivision of the said Land