Transfers LEB110100

• May be performed through (i) a contract of sale n purchase that practically comes together with an
agreement; (ii) agreement in the form of a regulated contract; (iii) performed voluntarily without any
specific contract between the parties; (iv) operation by law
• The relevant sections r s214 to 220

Only RP has power to transfer the land

• Once a people is registered as proprietor, his title will be indefeasible n this would enable him to deal
with the land
• Power to transfer is only given to a RP
• In Md Kamis b Yakob v Ismail Abdullah, an agreement to transfer a land is invalid since P has entered
into an agreement with a party who was not the RP, thus has not right to transfer the land

Subject matter of Transfer

• According to s214(1), there r 5 types of land capable of transfer
• The phrase ‘the whole but not part only’ in paragraph (a) means that a proprietor of any alienated land
is not allowed to transfer only a part of land. This is to reduce or eliminate the uneconomic subdivision
or fragmentation of land
• Proprietors r also not allowed to only transfer part of their undivided share of land, according to
paragraph (b). If one of the proprietors want to sell his part of land, the whole land must be transferred,
and the new purchaser shall be inserted as the new co-proprietor. It is to prevent a proprietor from
creating a new boundary on his land at random

Restriction on exercise of powers

• There r some restrictions which r laid down in s214(2), such as:
1. Agricultural land cannot be transferred to a new co-proprietor if it may result in the land size being less
than to-fifths of a hectare
2. Estate land cannot be transferred to 2 or more persons without prior approval of the Estate Land
Board
3. Restriction in interest to which the land in question is for the time being subject or must obtain the
approval of the state authority
4. Charge, lease n tenancy which r exempted from registration, r subject to express or implied conditions
available in code

Effect of transfer of land in general

• Once the mandatory procedures have been complied with, the title as well as the benefit of any such
registered interest on the land of the transferor shall pass to the transferee
 • The purpose is to transfer the entire rights incidental to present n future possession of the transferor
• It must be effect by an instrument of transfer of Form 14A
• The legal title will pass to and vest in the transferee upon registration of the transfer

Effect of Transfer of land subject to charge or lease or tenancy exempt from

registration
• If the registered interest exempt from registration that has been endorsed on the RDT has been
created on one particular land, then the transferee shall take that respective land subject to all those
encumbrances. The registered interest shall be enforceable by or against the transferee s216(1)(2)
• Once the land is transferred, the transferee becomes incumbent, n he will duly perform and to
indemnify the transferor against all claims unless provided otherwise in the agreement
• If A sold the land to C subject to the lease which was registered, C buys the land together with
encumbrance. C as a transferee is assumed that he will duly perform n observe the provisions in the
lease. If there is any breach of provision, C will indemnify A against all claims
• If the lease was unregistered, C will hold the land free from encumbrance, but B can still claim against
A either based on contract or equity s206(3)

Transfers without monetary consideration

• The transfer on terms of ‘love n affection’ is considered as one of the exceptions that every contract
shall be supported with consideration
• It is only applicable in transfer between parent n child
• This consideration of love n affection is indicated in Form 14A or in the deed of assignment. The F14A
shall be adjudicated n stamped
• Another situation is whenever the husband transfers his property to his wife. In this situation, the
consideration clause in F14A shall be notes as ‘without any consideration’

Transfer by Operation of Law

A. Death s346-348
• We must determine whether the deceased died testate or intestate. This is important for determining
the distribution of property of the respective deceased’s estate
• In case of a person who dies testate, his executor will apply to HC for a grant of probate which will
authorize him to administer the estate of the deceased. The executor will act as a personal
representative, n he will distribute the property to all the beneficiaries according the will of the
deceased
• An intestate’s estate may be further divided into two: small estate n non-small estate. For small estate,
the deceased’s estate must not exceeding RM600,000 in total value, which consisting wholly or partly
of immovable property. Certain persons may apply for a letter of administration to HC to appoint a
personal representative, for example a surviving spouse is the 1st person in the list of priority to apply
• For both situations, the executor or personal representative may apply to the Registrar for the
property of the deceased to be registered in their names. This is called transmission application n they
 r unable to execute any instrument of dealing in respect of any land, share or interest until it has
become registered in their names
• The application by the executor or PR shall be accompanied by the grant of probate or letters of
administration. The Registrar shall endorse on the RDT n give effect to the transmission application,
relates a note of the date of death of deceased n a memorial to the effect that the said land is vested in
executor or PR. Consequently, a memorial shall be signed n sealed by Registrar n a copy shall be made
on the IDT or duplicate lease or charge
• The procedure for the registration of transmission of the property in the estate of the deceased to the
beneficiary depends on whether the estate falls under ‘small estate’ or not
• If the estate is a non-small estate, the procedure shall be similar to the procedure of transfer in cases
of ordrinary sale or gift inter vivos in which the PR will have to sign the instrument of transfer ie Form
14A
• If there is a restriction in interest with regard to the requirement of consent of the SA prior to the
transfer, such a requirement is inapplicable. It is because the purpose of restriction is meant to limit
the powers of the proprietor only whereby in the case of transmission the transfer is effected by the
PR
• For the small estate, the distribution shall be made according to the Distribution Act 1958 or according
to an agreement entered by all beneficiaries. It includes a direct transmission to the beneficiary or any
other person who is equitably entitled to the property. The Collector shall arrange for the order to be
registered as required by s348 of the NLC, n Form 14A for registration is not needed
• If proprietor without a successor, the LA may make or cause to be made an endorsement on the RDT to
the land that the said land is reverted to or vested in SA, where (i) LA satisfies that original proprietor
has died; (ii) LA satisfies that no petition has been filed
B. Bankruptcy
• Where the official assignee claims any land, or share or interest in land, under any law relating to
bankruptcy, he may apply to the Registrar for the registration of his name
• The Registrar shall give effect to the application by endorsing a memorial of the transmission on the
RDT to the said land
• Every such memorial shall be signed n sealed by the Registrar
C. Order of sale
• If the borrower defaults in his payment, the lender can apply to the appropriate authority for an order
for sale of the respective land
• The successful bidder or the lender will have to prepare the Certificate of Sale (Form 16F) to transfer
the property or DoA to assign the property to the successful bidder
• The Certificate of Sale which has been duly signed by the Senior Assistant Registrar (if the sale
conducted in court) or LA (conducted in land office) shall be sent for adjudication n stamping
• The Certificate of Sale shall be treated for all purpose under the NLC as an instrument of dealing
Lease and Tenancies
• A lease is a type of dealing under NLC whereby the RP allows a lessee to occupy the land for a specified
duration in consideration of the payment of rent
• A lease must be for a term above 3 years n must be registered at the land office, while for a term of 3
years n below is termed as a tenancy
• A lease transaction is normally evidenced by a written agreement. The parties also should execute the
requisite statutory forms for a lease or sub-lease under NLC in order to have statutory recognition of
this agreement
• Where a conflict arises, the court will look at the lease agreement n then provisions of the NLC

Characteristics of a Lease
• A lease has 3 essential characteristics:
(a) The lessee is given the right to exclusive possession of the land so as to exclude all other persons from
the land
(b) The parties must have intention to create a lease n not a licence
(c) A lease must be granted for a definite period. A lease which has no definite time is void for uncertainty
• Yong Tong Hong v Siew Soon Wah
F: the A, tenant at the request of his landlord, paid a sum of S8000 to a building contractor for the
construction of the building. The parties subsequently entered into an agreement with rent stated at
S200 with a stipulation that any future increase or deduction would be based on land assessment.
Later, the landlord asked A to quit if he doesn’t accept a new tenancy at an increased rent. After
landlord transferred his land to his children, the R, R brought an action to eject the A
H: there was no uncertainty as to the period of the tenure as the parties had expressly agreed on some
term form of permanent letting. The tenant had paid a large sum of money for building the shophouse
as consideration for his remaining in undisturbed occupation as long as he pleases. The court qualified
the duration according to s222(3) where the maximum duration for a lease of a part of a building is 30
years. Although an unregistered lease is void, it is good as an agreement for a lease

Differences between a Lease and a Licence

• A licence does not create an interest in land but is a personal obligation, compensatable on breach,
with damages
• A lease creates an interest in land which upon dispossession entitles the lessee to recover possession
of the land
• A lease is also capable of enforcement against the landlord’s successors in title, thus a lease is a right in
rem, while a licence is a right in personam
• In common law, a lessee must have exclusive possession of the land or premises. A person who is
granted the right to occupy premises where the grantor retains a right to enter the premises at will,
has a licence but not a lease
 • Nonetheless, the courts have held that exclusive possession is no longer a decisive factor, but what is
important is the intention of the parties
• Woo Yew Chee v Yong Yong Hoo
F: the written agreement allowed the R to occupy the premises for 10 years with monthly payment. R
was to share with the A, landlord, the kitchen, bathroom n toilet n the A held the key
H: the agreement was in the nature of a lease n not a licence, observed that the ultimate test is ‘the
nature n quality of the occupancy’, whether it was intended that the occupier should have a stake in
the premises sub-let or whether he should have only a personal privilege
• Thus, the court will look at the arrangement between the parties evidenced by the lease agreement n
interpret the intention of the parties to determine whether it was intended to create a lease or a
licence

Power to grant a lease or tenancy under the NLC

• Under s221, the proprietor of alienated land may grant leases in respect of the whole or any part of his
land
• For lease relates to the whole land, the max duration is 99 years, whereas where the lease relates to
only a part of land, the max duration is 30 years
• The proprietor n lessee r to execute Form 15A in respect of creating a lease while Form 15B is used for
creating a sub-lease
• A lease is created when the RP grants a right to exclusive possession over the land or part thereof for a
term > 3 years to a person or body under s43 in consideration of the payment of rent. Both parties
have executed Form 15A n registers it at the land office
• A proprietor, lessee or sub-lessee ay create tenancies in respect of the land < 3 years under s223
• A tenancy can be created either by word of mouth or by a written agreement. There is no statutory
form to be executed n no registration is required
• Such tenancy is termed as an ‘exempt tenancy’ n is an unregistered interest, while a lease or sub-lease
is a registered interest
• There r several restrictions on the power to create a lease:
(a) Leases being subject to any prohibition or limitation imposed by the NLC or any written law
(b) May not be created in favour of more than one person or body unless in the capacity of trustees or
representatives
(c) Where the land is subject to a charge, the written consent of the charge is required

Tenancy exempt from registration

• S223, s213(1)(2) – a tenancy exempt from registration is a tenancy for a term < 3 years. It is not a
dealing under NLC. Such tenancies can be created by word of mouth or in writing
• NLC has provided a method to protect such tenant by allowing the tenant to endorse his claim to the
tenancy on the RDT to the land under s316(1)
• If the tenant fails to endorse the tenancy on the RDT, such tenancy would not bind any subsequent
transferee, lessee, tenant and others of the land
• Than Kok Leong v Low Kim Hai
 F: D was a tenant of the previous proprietor. P gave D a notice to quit the premise, but D refused based
on the ground that he had an oral agreement with the formal landlord who granted him an option to
renew for another 3 years to be exercised by him. D claimed that the tenancy was binding on P as P
had ‘constructive notice of the extent n interest’ of D
H: based on s213(3), the oral agreement between D n previous landlord was a tenancy exempt from
registration, n it had not been endorsed on RDT. Thus, tenancy was not binding on P. Furthermore,
under s228(2), an option for renewal conferred by an oral tenancy is not enforceable
• Luggage Distributors (M) Sdn Bhd v Tan Hor Teng
F: A had an agreement with R to rent the property for 2 years plus a further 2 years option. There was
no endorsement on RDT. Later, A wanted to sell their property. R exercised their option to extend the
tenancy for another 2 years n entered a private caveat on RDT. R claimed that with the exercise of the
option to renew, they had obtained a tenancy of 4 years, thus became lease, n entitled to registration.
R opined that protection given by s213(3) was not exhaustive
H: although the exercise of renew was valid, s224(b) expressly prohibit any option for renewal from
being taken account when determining the length of a tenancy. A tenancy exempt from registration
was not registrable n thus does not qualify as a caveatable interest

Express and Implied Provisions

• NLC provides some express provisions, that may at the option of the parties, be incorporated into the
agreement on the part of lease s229. Some provisions relating to agricultural tenancies, some r
residential tenancies, n the rest relate generally to all types of tenancies
• NLC also provides implied provisions relating to the obligation of the lessee n sub-lessee with regard to
payment of rent as well as observing all conditions to which the land is subject
• The lessee is implied agreed to pay all rates, taxes other tha n the annual rent due to the SA to be paid
by lessor
• The lessee n sub-lessee also implied agree to keep the property in repair except roof, the main walls,
drains n any common passages n installations. He must permit the lessor to enter the premise n
examine its condition
• The lessee also cannot transfer or charge the lease without the written consent of the lessor
• For lessor, he is taken to impliedly agree to allow lessee to enjoy peaceful possession of the property
during the term granted, as long as lessee performs the provisions of the lease
• The lessor also impliedly to keep the roof, main walls, main drains, common passages or installations in
repair
• If the premise becomes unfit for occupation without the fault of the lessee, the rent will cease to be
payable until the property is rendered fit for occupation. The lessee may determine the lease by giving
one month’s notice in writing after six month that the property still unfit for occupation
• S5 read together with s233, ‘in repair’ means that in such state of repair as that in which a prudent
owner might reasonably be expected to keep his property

Determination of a Lease
A. Surrender s239
 • Lessee can terminate the lease b4 the original termination date by agreeing with landlord to surrender
the lease, with executing Form 15C n registering such form at the land office
• For a tenancy exempt from registration, a surrender can be done by word of mouth or any written
agreement
• Any such surrender must obtain the written consent of the charge
• Any sub-lease or tenancy granted from the lease will not be affected by the surrender of lease, as
lessor is taken as taking over such sub-lease or tenancy
B. Expiry of term s240
• A lease automatically terminates upon expiry of the prescribed period
• Registration of such lease may be cancelled by the Registrar under s313
• With regard to a tenancy exempt from registration, upon the expiry of tenancy, the endorsement
made on RDT may be cancelled
C. Service of a valid notice of quit
• Either party have the right to terminate the lease b4 expiry by serving a valid notice of quit to the other
party in accordance with the manner prescribed in the lease agreement, as NLC does not provide any
provision or Form relating to notice of quit
• Reliance is placed on the words of the lease agreement itself n common-law may be referred to with
regards to the reasonable period
• The words used in a Notice to Quit must express an unequivocal n unconditional intention to terminate
the lease as of a certain date
D. Forfeiture of lease s234
• Landlord has the right to terminate the lease, if lessee violates certain terms n conditions. Such right is
called forfeiture of lease
• For example: failure to pay rent, unauthorized sub-letting, unlawful use of premises n damage to the
premises
• Every lease shall be liable to forfeiture where the lessee breaches any of the provisions of the lease; or
is adjudicated a bankrupt; or being a company, it goes into liquidation
• The manner is either by way of re-entry of the land or by action in court by the lessor
• The lessor must serve firstly on the lessee a written notice specifying the breach or violation, n
requiring the lessee to remedy
• Any action done by the lessor in accepting rent or doing any act which show an intention to treat the
lease as subsisting shall constitute a waiver of the right to forfeit
• The effect of forfeiture of the lease is to extinguish all interests dependent on the lease including a
charge, sub-lease n tenancy
• S241 a lessee can apply to the court for relief against forfeiture
• S238 Any sub-lessee, tenant or charge adversely affected by the forfeiture may apply to the court for
an order that any lease, sub-lease or tenancy to be granted to them as the case may be but this is
entirely based on the discretion of the court

Effect of an unregistered lease

• If an agreement for a lease, not followed by the registration of Form 15A or 15B under NLC, will still
create a lease relationship between lessor n lessee
 • Such lease creates contractual rights but it will not bind parties who r not privy to the lease agreement.
Thus, it only confers a right in personam, n not right in rem
• It may stand as an equitable lease n the aggrieved party may sue for specific performance, to compel
the other party to register the lease
• Margaret Chua v Ho Swee Kiew
F: A was the RP, n had an agreement with R to lease a shophouse for a term of 25 years. A had taken
no step to execute a registrable lease, n subsequently sought to sell the premises n gave R an option to
buy the premise. R claimed for specific performance
H: although the lease was not registered, the agreement is valid as an agreement for a lease n can be
enforced in equity by a decree of specific performance
• Wan Salimah bte Wan Jaafar v Mahmood bin Omar
F: P had entered into a written agreement with D whereby D agreed to lease his land for 15 years to P.
P paid the 1st year rent n built two houses on the land. The lease was not registered because the D
refused to sign Form 15A. D entered into a SnP agreement to sell the land to a 3 rd party
H: the lease agreement was as good as an agreement enforceable in equity. Since the parties intended
that there should be a lease, equity must be invoked to carry out the intention effectively. The court
ordered D to execute the lease instrument in Form 15A to grant a lease to P

Tenancy coupled with equity

• It is a doctrine that a tenant in possession of a land based on encouragement of the landlord, and the
tenant based on this encouragement, spends his money to improve the land, having done so due to an
expectation of being able to remain on the land. This concept was clarified in Inwards v Baker
• If the landlord serves a notice of quit to tenant, tenant can rely on the doctrine of ‘tenancy coupled
with equity’ to set aside the notice of quit
• The court will hold that the landlord is estopped from terminating the tenancy until he satisfied the
tenant’s equity, either by giving more time to the tenant or pay an amount as compensation
• Mok Deng Chee v Yap See Hoi
H: the original house had been built as the expenditure raised in favour of the tenant, with the
encouragement n approval of the previous landowner. Thus, the tenancy coupled with equity bound
future successors in title, n the A’s tenancy could not be defeated by a bare notice to quit

Tenancy by estoppel
• S116 of the Evidence Act 1950 enacts that not tenant of immoveable property shall during the
continuance of the tenancy be permitted to deny that the landlord of such tenant had, at the
beginning of the tenancy, a title to such immoveable property
• A tenant who has been let into possession cannot deny his landlord’s title, however defective it may be,
so long as he has not surrendered the property to the landlord
Security Dealings
• They r dealings in respect of alienated land where the RP will be able to confer interests in the land in
favour of a lender to secure or guarantee the repayment of the loan given to the landowner
• If borrower defaults, the lender will be entitled to commence foreclosure proceedings to obtain an
order for sale to recover the loan granted
• The recognized security dealings under NLC r charges n liens s205(1)
• Jual Janji is not regulated by NLC as it is a customary security transaction n r recognized by the courts
as having effect only as a pure contract of sale

Torrens Land Charge

• Charge is entered into by between the proprietor of the land n a lender wherein the proprietor
provides security in consideration of the loan advanced by the lender
• Charge is created when a RP or a lessee who when in need of case, uses his land as a collateral or
security to guarantee the repayment of the loan given by the lender
• Land can be used as a security as a loan, because it is permanent, durable, n its value is never lost
• If the borrower fails to repay the loan with interest, the lender can recover his money by selling the
land conferred as security by way of public auction or by way of private treaty subject to consent from
the chargor

Differences between Torrens charge and Mortgage

• The Torrens charge is a creation of statute, ie NLC n its characteristics r different from the common law
deed of mortgage
• Mortgage:
(a) Is a mechanism to create a lien on real estate by contract
(b) Individuals or businesses can buy residential or commercial property without paying the full value
upfront
(c) Mortgagor uses a mortgage to pledge real property to the lender as security against the debt for the
rest of the value of the property
(d) The legal title (exists as a security for a debt) is transferred to the mortgagee while mortgagor has an
equitable title
(e) Mortgagor only has a right in equity to redeem the land from the mortgagee upon repayment of the
loan
• Charge:
(a) The person in favour the charge acquires only an interest in the land
(b) Has statutory right to enforce his security by way of a sale of the land with an order from the court or
land office or to take the possession in case the borrower defaults the repayment
(c) The legal title to ownership of the said land remains vested in the name of the RP
Creation of Charge
• S241(1) provides for powers of charging n also speaks of what type of property should be charged
• The power to create charge a charge available to RP irrespective as to whether it is an individual or a
body whether held as final or qualified title or strata title
• S214(3) provides that the power to charge must be executed in any particular case subject to any
prohibitions laid down by the Code or any written law then in force. Any person seeking to create a
charge must be those prescribed s43 n 205
• For non-citizen, they must conform to the requirements specified in s433B that must obtain the
approval of SA first
• The power of a corporation to charge land or a lease depends on the powers given by the Companies
Act 1965

Subject matter of Charge

• A charge can only be created over the whole, but not part of land or a lease
• In J Raju v Kwong Yok Bank Berhad, it is possible to charge part of land but only by way of an equitable
charge, as the statutory form did not provide for registration of such transaction
• A co-proprietor is empowered to charge his undivided share in an alienated land provided its over the
whole of the undivided share in the land n not on a part only, this is to provide difficulties in
identification of the quantification n on default, in the chargee enforcing his remedies
• Mahadevan s/o Mahalingam v Manilal & Sons (M) Sdn Bhd
H: an agreement to secure a debt in favour of the credit in respect of the debtor’s land may create an
equitable charge giving rise to an equitable right in favour of the creditor although no charge within
the provisions of NLC has been executed. However, such charge may not have the benefit of obtaining
the remedy prescribing in the stature, that is order for sale or taking possession of the charged
property
• The creation of charge is only to secure the repayment of loan or debt or the payment of any sum
other than a debt
• R&I Securities Sdn Bhd v Golden Castle Finance Corp (M) Ltd
H: there is no possible for the creation of a charge where there is no loan transactions, as it defeats the
essence of a charge, which is to secure the repayment of a loan
• Yee Sin Cheong v UMBC
H: unless there is a loan in existence, no security is required
• A charge duly registered, amounts to an interest in land. The RP still has title over his land, what he
confers upon the chargee is merely an interest. Thus, he still can create subsequent charges subject to
obtaining consent from the prior registered chargee. The charges however take priority in accordance
with the date of registration
• A charge constitutes an interest in land, n it renders the land liable as a security where the chargee
could enforce by way of the sale of the land in the event of default by the chargor, this was rightly
concluded in Ho Giak Chay v Nik Aisyak
 • For Malay Reservation land, the land can only be sold to Malays in the event of default by the Malay
proprietor under the charge, this is ensure that the reservation land would remain in the hands of the
Malays
• Co-operative Central Bank Ltd v Y&W Development Sdn Bhd
H: a registered charge is not even a contract. It is a statutory instrument, a dealing authorized to be
created by the NLC. The default giving rise to remedies under the charge is always, statutorily, the
default of the chargor. For third-party charge, it is statutorily a bipartite situation between the chargor
n the charge. Two sections r relevant: s253(1) charge obtaining the sale of the land charged, and
s271(1) chargee’s right to enter into possession of the land charged. The remedy is against the
property but not the person, thus a charge is not a contract of guarantee n the chargor is not a surety

Express and implied conditions imposed on charge

• Express conditions to a charge r prescribed in the charge agreement n the annexure itself which is
annexed to the Statutory Form 16A or 16B
• The implied conditions r those provided in s249-252
• Failure on the part the charge to comply with the express or implied conditions provided in NLC, the
chargor faces the risk of the chargee instituting foreclosure proceedings

Restriction on powers of charging

• The powers of creating charges r subject to further restrictions as specified in s241(3) as: (i) limitation
for Malay Reservation Enactment; (ii) written consent of SA; (iii) the express n implied conditions of the
lease
• A charge cannot be granted to 2 or more persons or bodies, but it can be created in favour of them as
trustees or representatives so that it can held by them jointly
• The first charge is entitled to the custody of RDT in absence of any agreement to the contrary.
However, the said charge is required to produce the documents at any Registry or Land Office on the
written request of the RP or lessee within reasonable time for the purpose for which the documents r
required under NLC
• Any charge created without complying the stipulated restrictions n requirements can be held to be
void ab inito n unenforceable

Prerequisite or Requirements to create a Torrens Charge

• 2 important requirements that must be fulfilled:
(i) Using Form 16A or 16B to create the charge, s242(1)
(ii) Registration of the instrument of dealing in land office
• Form 16A – to secure the repayment of a debt or the payment of any sum other than a debt
• Form 16B – for charges providing for the payment of an annuity or other periodic sum

Position of charge created using the wrong form

• The court held that the forms are flexible enough, and wrong use of form will not invalidate the charge
created
 • V Letchumanan v Central Malaysian Finance Bhd
F: chargor objected on the basis that the charge should not use Form 16A because it provided for
payment in instalments
H: the use of Form 16A was correct as the statutory form is flexible enough. The court rejected the
contention that Form 16A for repayment of principal sum, while Form 16B for payment of periodic
sums
• Tan Yee Yee v Equity Finance Corp Bhd
H: for payment of rent on a monthly basis, it falls within the description of ‘other periodic sum’
appearing in s242(2). Even Form 16A was the proper form to be used, the deviation from it using Form
16B according s62 of the Interpretation Acts could not be said to have any substantial effect or be
calculated to mislead

Registration of Charge

• S243 states that the charge must be duly registered, and upon registration, the chargee acquires an
interest in the land or the lease
• It confers upon the chargee the priority over all other dealings that may be created by chargor after
the registration
• The charge becomes an encumbrance of land and proprietor is prevented from dealing with land
without the prior consent of chargee
• A charge created over property belonging to companies will not function as a charge under the Code
nor will an assignment
• The immediate effects of registration: (i) chargor still can sell the land, but subject to charge itself; (ii)
chargor can only lease the land with consent of chargee; (iii) the remedies of charges on obtaining
order for sale and taking possession; (iv) chargee can assign his interest in the charge
• However, there is no statutory power authorizing the chargee to create a charge over his charge
• Yet until registration, the chargee have certain contractual rights, and right to enter a caveat pending
registration. The chargee will also have a right to recover the amount of debt, in accordance with
contract
• For unregistered charge, it ultimately can involve the process of execution against the land on default
or repayment of debt which require the chargee to obtain a judgment debt, and on further default, to
attach the debt to land and seek an order for sale
• For land which the subject matter of charge is held by a company, the chargee should register the
charge with Registrar of Companies to gives the chargee to have priority against unsecured or
subsequent secured creditors of company on insolvency. The chargee still needs to register the charge
under NLC to secure the land
• If the charge us register under Companies Act but not under NLC, the chargee will be a secured
creditor in relation to the debt on the liquidation of company, but the chargee will not be able to make
use of remedies provided by the Code that is public auction n taking possession
• S304(1) – the date of registration means the date of presentation for registration, thus priority of
chargee is guaranteed upon presentation of the instrument
• Upon registration the chargee is conferred with the indefeasible interest as against the whole wide
world
Position of unregistered charge

• It has no right to enforce the charge, although recourse under contract may still be available
• In Southern Bank Bhd v Chuah Beng Hock, it was held that no charge is effective unless registered
• Chuah Eng Khong v Malayan Banking Bhd
H: an equitable mortgage could exist, because NLC does not have provisions which would render it null
and void. However, such a charge does not entitle the chargee the benefits of the registered charge
under the Code. The decision of Haji Abdul Rahman should not be used as an authority to negative any
equitable mortgage, as the agreement was void because of contravention of s4 of the Selangor
Registration of Titles Regulation 1891
• Mahadevan s/o Mahalingam v Manilal
H: (i) An agreement to secure a debt in favour of the creditor over the debtor’s land may create an
equitable charge, although no charge within the provisions of NLC has been executed; (ii) the creation
of equitable charge depends upon the intention and conduct of parties at the time when the payments
were made; (iii) the provision in NLC is silent and does not prohibit the creation of equitable charges
and liens
• In situations where parties fail to proceed with registration despite the completion of the instrument
of charge, and the title is available, the Lender can seek equitable recognition of the charge and obtain
contractual relief
• There r 3 popular ways of effecting a charge over a piece of land in M’sia:
(i) Legal charge – the charger executes a formal instrument of charge in statutory form. IDT would be
handed over to the chargee; s234
(ii) Equitable charge – same with the legal charge but the instrument have not registered. The chargee
is allowed to enter a caveat to protect his interest; s206(3)
(iii) Lien – not any formal instrument but IDT would be deposited with the lender as a pledge; s281
• Tun Salleh Abas: Malaysian Law does not recognize a mortgage in the sense of English land law
whereby the ownership of land is transferred to mortgagee while mortgagor only has an equitable
right to redeem. For our country, it must follow the sense of Torrens system, which the mortgagor
retains the legal ownership whilst the mortgagee acquires a statutory right to enforce his security. Our
NLC drops the word mortgage and use the word charge to avoid confusion
• The right under the contract would be preserved under s206(3) where the court, in the exercise of its
equitable jurisdiction, grant the creditor specific performance of contract

Custody of IDT

• The chargee registered first in time is entitled to retain IDT to the land or the duplicate lease whilst the
charge remains in existence
• A co-proprietor of land can obtain a copy of IDT for the purposes of charging his share in the land, and
the charge will be entitled to hold such copy
• The chargee does not lose te security during the time he departs with the IDT whilst the loan remains
unsettled
Subsequent Dealings with Charged Property
• For registered proprietor, he has the right to also create second and subsequent charges, but generally,
it is subject to any prohibition or limitation imposed by NLC or any written law
• RP can create subsequent charges over the land with same or other chargees, after he obtains prior
written consent of all existing chargees to the creation of subsequent charge
• RP or lessee must subject to: (i) s241(3) of NLC; (ii) any agreement contrary between the chargor and
prior chargee; (iii) any restriction resulting from consolidation of charges, tacking or postponement
• RP or lessee must apply in writing to the person lawfully holding the IDT or duplicate lease requesting
the release of relevant document to enable the subsequent charge to be effected. If without the prior
consent, then the subsequent dealing cannot be validly created. The chargee however must not
withhold consent unreasonanly
• LA is required to apply the purchase money arising on any sale in the repayment of the subsequent
charges

Priority of charges

• A charge is given priority in order of creation

• The principle of 1st in time will get 1st priority is applicable
• Under NLC, the priority of charge may be affected by using the following mechanisms:
(i) Consolidation as provided in s245
• In common law, consolidation takes place where the chargor had charged two pieces of land, A & B.
Normally relief would only be given if money is paid for both pieces. A chargee who is registered over
different properties belonging to the same chargor can refuse to discharge one charge without the
chargor simultaneously discharging all the other existing charges
• Under modified Torrens System in M’sia, s245 allows consolidation only if both parties consents to the
consolidation, thus it only is permitted if expressly provided for by the charge
• It is different because of the difference of the nature of Torrens Mortgage
• The effect of consolidation is to alter the priority of a subsequent chargee by restricting its priority in
respect of land, by giving the consolidation chargee an advantage
(ii) Tacking as provided in s246
• Tacking means the chargor’s loan will increase and the chargee will obtain priority over other chargees
• Whenever there is a tacking transaction, the chargee offering taking facilities will gain priority in
respect of the original sum and further advances
• This tacking will take place only in accordance to s246(2), which the making of the advance must
expressly be authorized by the prior charge
(iii) Postponement as provided in s247
• It operates to alter the priority of prior charge by placing it on la lower level or priority. This may allow
the subsequent charge to take the place of the prior charge
• It must be registered by using Form 16C
Remedies for Registered Chargee
• NLC provides 2 remedies to a chargee in the event the chargor fails to repay the loan:
(i) Order for sale by way of public auction
(ii) Taking possession of the charged property
• Kimlin Housing Development Sdn Bhd v Bank Bumiputra (M) Sdn Bhd
H: the provisions of Code setting out the right n remedies of the parties under a statutory charge over
land r exhaustive n exclusive, n any attempt at contracting out of those rights, unless provided in code,
would be void as being contrary to public policy
• Chargor cannot confer power of sale by debenture, but proceedings must be brought by chargee to
court to obtain a judicial sale
• Any chargee who has taken possession of charged land, can still apply for an order for sale if the result
is not effective to settle the outstanding loan
• The right to take possession is not given to all chargees, it only available to chargees of land held under
registry land, of town or village land which is not occupied by the chargor

The procedure to apply for an Order for Sale at the High Court and to the Land Administrator

• In the event of any default or breach under the charge, the chargee can choose to:
(i) Obtain the sale of the land or lease
(ii) Enter into possession of the land
• Chargee must serve a notice on the chargor. It can be
(i) Either Form 16D (s254);
(ii) Or Form 16E (s255)
• The notice of must have:
(i) Specifying the breach in question
(ii) Requiring it to be remedied within one month or alternative period
(iii) Warning the chargor that he will take proceedings to obtain an order for sale if the notice is not
complied with
• Form 16 D (Notice of Default)
I. The breach of the agreement has continued for at least one month/ any other specified period
II. If chargor fails to remedy the breach within that period, then the charge is at liberty to apply for an
order for sale
• Form 16E (Notice of Demand)
I. Specially being used in cases where the principal sum is payable on demand
II. May also includes interest which have become due and payable
III. Generally, Form 16 D also has this function
• To the High Court
i. Registry title
ii. S256, s257
• To the Land Administrator
i. Land office title
ii. S260, s261
Procedure for Applying to Court for Order for Sale

• A forced sale is conducted by a registrar or a licensed auctioneer as agent of the charge, and they
should not have any interest in the sale
• The chargor’s rights are not completely lost, but only abrogates his rights and powers on condition that
the sale of his land is carried out in accordance with the order granted by the court
• If the sale under such orders is aborted, the chargor’s rights are restored pending fresh orders
• Application for sale is to be made to the court in accordance with the provisions of the Rules of the
High Court 1980, especially Orders 31 and 83
• The court is functus officio, once
I. an order for sale has been granted
II. the public auction pursuant to the order has been completed; and
III. the certificate of sale has been issued to the successful purchaser,

Procedure for making application for Order for Sale at Land Office

• LA during the enquiry held under s261 is required to make an order for sale in respect of the land
charged when he is satisfied that there is no cause to the contrary
• All orders made by LA must be made using Form 16H
• Form 16H must have:
(i) Specify the date on which the sale is to be held
(ii) Specify the amount due to the charge
(iii) Fix a reserve price for the purpose of the sale
• During enquiry, LA must makes enquiries as to whether default has been made, rather than examining
the merits of the charge itself and its validity
• Only the court possesses the power to set aside any registered interest
• LA after making an order under s263 is required to serve a copy of the notice on the chargor and every
charge of the land or lease; and also to give a public notice of the sale
• Chargee must deposit with LA the duplicate charge document, n the original document of title within 7
days before the date fixed for the sale
• LA has no right to postpone the sale, unless he is of the view that it is expedient to do so. He is not
allowed to cancel the order once it’s made as he is functus officio

Cause to the contrary

• The court has the discretion to reject an application for an order for sale in the event if it can be proved
the existence of cause to the contrary – s256(3)
• It is for the chargor or any third party claiming to have an interest in land to prove
• If there is no cause to the contrary that could be proved to be in existence, the court is obliged to make
an order for sale
• Low Lee Lian v Ban Hin Lee Bank, held that cause to the contrary might be established only in 3
categories of cases
i. Within exceptions to the indefeasibility doctrine in s340
 ii. Chargee had failed to meet the conditions precedent for the making of an application for an order
for sale
iii. The grant of an order for sale would be contrary to some rule of law or equity
• Cempaka Finance Berhad v Ho Lai Ying
H: if there is no proper notice given to the chargor; or where the notice demands for a sum to which
the charge is not entitled, the existence of cause to the contrary can be established
• Oriental Bank v Chup Seng Restaurant Sdn Bhd
H: NLC clearly requires a charge to be registered in the prescribed form b4 a charge can enforce his
statutory remedies
• OCBC v Lee Tan Hwa
H: the bona fide purchasers (intervenes) successfully prevented the chargee from selling the charged
land. He claimed that chargee aldy awared that chargor retained only a limited interest in the land due
to the sale of most of land to the him prior to the registration of the charge
• The provision of ‘cause to the contrary’ can provide both chargor and chargee, because:
Chargor – can apply to annul the notice of demand or order for sale if the sale has been conducted
fraudulently and improperly. He is not stopped from bringing a fresh action against the chargee, after
the making of the order
Chargee – the order for sale can only be void if fall only 3 situations

Right of chargor to tender payment to chargee at any time b4 sale

• Any chargor, can seek to stop the public auction by tendering the full amount due under the charge b4
the conclusion of sale
• The chargee is obliged to accept this amount and this will terminate the sale by public auction
• The chargor will be entitled to a discharge of charge n return of the IDT or the duplicate lease
• M & J Frozen Foods Sdn Bhd v Siland Sdn Bhd
H: for ‘sale concluded’ or ‘conclusion of sale’ r merely used to signify the point of time when there was
an acceptance of the bid. Thus the goods will no longer be offered for sale to prospective buyers n the
successful bidder cannot be permitted to retract his acceptance
• Even after when the order for sale was made n when the auction sale was aldy in progress, but b4 a bid
has been accepted, the chargor still retained the right to tender payment of the amount which he owes
• Eng Ah Mooi v Oversea Chinese Banking Corp Ltd
H: so long as the rights of the chargee were protected under a sale, there was nothing to prevent the
chargor seeking a discharge

Sale of charged property by way of private treaty

• The chargor can seek to sell the charged land by way of private treaty if he cannot remedy the default
after he gets consent of the chargee prior to the commencement of foreclosure proceedings by the
chargee as long as chargee’s interest has not been adversely affected
• UMBC v Chong Bun Sun
H: once an order for sale by way of a public auction has been made by the court, the court does not
have the power to make a subsequent order to vary or set aside the earlier order
 • The s266(1) would seem to support the right to fall back on sale by private treaty when attempts to sell
by public auction were exhausted

Remedies of Charges by taking Possession of Charged Land

• The chargee also is entitled to take possession of charged land, but it is limited to land held under
registry title n only available to first chargees only
• S270(1)(aa) expressly denies the right of possession where the subject matter of the charge is an
undivided share in the land
• Any chargee intending to take possession of any land pursuant to s271 is required to serve notice of
taking possession, Form 16J
• Failure to serve the notice will render the chargor’s act of taking possession invalid
• A chargee in possession can remain in possession as the loan remains unpaid
• The chargee in possession of any land by occupation may remain in possession either by continuing in
occupation, or by exercising his power under s275 to lease the land n receive the rent payable under
the lease
• The chargee is entitled to manage the land n take all the profits accrued from the land. He must
accountable to the chargor for all sums actually received by him, but also for any additional sums
which he might reasonably receive
• But he is liable to the chargor for any act whereby the capital value of land is impaired or the chargor is
put to any loss
• S275 enhances the power of the chargee to act to recover the money owning to him by entitling the
chargee to lease or sub-letting the land. However, the right does not extend to granting a tenancy
exempt from registration, and permitting the lease of max 14 years

Discharge of Charge
• A chargee is obliged to discharge the charge upon full n final settlement of the loan amount secured by
the charge
• A chargee can use Form 16N to discharge the land or lease from all further liability
• The discharge of charge can be in respect of the total or partial amount of land, can shall be effective
from the date of registration of Form 16N
• S279(1) – a chargor can apply to discharge the charge if chargee is unable or unwilling to accept the
payment due to the grounds:
a. The chargee is dead, cannot be found, evades or refuses to accept payment
b. The chargor is unable to trace any person or body authorized to receive the payments on the
chargee’s behalf
• The registrar after satisfied the grounds specified, must authorize the chargor to deposit the amount in
question with him. Once the deposit is made, the land must be discharged
Statutory Liens
Meaning

• A lien creates an equitable interest in the land which gives the holder of that interest to enter a lien-
holder’s caveat
• The lender obtains the right to retain the IDT, copy IDT issued under s343(3)
• Palaniappa Chetty v Dupire Brothers
H: the lien is a right in one man to retain that, which is in his possession belonging to another man until
certain demands of the person in possession r satisfied

Essential characteristics or elements of a lien

• The method of creating lien is by the proprietor or lessee depositing the IDT or duplicate lease with any
person or corporation as security for a loan
• The depositee-lender should using the specifically prescribed Form 19D n accompanied by the
registered title or state lease that belongs to the registered proprietor
• 3 essential conditions in s281(1) however must be fulfilled in order to claim a valid n enforceable lien:
(i) Deposit of the original IDT
• S281(1) – a lien can be created by the proprietor of alienated land, co-proprietor of undivided share or
a registered lease holder
• Lien can be created irrespective as to whether the land concerned is held under a Registry title or a
Land office title
• Co-proprietor can also create a lien as a copy of IDT is also allowed
• The proprietor, co-proprietor or lessee can deposit the IDT, copy of IDT or duplicate lease with a
creditor with the intention of creating a lien
• Only the creditor is authorized to enter a lien-holder’s caveat which is to protect the lien
• Perwira Habib Bank (M) Bhd v Loo & Sons Realty Sdn Bhd
H: only the RP had the power or the right to deposit the title deed for the purpose of creating a lien
holder’s caveat
• Mere possession of an IDT is not proof of an intention to deposit the title as security for a loan, as the
consent of the proprietor is essential to enable the creation of a lien holder’s caveat
• A lien-holder must be persons or bodies with whom the IDT has been deposited
(ii) Intention to create lien
• S281(1) is clear that only a proprietor of land or lease may deposit the IDT, thus the act of deposit must
be coupled with the intention to create a lien. It must only the reason of ‘as security for a loan’
• Without the existence of intention, any act of deposit that could be construed as a deposit done
merely as a matter of convenience in view of possible sale or simply for safekeeping would not justify
the entry of a lien-holder’s caveat
• The onus is on the plaintiff-depositee to prove that the deposit was made on the advance of money n
he as the lender, must connect the advance with the deposit
• The lender must prove the true intention of the proprietor when the title was deposited by the
proprietor with him
• Nallammal v Karuppanan
 F: P’s husband, who was the 1st D took the title deed with a promise to return the same within a month.
P could not obtain the return of title n discovered 1st D had deposited the title with Bank as security for
a loan without her authorization
H: the husband had no right in law to make use of the IDT as security for the loan. Bank cannot enforce
the security against P when it has been established that the title was obtained by misrepresentation on
part of 1st D
• If the title is deposited merely for purposes of safe-keeping, a lien cannot be created
(iii) Lodging or entry of lien-holders caveat
• A lien is an unregistrable interest as NLC has not provided a Form to create lien. Thus, the lien-holder
cmust proceed to enter the lien-holder’s caveat over the said land, then the lien only will then take
effect
• The entry of such caveat protects the interest of the lender in that it will prohibit any further dealings
with the said land
• Vallipuram Sivaguru
H: the 1st D as depositee of IDT acquired the first right to present a caveat n so entitled to create a lien
under s134(i), as against the rights of a subsequent assignee who had lodged a caveat prior to 1 st D’s
• Failure to lodge a caveat does not entitle the depositee with whom the IDT is deposited, to a lien, he
still possesses a right to it in equity
• He can exercise that right by registering the caveat under s134 at any time, as he has a right in equity
to the lien. But in the case of two conflicting equities, the first in time prevails, all other things being
equal
• Even if applicant of the lien holders does not enter the caveat at the time of act of bankruptcy, he still
had equitable rights to a lien in contract at that time, thus he still has a prior interest n was entitled to
an order for sale
• Failure to enter a lien-holder’s caveat does not prevent the lien-holder with whom the title has been
deposited to infer the existence of a valid lien

Differences between Torrens lien & charge

• In lien there must be an intention to create a lien

• The failure to enter a lien-holder’s caveat will not necessarily deprive the lender of the right to a lien in
equity
• A person entitled to a lien must have first obtained judgment for the amount due to him, then only he
can be able to apply to the court for sale
• A lien is not transferable as there is no statutory provision providing for the transfer
• There can only one lien created at one time, as there is no provision to create subsequent lien

Remedy for lien-holder

• He is similar to a chargee to invoke the statutory remedy to realize his security that is applying for an
order for sale
• Pursuant to s281(2), prior to seeking to obtain an order for sale, he must 1st obtain judgment from the
court for the amount due to him from the borrower
 • The enforcement of the remedy of a lien-holder is conditional upon the recoverability of the debt
secured as a personal obligation

Jual Janli
Introduction

• A kind of Malay customary dealing with land

• In nature a security transaction
• The borrower transfers his land to the lender who thereby takes possession of it
• Whatever profits the lender may make out of the land will be his to keep as reward, akin to interest,
for the loan.
• The borrower is entitled to resume the land upon discharging the debt except that, where a period was
fixed for the repayment of the loan, default will turn the original arrangement into an absolute sale,
jual putus

As an equitable security transaction

• The collateral agreement for a re-transfer in a jual janji transaction is in the nature of a security
transaction whereby the right to redeem remains irrespective of whether or not the period within
which it is specified the loan shall be repaid has expired.

Rights of Borrower in Cases of Fraud

• Where the jual janji agreement is still in subsistence, the borrower may, in cases of fraud, recover the
land from the party to the fraud who is last registered as proprietor of the land. (Mohamed Isa v Haji
Ibrahim)

Quick summary on position of traditional Malay Jual Janji

• Based on the views of Salleh Abbas CJ (as he then was), it could be interpreted to mean that a jual janji
transaction intended to operate as a security transaction could be taken as an equitable customary
security transaction, more so in light of the provision of section 4(2)(a) of NLC

With the conflicting views, Teo and Khaw in their text suggested that :

• Although it is not necessary to amend the NLC for purposes of according recognition to jual janji
transactions as suggested, it is felt that perhaps provisions should be made in the NLC to incorporate a
jual janji transaction as one of the statutory security transactions and to facilitate dealings in respect
thereof.

Rights and remedies in event of a breach

• In the event the borrower defaults, the lender becomes absolutely entitled to the land in question,
making the transaction a Jual Putus (“severed” sale).

• Thus, it is pertinent to determine whether

i) It is a mere contract of sale
- time is of essence
- time is not of essence

This would then determine at the expiry of the time for repayment, what are the remedies for the lender.

i) It is an equitable security transaction

- time to redeem the land remains irrespective of the expiry of time for repayment.
Restraint on Dealings

Registrar Caveat
• Official caveat
• Can be entered or lodged by the Registrar on the application specified in s320 of NLC.
• The registrar has discretion enter his caveat on the application made to him.

Nature & Role of Registrar in Registrar’s Caveat

• RC is entered into to protect and inhibit dealings with land and the entry or lodgement of the Caveat
does not create or enhance any existing claim to title or interest or give rise to any claim to title or
interest.

Functions of Registrar

• S319(2)(a)
• The registrar exercise discretionary powers in entering or rejecting an application for RC.
• However, discretion must be exercise judiciously or reasonably and bona fide, not arbitrarily or mala
fide.
• ARPL Palaniappa Chettiar v PL AR Lethumanan Chettiar & Anor
H: the discretion is with the registrar as to whether to enter the caveat or not. However, the discretion
of the registrar must be exercised judiciously and reasonably without any element of mala fide. The
Court may remove the caveat if it’s entry is misleading and is no longer necessary or desirable in the
circumstances specified.
• Registrar of Titles, Johore v Temenggong Securities Ltd
H: the nature of the Registrar’s functions pursuant to s320 of the NLC are not exclusively ministerial as
they are in relation to the other kinds of caveats. They require the exercise of a discretion that is quasi
judicial in role
• Palaniappa Chetty v Letchumanan Chetty
H: The Court does not have jurisdiction to order the entry of a Registrar’s Caveat since the Registrar
was not made a party to the proceedings.

Functions of RC

• Specified in s 320(1) of NLC

• Can be entered whenever necessary/ desirable to the Registrar for the following purposes:

a) Prevention of Fraud/ Improper Dealing

• A Registrar can enter in his caveat on the application made by persons or representatives of persons
stipulated in section 320(1)(a)(b)(c) of NLC to prevent fraud/ improper dealing with their land.

b) Protection of Interests of Persons with Disability

 • S320(2)
• A RC can be entered for protecting the interests of the
I. Federation or State Authority;
II. Any person under disability of minority; or
III. Mental disorder or unsound mind

c) Protection of the Unsecured Government Debts

• A RC can be entered to restraint the land from being dealt with in order to ensure that the land is
available to satisfy the whole part of debt due to the Federation or State Authority, irrespective if
judgement has been obtained or not.
• S320(1)(b)(i) of the NLC provides that the interest of the Federation or State Authority can be
protected using RC.

d) Protection of Register Pending Correction of Errors on Register Document of Title

• The RC can be entered to protect the register pending the Registrar correcting errors on the register
document of title to land or any other related instruments that appears to the Registrar necessary to
be made.

Procedure to enter

• s321(1)
 Form 19F
 The entry on any document of title be effected by the endorsement under the hand and seal of the
Registrar
 Together with a statement of the time of entry
• s321(2)
 Upon the entry, the Registrar shall serve upon the proprietor of the land and any person or body
having a registered interest in the land affected thereby affected a notification in Form 19A

Persons who can apply for RC

 S 320(1)(b)
 Entered by Registrar on the application of persons specified in the section to protect the interest of :
I. minority interest – minor (s2 of Age of Majority Act, 18 years old)
II. mental disorder/unsound mind
III. owner absent from the Federation

Nature and effect of RC

• s319(1) of NLC
• Effect of prohibiting all the registration of all dealings, endorsement of tenancy exempt frm
registration or entry of a lien-holders caveat on the register document of title of the caveated land.
• S319(2)
 • Effect of preventing the registration of any instrument of dealing presented prior to the time the RC
takes effect.

Removal of RC

• RC will be in force until cancelled by the registrar in the following circumstances:

1) Removed by the Registrar on his own motion pursuant to s 321(3)(a)of NLC;

• S321(3)(a)
• The Registrar can remove the caveat on his own motion, ie when he is of the view that there is no need
for the caveat to remain as it has served it’s purpose.

2) On the application by the proprietor of the caveated land pursuant to s321(3)(b) of the NLC;

• as a result of a successful application to the registrar by the proprietor of the land that he is able to
dispute that the interest no longer requires protection
• Example: R.P, be able to show that he has no tax liability and so the caveat, entered in respect of tax,
should be removed.
3) By the Court Order as provided in s321(3)(c) of the NLC.
• pursuant to any order of the court made on appeal under s418 on the decision of entry of caveat or
refusal of cancellation of caveat under para (b)
• S418: one must be the “aggrieved person” to seek relief via this para.
• Second limb is available to proprietor in land, not proprietor in interest over the land.
• Only first limb applies to proprietor in interest ie chargee, as no provision of application of removal by
chargee.

A RC once entered will have effect of preventing the creation of the following dealings:

(i) The registration of all dealings such as transfer, charge, lease, sub-lease, easement on the disputed
land by anyone including the registered proprietor.
(ii) Claim for tenancy exempt from registration on the disputed land.
(iii) Entry of Lien-Holders caveat on the disputed land.
(iv) The RC, however will not prevent the entry of private caveats, trust caveats or prohibitory orders.
(v) RC is unique & different from all other caveats as it takes effect retrospectively.
(vi) RC has the effect of preventing registration of all dealings which was presented for registration but yet
to be registered at the point of time when the RC was entered.

However, RC will not affect any prior registered dealings

The entry of a Registrar’s caveat under paragraph (ba) to section 320(1) NLC against a piece of land has the
effect of turning an unsecured debt owed by the land owner to the Federation or the State Authority into a
secured debt.

• The registrar may, if he thinks it necessary/ desirable, enter such a caveat in respect of any debt,
whether secured/unsecured, due to the Federation or the State Authority.
 • S320(1)(ba) was enacted after the Government suffered a defeat in the Privy Council case of
Temenggong Securities v Registrar of Titles Johor, where the registrar’s caveat to secure income tax
liabilities was removed as the proprietor no longer has any beneficial interest in the land.

Temenggong Securities Ltd v Registrar of Titles, Johore

• The Malaysian Inland Revenue Department requested the Registrar of Titles to enter a registrar’s
caveat over the lands sold by Li-Ta Company (Pte) Ltd to the first applicant, Temenggong Securities Ltd,
who 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 transaction on 22/9/1972.
• The Registrar’s caveat was entered on 11/10/1972 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, for registration on 14/12/1972, and informed the applicants on 15/3/1973 that
a Registrar’s caveat had been entered.

HELD:

• The arrears of income tax did not create such an interest in land as was recognized by the Code for the
Inland Revenue Department to lodge a caveat, but was merely an unsecured civil debt, which, until
converted into a judgment debt, had no right over the property of the debtor (the tax payer there).

Private Caveat
Application of the rule on caveatable interests

• SECTION 323(1) NLC: The persons and bodies at whose instance a private caveat may be entered are:
 Any person/ bodies claiming title to, or any registrable interest in. any alienated land or any right to
such title or interest
• Most of the cases after year 1995 follow the case of LUGGAGE DISTRIBUTORS (M) SDN BHD V
TAN HOR TENG
• Caveatable interest – unregistered interests which are capable of protection by the entry of a private
caveat
• Caveatable interests = Only persons come under REGISTRABLE INTERESTS may be protected by the
entry of a private caveat
• Good registrable title/ interests will only take effect when a written instrument in the appropriate form
provided by the Code is presented for registration at the Registry.
• People who claimed to have registered title/ registrable interest on the land can enter private caveat

WHO & WHEN MAY ENTER

• S.323
• Damodaran v Vasudeva - The persons and bodies who may enter private caveat are:-
 Any person or body claiming title to, or any registerable interest in any alienated land or any right to
such title or interest
  Any person or body claiming to be beneficially entitled under any trust effecting and such land or
interest
 The guardian or next-of kin of any minor claiming to be entitled.

PURPOSE

• To protect the interests claimed by Caveator, regardless the validity of the claimed.

PROCEDURE TO ENTER

• S323(2) Application should be made in Form19B,which must be attested in accordance with s 211, and
must state the nature of claim on which application is based, and state whether caveat bind whole land
or particular interest.
• S322(3) Fees, statutory declaration, description or plan of land affected
• S324 On the function of the Registrar upon receipt of such application
• Ong Chat Pang v Valliappa Chettiar - The Registrar must as soon as possible enter the caveat by
effecting an endorsement on RDT and the caveat is deemed to have taken effect from the time of
receipt of the application (S323(2)C ),without being concerned with the validity of the claim on which
the application is based. Here, the Registrar exercises a merely administrative or ministerial function.

EFFECT

• S.322(2)
• Prohibits the following:-
 Registration of any instrument of dealing executed by or on behalf of the proprietor
 Registration of any certificate of sale
 Endorsement of any claim to the benefit of tenancy exempted from registration granted by the
proprietor
 Entry of lien-holder’s caveat in respect of the land
• Eng Mee Yong & Ors v Letchumanan
• Macon Engineers Sdn Bhd v Goh Hooi Yin

CESSATION OF EFFECT

• S 328 if the caveat is not withdrawn or removed/cancelled, the caveat shall lapse after six years.
• Withdrawal by the caveator or his representative under s325
• Application in Form 19G to the Registrar, accompanied by a fee.
• Upon cancellation, notice shall be served on caveatee.
 Removal by Registrar under s326
 Removal by the court under s327
• Eng Mee Yong & Ors v Letchumanan

Lien-Holder Caveat
WHO & WHEN MAY ENTER
 • S281
• any proprietor of land or any lessee for the time being may deposit with any other person or body, as
security for a loan, his issue document of title of duplicate lease.
• S.330(1)
• any person or body, with whom the issue document of title or duplicate lease to any land, deposited as
security for a loan, may apply to Registrar for the entry of lien-holder’s caveats.

PURPOSE

• To protects the non-registrable interest of the Lien-holder (lender) in the land.

• PROCEDURE TO ENTER
 Section 330(2) application of a lien-holder’s caveat must be made using Form 19D
 Paragraph 3(b) of Form 19D to create a lien-holder’s caveat, the form must be accompanied by the
registered title or state lease that belong to the registered proprietor.
• Hong Leong Finance Bhd v Stafhom Sdn Bhd
• Master Strike Sdn Bhd V Sterling Heights Sdn Bhd

EFFECT

• S 330(5)
• the same as those of the private caveat. Prohibits the followings:
 Registration of any instrument of dealing executed by or on behalf of the proprietor
 Registration of any certificate of sale
 Endorsement of any claim to the benefit of tenancy exempted from registration granted by the
proprietor
 Entry of any lien-holder’s caveat in respect of the land

CESSATION OF EFFECT

• Section 331(1)
• A lien-holder may by a written notice given to the Registrar withdraw his lien-holder’s caveat at any
time.
• Section 331(3)
• registrar can cancel any lien-holder’s caveat upon proof to his satisfaction that all sums due under the
lien have been paid.
• Section 331(4)(a)
• If court satisfied that a lien-holder’s caveat should not be entered, or ought to be withdrawn, it can
order the cancellation.
• Section 331 (4)(b)
• If the entry or failure to withdraw the caveat cause damage and loss to any person or body, the
payment of compensation must be made by the person who entered the caveat and ought to have
withdrawn it.
• Sayang Plantation Bhd v Koh Siak Poo
Prohibitory Order
WHO & WHEN MAY ENTER

s.323(1)

• available to a judgement creditor who does not come within the category of person having caveatable
interest.

PURPOSE

• To ensure the judgment debtor will not deal with the land with other innocent 3rd parties.
• S334 -prohibiting the judgment debtor from effecting any dealing as may be specified in the Order 47
Rule 6 of the RHC 1968.
• Order 47 Rule 6 of the RHC1968 – provides for the seizure of immovable property or any registered
interest therein to be made by an order prohibiting the judgment debtor from transferring, charging or
leasing such property or interest.

PROCEDURE TO ENTER

• Section 335 (2)

• Copy of prohibitory order to be presented to the Registrar for registration.
• Section 335 (1)
• The order comes into full force only when it is entered by Registrar on register document of title to the
land to which or an interest in which it relates.

EFFECT

• Section 336(1)
• Prohibiting entry of any instrument of dealing, claim to the benefit of any tenancy exempt from any
registration granted and any lien-holder’s caveat.
• Secction 336(2)
• Prohibit the registration of any instrument of dealings, other than certificate of sale which directly
affect the registration of interest. If the interest is lease or sublease, then any claim of any tenancy
exempt from registration and lien-holder caveat shall not entered.
• The prohibitory order holder reserves the right to sell land that is attached. If there is an existing
private caveat, the judgment creditor’s right is subjected to the private caveat.
• Karuppiah Chettiar v Subramaniam
H: Judgement creditor only take whatever interest the judgement debtor has in the land and not
against any interest in land which the judgement debtor had already parted with.
• Karuppiah Chettiar v Subramaniam
H: Between the holder of a statutory lien which is created earlier and prohibitory order of the same
land which created later, the claim of the former has the priority.

CESSATION OF EFFECT

• Section 338(1) will lapse at expiry of 6 months from the date of the order.
 • Section 339 (1) can be withdrawn by order of court.
• Section 339(2) shall cease to be effective on registration of transfer executed by officer of the court
under Section 337(1) or registration of certificate of sale

Injunction
WHO & WHEN MAY ENTER

• Part III of the SPA 1950

• Preventive relief.
 Granted at the discretion of the court by injunction: temporary or perpetual.
• Temporary injunction
Section 51(1) of Specific Relief Act -
Temporary injunctions are such as to continue until a specified time, or until the further order of the
court. They may be granted at any period of the suit, and are regulated by the law relating to civil
procedure.
• Perpetual injunction
Section 51 of Specific Relief Act -
A perpetual injunction is an injunction which is directed towards the final settlement and enforcement
of the rights of the parties which are in dispute. Section 51 states that this type of injunction “can only
be granted by the decree made at the hearing and upon the merits of the suit; the defendant is
thereby perpetually enjoined from the assertion of a right, or from the commission of an act, which
would be contrary to the rights of the plaintiff"

WHEN CAN IT BE ENTERED?

• When the damages or other legal remedies are inadequate (Attorney-General v Sheffield Gas
Consumers Co)
• If the conditions or principles governing the grant of injunction are satisfied (American Cynamid Co v
Ethicon Ltd)
• Further to that, the circumstances must not be falls under the categories of “circumstances which
injunction cannot be granted” which provided by the Specific Relief Act.
• When the status quo of the parties pending the settlement of the disputes
• Available to party whose caveat has been removed by the court, notwithstanding that an injunction is
not registrable on the register document title of the land.

PURPOSE

• To restrain the sale and charge of a land to a third party (Foo Poh Sang & Ors v Yuen Lum S/B)

PROCEDURE TO ENTER

• Through registration by showing that the claim is neither frivolous nor vexatious (Eng Mee Yee & Ors v
Letchumanan)
 • In an ex parte application for the issue of an injunction order restraining the defendant from doing a
certain thing. The plaintiff/applicant is required to give an undertaking to pay damages in the event he
fails in his action (TSC Education S/B v Kolej Yayasan Pelajaran Mara &Anor)

EFFECT

• Forbidding the initiation or the continuance of some act or state of affairs or commanding that an act
be done (MBF Holdings Berhad v. East Asiatic Company (Malaysia) Berhad)

CESSATION OF EFFECT

• Temporary injunction – will cease until a final adjudication by the court of the rights of the parties
subsequently take place
• Permanent injunction – permanently

Les Pendens
WHO & WHEN MAY ENTER

• Item 6 of the Schedule to COJA 1964

 When a lawsuit affecting tittle to land that has not been resolved and is still pending, the parties can
apply to the court for lis pendens (Damodaran v Vasuvedan)
• Basically, it applied where litigation is pending between a plaintiff and the defendant as to the right of
a particular land, by making the suit binding not only on the litigants but also on those who derive title
under them by alienation while the suit is still pending.

PURPOSE

• To give the public notice that a lawsuit is pending that affects title to a particular land
• It puts would-be purchasers, lenders and others on notice

PROCEDURE TO ENTER

• Lis pendens can be applied only in an action that directly affects the tittle.
• COJA empowered the court to make an order for lis pendens.
• item 6 of the Schedule to the Courts of Judicature Act 1964 empowered it to do so (Damodaran v
Vasuvedan (FC))

EFFECT

• Serve as a notice that certain land is under pending lawsuit.

 the subject matter of the suit should not be transferred to third party during the pendency of the suit.
 the transferee is bound by the result of the suit in a case when such such property is transferred during
the pendency of the suit.

CESSATION OF EFFECT
 • Until the expiry date of the said lis pendens.

APPICATION IN MALAYSIA

• However, the act of entering lis pendens is a mere brutum fulmen in the existence of NLC and should
not be followed/allowed (Damodaran v Choe Kuan Him (PC))
• The entry of lis pendens has no legal efficacy, is wholly superfluous and can only be considered as a
‘brutum fulmen’. In a pending action where title to registered land is in dispute, the proper way to
suspend the registered proprietor’s right to deal with the land is to employ one of the methods as may
be suitable for lodging a caveat against the title as provided for under the NLC.

Application of the rule of competing priorities between 2008 until 2013

General principle
• qui prior est tempore potior est jure (he who is earlier in time is stronger in law)
• Rice v Rice
• According to CJ Griffith, priority in time is the ground of preference last resorted to when the merits
between the equities are equal.
• “As between persons having only equitable interests, if their equities are in all other respects equal,
priority of time gives the better equity”

• The Malaysian Courts approach when dealing with Competing claims have been primarily influenced by
the judicial opinions of 2 Australian cases which is Butler v Faiclough and Abigail v Lapin.
• Butler v Fairclough
 In the case of a contest between two equitable claimants the first in time, all other things being equal,
is entitled to priority. But all other things must be equal, and the claimant who is first in time may lose
his priority by any act or omission which had or might have had the effect of inducing a claimant later
in time to act to his prejudice
 A person who has an equitable charge upon land may protect it by lodging a caveat, which in my
opinion operates as notice to all the world
• Abigail v Lapin
 The principle laid down in this decided case is governed by the principle laid down in the case of Butler
v Fairclough.
 the original proprietors are bound by the natural consequences of their acts in arming the primary
purchaser with the power to go into the world as the absolute owner of the lands and thus execute
transfers or mortgages of the lands to other persons, and they ought to be postponed to the equitable
rights of the ultimate mortgagee to the extent allowed by the Supreme Court.

PRIORITIES OF COMPETING CLAIMS TO UNREGISTERED INTERESTS

 • As between competing unregistered claims, the maxim ‘qui prior est tempore potior est jure’ =
He has the better title who was first in point of time, applies.
• These principles laid down in 2 landmark cases:
• Butler v Fairclough’s principle:
 In a contest between two equitable interests, the first in time, all other things must be equal, is
entitled to priority.
 But the first in time may lose his priority by any act or omission which had or might have had the effect
of inducing the latter claimant to act to his prejudice.
• Principle in Abigail v Lapin:
 the interest of the possessor of the prior equity of the land cannot be postponed to the possessor of a
subsequent equity unless the proven act or omission on his part has contributed to a belief on the part
of the holder of the subsequent equity, at the time when he acquired it, that the prior equity was not
in existence.

Case Analysis Before 2008

Vallipuram Sivaguru v Palaniappa Chetty

• It was held that a person who has taken possession of the land or issue document of title is said to
have given constructive notice to the world at large of the prior interest in the land even though no
caveat has been entered. This was not an omission which operated and enured to forfeit his pre-
existing equitable title.

Haroon v Nik Mah

• Caveat should only be taken as one of the factors to be considered in determining who among the two
competing unregistered purchasers would have a higher priority. In this case, the court also consider
the factor of whoever is in possession of the land
• Even when an unregistered purchaser didn’t register nor entered a caveat or has possession of the
issue document of title (IDT), the fact that he has possession over the land can be a sign that he has the
title over it.
• Held: Rule of equity apply unless there is gross negligence on part of purchaser. Though Haroon was
given licence to occupy the land, Haroon never did so and at all times Nik Mah was in possession of the
land. The act of Haroon will not do anything to improve Haroon’s position in equity and as such, Nik
Mah’s equity shall prevail.

UMBC v Goh Tuan Laye

• In this case, the bank did not enter a caveat and the respondents also did not enter a caveat to protect
their equitable interests. The bank obtained the documents of title to secure the repayment of a loan.
• The bank did not enter the caveat as it was prohibited from doing so by S3(2) of the Kelantan Land
Settlement Ordinance 1955.
• Held: The fact that the bank was in possession of the documents of title gives the bank an equitable
interests in the lands, which is not affected by the absence of a caveat. This is because a caveat in itself
 does not create an interest but merely gives notice to the world of the presence of an interest
belonging to some one other than the registered proprietor.

Evaluation

• In the Australian context, the principle laid down is such that an omission to enter a caveat by one
party shall forfeit his priority to a subsequent party as it will be detrimental to the latter.
• On the contrary, in the Malaysian context, the same principle applied but it is given a wider approach.
Instead of merely looking at the acts or omissions done by one party solely, the courts compare the
acts or omissions of both parties in order to ascertain who has better footing in the priority.
• Though the principles are similar, the judgment can be very subjective in resolving priority disputes
between competing equitable interests in land.
• The court would look into:
 whether the party has omitted from doing a necessary step to protect his interest, and if such omission
fatal to his claim, his right will be postponed to the other competing party-Vallipuram
 whether the protection made by the parties to protect their interest is sufficient to be given priority-
UMBC

Case Analysis after 2008

Ang Peng Chin v Perbadanan Tabung Amanah Islam Brunei (TAIB) & Ors

• The 2nd defendant(Morsima) was the developer of a commercial building project. In return for financial
facilitis obtained from the 1st defendant(TAIB), Morsima assigned to TAIB all its rights and interests in
the development.
• Plaintif executed a S&P agreement with Morsima in respect of 2 units in the development. It is stated
in the agreement that all payments by the plaintif towards the purchase price had to be made to
Morsima’s account with TAIB.
• Plaintif only paid a large sum of the purchase price to Morsima, but not to TAIB as well. Plaintif said
that he is willing to pay the balance of purchase price if TAIB undertake to transfer the property to him.
• As TAIB refused to do so, Plaintif sought a declaration stating that he was the beneficial owner of the
said property.
• At law, as in equity, the basic rule is that rights and interests primarily rank in order of creation. An
important qualification to the basic rule is the doctrine of purchaser without notice. A subsequent
purchaser must have no notice of the earlier equitable interest. Subsequent purchaser is affected by
notice of an equity when there is actual notice, constructive notice and imputed notice.
• Plaintif’s claim is subject to a prior absolute assignment in favour of TAIB, since TAIB had obtained an
absolute assignment of Morsima’s rights before the S&P agreement was entered with the plaintiff.
Plaintiff had actual notice of the assignment of Morsima in favour of TAIB, but failed to pay the
purchase money to Morsima’s account with TAIB.
• Held: TAIB has better equity than plaintiff, as plaintiff’s conduct did not deserve to be saved by equity.
Plaintiff was therefore in breach of the agreement.

Yeong Oon Kong & Anor v Lee Chu Ming and Ors
 • This is a suit filed by the 1st and 2nd plaintiff against the 1st defendant, claiming for specific performance
of a single storey house.
• 1st and 2nd plaintiff are husband and wife
• 1st defendant is the registered owner of the property
• 2nd defendant had acted as the conveyancing solicitors for plaintiff
• 3rd to 7th defendants are the new purchasers of the property.
• There was a S&P agreement to sell property for Rm90,000 between the defendant and 1st plaintiff.
Plaintiff only paid a sum of RM 1,000 and agreed to pay the balance of the purchase price within 3
months of the date of agreement.
• S&P and transfer was duly executed and 1st defendant allowed plaintiff to occupy the property.
• 1st defendant informed 1st plaintiff that he was no longer interested to sell the property to him &
plaintiff moved out of the property. Plaintiff also did not pay the balance of purchase price in order to
complete the purchase of the property.
• In 1999, plaintiff found out that 1st defendant had sold the property to a new purchaser(3rd to 7th
defendant). They moved into the property and entered a private caveat on the title of the property.
• Plaintiff also lodged a private caveat on the title of the property.
• Whether the subsequent unregistered interest of the 3rd to 7th defendants has priority over the
earlier rights of plaintiff?
 Macon Engineers Sdn Bhd v Goh Hooi Yin [1976] 2 MLJ 55 has held that the trial court has to decide
whether the subsequent interest of a caveator overrides the earlier right of a caveator because a
caveat may be lodged with the registrar by any person claiming under any non-registrable instrument.
 Harun v. Nik Mah (1951) 17 MLJ 209 that apart from the register, and in the absence of any caveat or
issue document of title, the only indicium of title which can be considered is that of the de facto
possession of the land.
 Vallipuram Sivaguru v Palaniappa Chetty (1937) MLJ Rep 55 held that a party could lose his priority if
he neglected the most elementary precaution when [he] purchased the property amongst other things
the failure to make a search on the title to the property.
• Judgment
 It is clear from the fact that the plaintiffs did not take any steps to protect their equitable interest
under the 1st SPA by lodging a caveat on the property.
 The 3rd to the 7th defendants have testified that before making their decision to purchase the
property, a search was conducted on the title to the property. The search revealed that there was no
claim made by any party which was endorsed on the title to the property.
 The transfer of the plaintiff was incapable of registration as the plaintiff the plaintiffs did not pay to the
1st defendant the balance of the purchase price amounting to RM89,000.00.
Qui prior est tempore potior est jure" which means he who is earlier in time is stronger in law applied
and the 3rd to the 7th defendants have a better equity.
• Evaluation
 The judge applied the maxim “he who is first in time will prevail, provided all other things being equal”.
However the court will look into whether there is any conduct or omission on the part of prior equity
possessor which can make he lose the priority.

Gemencheh Enterprises Sdn Bhd v Hock Seng Mining Sdn Bhd

 • There was a S&P agreement between Aikpoint and the plaintiff for RM906,750.00. Plaintiff had paid a
10% deposit of the purchase price.
• Aikpoint solicitors informed plaintiff’s solicitors that they no longer wished to execute the fair copies of
the S&P and returned the 10% deposit.
• Plaintiff applied for specific performance of the S&P agreement against Aikpoint.
• High Court granted the application, affirmed in the Court of Appeal and at the Federal Court, Aikpoint
application for leave to appeal was also dismissed.
• Aikpoint failed to sign and execute the fair copies of the S&P and thus, Plaintiff applied for further
orders and to give effect to the specific performance orders towards Aikpoint.
• However, plaintiff still failed to have the transfers of the said land because of the existence of the
defendant’s private caveat. It is not within the plaintiff’s knowledge that one of Aikpoint’s directors
had sold the said land to the defendant.
• Judgment
 Plaintif position could also be viewed from the principles of competing equities perspective.
 Haroon v Nik Mah- “Where competing equities arise, their relative priority inter se at the moment
before a caveat is imposed to protect either will be determined by the ordinary rules of equity. If a
caveat is then put on to protect that which has the lower priority according to such rules, it may be
warned off by the person entitled to the higher priority”.
 Held: Plaintiff has a better equity, even though no caveat had been lodged on its behalf.
• Evaluation
 The court in this case is more concerned with the main issue of the removal of private caveat and that
the plaintiff has to prove that he is an ‘aggrieved person’.
 The court considers that a case as such can also be included under the categories of competing equities
by referring to the case of Haroon v Nik Mah. It was held that since the plaintiff has done all the
necessary actions to give effect to the earlier order of specific performance and the fact that he had
paid full purchase price, he is entitled to be the beneficial owner of the said land.

Prior Registered Interest VS Subsequent Unregistered Interest

• USUALLY, the first in time will have the priority, UNLESS, the court is satisfied that the acts or
omissions of prior claimant which might have had the effect of inducing the subsequent claimant to act
to his prejudice and if such circumstance exists, then the prior claimant’s priority will be postponed.
• This principle is applicable IF and ONLY IF both interests are equal.

Bank of Tokyo Ltd v Mohd Zaini bin Arshad

• Lim Beng Choon J: “In my search for an answer to this question I must bear in mind that at law, as in
equity, the basis rule is that rights and interests primarily rank in order of creation -- he who is earlier
in time is stronger in law -- will apply where the equities are equal and neither claimant has the legal
estate. “
AmBank (M) Bhd v Angkutan Permai (M) Sdn Bhd

 Registered Proprietor : Double Bay Sdn Bhd

 Registered Chargee (Applicant) : Ambank
 Buyer who entered S&P AGM with RP (1st
 Respondent) : Angkutan Permai
• Double Bay is the RP of the land & AmBank is the registered chargee of it.
• 16/9/2008: Upon non payment, Am Bank applied to the court for an order for sale. The order for sale
was granted; however, the applicant did not proceed with the auction
• 10/12/2010 : the RP has entered into a Sale and Purchase Agreement with 1st R (the subj-mat : the said
land and 3 warehouses and 3 jetty points constructed thereon.)
• the 1st R had paid a deposit of RM1,150,000 to the R and the A has received RM800.000 from it.
• The RP has later breached 2 clauses by failing to provide the 1st R with the necessary documents With
regard to the said land and also certificates of fitness for the warehouses and jetty points located
thereon.
• The 1st R has requested an extension of the S&P completion period.
• Nevertheless, the RP had terminated the S&P.
• The Applicant applies to this Honourable Court for the private caveat to be removed.
• ISSUE : Whether the Rs have serious questions to be tried
 Discuss on the issue of competing priorities between the parties to determine whether there is a
serious questions to be tried.

Registered Charge

 Torrens System: Registered = indefeasible + Prior in time in order of creation = charged registered
some time before 2007

Is heavier than

Unregistered Transfer

 Later in time: Sales and Purchase agreement signed in year 2010

Evaluation

• Torrens System – Registered (S.340) = indefeasible

• Under the legal maxim of qui prior est tempore potior est jure - the first in time shall prevail
• the claim for a registered title owner in a scenario of competing priority is much stronger than the
subsequent unregistered interest holder.

Unregistered Interest v Registered Interest

Position before 2008

Ong Chat Pang & Anor v Valliappa Chettiar

 • Facts:
 The 1st and 2nd Ds had agreed in writing, to sell their land to P.
 P paid the agreed purchase price &he lodged a caveat against the land.
 On the same day, 3rd & 4th Ds approached him and offered to pay him $10,000 to give up his rights
under the agreement and to withdraw his caveat. He refused.
 Subsequently, he called at the land office and discovered that his caveat had been rejected and that
the land had been registered in the names of 3rd & 4th Ds in pursuance of a document of transfer in
their favour.
 P brought an action for specific performance of the sale agreement.
 The High Court gave judgment for specific performance of the agreement.
 Against this judgment the second and third defendants appealed.
• Held:
 dismissing the appeal.
 3rd & 4th Ds failed to prove that they were bona fide purchaser for value without notice.
 It was proved that when P presented his caveat, they knew that P had agreed with the 1 st & 2nd Ds to
buy the land and that P had filed a caveat. Furthermore, there was no evidence that when the
memorandum of transfer in favour of 3rd & 4th Ds was executed a week earlier. They knew of the
previous sale agreement.

Position after 2008

Jit Singh a/l Kishen Singh v Bakshi Singh a/l Kishen Singh & Anor

• Facts:
 P took action against his brothers(1st D & 2nd D), in respect of a property which was previously
registered in the name of 1st D & now transferred to 2nd D.
 (2nd D is a registered owner of the said property)
 P claimed that there was an agreement between P & his 3 brothers that all of them have a share in the
property & he had right to a ¼ share.
 (P argued that he had unregistered interest, as the property was under 1 st D’s name)
 P relied on the registration was obtained by means of an insufficient or void instrument & 2 nd D was a
party to a fraud on P.
• Held:
 Dismissing the action with costs
 There was a valid transfer of NLC between 1st D & 2nd D under NLC. Thus,2nd D is a registered proprietor,
who has legal title on the said property.
 2nd D was unaware of the said agreement when he signed the S&P agreement with 1st D, so 2nd D
remained as a bona fide purchaser for value without notice. He had priority interest against P.
• Evaluation:
 The party with the unregistered interest, may have had an interest in the land before the subsequent
registered interest.
 However, in most instances, the registered interest will have priority, unless:
(i) the legal title holder has notice (actual, imputed or constructive) of the prior unregistered interest
(ii) Not in good faith (the registered purchaser is not a bona fide purchaser)
Conclusion:

• EquaL interest
 qui prior est tempore potior est jure
 first in time, all other things must be equal, is entitled to priority.
 But the first in time may lose his priority by any act or omission which had or might have had the effect
of inducing the latter claimant to act to his prejudice.
• Unequal interest
 Registered interest shall prevail regardless of order of creation.
 However, the registered interest may be defeated when the registered interest holder was not bona
fide.