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Sharifah Zubaidah

Section 3 (Sem. 1- 2009/2010)

PRIVATE CAVEATS


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What is a Private Caveat ?

A personal caveat

entered by the

Registrar uponapplication by a

person or body who

has a caveatable

interest.A statutory injunction

to protect a claim to

an existing

unregistered


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Effect?

Preserves the statusquo of the land.

Suspends the

process ofregistration until

settlement of

conflicting claims

relating to the landunder dispute.


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Nature of a Private Caveat

Damodaran v

Vasudeva[1974]:

a caveat is nothing

more than astatutory injunction

to keep the property

in status quo until

the court has had anopportunity of

discovering what are

the right of the

parties.

per Syed Agil

Barakbah, J.


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Main purpose of caveat?

To restrain the caveatee from

dealing with the land in dispute

pending the determination of thecaveators interest in the land by a

court of competent jurisdiction.

(Mil ler v Min ister o f Mines

1963, Privy Council).


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Purposes of a Caveat:

1) A notice to the world at large that the

caveator has a claim to an alleged

interest in the disputed land. 2) Prohibits subsequent dealings with

the land or interest therein.

3) Preserves the status quo of the landpending resolution of the dispute

by the court.


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Notice

Prohibition

Status Quo


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Private Caveat does not create or

enhance interest of caveator

Does not have the effect of enhancing

the caveators interest in the land it

does not create a legal interest in theland.

See Syed Agil Barakbahs observation in

Damodaran v Vasudeva: no personcan create rights in his own favour nor

enlarge or add to his existing proprietary

rights by means of a caveat.


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.Ano r. V Reg istrar of Tit les Johor &

Ors.[1976]

is to preserve the status quo pending

the taking of timeous steps by the

applicant to enforce his claim to aninterest in the land by proceedings in the

court.


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Who can apply for a Private

Caveat?

See s.323 that specifies 3 categories ofpersons:

a) any person or body claiming title to, or

any registrable interest in, any alienatedland (1), or any right to such title or

interest (2) ; (Notice 2 limbs here.)

b) any person or body claiming to be

beneficially entitled under any trustaffecting such land or interest;

c) the guardian or next friend of any minor

claiming to be entitled under any trust

affecting such land.


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s.323(1)(a) interpreted liberally?

Macon Work s & Trading S/B v Phang

Hon Chin[1976] 2 MLJ 177:

the whole system of caveats isfounded on the principle that they exist

for the protection of alleged as well as

proved interest (per Hashim Yeop Sani, J.)


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Interpretation of First Limb of

s.323 (1)(a) can be divided into 2:

Person or bodyclaiming title to land

See: Kumpulan SuaBentong v Dataran

Segar S/B [1992]A prior registeredproprietor challenging

the title of a new

registered proprietoris a body claiming titleto the land u-

s.323(1)(a) and has acaveatable interest.

Person and bodyclaiming a registrableinterest in land.

Standard Chartered

Bank v Yap Sing Yoke[1989]

A chargee could entera private caveat

where the chargedocument had beensigned but had yet tobe registered.


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Krishna Kumar v UMBC[1983]

An unregistered 2nd chargee who had an

instrument of charge in registrable form but had

not obtained the consent of the first chargee had

a registrable interest in the land and could enter

a private caveat to protect its interest.


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Interpretation of Second Limb of

s.323 (1)(a)

The second limb person or body claiming ANYRIGHT to such title or interest may cover those

who have signed contracts relating to land and

have an equitable or in personam right to have

such contact enforced.

This would include a purchaser who has signed

the SPA and has paid the deposit towards the

purchase.

In Macon Engineers S/B v Goh Hooi Yin [1976], a

purchaser of land under an agreement has a right

to the land or interest in the land and can thus

lodge a private caveat.


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Effect of Restriction in Interest on

IDT?

Where there is a restriction in interest on the title

requiring the consent of the State Authority for the

transfer of the land, the purchaser will not have

any caveatable interest until the consent of the

State Authority has been obtained.

See Goh Hee Sing v Will Raja & Anor. [1993] 3

MLJ 610)

oes an n en e p rc aser a


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oes an n en e purc aser anegotiations stage have a caveatable

interest?

Million Group CreditS/B v Lee Shoo

Khoon & Ors. [1986] 1

MLJ 315, it was held

that an intendedpurchaser at

negotiation stage who

has not yet concluded

a contract does nothave any caveatable

interest.


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No concluded contract, no

caveatable interest.

Murugappa Chettiar vLee Teck Moon

[1995], the COA held

that in the absence of

an assertion of aconcluded contract, it

cannot be said that

the caveator had a

claim to the title toland- thus no interest

that is capable of

being protected by the

entry of the caveat.


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Effect of a Private Caveat?

(s.322(2) NLC)

Prohibits registration ofdealings/ Cert. of Saleby court.

No Dealings

Prohibits endorsementof Tenancy Exempt.No T.E.R.

Prohibits entry of

Lienholders Caveat

No

LienholdersCaveat


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Eng Mee Yong & Ors. v

Letchumanan[1979]:

the effect of entry of a caveat expressed to bindthe land itself is to prevent any registered

disposition of the land except with the caveators

consent until the caveat is removed. This is a verygrave curtailment of the rights of the proprietor. Itcan be imposed at the instance of anyone who

makes a claim to title to the land, howeverbaseless that claim may turn out to be. A privatecaveat does not have the effect of altering the

ownership of the land or interest. It merelyfunctions as a notice of a claim and priority of a

claim.

(per Lord Diplock)


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Wong Kim Poh v Saamah [1987]

Supreme Court:

So long as a caveat is in force, registration,

endorsement or entry on the RDT of any

instrument of dealing shall be prohibited. Under the Torrens system where registration

is everything, the prohibition in s.322(2) must

be strictly complied with.

The Registrar is statutorily obliged to refusethe registration because to do so would be a

violation of an express provision of the NLC.


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How to Enter a Private Caveat?

S.324 NLC:

a) Fill in the prescribed statutory Form 19B.

b) Accompanied by:

i) prescribed fee

ii) statutory declaration of applicant or solicitor to

verify the claim.

c) Upon receipt of F.19B, Registrar will note on the

application the time it was received.


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Cont.: d) Registrar will endorse on the RDT the words

private caveat together with a statement

specifying 4 things:

i) Whether the caveat binds the land itself or a

particular interest. ii)Name of caveator.

iii) Time it is effective time the application was

received (s.324(2)(c))

iv) The reference under which it is filed.

e) The Registrar will notify the proprietor in Form

19A or any other person vested with the interest

caveated.


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Registrars duties in entering a

Private Caveat ( s.324(1))

The entry of a private caveat is purely an

administrative act of the Registrar.

The Registrar cannot refuse to accept a caveat

presented so long as it conforms to the form

prescribed.

The Registrar cannot question the merits or

validity of the caveat. No undertaking in damages in required as a

precondition of the right to lodge a private caveat.


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Can a Registered Proprietor Caveat

His Own Land?

In Eu Finance Bhd. v Siland S/B [1989] 1 MLJ195, Justice LC Vohrah said that the registeredproprietor could not caveat his own land because:

a person who relies on his status registered

proprietor must necessarily be a person alreadypossessing title/interest in the land and notmerely a person claiming title to or any interest inthat land and must as a matter of logic have beenexcluded by the language of s.323(1) NLC.

However in Hiap Yiak Trading S/B & Ors V HongSoon SengS/B [1990]. Richard Tallalla JCallowed the registered proprietor to caveat hisown land.


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Caveating Part Only of Land

See proviso to s.322:

Provided that where the claim is in respect a part

of the land, the caveat binds the whole land

Does this mean that one may not caveat only a

portion of land?

See discussion of cases at p. 390-391 of your

text.

Position after amendment of NLC in 2001 acaveator may caveat a particular interest only in

the land by caveating the whole land but

expressing it to bind a particular interest only.

(See s.322(3) NLC)


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Duration of a Private Caveat ?

s.328(1) : a privatecaveat lapses after 6

years.

Similarly observed inGoh Heng Kow v

Raja Zainal Abidin

[1995].

Azlan b. Maidin &Anor. V. PT Melaka

Tengah & Anor.

[2007] 2 MLJ 47, it

was held that once a

caveat has lapsed,

the caveator will not

be able to rely onany claim to a

caveatable interest

in the land anymore.


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Can a Private Caveat be

Withdrawn?

Yes, by the caveator by filling in Form 19G and aprescribed fee. (See s.325 NLC)


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Can a Private Caveat Be

Removed?

Yes, under section 326 and 327 NLC.

Who can apply?

A caveatee can apply to the Registrar for removal

of the private caveat under s.326. Caveat will be

removed after 2 months unless the caveator

obtains a court order to extend the duration of the

caveat.

Any other person or body aggrieved by theexistence of the private caveat may apply to the

High Court under section 327 for an order to

remove the caveat.

The purposes and procedures under s.326 and


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Section 326

Who can apply?any person whose land orinterest is bound by a private caveat

This would mean:

1) the registered proprietor

2) a registered chargee

3) registered lessee or sub-lessee.


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Procedure under s.326:

1) Caveatee applies for removal of caveat bypresenting Form 19H accompanied by

prescribed fee.

2) Registrar will serve the caveator with a

Notice of Intended Removal in Form 19C andendorse the RDT that F.19C has been

served.

3) Under s.326(1B) the caveat will lapse after 2

months specified in the notice.(unless the

caveator obtains a court order to extend the

said caveat).

E i f P i C


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Extension of Private Caveat u-

s.326

It is the caveator who applies to the court forextension.

He is to satisfy the court that there are sufficient

grounds in fact and in law for continuing the

caveat in force. (per Lord Diplock in Eng MeeYongs case)

The court will not usually test the validity of the

claim/interest protected by the caveat but will

consider whether or not the caveator had taken

any other court action to determine his claim.

(e.g. claim for specific performance of the

agreement.)

Wh t i th Eff t f R l f


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What is the Effect of Removal of

the Caveat u-s.326?

The caveator cannot enter another private caveaton the same grounds. (See s.329(2) NLC)

Cases:

-Hong Keow Tee & Anor. V Alkhared & Khoo

Holdings S/B [1982] 2 MLJ 42.

- Hock Hin Bros. S/B v Low Yat Holdings S/B

[1984] 1 MLJ 92.

T L S K M h


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Tan Lay Soon v Kam Mah

Theatre S/B [1990] 2 MLJ 482

The caveator in this case was a purchaser undera contract of sale and the caveatee, a chargee.

Caveator applied for extension of the PC upon

receiving Form 19C under s.326(2) NLC.

Held: (Edgar Joseph Jr., J.)

There was sufficient grounds for continuing in

force the caveatsuntil the claim for specific

performance is adjudicated by the court.


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Tan Hor Teng & Anor. [1995] 1 MLJ

719

COA laid down 3 guidelines on whether a caveatshould be extended under s.326(1B):

1) Whether the respondent has disclosed a

caveatable interest?

2) If yes, then whether his affidavit in support of

his application for extension discloses a serious

question to be tried?

3) If yes, then whether the balance ofconvenience is in favour of the caveat

remaining on the register pending the disposal

of his suit.


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Goh Paik Swan v Ng Choo Lum

[1996] 3 MLJ 437

The Court of Appeal cited the guidelines in

Luggage Distributors with approval.

In this case, as the purported agreement between

the respondent and the caveatee was merely an

option and not a concluded contract, there was

no serious question to be tried and thus, caveat

was not extended.

See other latest cases mentioned at p.401 of your

textbook.

(Institut Teknologi Federal S/B V IIUM Education

S/B, Sanjung Selamats case, etc.)

327 R l f P i t C t


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s.327: Removal of Private Caveat

by the Court

Who can apply?person aggrieved. This refers not only to the registered proprietor

but to any party who is claiming an interest in the

land but is unable by virtue of the caveat to

register his interest.

E M Y C


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Eng Mee Yongs Case

distinguished s.326 and s.327

whereas the procedure under s.326 is available

only to the caveatee, the procedure for applying

directly to the court for an order of removal is

available not only to the caveatee but also anyother person aggrieved by the existence of the

caveat.

(per Lord Diplock)

M i f i d t i


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Meaning of aggrieved party in

s.327 not defined in NLC

Punca Klasik S/B v Abd. Aziz b Abd Hamid & Ors.[1994], the word was taken by the court to mean:

something wrongful in law which has been done

to a person or body that affects their title to the

property.

RAP Nathan v Hj Abd Rahman [1980], the court

was of the view that whether a person is

aggrieved by the existence of a caveat will

depend on whether he will suffer loss if the caveat

is not removed.

In UMBC v D& C Bank[1983], a registered

chargee was held to be an aggrieved party as the

subse uent entr of a caveat b the a ellants

T h f th t t


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Two approaches for the court to

decide in s.327:

Traditional approach

in Macon Engineers

S/B v Goh Hooi Yin

[1976] (Federal Courtdecision)

The guidelines set by

the Privy Council in

Eng Mee Yongs case.


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Macon EngineersApproach

In an application under s.327, the court is to ask

first:

Whether the caveator has a caveatable interest

.

If no, caveat removed.

If yes, caveator must show that his claim is not

frivoulous or vexatious. Courts have therefore equated caveatable

interest with serious question to be tried.

Issue: Is this correct?


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Guidelines in Eng Mee Yong:

If the applicant has no registered interest on theland, he must first satisfy the court that he is a

person aggrieved by the existence of the caveat.

If he is not, his application to remove the caveat

will be dismissed.

If the applicant manages to prove he is a person

aggrieved, then the onus moves to the caveator.

The caveator must then satisfy the court that on

the evidence presented to it, his claim to an

interest in the land does raise a serious question

to be tried and show that on a balance of

convenience, it would be better to maintain the

status uo until the trial of the action.


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Current Approach of the Courts?

In MurugappaChettiar v Lee Teck

Mook[1995],

Supreme Court

followed the

approach in Eng

Mee Yong.

In Soon Seng Co. vToko Palayakat

Jamal (M) S/B

[1999], the High

Court followed also

the approach in Eng

Mee Yong.

Compensation for Wrongful


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Compensation for Wrongful

Caveat?

S. 329(1) Mawar Biru S/B v Lim Kai Chew[2992] 1 MLJ

336

In such cases, the court will determine whether

there is a property value loss (decrease in the

price of the said property) after the land is offered

for sale subsequent to the removal of the caveat.

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