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DALAM MAHKAMAH TINGGI MALAYA DI JOHOR BAHRU

DALAM NEGERI JOHOR DARUL TAKZIM


SAMAN PEMULA NO. 24M-154-04/2013
Dalam Perkara Mengenai Seksyen 340
(2) (b) Kanun Tanah Negara, 1965.
Dan
Dalam Perkara mengenai Aturan 83,
Kaedah-Kaedah Mahkamah 2012
Dan
Dalam perkara mengenai gadaian
perserahan No. 35022, Jilid: 4482,
Folio: 10 bertarikh 2hb Ogos 1999
keatas harta tanah yang dipegang di
bawah Pajakan No. 648, No. Lot 1876,
Mukim Plentong, Negeri Johor dan harta
tanah yang dipegang di bawah Pajakan
No. 548, No. Lot 139, Mukim Tebrau,
Negeri Johor.
ANTARA
PLAINTIF

KCSB KONSORTIUM SDN BHD


(No. Syarikat: 399408-A)
DAN

1.

MALAYSIAN BUILDING SOCIETY BERHAD


(No. Syarikat: 9417-K)

2.

PENTADBIR TANAH,
PEJABAT TANAH DAN GALIAN NEGERI JOHOR
DEFENDAN-DEFENDAN

DI HADAPAN
YA TUAN GUNALAN A/L MUNIANDY
PESURUHJAYA KEHAKIMAN MAHKAMAH TINGGI

GROUNDS OF DECISION

[1]

In this application, the Plaintiff (P) prayed for the following orders:
(a) Selaras dengan Seksyen 340 (2) (b) Kanun Tanah Negara
1965, gadaian yang dimasukkan oleh Defendan Pertama
melalui perserahan no 35022 bertarikh 2hb Ogos 1999 ke
atas harta tanah yang dipegang di bawah Pajakan No. 548,
No. Lot 139, Mukim Tebrau, Negeri Johor, milik Plaintif
diketepikan dan tidak mempunyai kesan;
(b)

Defendan Kedua mengeluarkan dan membatalkan gadaian


yang dimasukkan oleh Defendan Pertama melalui
perserahan no 35022 bertarikh 2hb Ogos 1999 keatas harta
tanah yang dipegang di bawah Pajakan No. 648, No. Lot
1876, Mukim Plentong, Negeri Johor dan harta tanah yang
dipegang di bawah Pajakan No. 548, No. Lot 139, Mukim
Tebrau, Negeri Johor, milik Plaintif daripada buku
pendaftaran Pejabat Tanah dan Galian Johor;

(c)

Apa-apa relif yang difikirkan suaimunafaat dan adil oleh


Mahkamah Yang Mulia ini;.

Background Facts
[2]
P was awarded a contract by the Government of Malaysia
pursuant to a letter of intent issued by the Prime Ministers Department
dated 02.03.1996 for a Ministry of Defence Army Camp Project on 3 pieces
of land in Pulai, Johor Bahru (JB) at a price of RM250 million. The 3 lots
of land were:
(i)

HS(D)19560, Lot 2967 measuring in area of 308.25 acres;

(ii)

HS(D) 116425, Lot No. 27633 measuring in area of 10.229


acres; and

(iii)

HS(D) 116424, Lot 27634 measuring in area of 232.457


acres.

In consideration, the Government agreed to transfer to P these 2 pieces of


land located in JB:
(i)

Lease No: 648, Lot 1876, Mukim of Plentong measuring in


area of approximately 310.75 acres; and

(ii)

Lease No: 548, Lot 139, Mukim of Tebrau measuring in area


of approximately 71.406 acres.

[3]
Upon negotiations, P and the Government entered into a
Privatisation Agreement dated 10.07.2007 for privatisation of the project
and development on the said land.

[4]
On the same date, P entered into an assignment agreement with
one Kausar Corporation Sdn Bhd (Kausar) whereby P assigned all its
rights and benefits under the Privatisation Agreement (PA) to Kausar. In
return, Kausar agreed to assume all of Ps obligations and liabilities under
the PA.
[5]
MBSB Development Sdn Bhd (MDSB) was thereafter invited by
Kausar to participate in the development of the land on a joint venture basis
and to share the benefits thereof. As a result, the 2 parties executed a
Joint Venture Agreement (JVA) pursuant to which they agreed to establish
a joint venture company named Definite Pure Sdn Bhd (DP) to carry out
mixed development on the land.

[6]
At the request of DP and pursuant to a Loan Agreement dated
21.10.1997, the 1st Defendant (MBSB) provided 2 loan facilities to DP,
namely:

(i)

A term loan of up to RM465 million (Term Loan) for


principal only inclusive of a Land Bond (Land Bond); and

(ii)

An advance of up to RM65.1 million (Advance).

By virtue of a term of the Loan Agreement, P was to create a 3rd party


charge against the said land. Vide Form 16A dated 02.08.1999, a charge
was created in favour of MBSB on the said land as security for the loan
facilities.

[7]
Contrary to above term of the agreement, the charge instrument
(Form 16A) was registered as a 1st party charge instead of a 3rd party
charge whereas the Charge Annexure clearly classifies the charge as a 3rd
party charge. Both P and MBSB admitted that the Form 16A was a
mistake and thus, defective. Hence, this application to set aside the charge
on the ground that the Form 16A creating the charge was an insufficient
instrument that rendered the charge void and invalid.

The Defence Case


[8]
MBSB contended that the charge was wrongly registered as a 1st
party Charge instead of a 3rd party Charge as a result of an error or mistake
made in the instrument of Charge (Form 16A). It did not nullify the Charge
as there were provisions in the NLC for rectification of the mistake. This
position was supported by the 2nd Defendant. There was no fraud or
insufficient instrument filed in the registration of the charge that rendered
the charge defeasible under section 340 (2), NLC.

Issues Arising
[9]

1)

Whether the mistake or error in the Form 16A rendered it an


insufficient instrument and the Charge defeasible under
section 340(2), NLC?

2)

Whether the said mistake or error was a mere technical


defect that was curable by rectification under the provisions
of section 380 NLC?
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3)

Whether the Charge should be set aside on the ground of


being null and void?

Analysis of Issues and Grounds of Application


[10]
It was not in dispute that at all material times the parties intended
to create a 3rd party charge in favour of the 1st Defendant over the said
land. This intention is reflected in the Loan Agreement and the Charge
Annexure. The 1st Defendant contended that the error or mistake in
wrongly registering the charge as a 1st party charge instead of a 3rd party
charge was not serious enough to warrant a setting aside of the whole
charge. The contention was premised on 2 grounds, namely, that removal
of the charge would be highly prejudicial to the 1st Defendant as it would be
deprived of any security for the loan granted to the borrower (DP) and that
the court had the power to rectify the mistake pursuant to section 380 of the
National Land code (NLC).
S. 380 (1), NLC provides that:
(1)

Where the Registrar is satisfied(a)

That any document of title has been registered or


issued in the wrong name, or contains any misdescription of land or boundaries, or other error or
omission, or

(b)

That any memorial or other entry has been made in


error an any document of title or other instrument
relating to land, or

(c)

That any memorial or other entry made on any such


document of title or instrument itself contains any
error or omission,

he may, subject to sub-sections (2) and (3), make such


correction on the document or interest in question as may be
appropriate in the circumstances of the case..

[11]
In Hassan Seman v. Jusoh Awang Kechik [1982] CLJ (Rep) 110
the Federal Court held:
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We are of the view that indefeasibility is not affected, when the


correction only relates to a mere technical mistake. As has been
stated earlier there was neither evidence, nor even a suggestion
that the discrepancy between the memorandum of transfer and its
memorial on the register was a fraud, it must therefore be a
genuine mistake which can be corrected by the Registrar of Title
as an error or omission within the meaning of s. 380(1)(c) of the
National Land Code..

[12]
The first and crucial point to note is that the power conferred by
section 380 (1), NLC is confined to correction of errors in documents of title
or any other instrument relating to land and more importantly, that the
power is vested in the Registrar of Titles and not in the Court. Nowhere in
section 380, NLC is there provision for the Court to exercise its powers to
correct any error or omission as stated. The 1st Defendants contention in
this regard was, thus, plainly misconceived and erroneous. Despite being
fully aware of the purported genuine mistake or error in the registration of
the impugned charge, the 1st Defendant had to date not made any
application to the Registrar to correct it and rectify the charge pursuant to
the powers provided for in section 380, NLC.

[13]
I agree with the proposition of law that under section 380, NLC
only the Registrar of Titles was empowered to make the correction of any
error and that the Court was only empowered to act on appeal from the
Registrars decision under section 418 or on reference by the Registrar
under section 419, NLC. This was decided by Mohd Hishamudin Yunus, J
(as he then was) in Kuah Chiew Ann v. Pendaftar Hakmilik Tanah Wilayah
Persekutuan [2000] 6 MLJ 127 where it was held:
The court does not possess the power to make the order as
prayed for because under s 380 of the National land Code 1965
(the NLC), the party authorized to amend the document of title is
the registered proprietor and not the court.
Therefore, an
interested party who wishes to have the amendments must defer
to the registered proprietor. The court can only act where the
matter has been brought to court under s 418 or s 419 of the NLC
(see pp 130D, 132B-C).
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Under s 380(1)(b) of the NLC, the registrar of titles was


empowered to make the correction where an error had been
committed by another party (see p 132B); Mohammad bin Buyong
v Pemungut Hasil Tanah Gombak & Ors [1982] 2 MLJ 53 followed.
In addition, the provisions under s 380 (1) (a), or (b), or (c) were
not restricted to errors committed by the registry office alone but
also covered errors made by the registrars office which resulted
from someone elses mistake (see p 133D E).
What the plaintiff should have done, according to s 380 of the NLC
was to make an application supported by a statutory admission by
attaching relevant documents that have been certified true (see p
130E). In the event the registrar of title dismissed such an
application, the applicant may refer to the High Court by lodging
an appeal under the provision of s 418 of the NLC (see p 131G).
On the other hand, if having considered the application the
registrar was satisfied that a mistake had been made in the
document of title in question but, based on reasonable grounds,
found it difficult to decide whether to dismiss or approve the
application for correction, the registrar of titles would be under a
duty to refer the matter to court under s 419 of the NLC (see pp
131H-132A).] .

[14]
From the clear and unambiguous terms of s. 380, NLC read
literally, there can be no doubt that the 1st Defendant did not have recourse
to the Court to correct or amend the mistake in the charge instrument
without having applied to the Registrar to do so in the exercise of his
powers under the same section.

[15]
The Plaintiff next submitted that the power conferred by section
380, NLC did not extend to correcting the nature or vital terms of the
document creating the charge, the document in this case being the Form
16A. Under section 380, NLC, the errors or omissions on documents of
title or instruments amenable to correction or amendment are as specified
therein. I upheld the submission that these do not include mistakes relating
to the very nature of the instrument itself or amendments to its fundamental
terms. In this case, the Form 16A that created the charge was in conflict
with the Loan Agreement and JVA entered into between the parties. The
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mistake that occurred went to the type of charge as intended by the parties
or the nature of the instrument itself that wrongfully created a first party
charge over the subject land to the detriment of the Plaintiff. The Form 16A
had the effect of changing the nature of the transaction between the parties
in that the Plaintiff was described as the borrower of the loan of
RM465,000.00 from the 1st Defendant whereas the 2nd Defendant was the
borrower to whom the loan had been released. It had clearly altered the
capacity of the Plaintiff from that of a third party chargor to that of a
borrower liable under the Loan Agreement. A mistake of this nature going
to the type and status of the charge, was in my view, fundamental and
serious that did not fall with the types of error or omission that were curable
or rectifiable under section 380, NLC.

[16]
A charge that is created, inter-alia, by an insufficient or void
instrument, is rendered defeasible under the exceptions to indefeasibility
specified in section 340 (2), NLC. In this case, the Form 16A that
fundamentally conflicted with the Loan Agreement that was the basis of the
charge over the subject land and the express intention of the contracting
parties, could be regarded as an insufficient and defective instrument. It
was, thus, voidable at the instance of the affected or aggrieved party, viz.,
the Plaintiff as the chargor. [See Tan Tock Kwee & Anor v. Tey Siew Cha
& Anor [1995] MLJU 408]. Section 340, NLC states that:
340

Registration to confer indefeasible title or interest, except


in certain circumstances

(1) The title or interest of any person or body for the time
being registered as proprietor of any land, or in whose name any
lease, charge or easement is for the time being registered, shall,
subject to the following provisions of this section, be indefeasible.
(2) The title or interest of any such person or body shall not
be indefeasible
(a) in any case of fraud or misrepresentation to which
the person or body, or any agent of the person or
body, was a party or privy; or

(b) where registration was obtained by forgery, or by


means of an insufficient or void instrument; or
(c) where the title or interest was unlawfully acquired by
the person or body in the purported exercise of any
power or authority conferred by any written law..
[17]
As regards section 417, NLC, the 1st Defendants reliance on this
section in support of its case that the Court had the power to order
rectification of the aforesaid mistake in the Form 16A was patently
misplaced. The wording of section 417 is plain and clear that its purpose is
for the Court to direct the Registrar to do all acts that are necessary to give
effect to the relevant judgment or order of the Court. The party seeking to
invoke this section for an order against the Registrar or Collector should
first have obtained a judgment or order relating to land under the relevant
provisions of the NLC. To put it another way, the said judgment or order is
a condition precedent to section 417, NLC being invoked to obtain the
order therein directing the Registrar to do any act. Without the condition
precedent being satisfied, the question of an order being granted under
section 417, NLC would not arise. In the Supreme Court case of Woon
Kim Poh v. Saamah Bt Hj. Kasim [1987] 1 MLJ 400 Hashim Yeop A. Sani,
SCJ (as he then) was remarked:
Section 417 of the Code provides that the court or a judge may by
order direct the Registrar or Collector to do all such things as may
be necessary to give effect to any judgment or order given or
made in any proceedings relating to land, and it shall be the duty
of the Registrar or Collector to comply with the order forthwith..
Conclusion
[18]
Under section 242, NLC, the Form 16A is a formal requirement
that is mandatory for registration of a charge over property. It entitles the
chargee to enforce the charge on the land belonging to the chargor
(Plaintiff) and confers on the charge an indefeasible interest in the land.

[19]
The mistake in the Form 16A adverted to is serious and
fundamental as, inter alia, it altered the status of the Plaintiff from that of a
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mere third-party chargor to a borrower of the substantial loan from MBSB.


This altered capacity carried serious implications as to the legal liabilities
and obligations of the Plaintiff under the charge. The charge annexure
could not rectify the situation as the Form 16A was the only instrument
recognised under section 242, NLC. The said mistake was not a mere
error, omission or technical defect as envisaged under section 380, NLC
that could, on application to the Registrar, be corrected. In any event, the
Registrar and not the Court was empowered to make the correction that
was required. MBSB, thus, cannot in law invoke section 380, NLC to seek
on order for rectification of the Form 16A.
[20]
The above mistake renders the Form 16A an insufficient and
defective instrument for registration of the charge, which would, thus,
become defeasible under the provisions of section 340 (2), NLC. It was,
accordingly, voidable and liable to be declared void at the instance of the
chargee.
[21]
For the reasons alluded to, section 417, NLC did not have any
application to the issues in dispute in the present case as MBSB had not
obtained any judgment or order for the Registrar to give effect to.
[22]
By reason of the foregoing, I held in conclusion that the Plaintiff
had raised sufficient grounds as to why the charge instrument should be
held null and void and for an order that the charge be accordingly set aside
for being void and bad in law. This application was, therefore, allowed with
costs of RM5,000.00 and MBSBs application vide its counter-claim for
correction of the error under section 380, NLC was dismissed.
Dated: 22nd January 2014.

(GUNALAN A/L MUNIANDY)


Judicial Commissioner
High Court
Johor Bahru
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For the Plaintiff

Encik Mohd Adlizan


Messrs Hazli & Ihab
Advocates and Solicitors
Kuala Lumpur.

For the 1st Defendant

Mr. K. Gopinath &


Mr. M Sanjay
Messrs Kadir Andri & Partners
Advocates and Solicitors
Kuala Lumpur.

For the 2nd Defendant

Puan Nor Jamilah Tohed &


Encik Shahrizal b. Dato Shaari
Pejabat Kamar Undang-Undang
Negeri Johor
Nusajaya.

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