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PRIVATE CAVEATS

Sharifah Zubaidah Section 3 (Sem. 1- 2009/2010)

What is a Private Caveat ?


A personal caveat

entered by the Registrar upon application by a person or body who has a caveatable interest. A statutory injunction to protect a claim to an existing unregistered

Effect?
Preserves the status

quo of the land. Suspends the process of registration until settlement of conflicting claims relating to the land under dispute.

Nature of a Private Caveat


Damodaran v

Vasudeva [1974]: a caveat is nothing more than a statutory injunction to keep the property in status quo until the court has had an opportunity of discovering what are the right of the parties.

per Syed Agil

Barakbah, J.

Main purpose of caveat?


To restrain the caveatee from

dealing with the land in dispute pending the determination of the caveators interest in the land by a court of competent jurisdiction. (Miller v Minister of Mines 1963, Privy Council).

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 land pending resolution of the dispute by the court.

Notice Prohibition Status Quo

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 the land. See Syed Agil Barakbahs observation in Damodaran v Vasudeva: no person can create rights in his own favour nor enlarge or add to his existing proprietary rights by means of a caveat.

Temenggong Securities Ltd. & Anor. V Registrar of Titles Johor & Ors.[1976]
is to preserve the status quo pending

the taking of timeous steps by the applicant to enforce his claim to an interest in the land by proceedings in the court.

Who can apply for a Private Caveat?


See s.323 that specifies 3 categories of

persons: a) any person or body claiming title to, or any registrable interest in, any alienated land (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 trust affecting such land or interest; c) the guardian or next friend of any minor claiming to be entitled under any trust affecting such land.

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


Macon Works & Trading S/B v Phang Hon Chin [1976] 2 MLJ 177: the whole system of caveats is founded on the principle that they exist for the protection of alleged as well as proved interest (per Hashim Yeop Sani, J.)

Interpretation of First Limb of s.323 (1)(a) can be divided into 2:


Person or body

claiming title to land See: Kumpulan Sua Bentong v Dataran Segar S/B [1992] A prior registered proprietor challenging the title of a new registered proprietor is a body claiming title to the land us.323(1)(a) and has a caveatable interest.

Person and body

claiming a registrable interest in land. Standard Chartered Bank v Yap Sing Yoke [1989] A chargee could enter a private caveat where the charge document had been signed but had yet to be registered.

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.

Interpretation of Second Limb of s.323 (1)(a)


The second limb person or body claiming ANY

RIGHT 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.

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)

Does an intended purchaser at negotiations stage have a caveatable interest?


Million Group Credit

S/B v Lee Shoo Khoon & Ors. [1986] 1 MLJ 315, it was held that an intended purchaser at negotiation stage who has not yet concluded a contract does not have any caveatable interest.

No concluded contract, no caveatable interest.


Murugappa Chettiar v

Lee Teck Moon [1995], the COA held that in the absence of an assertion of a concluded contract, it cannot be said that the caveator had a claim to the title to land- thus no interest that is capable of being protected by the entry of the caveat.

Effect of a Private Caveat? (s.322(2) NLC)


No Dealings
Prohibits registration of dealings/ Cert. of Sale by court.

No T.E.R. No Lienholders Caveat

Prohibits endorsement of Tenancy Exempt.

Prohibits entry of Lienholders Caveat

Eng Mee Yong & Ors. v Letchumanan [1979]:


the effect of entry of a caveat expressed to bind

the land itself is to prevent any registered disposition of the land except with the caveators consent until the caveat is removed. This is a very grave curtailment of the rights of the proprietor. It can be imposed at the instance of anyone who makes a claim to title to the land, however baseless that claim may turn out to be. A private caveat does not have the effect of altering the ownership of the land or interest. It merely functions as a notice of a claim and priority of a claim. (per Lord Diplock)

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 refuse the registration because to do so would be a violation of an express provision of the NLC.

How to Enter a Private Caveat?


S.324 NLC:

a)
b)

Fill in the prescribed statutory Form 19B. 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.

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. The Registrar will notify the proprietor in Form 19A or any other person vested with the interest caveated.

e)

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.

Can a Registered Proprietor Caveat His Own Land?


In Eu Finance Bhd. v Siland S/B [1989] 1 MLJ

195, Justice LC Vohrah said that the registered proprietor could not caveat his own land because: a person who relies on his status registered proprietor must necessarily be a person already possessing title/interest in the land and not merely a person claiming title to or any interest in that land and must as a matter of logic have been excluded by the language of s.323(1) NLC. However in Hiap Yiak Trading S/B & Ors V Hong Soon Seng S/B [1990]. Richard Tallalla JC allowed the registered proprietor to caveat his own land.

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 a caveator 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)

Duration of a Private Caveat ?


s.328(1) : a private Azlan b. Maidin &

caveat lapses after 6 years. Similarly observed in Goh Heng Kow v Raja Zainal Abidin [1995].

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 on any claim to a caveatable interest in the land anymore.

Can a Private Caveat be Withdrawn?


Yes, by the caveator by filling in Form 19G and a

prescribed fee. (See s.325 NLC)

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 the existence 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

Section 326
Who can apply? any person whose land or

interest is bound by a private caveat This would mean: 1) the registered proprietor 2) a registered chargee 3) registered lessee or sub-lessee.

Procedure under s.326:


1)

Caveatee applies for removal of caveat by presenting Form 19H accompanied by prescribed fee. 2) Registrar will serve the caveator with a Notice of Intended Removal in Form 19C and endorse 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).

Extension of Private Caveat us.326


It is the caveator who applies to the court for

extension. 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 Mee Yongs 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.)

What is the Effect of Removal of the Caveat u-s.326?


The caveator cannot enter another private caveat

on 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.

Tan Lay Soon v Kam Mah Theatre S/B [1990] 2 MLJ 482
The caveator in this case was a purchaser under

a 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.

Luggage Distributors (M) S/B v Tan Hor Teng & Anor. [1995] 1 MLJ 719
COA laid down 3 guidelines on whether a caveat

should 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 of convenience is in favour of the caveat remaining on the register pending the disposal of his suit.

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.)

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.

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 any other person aggrieved by the existence of the caveat. (per Lord Diplock)

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 subsequent entry of a caveat by the appellants

Two approaches for the court to decide in s.327:


Traditional approach The guidelines set by

in Macon Engineers S/B v Goh Hooi Yin [1976] (Federal Court decision)

the Privy Council in Eng Mee Yongs case.

Macon Engineers Approach


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?

Guidelines in Eng Mee Yong:


If the applicant has no registered interest on the

land, 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 quo until the trial of the action.

Current Approach of the Courts?


In Murugappa In Soon Seng Co. v

Chettiar v Lee Teck Mook [1995], Supreme Court followed the approach in Eng Mee Yong.

Toko Palayakat Jamal (M) S/B [1999], the High Court followed also the approach in Eng Mee Yong.

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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