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Caveats, Prohibitory Orders And Injunctions

Under The National Land Code 1965*

by

Datuk Dr. Wong Kim Fatt**

Introduction

The Malaysian National Land Code 1965 (“the NLC”), modelled

on the Australian Torrens System, came into force on 1 January

1966 and applies to the eleven states of Peninsular Malaysia, the

Federal Territory of Kuala Lumpur (with effect from 1 February

1974 – P.U. (A) 56 of 1974), and the Federal Territory of

Putrajaya (with effect from 1 February 2001, see Federal Territory

of Putrajaya (Modification of National Land Code) Order 2001).

Before the NLC came into force in 1966, there were seven

separate land laws in Peninsular Malaysia, ie, (a) the National

Land Code (Penang and Malacca Titles) Act 1963 codifying the

land laws of Penang and Malacca, (b) the Federated Malay States

Land Code of 1926 (Cap 138) applicable to the four federated

states of Negeri Sembilan, Pahang, Perak and Selangor, (c) the

five land laws of each of the states of Johor, Kedah, Kelantan,

Perlis and Terengganu. As for the State of Johor, its land laws

were codified as the Land Enactment No. 1 (2 of 1910). It was

in operation for over 50 years until it was replaced by the NLC

in 1966. It is interesting to note that under s. 2 of the repealed

Johore Land Enactment, “the court” means the Supreme Court of

Johore, and only one form of caveat in Schedule L is provided

under s. 55 of this Enactment, where the person whose title is

bound by the caveat is called the “caveatee”, an expression not

* This article is based on a talk given by the writer on Day 1 in a 3-day

seminar on Land Development Issues held on 27 November 2012 in

Mutiara Hotel, Johor Bahru, organised by Uni-Link Smart Venture Sdn

Bhd. I wish to thank Mr. Wong Boon Lee, Mr. Wong Boon Chong and

Miss Kelly Yeo Hui Yain for the valuable discussions I had with them on

the relevant subjects and authorities. I am solely responsible for the

shortcomings of this article which discusses restraints of dealings,

injunctions, and the appeal procedures in the Malaysian Courts.

** Advocate & Solicitor Co-founder & Partner, Gulam & Wong

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used in the NLC. To meet modern requirements and for

uniformity, it was necessary to have a single Land Code to

replace these seven out-moded separate land laws in the States of

Malaya before they achieved independence on 31 August 1957.

Clause 1 of the Introduction to the Explanatory Statement of the

National Land Code Bill published in the Federal Government

Gazette on 1 July 1965 reads:

Under the present law of the States of Malaya two quite different

systems of land tenure exist side by side:

(a) The States of Penang and Malacca retain a system peculiar

to the pre-war “Straits Settlements” (modelled on the

English laws of property and conveyancing) whereby

privately executed deeds are the basis of title to land;

(b) The nine Malay States, by contrast, employ a system based

on the principle that private rights in land can derive only

from express grant by the State or secondarily from State

registration of subsequent statutory dealings.

The purpose of the Bill is stated in cl. 4 of the Explanatory

Statement:

The purpose of the present Bill is to remedy this state of affairs

– to replace the complex of seven separate and out-moded laws

by a single statute of general application throughout all eleven

States and so establish a uniform system of land tenure and

dealing appropriate to the present day.

For such a unified system there can be only one model that is

already in existence in the majority of the States as described in

(b) above. In itself it is entirely acceptable; it is efficient, well tried

and familiar and can without difficulty be modified to suit modern

requirements. In nine States its introduction will mean no break

in continuity and in Penang and Malacca the way for its

introduction has already been prepared by the National Land Code

(Penang and Malacca Titles) Act 1963 which, when brought into

force, will abolish the existing system described in (a).

Caveat Under The NLC

Under s. 5 of the NLC on interpretation, a “caveat” means “a

registered caveat”. This shows that a caveat is not effective unless

registered under the provisions of the NLC. A caveat, when

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registered, will have the particulars of registration, the serial or

presentation number, with the date and time of entry, and signed

under his seal by the Registrar of Titles in respect of a registry

title or the Land Administrator in respect of a Land Office title.

Thus a caveat entered under the NLC is an entry or an

endorsement on the register document of title under the hand and

seal of the Registrar of Titles or the Land Administrator, as the

case may be. Unless the caveator gives his consent in writing

under s. 322(5)(b) of the NLC, a caveat shall prohibit dealings by

the registered proprietor in the land or interest affected. A caveat

gives notice on the register document of titles to the world at large

as well as protects the existing interests or claims to such interest

of the caveator in the land or particular interest affected. A

caveat, often described as a temporary or interlocutory statutory

injunction, is not an instrument of dealing and it creates no new

interest in land. However, when determining the priority of

competing claims or equities between the claimants in any dispute

concerning the land or interest bound by the caveat, it is material

to note that, everything being equal, the first in time prevails.

The New Rules Of Court 2012

Effective From 1 August 2012

It should be noted that, with effect from 1 August 2012, the new

Rules of Court 2012 (P.U. (A) 205/2012) came into operation,

repealing, under O. 94 r. 1, the Rules of the High Court 1980

and the Subordinate Courts Rules 1980.

Language Of The Courts

Under the National Language Acts 1963/1967, in Peninsular

Malaysia, the language of the courts is the national language

(bahasa kebangsaan), ie, the Malay language. However, currently

the language of the courts in the two East Malaysian states of

Sabah and Sarawak is the English language. Writs, pleadings,

cause papers, orders, and legal documents in the courts in these

two states are filed in English and proceedings are still conducted

in English. In Peninsular Malaysia, all writs pleadings, cause

papers, orders and legal documents filed in the courts, and

correspondence with the courts, government ministries and

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departments, shall be in the national language (bahasa

kebangsaan), other than the giving of evidence by witnesses.

However, all these documents filed in the courts in the national

language may be accompanied by their English translations. In

practice court proceedings in chambers or in open court are very

often conducted in English in the High Court, the Court of

Appeal, and the Federal Court in Peninsular Malaysia, and written

and oral submissions are frequently made in English in the interest

of justice. In these superior courts counsel and judges more often

conduct the proceedings in English, unlike in the Subordinate

Courts, ie, the Magistrate’s Court and the Sessions Court where

proceedings are virtually conducted in the national language,

except the giving of evidence by witnesses. Section 8 of the

National Language Act reads:

8. All proceedings (other than giving of evidence by a witness) in

the Federal Court, the Court of Appeal, the High Court or any

Subordinate Court shall be in the national language:

Provided that the Court may either of its own motion or on the

application of any party to any proceedings and after considering

the interests of justice in those proceedings, order that the

proceedings (other than the giving of evidence by a witness) shall

be partly in the national language and partly in the English

language.

In this connection, it is relevant to refer to art. 152 of the Federal

Constitution which reads:

152 National language

(1) The national language shall be the Malay language and shall

be in such script as Parliament may by law provide:

Provided that –

(a) no person shall be prohibited or prevented from using

(otherwise than for official purposes), or from teaching or

learning, any other language; and

(b) nothing in this Clause shall prejudice the right of the

Federal Government or of any State Government to

preserve and sustain the use and study of the language

of any other community in the Federation.

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….

(4) Notwithstanding the provisions of Clause (1), for a period

of ten years after Merdeka Day, and thereafter until

Parliament otherwise provides, all proceedings in the Federal

Court, the Court of Appeal or a High Court shall be in the

English language:

Provided that, if the Court and counsel on both sides agree,

evidence taken in language spoken by the witness need not

be translated into or recorded in English.

(5) Notwithstanding the provision of Clause (1), until Parliament

otherwise provides, all proceedings in subordinate courts,

other than the taking of evidence, shall be in the English

language.

Grounds Of Judgment In English Are Lawful

The crucial national language issue concerning the grounds of

judgment written in the English language came up for adjudication

by the Federal Court in a criminal case in Harcharan Singh Piara

Singh v. PP [2011] 6 CLJ 625 in which the Federal Court

unanimously held that the grounds of judgment in the English

language do not contravene the National Language Act and the

court has a wide discretion to conduct proceedings in English or

in the national language. Delivering the judgment of the Federal

Court, Richard Malanjum CJ (Sabah and Sarawak) said at p. 636:

[30] Accordingly, on the authority of Dato’ Seri Anwar Ibrahim v.

Tun Dr. Mahathir (supra) which we accept as good law, we hold

that grounds of judgments do not fall within s. 8 of the Act, and

the court has a wide discretion whether to conduct proceedings in

the English language or in the national language, be it on the

courts own motion or on application by the parties. Further,

judges have the discretion to provide their grounds of judgment

in either in the national language or the English language. The

choice of language adopted by the respective judge is not open

for challenge as long as it is in the national language or the

English language.

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In the 1991 issue of the Singapore Journal of Legal Studies, I had

the opportunity at pp. 611 and 612 to make the following

observations on the language issue:

For over a century, English has been the language, both spoken

and written, of the courts in Peninsular Malaysia. The change

came when s. 8 of the National Language Act was amended by

the National Language (Amendment) Act 1990 which took effect

from 30 March 1990 and administratively from 1 June 1990 by

Practice Direction of the Chief Justice (Malaya).

...

The Bench and the Bar in Peninsular Malaysia are doing

reasonably well in the conduct of cases in the National language,

especially in the Subordinate Courts. Judges of the High court and

Supreme Court are encouraged to write their judgments in the

National Language. Some of these judgments and their English

translations, have found their way into the law journals. However,

it is respectfully urged that Malaysian judges should continue to

write their judgments in English so that these may be read and

studied in other parts of the world interested in Malaysian laws

because their published judgments in the Malay language will

hardly be read or understood in the English-speaking world. As

long term objective, English should continue to be used, alongside

Malay, where justice requires it in the superior courts of the

country. The best of post-independence judgments written in the

English language by judges of the Malaysian High Court, the

Federal Court and its successor, the Supreme Court [now the

Federal Court with the Court of Appeal below it] are of

comparable standard and quality with those of their counterparts

in the Commonwealth.

National Language Not Threatened

Now looking back the last 55 years since Merdeka Day on 31

August 1957, I am of the view that the secure constitutional

position of the Malay language as the national language of

Malaysia has never been threatened, and will never be, by the

continued use of English in the Malaysian Courts. Malaysians of

different races accept the Malay language as the national language

of the country. Mastery and use of the English language will be

to the benefit of Malaysia and her citizens in the international and

domestic scenes, now and in the future.

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Application Of The New Rules

Order 1 r. 2 of the Rules of Court 2012 provides as follows:

2(1) Subject to paragraph (2), these Rules apply to all proceedings

in

(a) the Magistrate’s Court;

(b) the Sessions Court; and

(c) the High Court.

(2) These Rules do not have effect in relation to proceedings in

respect of which rules have been or may be made under any

written law for the specific purpose of such proceedings or

in relation to any criminal proceeding.

Overriding Objective Of The Rules: Justice

It should be borne in mind at all times that the overriding

objective of these Rules is justice, as provided in O. 1A reading

as follows:

In administering these Rules, the Court or a Judge shall have

regard to the overriding interest of justice and not only to the

technical non-compliance with these Rules.

Non-Compliance With The Rules

Under O. 2 r. 1(1) mere non-compliance of the Rules of 2012

does not nullify the proceedings. It is significant to note that

under O. 2 r. 1(2), the parties must now assist the court to

achieve the overriding objective of dealing with the cases justly.

Commence By Writ, Or Originating Summons, Or Notice Of Application

We should take note that O. 5 of the Rules of 2012 makes

provisions for the mode of commencement of civil proceedings by

writ or originating summons (rr. 3 and 4). Order 32 r. 1 of these

Rules provides that “every application in chambers shall be made

by notice of application in the new Form 57”, replacing, but

practically in the same format of, the old familiar summons-in-

chambers, except the new Form 57 is headed Notice of

Application.

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Cases In Which The Rules Of Court 2012 Are Inapplicable

Currently, in Peninsular Malaysia, proceedings relating to company

winding-up matters may still be filed in the English language.

Under the Appendix C (O. 94 r. 2), the Rules of Court 2012 do

not apply to the following proceedings under the following laws:

Appendix C

List Of Exempted Laws

1. Bankruptcy proceedings Bankruptcy Act 1967

2. Proceedings relating to Companies Act 1965

the winding up of

companies and capital

reduction

3. Criminal proceedings Criminal Procedure Code

[Act 593]

4. Proceedings under the Elections Offences Act

Elections Offences Act 1954 [Act 5]

1954

5. Matrimonial proceedings Law Reform (Marriage and

Divorce) Act 1976 [Act 164]

6. Land reference Land Acquisition Act 1960

[Act 486]

7. Admission to the Bar Legal Profession Act 1976

[Act 166], Advocates

Ordinance of Sabah

[Sabah Cap. 2], Advocates

Ordinance of Sarawak

[Sarawak Cap. 110]

8. Proceedings under the Income Tax Act 1967 [Act 53]

Income Tax Act 1967

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Proceedings Under The New Rules

Proceedings relating to caveats under the caveat system,

prohibitory orders, and injunctions relating to the NLC should now

be taken under the Rules of Court 2012, with effect from

1 August 2012. On the caveat system, there are four types of

caveats provided under Part Nineteen on Restraints on Dealing in

the NLC. These caveats are the Registrar’s caveat, private caveat,

lien-holder’s caveats, and trust caveat. Over the last 46 years since

the coming into force of the NLC in 1966, there have been many

amendments made to the NLC. In the future, there will many

more arising under the NLC amendments in order to update the

NLC to meet future requirements. Our courts have adjudicated on

many disputes and have had many cases decided and reported in

the law reports for guidance of the legal profession.

The Registrar’s Caveat

Form Of Registrar’s Caveat

The Registrar’s caveat is now entered by the Registrar in Form

19F (previously Form 7) on the register document of title to any

land under specified circumstances. Form 19F provides as follows:

[Form 19F]

(Section 320)

ENTRY OF REGISTRAR’S CAVEAT

By virtue of the power conferred on me by section 320 of the

National Land Code, I have entered a Registrar’s Caveat on the

land held under Title No. ..................... for Lot No.

…………………...…..*Town/Village/Mukim ……………………...

District …………….. for the following reason:

……………………………………………………………………….........

2. This caveat shall, so long as it continues in force, prohibit

the registration, endorsement or entry on that document, of any

instrument of dealing, any claim to the benefit of a tenancy

exempt from registration and any lien-holder’s caveat. This

prohibition shall apply to any such instrument, claim or application

notwithstanding that it was received before this caveat was

entered.

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Dated the ………………… day of ……………….., 20 ……….

………………………………..

Registrar/Land Administrator

Definitions

Note the following definitions under s. 5 of the NLC:

“Court” means the High Court in Malaya.

“Dealing” means any transaction with respect to alienated land

effected under the powers conferred by Division IV, and any like

transaction effected under the provisions of any previous land law,

but does not include any caveat or prohibitory order.

“Registrar” means –

(a) in relation to land held or to be held under Registry title, or

under the form of qualified title corresponding to Registry

title, or under subsidiary title dependent on a Registry title,

a Registrar of Titles or Deputy Registrar of Titles appointed

under section 12;

(b) in relation to land held or to be held under Land Office title,

or under the form of qualified title corresponding thereto, or

under subsidiary title dependent on a Land Office title, the

Land Administrator.

“Registry title” means title evidenced by a grant or a State lease,

or by any document of title registered in a Registry under the

provisions of any previous land law.

“Land Office title” means title evidenced by a Mukim grant or

Mukim lease, or by any document of title registered in a Land

Office under the provisions of any previous land law.

“Land Administrator” means a Land Administrator appointed

under section 12, and includes an Assistant Land Administrator

appointed thereunder; and, in relation to any land, references to

the Land Administrator shall be construed as references to the

Land Administrator, or any Assistant Land Administrator, having

jurisdiction in the district or sub-district in which the land is

situated.

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Prohibitive Effect Of Registrar’s Caveat

Under s. 319(b) of the NLC, so long as the Registrar’s caveat

remains in force, it shall prohibit the registration, endorsement or

entry of:

(i) any instrument of dealing;

(ii) any claim to the benefit of a tenancy exempt from

registration; and

(iii) any lien-holder’s caveat.

The Registrar’s caveat is more powerful than a private caveat in

that it can operate backward to prevent registration of an

instrument of dealing under s. 319(b) (i) above like a transfer of

land in Form 14A, or the tenancy claim under (ii) above or a lien-

holder’s caveat under (iii) above, notwithstanding these documents

were presented, but had not been registered or endorsed, prior to

the entry of the Registrar’s caveat. Under s. 319(3), the Registrar

has the discretion to waive the prohibition.

Circumstances For Entry Of The Registrar’s Caveat

Section 320 of the NLC, as amended in 1979 by Act A444 by

the insertion of subsection (1)(ba), now reads as follows:

320 Circumstances in which Registrar’s caveats may be entered

(1) Subject to sub-section (2), a Registrar’s caveat may be

entered in respect of any land wherever such appears to the

Registrar to be necessary or desirable –

(a) for the prevention of fraud or improper dealing; or

(b) for protecting the interests of –

(i) the Federation or the State Authority; or

(ii) any person who is in his opinion under the disability

of minority, mental disorder or unsoundness of mind,

or is shown to his satisfaction to be absent from the

Federation; or

(ba) for securing that the land will be available to satisfy the

whole or part of any debt due to the Federation or the

State Authority, whether such debt is secured or

unsecured and whether or not judgment thereon has been

obtained; or

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(c) by reason of some error appearing to him to have been

made in the register or issue document of title to the

land or any other instrument relating thereto.

(2) Knowledge by the Registrar of the fact that any land or

interest therein has been acquired, or is to be held, by any

person or body in a fiduciary capacity shall not of itself

constitute a ground for entering a Registrar’s caveat in

respect of that land.

Cancellation Of The Registrar’s Caveat

Section 321(3) of the NLC provides as follows:

(3) A Registrar’s caveat shall continue in force until it is

cancelled by the Registrar –

(a) of his own motion; or

(b) on an application in that behalf by the proprietor of the

land affected; or

(c) pursuant to any order of the Court made on an appeal

under section 418 against his decision to enter the

caveat, or his refusal of any application for its cancellation

under paragraph (b).

Authority Of The High Court

The decision, including any act, omission, refusal, direction or

order, of the Registrar or the Land Administrator is subject to the

control and order of the High Court in proceedings relating to

land. It is the duty of the Registrar or the Land Administrator to

comply forthwith with the order of the court under s. 417(1) of

the NLC.

Appeals To The High Court

It is important to note that under s. 418(1) of the NLC, any

person or body aggrieved by the decision of the Registrar or Land

Administrator has the right of appeal to the High Court within the

period of three months beginning from the date of communication

of the decision. Unlike O. 3 r. 5 of the Rules of Court 2012

where the High Court has the discretion to extend time, the court

has no jurisdiction to extend this statutory period of three months

under s. 418(1) of the NLC. See the Federal Court case of Land

Executive Committee of Federal Territory v. Syarikat Harper Gilfillan

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Bhd [1980] 1 LNS 150; [1981] 1 MLJ 234, where Raja Azlan

Shah AG LP (as he then was) said at p. 237:

Reading section 418 of the Code, we are satisfied that the latter

is the correct interpretation. Having regard to the special provision

for limiting the time within which to enforce the right, the

indications are that Parliament has by using plain and

unambiguous language intended the right to be exclusive of any

other mode of enforcing it. The time-limit is the foundation of the

right given in the section. It is in the highest degree improbable

that the period of three months as a limitation would have been

inserted if an indefinite period were intended to be given. The

period of the three months is obviously for the purpose of

preventing stale claims.

In Public Bank Bhd v. Pengarah Tanah & Galian & Anor [1989] 1

LNS 159; [1990] 2 MLJ 510, Mohtar Abdullah JC (as he then

was), without referring to the above earlier case of Land Executive

Committee of Federal Territory, held that the three-month period

runs from the date of communication. His Lordship said at p. 510:

By virtue of s. 418, the time limited for appeal against the order

of the registrar is three months from the date of communication

of the decision of the registrar. The decision of the registrar in

this case is the decision to enter the caveat and not the decision

to refuse the application for cancellation of the said caveat since

para (b) and the second limb of para (c) of s. 321 are not

relevant in the present case. Therefore, for the purpose of

computation of time under s. 418, it is crystal clear that time runs

from the date of communication of the decision of the registrar to

enter the caveat, ie, 20 October 1988. The plaintiff’s appeal under

s. 418 was entered on 29 January 1989. Therefore, I hold that

the Plaintiff’s appeal was filed out of time and consequently time

barred.

Appeal Procedure

The appeal procedure was, before the commencement of the Rules

of Court 2012 on 1 August 2012, by originating motion. Under

the new Rules of 2012, I am of the opinion that the appeal will

be by originating summons under O. 5 r. 4. Section 418 of the

NLC reads:

418(1) Any person or body aggrieved by any decision under this

Act of the State Director, the Registrar or any Land

Administrator may, at any time within the period of three

months beginning with the date on which it was

communicated to him, appeal therefrom to the Court.

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(2) Any such appeal shall be made in accordance with the

provisions of any written law for the time bring in force

relating to civil procedure; and the Court shall make such

order thereon as it considers just.

(3) In this section “decision” includes any act, omission,

refusal, direction or order.

Person Aggrieved

In a nutshell, a person aggrieved is one whose legal right or

interest is affected by the wrongful act or conduct of another

person. Following the Privy Council case of AG of Gambia v. Pierre

Sarr N’jie [1961] AC 617, Mokhtar Sidin JCA, in delivering the

judgment of the Court of Appeal in Wu Shu Chen & Anor v. Raja

Zainal Abidin Raja Hussin [1997] 3 CLJ 854, said of an aggrieved

person at p. 868:

The Code contains no definition on who is an aggrieved person.

To my mind, the word ‘aggrieved’ must be given its ordinary

meaning. To be aggrieved means one is dissatisfied with or

adversely affected by a wrongful act of someone. An aggrieved

person is therefore a person whose legal right or interest is

adversely affected by the wrongful act or conduct of another

person or body. The category of aggrieved persons is never

closed.

Cases On Registrar’s Caveat

There are relatively a few cases reported in the law reports on the

Registrar’s caveat. One of the leading cases under s. 418 against

the decision of the Registrar to enter his caveat under the NLC

is Temenggong Securities Ltd and Tumbuk Estate Sdn Bhd v. Registrar

of Titles, Johore which was commenced by originating motion No.

4 of 1973 by the two applicants in the Muar High Court as

persons aggrieved. In this High Court case (unreported), the

Malaysian Inland Revenue Department requested the Registrar of

Titles to enter a Registrar’s caveat over certain lands sold by the

registered proprietor Li-Ta Company (Pte) Ltd as vendor to the

first applicant Temenggong Securities Ltd which 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

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transaction on 22 September 1972. The Registrar’s caveat was

entered on 11 October 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,

after adjudication for stamp duty payment, for registration on

14 December 1972, and informed on 15 March 1973 the

applicants that a Registrar’s caveat had been entered. The

applicants lost their case before Pawan Ahmad bin Ibrahim Rashid

J, who erroneously held in his judgment (reproduced from p. 32

of the appeal record in Privy Council Appeal No. 38 of 1975):

I am of the view that the legislature clearly had in view the

protection of the interests of the Federation or the State authority

and because of this, gave the Registrar specific powers under

Section 320 to enter a caveat in respect of any land when he

deemed it necessary or desirable to do so in the protection of

such interests. It might also be mentioned here that the word

‘interests’ is plural in number and in my view it can be

interpreted to include interests other than registrable interests,

whereas in Section 323 the word ‘interest’ is singular in number

and includes only a registrable interest. For this reason I am of

the opinion that interests such as vested or contingent are also

within the purview of Section 320 of the National Land Code, as

far as it pertains to the Federation or the State authority.

In The Federal Court

The applicants appealed to the Federal Court in Temenggong

Securities Ltd & Anor v. Registrar of Titles, Johore & Ors [1974] 1

LNS 175; [1974] 2 MLJ 45. In allowing the appeal and reversing

the decision of the learned High Court Judge, Ong Hock Sim FJ,

in delivering the unanimous judgment of the Federal Court, said

at p. 47:

We are of the view that the vendor, having parted with their

interest in the lands to the appellants, are bare trustees and have

no interest in the land over which a valid caveat can be lodged.

Respondent’s counsel tried to make much of clause 1 of the

Agreement of August 30, 1972 that “the vendor shall sell and

purchaser shall purchase” and that therefore no rights passed as

the agreement was non-registrable and a non-statutory instrument

capable of passing title to the appellants. He glossed over the fact

that the vendors had done everything that was required of them

to transfer the title and had thereby constituted themselves bare

trustees for the appellants and had no other or further interest in

the lands.

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In The Privy Council

The Registrar of Titles appealed to the Privy Council against the

judgment of the Federal Court. The Privy Council dismissed with

costs the appeal by the Registrar in Registrar of Titles, Johore v.

Temenggong Securities Ltd [1976] 1 LNS 135; [1976] 2 MLJ 44,

[1976] 2 WLR 951, [1977] AC 302. In delivering the judgment

of the Privy Council, Lord Diplock said of the Registrar’s caveat

at [1976] 2 MLJ 44, at p. 46:

A registrar’s caveat has substantially the same prohibitory effect

as a private caveat expressed to bind the land itself. It is entered

by the registrar of his own motion by endorsing the register

document of title to the land with the words “Registrar’s Caveat

Entered” and the time of entry. In one respect its effect is more

severe than that of a private caveat: it operates to prohibit the

registration, endorsement or entry of instruments, claims to

exempt tenancies and lien-holders’ caveats which were received at

the registry before the time of entry of the registrar’s caveat if

they have not been already entered on the register document of

title by then. On the other hand the registrar may waive the

prohibition in any case where he is satisfied that this would not

be inconsistent with the purpose for which the caveat was entered.

Note the learned Law Lord’s concluding opinion on s. 320(1)(b)

(ii) that the Registrar was not entitled to enter a Registrar’s for

unpaid income tax at p. 48:

The characteristic which is common to the three categories of

persons specified in sub-paragraph (ii) is that they are handicapped

in their ability to search for themselves the entries in the register

relating to land in which they are entitled to an interest or to learn

of any threatened dealing with the land which might have the

effect of overriding their interest and which accordingly would

justify an application for a private caveat. So far as these three

categories of persons are concerned, in their Lordships’ view the

clear intention of Parliament in including paragraph (b) in

s. 320(1) was to enable the registrar of his own initiative to do

for persons in any of these categories what could have been done

upon an application made by them for private caveat; and to do

no more than that. As a public servant appointed by the state,

the registrar is an appropriate officer himself to do on behalf of

the Federation and the State Authority what in the case of private

individuals he could be required to do by a formal application on

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their part for the entry of a private caveat. Their Lordship

accordingly conclude that the interests which the registrar is

empowered to protect under s. 320(1)(b) are confined to interests

in the land that are recognised by the Code as being either

registrable or otherwise entitled to protection. An unsecured

creditor of the proprietor of land has no such interest in the land.

Even if no contract of sale by Li-Ta to Temenggong had been in

existence at the time, the registrar would not have been

empowered by s. 320(1) to enter any registrar’s caveat in respect

of Li-Ta’s land, upon the information which their Lordship have

assumed was available to him. Upon this ground they would

dismiss the appeal.

If the Registrar were entitled to enter the Registrar’s caveat for

unpaid income tax, then many individual and corporate tax payers

will run the risk of having their lands caveated by the Registrar.

Amendment To s. 320

After the decision in the Privy Council was made against the

Registrar of Titles, amendment was made to s. 320 of the NLC

by the insertion of (ba) to s. 320(1) by Act A444, gazetted on

15 February 1979 (see my article Registrar’s Caveat Amended

[1980] 1 MLJ, vii, and judgment of Mohamed Dzaiddin J (as he

then was) in Lim Ah Hun v. Pendaftar Hakmilik Tanah, Pulau

Pinang & Anor [1990] 2 CLJ 640; [1990] 2 CLJ (Rep) 369,

cancelling the Registrar’s caveat). The amendment to s. 320 does

not appear to assist the Government in tax collection where the

land in question has been charged. But the situation may well be

different where the tax payer’s land is not charged and is free

from encumbrances. In Oversea-Chinese Banking Corp Ltd v.

Pendaftar Hakmilik, Negeri Kedah [1990] 2 CLJ 275; [1990] 2 CLJ

(Rep) 594, KC Vohrah J (as he then was) did not support the

entry of the Registrar’s caveat. He said at p. 598:

It seems to me that once there is a charge registered in respect

of the land, a Registrar’s caveat is incapable of being entered in

respect of the land for it cannot possibly appear “necessary or

desirable” to him “for securing that the land will be available to

satisfy the whole or any part of the debt due the Federation”

since the caveat will not transform an unsecured debt into a

secured debt let alone give the debt a priority over other

registered interest in the land; instead the caveat serves to interfere

with the legitimate right of the chargee to sell the land under the

provision of the code to recoup losses secured by the charge.

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In Public Bank Bhd v. Pengarah Tanah & Galian & Anor [1989] 1

LNS 159 referred to earlier, a Registrar’s caveat was entered also

at the request of the Inland Revenue Department. In this case,

the plaintiff bank as registered charge applied by letter to the

Registrar to remove his caveat but the Registrar rejected the

chargee’s application to cancel the caveat. The proprietors of the

land affected, however, had not made the application for

cancellation of the caveat under s. 321(3)(b) of the NLC. Mohtar

Abdullah JC (as he then was), accepting the submissions of the

then Johor State Legal Adviser Zulkefli bin Ahmad Makinudin

(now CJ (Malaya)) for the first defendant, and Senior Federal

Counsel Balia Yusof bin Wahi (now JCA) for the second

defendant, correctly dismissed the appeal of the plaintiff

represented by Tan Kiah Teck on the ground that the appeal was

filed out of the three-month statutory period. A lesson to be

learned from this case is that whether or not a person or body

aggrieved requests the Registrar to cancel his caveat, it is always

prudent to file the appeal in the High Court within the three-

month period.

Private Caveat

Sections 322 to 329 of the NLC make provisions relating to

private caveats. Private caveats are practically entered every day

throughout Peninsular Malaysia in transactions involving sales and

purchases of land of various categories of uses (including industrial

land, houses and strata title units like condominiums), and loan

transactions to finance the purchases of various immovable

property. A basic working knowledge of private caveats is therefore

important to the practice of advocates and solicitors in advising or

acting for their clients whether in conveyancing or litigation.

Nature And Effect

Section 322 of the NLC as amended now reads as follows:

322 Nature and effect of private caveats.

(1) A caveat under this section shall be known as a “private

caveat”, and –

(a) may be entered by the Registrar on the register

document of title to any land at the instance of any of

the persons or bodies specified in section 323;

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(b) shall have the effect specific in sub-section (2) or (3),

according as it is expressed to bind the land itself or an

undivided share in the land or merely a particular interest

therein.

(2) The effect of any private caveat expressed to bind the land

itself or an undivided share in the land shall, subject to sub-

sections (4) and (5), be to prohibit so long as it continues

in force the registration, endorsement or entry on the register

document of title thereto of –

(a) any instrument of dealing executed by or on behalf of the

proprietor thereof, and any certificate of sale relating

thereto;

(b) any claim to the benefit of any tenancy exempt from

registration granted by the said proprietor; and

(c) any lien-holder’s caveat in respect thereof;

Provided that where the claim is in respect of a part of the land

the caveat bind the whole land and where the claim is in respect

of an undivided share in the land, the caveat binds the whole of

undivided share in the land. [Inserted by Act A1104].

(3) The effect of any private caveat expressed to bind a

particular interest only shall, subject to sub-sections (4) and

(5), be to prohibit the registration, endorsement or entry on

the register document of title of –

(a) any instrument of dealing directly affecting that interest

(including any certificate of sale relating thereto); and

(b) where that interest is a lease or sub-lease -

(i) any claim to the benefit of any tenancy exempt from

registration granted directly thereout, and

(ii) any lien-holder’s caveat in respect thereof.

(4) A private caveat shall not prohibit the registration

endorsement or entry of any instrument, claim or lien-

holder’s caveat where the instrument was presented, or the

application for endorsement or entry received, prior to the

time from which the private caveat takes effect.

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(5) A private caveat shall not prohibit the registration or

endorsement of any instrument or claim where –

(a) the instrument was presented or the application for

endorsement made by the person or body at whose

instance the caveat was entered; or

(b) the said instrument or application was accompanied by

the consent in writing of that person or body to its

registration or, as the case may be, to the making of the

endorsement.

(5A) No consent of the person or body at whose instance a

private caveat has been entered on a part of the land, an

undivided share in the land or a particular interest therein is

necessary to effect any registration, endorsement or entry of

any instrument on the register document of title not affecting

the claim relating to the part of the land, undivided share in

the land or interest therein. [Inserted by Act A1104].

Cases On Purpose And Effects Of Caveats

As early as 1917, in the well-known Australian High Court case

of Butler v. Fairclough [1917] 23 CLR 78 Griffith CJ was

considering the nature and effect of a caveat. The learned Chief

Justice said at p. 84:

The effect of these provisions is not to enlarge or add to the

existing proprietary rights of the caveator upon which the caveat

is founded, but to protect those rights, if he has any.

In 1976 in Registrar of Titles, Johore v. Temenggong Securities Ltd

[1976] 1 LNS 135; [1976] 2 MLJ 44 Lord Diplock said at p. 46

(also at [1976] 2 WLR 951, and [1977] AC 302 at p. 308) on

the purpose of a private caveat:

The purpose of a private caveat 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 courts.

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In 1979 in an appeal from the Federal Court of Malaysia, the

Privy Council in the often-quoted case of Eng Mee Yong & Ors v.

Letchumanan [1979] 1 LNS 18; [1979] 2 MLJ 212, Lord Diplock

has the opportunity to make useful observations on private caveats

under the NLC at p. 214:

The system of private caveats is substituted for the equitable

doctrine of notice in English land law. By s. 322(2) 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 caveator’s

consent until the caveat is removed … By s. 324 the Registrar is

required to act in an administrative capacity only; he is not

concerned with the validity of the claim on which the caveat

purports to be based. The caveat under the Torrens System has

often been likened to a statutory injunction of an interlocutory

nature restraining the caveatee from dealing with the land pending

the determination by the court of the caveator’s claim to title to

the land, in an ordinary action brought by the caveator against the

caveatee for that purpose. Their Lordship accept this as an apt

analogy with its corollary that caveats are available, in appropriate

cases, for the interim protection of rights to title to land or

registrable interests in land that are alleged by the caveator but

not yet proved.

Caveatable Interest

It is important to note that not everyone is entitled to enter a

private caveat and that before a person applies in Form 19B of

the NLC for the entry of a private caveat, he must make sure that

he has a caveatable interest in the land concerned under

s. 323(1) of the NLC.

In AKB Airconditioning & Electrical Sdn Bhd v. Hew Foo Onn &

Anor [2002] 1 LNS 26; [2002] 5 MLJ 391, Abdul Malik Ishak J

(as he then was) succinctly stated the law at p. 401 as follows:

It is wrong to presume that every person has a right to enter a

private caveat. Section 323 of the NLC envisages the situation

that only a person having a caveatable interest may enter a private

caveat. It is essential that a person who enters a private caveat

must claim title to the land or any registrable interest in the land

or any right to such title or interest to the land. Under s. 324(1)

of the NLC, it is not the duty nor the function of the registrar

to enquire into whether the application for the entry of a private

caveat is validly made. It is the domain of the High Court to

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exercise its judicial function to adjudicate on the validity of the

entry of the private caveat. According to the long line of

authorities, the registrar’s duty in respect of an application for

entry of a private caveat is purely administrative or ministerial.

In the Court of Appeal case of Luggage Distributors (M) Sdn Bhd

v. Tan Hor Teng @ Tan Tien Chi & Anor [1995] 3 CLJ 520, Gopal

Sri Ram JCA had paraphrased s. 323(1)(a) at p. 547 as follows:

To paraphrase sec. 323(1) (a) of the Code, a private caveat may

be entered at the instance of any person or body who claim

either:

(1) the title to land; or

(2) any registrable interest in Land.

The parameters of caveatability under s. 323(1) (a) are therefore

circumscribed by these words: “title” and “registrable interest”. It

is only one who makes a claim to either of these in land may

enter a private caveat.

In the case of Megapillars Sdn Bhd v. Loke Kwok Four [1996] 4

CLJ 82, Kang Hwee Gee J (as he then was) made the following

observations on caveatable interest at p. 90:

It is trite law that a caveator must have a caveatable interest in

the land and not merely a pecuniary interest in it before he can

lodge a caveat under s. 323 of the National Land Code (Registrar

of Titles, Johore v. Temenggong Securities Ltd. [1976] 2 MLJ 44).

Thus, in Wong Kuan Tan v. Gambut Development Sdn. Bhd. [1984]

2 MLJ 113, a contractual right to an unpaid balance of the

purchase price of the sale of land was held by the Federal Court

to be incapable of creating a caveatable interest in land which

would entitle the caveator to continue to maintain his caveat.

Likewise, in the Supreme Court case of Abdul Rahim v. Vallapai

Shaik (a case cited by defendant’s Counsel), an agreement entered

into by the three beneficiaries of the estate of the deceased to sell

land which was conditional upon consent being given by the four

other beneficiaries and upon the purchaser making the monthly

instalments towards the discharge of charge of that land to the

bank, was held to confer no caveatable interest on the purchaser.

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Further, where that interest is claimed through a contract for the

sale of land, the contract must be enforceable by the caveator and

negotiations for a contract no matter how advanced is not capable

of creating a caveatable interest in his favour (Ayer Hitam Tin

Dredging Malaysia Bhd v. Y.C. Chin Enterprises Sdn. Bhd. [1994] 3

CLJ 133). The point is well illustrated by the following passage in

the Court of Appeal case of Murugappa Chettiar Lakshmanan (Wasi

Tunggal Harta Pesaka M.R.L. Murugappa Chettiar, Simati) v. Lee

Teck Mook [1995] 2 CLJ 545 at p. 551:

Until and unless a purchaser has an enforceable contract for the

sale of land, he can lay no claim to the title to registered land. A

fortiori, he has no interest that is capable of protection by the

entry of a caveat … (per Gopal Sri Ram JCA).

No Caveatable Interest

The courts have held that in the following cases the following

persons have no caveatable interest. A creditor or judgment

creditor of a proprietor of land is not entitled in law to enter a

private caveat against the debtor’s land to secure or realize a debt

for the reason that a mere debt, whether under a judgment or not,

is not an interest relating to land. A judgment creditor for a

monetary debt may take out execution proceedings against the

land of the judgment debtor made by way of a prohibitory order

under ss. 334 to 339 of the NLC. In Hiap Yiak Trading Sdn Bhd

& Ors v. Gim Hin & Co (M) Sdn Bhd [1989] 1 LNS 32 in which

the applicants had paid the full purchase price, the private caveat

and prohibitory order were removed because they were not

interested in the land as they sought only the refund of the

deposit and other expenses. In United Malayan Banking Corp Bhd

v. Development & Commercial Bank Ltd [1983] 1 CLJ 82; [1983]

CLJ (Rep) 421, the Federal Court held that failure to obtain the

consent of the first chargee meant that the appellant bank did not

have a caveatable interest in the land. The claimant for a mere

chose in action arising out of or incidental to a contract for the

sale of land is not entitled to enter a private caveat (see Mawar

Biru Sdn Bhd v. Lim Kai Chew And Another Application [1990] 1

LNS 123). The caveator’s appeals to the then Supreme Court

were dismissed on 11 June 1991. A tenant for a tenancy for two

years with an option for having it renewed for a further two years

has no caveatable interest (see Luggage Distributors (M) Sdn Bhd

v. Tan Hor Teng @ Tan Tien Chi & Anor [1995] 3 CLJ 520). A

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purchaser of shares in a company has also no caveatable interest

in the land of the company (see Pembangunan Wang Kita Sdn Bhd

v. Fry-Fry Marketing Services Sdn Bhd [1998] 2 CLJ Supp 96). A

shareholder or officer of a company does not have a caveatable

interest in the land sold by his company, as was held in Hew Sook

Ying v. Hiw Tin Hee [1992] 3 CLJ 1325; [1992] 1 CLJ (Rep) 120

where Mohd Azmi SCJ said at p. 127:

Further, once the company has executed the instrument of

transfer in Form 14A in favour of the purchaser, and handed over

the original document of title, the managing director either as an

officer of the company or in his personal capacity as a shareholder

has no fiduciary duty to challenge the conduct of the company by

means of private caveat for the alleged purpose of protecting his

own interest or the interest of other shareholders.

In my article entitled “Private Caveats, Entry, Extension and

Removal” published in INSAF, the Journal of the Malaysian Bar,

(2006) XXXV No. 2, at p. 87, I wrote:

Having determined that the applicant has a caveatable interest

under s. 323(1) of the Code in the land in question, you may

then apply for the entry of a private caveat in Form 19B in

accordance with the provisions of s. 323 of the Code. The

following points and procedure should be observed:

(a) Apply in the prescribed Form 19B, which may be printed or

typed. The relevant particulars must be properly completed.

(b) Under para 2 of Form 19B, state concisely the grounds of

the claim to the title in the land or undivided share in the

land or interest therein, and/or further as stated in the

supporting statutory declaration. It is important to bear in

mind that what the applicant affirms in the statutory

declaration may be used against him in any subsequent

litigation concerning the caveat. Although the statutory

declaration can be affirmed by the advocate and solicitor

under para 3(b) of Form 19B, it is advisable for his client

to affirm it in order to maintain detachedness on the part of

the solicitor.

(c) Note the supplementary provisions as to forms and

procedure are provided under the Tenth Schedule of the

Code. Under para 11 thereof, the signatures of the caveat

applicant and the attesting witness “should be in permanent

black or blue-black ink.” Signatures in ball point pens are not

accepted. Roller point pens are accepted. It is important to

know the practice of the relevant land registry or land office.

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(d) Form 19B, if executed by a natural person, i.e. the caveator

or his attorney or the attorney of a company (typically an

attorney of a chargee bank whose power of attorney has

been registered with the Registrar of Titles or the Land

Administrator) requires attestation by one of the qualified

person stipulated in the Fifth Schedule, typically an advocate

and solicitor in Peninsular Malaysia. Execution of Form 19B

by a limited company under its common seal requires no

attestation but Form 19B must be accompanied by such

documents as the Memorandum and Articles of Association

of the Company, its board resolution, its Form 49 and the

supporting statutory declaration which may be affirmed by

one of its directors. If Form 19B is executed by a director

on behalf of the company (see Mahadevan & Anor v. Patel

[1975] 2 MLJ 207), the signature of the director requires

attestation.

(e) Identify the share of the land in column 4 of the Schedule

in Form 13A. In most cases, the caveat is to bind the whole

(‘semua’ in Malay) of the land itself. Sometimes, where the

land is registered in the name of more than one proprietor,

an undivided share like 1/2 or 1/3, caveat only the undivided

share of the particular proprietor involved.

(f) Caveating a part of land or a strata title unit requires greater

care. Note the new proviso to s. 322(2) of the NLC stating

that “where the claim is in respect of a part of the land the

caveat binds the whole land.” Note also para 3(c) of Form

19B. In my experience, I would, while indicating the whole

land, state and limit the caveat to the particular interest

claimed in column 4 of the Schedule like “limited to the X

sq. ft.” or “limited to the Y unit” (in Malay: Semua. Terhad

kepada X kaki persegi or Terhad kepada unit Y). The

details of the interest claimed in the agreement or a plan of

the land affected can be disclosed in the supporting statutory

declaration. Note the provisions in the new s. 322(5A) on

the question concerning the consent of the caveator. (See the

judgment of Suffian LP in the Federal Court case of N.

Vengedaselam v. Mahadevan & Anor. [1976] 2 MLJ 161.)

(g) Pay the appropriate registration fees, which vary from state

to state [and time to time]. For example,

(i) under the Federal Territory of Kuala Lumpur Land

Rules 1995, the fee for entry of a private caveat in Form

19B is RM300 per title (item 32),

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(ii) under the Federal Territory of Putrajaya Land Rules

2002 (P.U. (A) 76), the fee for entry of a private caveat

under item 29 of Schedule 4 is RM50 per title.

(iii) under the Selangor Land Rules 2003, the fee is RM300

per title (item 40), and

(iv) under the Johore Land (Amendment) Rules 2002, item

15 (XXVI), the registration fee is RM150 per title.

However, where Form 19B contains more than one title

the fee for each title after the first title is RM30 per title.

As for the solicitors’ legal costs relating to caveats, these are

slightly increased and are provided under the Fifth Schedule to the

Solicitors’ Remuneration Order 2005, which came into operation

on 1 January 2006. The remuneration for a solicitor for entry of

a caveat is now RM200 for the first title and RM50 for each

subsequent title. For the withdrawal of a caveat, it is RM150 for

the first title and RM50 for each subsequent title. Please observe

the no discount rule of the Bar Council.

Caveator Bound By His Grounds

A caveator should remind himself that he is bound by what he has

stated in his grounds for the entry of his private caveat, as these

grounds may later be used against him. In Teck Hong Development

Sdn Bhd v. Toh Chin Ann [2008] 4 CLJ 756, Gopal Sri Ram JCA

(as he then was) said at p. 761 in delivering the judgment of the

Court of Appeal:

The caveat is not grounded on the fact that the order for sale is

invalid. In Luggage Distributors Sdn Bhd v. Tan Hor Teng [1995] 2

CLJ 713, this court held that a caveator is bound by the grounds

he or she sets out in the application in Form 19B for the entry

of the caveat. It was also held if the grounds disclosed in Form

19B do not disclose a caveatable interest, then cadit quaestio.

Further Caveat After Lapsing

The statutory lifespan of a private caveat under s. 328(1) is six

years, unless extended by order of the High Court, or earlier

withdrawn or removed. Section 328(1) reads:

A private caveat shall, if not sooner withdrawn under s. 325 or

lapsing pursuant to sub-section (1B) of s. 326 or removed by the

Registrar pursuant to an order of the Court under s. 327, lapse

at the expiry of six years from the time from which it took effect,

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and the entry thereof may be cancelled accordingly by the

Registrar, either of his own motion or on an application in that

behalf by any interested person or body.

Can a further caveat be entered after lapsing? “I am inclined to

think that the caveator should be allowed to enter a further caveat

to protect the same interest based on the same ground, provided

his claim or interest is still subsisting and not barred by limitation”.

(See Wong: “Restraints of Dealings in Land.” in The Centenary of

the Torrens System in Malaysia. (Malayan Law Journal (1989), and

Teo: Further Thoughts on Second Caveats [1990] 3 MLJ cxvi.)

That question was answered in the positive by LC Vohrah J in

Thevathason s/o Pakianathan v. Kwong Joon [1990] 2 CLJ 308;

[1990] 3 CLJ (Rep) 248, where he said at p. 251:

I did not think that both these authorities which were cited in

Damodaran v. Vasudeva to support the proposition that a second

caveat may not be entered at the instance of the same applicant

in respect of the same land and precisely the same grounds under

the National Land Code in any way prohibited the entering of

fresh caveat even after the lapse of the first caveat based on a

different ground or even on the same grounds if it is for the bona

fide purpose of protecting the caveator’s interest in respect of the

same land. It was my judgment that if a contrary view was taken

there would be no way in which caveator like the defendant who

had already filed his action could protect his existing interest

pending resolution of his dispute by the Court. It seemed to me

that s. 328(1) merely provided for the normal longevity of a

private caveat and envisaged a time frame within which the

caveator should take action to realize his existing interest; it did

not exist to extinguish his right to further protection of that

interest if he had taken positive action, as was done in the present

case, to realize it.

Failure To Enter Caveat

As a rule of prudence, a solicitor should advise the client to enter

the private caveat immediately after execution of the sale and

purchase agreement. However, failure to enter a private caveat or

enter one later in time does not necessarily mean that a purchaser

of land or a chargee will lose his equitable interest in the land,

which eventually will be converted to a legal interest upon

registration of the transfer or charge. In Haroon bin Guriaman v.

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Nik Mah binte Nik Mat & Another [1951] 1 LNS 24, Briggs J held

that the caveat of Haroon cannot prevail over the prior equities

of Nik Mah. In the Temenggong Securities case, I was involved as a

solicitor in the sale and purchase of the relevant lands in the early

1970’s, just a few years after the NLC had come into force. At

that time I did not know of the Registrar’s caveat. The purchaser

had paid the full purchase price and had received the transfers and

other relevant documents. The purchaser and its nominee did not

enter any private caveat. The Inland Revenue Department had

caused a Registrar’s caveat to be entered against the lands. The

High Court refused to remove the caveat. On appeal, the

Registrar’s caveat was ordered to be removed by the Federal

Court, which was affirmed by the Privy Council. Much to my

relief, Temenggong’s nominee eventually became the registered

proprietor of the land free from encumbrances. In the Court of

Appeal case of Tsoi Ping Kwan v. Medan Juta Sdn Bhd & Ors

[1996] 4 CLJ 553, the second respondent company did not

appear to have entered a private caveat and its knowledge of the

appellant’s caveats did not affect its interest adversely. Gopal Sri

Ram JCA (as he then was), finding “the balance of convenience

favours the second respondent”, said at p. 567:

In our judgment, it would be wholly unjust and inequitable to

permit the appellant to contend that the caveats should remain as

against the second respondent which, in the light of the

circumstances adumbrated by Raja Aziz in the course of his

address to us, is entirely innocent.

The Federal Court applied the Australian case of Butler v.

Fairclough in United Malayan Banking Corporation Bhd v. Goh Tuan

Laye & Ors. [1975] 1 LNS 187 in which, in the absence of

caveats and registrations, the Federal Court found in favour of the

appellant bank which had possession of the documents of title.

In Ng Kheng Yeow v. Chiah Ah Foo & Ors [1987] 2 CLJ 108;

[1987] CLJ (Rep) 254, the Supreme Court held that “the entry

of a private caveat by one party does not necessarily mean that

he has better priority against another who has not as yet lodged

one”. The court found in favour of the 4th respondent although

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his caveat was later in time than that of the appellant. In

delivering the judgment of the court, Lee Hun Hoe CJ (Borneo)

said:

The submission of the 4th respondent that he has better equity is

well founded. He entered into the sale agreement with the vendor

first. He had paid the full purchase price. The vendors had

executed the Memorandum of Transfer in favour. Also, most

importantly the title deed is in his possession. He had become the

beneficial owner. The only thing against him is that he entered

the caveat later than the appellant. However, we are satisfied that

on the facts he has the better equity.

In Bank of Tokyo Ltd v. Mohd Zaini Arshad & Anor [1991] 2 CLJ

989; [1991] 2 CLJ (Rep) 341, Lim Beng Choon J held that the

plaintiff bank, as financier and absolute assignee, had the better

equity. The learned judge said at p. 349:

On principle and authority I cannot, therefore, accept the

proposition that just because the intervenor had caveated the land

in question in 1984 the priority of the plaintiff should be reduced

and be subservient to the equity of the intervenor.

Withdrawal Of Private Caveats

Withdrawal of private caveats poses no difficulty under s. 325 of

the NLC. A caveator may withdraw his caveat at any time by

presenting to the Registry or Land Office a notice in Form 19G

duly completed and accompanied by the prescribed fees.

Removal Of Private Caveats

There are two ways of removing a private caveat under the NLC

by the caveatee, ie, the person or body whose land or interest is

bound by a caveat. One way is by application under s. 326 in

Form 19H to the Registrar or the Land Administrator as the case

may be and paying the prescribed fee. A registered proprietor or

registered chargee under the NLC may proceed to remove the

caveat under s. 326 by virtue of his registered interest. The other

way is by application to the High Court as an aggrieved person

under s. 327(1) of the NLC to cover any one whose land or

interest therein is adversely affected by the caveat. See the well-

considered judgment of Abdul Malik Ishak J (as he then was) in

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AKB Airconditioning & Electrical Sdn Bhd v. Hew Foo Onn & Anor

[2002] 1 LNS 26; [2002] 5 MLJ 391 at 403 on an aggrieved

person, where he said:

If you are acting for the caveatee, you will have to decide and

advise clients as to which one of the two ways is the more

expedient in the circumstances of the case, bearing in mind (a)

the workload and the hearing time of the High Court concerned

and (b) the duration for removal by the Registrar or Land

Administrator is two months under s. 326(1B) after service, when

the burden is on the caveator to obtain an order for extension of

his caveat from the High Court.

Removal Under s. 326

Removal, in my experience, it is often faster for the registered

proprietor to remove the private caveat through the Registrar

under s. 326. As the applicant is the registered proprietor of the

land, the burden shifts to the caveator to show that his caveat

should not be removed. See Eng Mee Yong & Ors v. Letchumanan

[1979] 1 LNS 18, PC, Hew Sook Ying v. Hiw Tee Hee [1992] 2

MLJ 189, at 194, SC and Pembangunan Wang Kita Sdn. Bhd. v.

Fry-Fry Marketing Services Sdn. Bhd. [1998] 5 MLJ 709 at 716. A

recent case in point of removal under s. 326 is Urethane Systems

Sdn Bhd v. Quek Yak Kang [2006] 6 CLJ 81. In this case, the

caveator failed to get an order to extend its private caveat before

Helmy J (as he then was) and the caveat was accordingly removed

by the Land Administrator.

Removal Under s. 327

Section 327 of the NLC provides for “any person or body

aggrieved by the existence of a private caveat to apply to the

High Court for an order for its removal”. In normal circumstances

the caveator must be served with the application for removal. The

procedure for removal of a private caveat is regulated by the rules

relating to civil procedure, now the Rules of Court 2012 which

came into force on 1 August 2012, repealing the Rules of the

High Court 1980 which repealed the Rules of the Supreme Court

1957.

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In 1991 in Kumpulan Sua Betong Sdn Bhd v. Dataran Segar Sdn Bhd

[1992] 1 CLJ 20; [1992] 1 CLJ (Rep) 150, the Federal Court by

a 2:1 majority held that there were serious questions to be tried

and that the balance of convenience was in favour of allowing the

caveat to remain. Jemuri Serjan CJ (Borneo) said for the majority

at p. 158:

The crucial issue for our determination is whether in order to

support the caveat to remain in force, the appellant has succeeded

in satisfying us that it is a body at whose instance a caveat may

be entered under s. 323(1)(a). This seems to be the logical

approach to the issue. Be that as it may, the approach that is

common in Malaysia before the case of Eng Mee Yong & Ors v.

Letchumanan [1979] 1 LNS 18 was decided by the Privy Council,

is to ask the question whether the caveator has a caveatable

interest which terms are not defined in the National Land Code

1965, by applying to him para. (a) of sub-s (1) of s. 323 of the

Code. The relevant question which the court should address itself

to is: Is the appellant a person claiming title to, or registrable

interest in any alienated land, or any right to such title or interest?

If it is not, that ends the matter and the caveat cannot be allowed

to remain. The factual matrix of the claim to be a person or body

within the purview of para (a) of the subsection must be minutely

considered by evidence to establish that the claim is not frivolous

or vexatious. This approach can be best illustrated by reference

to the judgments of all the three Federal Court judges in the

Federal Court case of Macon Engineers Sdn Bhd v. Goh Hooi Yin

[1976] 1 LNS 67 where reference was made to s. 323(1)(a) of

the Code in the course of the judgments. At p. 54 Gill CJ

(Malaya), in dealing with s. 323(1)(a) of the NLC, says: “As

regards the first questions, s. 323(1)(a) of the National Land

Code 1965 provides that a private caveat may be entered at the

instance of ‘any person or body claiming title to, or any

registrable interest in, any alienated land or may right to such title

or interest.’ It would seem clear that the respondent cannot claim

title to or any registrable interest in the property in question

merely on the strength of the sale agreement which is a non-

statutory and non-registrable instrument, but it cannot be denied

that has a right under that agreement to such title or interest by

bringing an action for specific performance of the agreement,

which in fact he has already done.

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In the Court of Appeal case of Luggage Distributors (M) Sdn Bhd

v. Tan Hor Teng @ Tan Tien Chi & Anor [1995] 3 CLJ 520, the

court held that as exempted tenants the respondent’s private

caveats were not available to them. In a claim to a caveatable

interest, Gopal Sri Ram JCA (as he then was) at p. 535 stated

there are three stages involved. “The first stage is the examination

of the grounds expressed in the application for the caveat. If it

appears that the grounds stated therein are insufficient in law to

support a caveat, then cadit quaestio, and the caveat must be

removed without the necessity of going any further”. In the

second stage, the caveator must show “his claim discloses a

serious question meriting a trial”. The third stage is to determine

where the balance of convenience or justice lies. The caveator

must satisfy the three stages before his caveat is permitted to

remain.

In 1996 in Kho Ah Soon v. Duniaga Sdn Bhd [1996] 2 CLJ 218,

the Federal Court ordered the caveat which was removed by the

High Court to be restored as “there are indeed serious questions

for trial”. On the onus of the caveator, Peh Swee Chin FCJ, in

delivering the judgment of the court, said at p. 223:

It is settled that in a matter of removal of a caveat as between a

caveator and caveatee, as in the instance appeal, the onus is on

the caveator to satisfy the court that his evidence does raise a

serious question to be tried as regards his claim to an interest in

the land in question, and having done his claim so he must show

that, on a balance of convenience, it would be better to maintain

the status quo until the trial of the action by preventing the caveatee

from disposing of his land, as laid down by Lord Diplock in Eng

Mee Yong & Ors. v. Letchumanan [1979] 2 MLJ 212, and by

analogy indirectly to American Cyanamid Co v. Ethicon [1975] AC

396 as indicated by Lord Diplock, the serious question for trial

referred to above could mean a question not being vexatious or

frivolous.

In a pending suit, where the caveator and the caveatee are

parties, the removal application was previously made by summons-

in-chambers (Woo Yok Wan v. Loo Pek Chee [1974] 1 LNS 192),

which should now be made by an application under the Rules of

Court 2012.

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For an application to remove a private caveat made by originating

summons, see Chi Liung & Son Sdn Bhd v. Chong Fah & Sons Sdn

Bhd & Anor [1974] 1 LNS 21; Chiew Sze Sun v. Muthiah Chettiar

[1982] CLJ 39; [1982] CLJ (Rep) 423; and Bank Utama

(Malaysia) Bhd v. Periamma Vellasamy [2003] 1 CLJ 142 where

Azmel J (as he then was) refused to remove the caveat. As the

originating summons is retained by the new Rules of Court 2012,

this procedure may, in an appropriate case where there is no

serious dispute on facts, be used in removing a private caveat.

No Further Caveat On Removal

A caveator is prohibited from entering further caveats on like

claims after removal by the court or the Registrar, as provided

under s. 329(2) of the NLC:

(2) where the Court has ordered the removal of any private

caveat under s. 327, or has refused an application under sub-

section (2) of s. 326 for an extension of time with respect to any

such caveat, or where the Registrar has removed any caveat

pursuant to sub-section (3) of s. 326, the Registrar shall not

entertain any application for the entry of a further caveat in respect

of the land or interest in question it is based on the like claim as

that on which the former one was based.

Caveating Own Land

The provisions in s. 323(1) or any other section in the NLC is

silent on the question whether a registered proprietor can or

cannot caveat his own land or his interest therein to block a

chargee’s sale or a dealing affecting his land or interest. In the first

local case, the question was answered in the negative by LC

Vohrah J when he removed the caveat in Eu Finance Bhd v. Siland

Sdn Bhd (M & J Frozen Food Sdn Bhd, Intervenor) [1988] 1 LNS

200, following Richmond J in the case of Re An Application by

Haupiri Courts Ltd (No. 2) [1969] NZLR 353, at p. 357:

He must go further and establish some set of circumstances over

and above his status as registered proprietor which affirmatively

gives rise to a distinct interest in the land. In such circumstances

it would seem that the fact that he is the registered proprietor of

an estate or interest under the Act may not prevent him lodging

a caveat.

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In Hiap Yiak Trading Sdn Bhd & Ors v. Hong Soon Seng Sdn Bhd

[1990] 1 CLJ 912; [1990] 2 CLJ (Rep) 117, Richard Talalla JC

(as he then was) held that the registered proprietor could caveat

its own land, and the caveat in question should remain as the

nature of the agreements and the compensation issue should be

tried.

Damages For Wrongful Caveats

An intended caveator must first ensure he has a caveatable

interest in the land before entering a private caveat, as a caveator

is liable to pay compensation for his wrongful caveat under

s. 329(1) of the NLC. In Luggage Distributors (M) Sdn Bhd v. Tan

Hor Teng @ Tan Tien Chi & Anor [1995] 3 CLJ 520 Gopal Sri

Ram JCA (as he then was) gave the following caution at p. 537:

It is a serious matter to caveat a person’s property, and unless a

case is properly made out, caveat ought not to be permitted to

remain on the register a moment longer than is absolutely

necessary.

In the Court of Appeal case of Trans-Summit Sdn Bhd v. Chun

Nyook Lin (P) [1996] 3 CLJ 502 Siti Norma Yaakob JCA (as she

then was), with whom Shaik Daud JCA and Abu Mansor JCA

concurred, in ordering payment of damages, said at p. 506:

On that conclusion, we allow this appeal with costs here and

below and order that the deposit be refunded to the appellant.

Consequentially, there will also be an order to assess damages by

the Registrar of the High Court, Melaka, to be paid by the

respondent to the appellant under s. 329(1) of the National Land

Code 1965. The private caveat Jilid 75 Folio 99 entered by the

respondent against Lot 1915 is to be removed forthwith and ex

parte order for extension of the caveat is set aside.

In Pembangunan Wang Kita Sdn Bhd v. Fry-Fry Marketing Services

Sdn Bhd [1998] 2 CLJ Supp 96 Low Hop Bing J (as he then

was) ordered removal of the caveat and damages to be paid by

the wrongful caveator. The learned judge said at p. 106:

By reason of above, I hold that the defendant’s entry of the

private caveat is wrongful as the defendant had not disclosed a

caveatable interest in its application (Form 19B) under s. 323(1)

of the National Land Code. Hence the defendant is unable to

cross the first hurdle. I order that the private caveat be hereby

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removed forthwith, without the necessity of going further. I also

make a consequential order that damages be awarded to the

plaintiff, to be assessed by the Registrar of this Court. Costs to

be taxed and paid by the defendant to the plaintiff.

Burden To Prove Damages

To recover damages, the burden of proving loss or damage rests

on the caveatee, ie, the person or body whose land or interest is

bound by the private caveat. In practice, the task of proving loss

or damage suffered is not always easy. For example, in Mawar

Biru Sdn Bhd v. Lim Kai Chew [1992] 1 LNS 22, the defendant

land proprietor did not recover any damages as he had failed to

prove any loss for the wrongful entry of the private caveat by the

plaintiff purchaser. In Plenitude Holdings Sdn Bhd v. Tan Sri Khoo

Teck Puat & Anor [1994] 2 CLJ 796, a case concerning wrongful

termination of contract for purchase of land, the High Court had

awarded a total sum of about RM16 million in damages. On

appeal, in Tan Sri Khoo Teck Puat & Anor v. Plenitude Holdings Sdn

Bhd [1995] 1 CLJ 15, the Federal Court set aside the judgment

of PS Gill J (as he then was) and reduced the huge damages of

some RM16 million to a mere RM10 as nominal damages mainly

because the land had appreciated in value. In the course of his

judgment Edgar Joseph Jr. FCJ said at p. 31:

At the end of the day, the purchaser got the land worth

approximately RM120,000,000, for which they had paid only

RM47,939,958.

No Extension If Caveat Cancelled

In Manian Kandasamy v. Pentadbir Tanah Daerah Raub & Anor

[2011] 7 CLJ 583, the Court of Appeal refused to extend the

caveat which had been cancelled by the Land Administrator.

Zaleha Zahari JCA, in delivering the judgment of the Court of

Appeal, said at p. 591:

[15] The popular meaning attributed to the word “extend” in

s. 326(2) of the Code is that it enlarges or gives further duration

to any existing right rather than re-vests an expired right. We are

in agreement with the judicial commissioner that the court’s power

to extend a caveat under s. 326(2) of the Code was only

exercisable where a caveat is still “alive” and was no longer

exercisable after a caveat had been cancelled.

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[16] On the facts of this case the Land Administrator had clearly

acted within the powers conferred upon him by s. 326(1B) of the

Code in removing the appellant’s 4th private caveat for failure to

furnish a court order within the time specified. The judicial

commissioner was right in ruling that once a private caveat has

been removed, the Code does not give the court power to revive,

renew/continue a private caveat which has been cancelled. It is not

within the inherent jurisdiction of the court to make orders which

go beyond the limit of the powers expressly given to it by statute.

Restoration Of Caveat

If a private caveat had been wrongly removed, the court has the

power to restore it. In Palaniappa Chettiar v. Letchumanan Chettiar

[1981] 1 LNS 83; [1981] 2 MLJ 127, the caveat was removed

by the High Court, but on appeal the Federal Court ordered the

caveat to be restored on the ground at p. 129 that:

There are many factors concerning the caveat which were not

considered and from the evidence that is available the

considerations in favour of maintaining the caveat outweigh any

consideration that has so far been shown to be in favour of

removing it. We therefore restored it.

In Syed Ibrahim bin Syed Abdul Rahman v. Liew Su Chin (F) [1983]

1 LNS 45; [1984] 1 MLJ 160, the Federal Court refused to

restore the caveat of the appellant ordered to be removed by Wan

Hamzah J Lee Hun Hoe CJ (Borneo) said at p. 163:

The learned Judge rejected the contention of the appellant that he

was entitled in law to have the caveat imposed. He cited the

principle laid down in Karuppiah Chettiar v. Subramaniam and

followed in Temenggong Securities Ltd. & Anor. v. Registrar of Titles,

Johore & Ors. that once the owner by a sale had wholly disposed

of the land he divested himself of all interest therein and he

becomes thereby merely a bare trustee for the purchaser. There

was therefore no interest remaining against which a third party’s

caveat can lie. He distinguished Macon v. Goh Hooi Yin from the

case before him where the respondent had paid the full purchase

price. But in Macon’s case the earlier of the two sales was not

completed as only part payment was made. The later sale was

completed by full payment of the purchase price. Also, there was

a pending suit whereas there is none in the instant case. The

question of notice on the part of the appellant becomes important

as both sales were unregistered and subject to the approval of the

State. On the evidence the learned Judge held that the appellant

had notice of the earlier sale.

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In affirming the judgment of the High Court, the learned Chief

Justice said at p. 164:

In the circumstances is it just for the learned Judge to restore the

caveat? The answer must depend on the facts and merits of each

particular case. On payment of the full purchase price on April 1,

1978 the purchaser obtained the document of Title to the land

from the vendor. By paragraph 9 of the affidavit the respondent

stated that “the issue document of title to the said land has been

and is presently in my possession.” True no caveat was lodged.

It may be that she thought that her interest was sufficiently

protected by taking possession of the document of Title and also

that her husband was then building the house on the land.

Further, the registered proprietor had executed a Memorandum of

Transfer as mentioned earlier. The evidence that the appellant had

prior notice is overwhelming. We do not think the learned Judge

was wrong to refuse restoring the caveat.

Joint-Venture Cases

In the Court of Appeal case of Trans-Summit Sdn Bhd v. Chun

Nyook Lin (P) [1996] 3 CLJ 502, at p. 506, Siti Norma Yaakob

JCA (as she then was), in refusing to extend the private caveat

entered in consequence of a joint venture agreement, said:

In the proceedings before us, what interest does the respondent

possess? It is not in the land. That has already been validly sold.

Her interest really lies in the profits that her company hopes to

gain from the joint venture agreement with the appellant, which is

being challenged by the appellant. The civil suit testifies to this.

As her interest is only monetary in nature, she has therefore no

caveatable interest over the land. She cannot continue to have the

private caveat lodged by her extended until after the disposal of

the civil suit.

The above Trans-Summit case, Hew Sook Ying v. Hiw Tin Hee

[1992] 3 CLJ 1352; [1992] 1 CLJ (Rep) 120, and Perbadanan

Setiausaha Kerajaan Selangor & Ors. v. Metroway Sdn Bhd & Anor

& Another Appeal [2003] 3 CLJ 339 were referred to and followed

by the Court of Appeal (Mokhtar Sidin JCA, Mohd Ghazali

Yusoff JCA (as he then was), and Zulkefli Makinudin JCA (as he

then was)) in Tan Geok Teck & Yang Lain lwn. Upaya Kelana (M)

Sdn Bhd [2007] 3 CLJ 312, a case on joint-venture to develop a

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piece of land caveated by the defendant. The application of the

appellants (plaintiffs in the High Court) to remove the caveat

entered by the defendant based on monetary interest in the joint-

venture agreement (see also Wong Kuan Tan v. Gambut Development

Sdn Bhd [1984] 2 CLJ 26; [1984] 1 CLJ (Rep) 441) was dismissed

by the High Court and hence the appeal to the Court of Appeal

which allowed the appeal and ordered the removal of the caveat.

Mokhtar Sidin JCA delivered in the National Language the

judgment of the Court of Appeal.

File Action Timeously

After the entry of the private caveat it is important to note that

the caveator must take civil action, in the word of Lord Diplock

in the Privy Council case of Eng Mee Yong & Ors v. Letchumanan

[1979] 1 LNS 18; [1979] 2 MLJ 212 at p. 215 “timeously … for

specific performance of the contract of sale he alleges had been

tried.” In other words, the caveator must not delay in filing his

civil action against the caveatee for specific performance of the

contract. Delay will cause the caveat to be removed by the court

with the consequence that the land may be sold by the caveatee

to a third party.

In Paya Terubong Estates Sdn Bhd v. Pusaka Warisan Sdn Bhd

[1998] 2 CLJ 909 at p. 913 Gopal Sri Ram, JCA (as he then

was), in delivering the unanimous judgment of the Court of

Appeal, said:

Before us, counsel for the appellant properly conceded that there

was a caveatable interest and that the matters put in issue during

the caveat proceedings did raise serious questions to be tried. She

however argued that the learned judge had erred in failing to

consider the balance of convenience. She submitted that the caveat

could not be permitted to remain on the register because the

respondent had not timeously commenced proceedings for specific

relief. Counsel also drew our attention to the fact that no action

had been instituted even as at the date of hearing of this appeal.

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After citing the Privy Council case of Eng Mee Yong & Ors v.

Letchumanan [1979] 1 LNS 18; [1979] 2 MLJ 212, at 215, on

timeous action to be taken for specific performance, the learned

judge continued at p. 2362:

The importance of timeous institution and prosecution of

proceedings in this area of the law is well brought out by the

judgment of Sinnathuray J, in the Singapore High Court in Teoh

Ai Choo v. Leong Sze Hian [1982] 2 MLJ 12. It is a brief

judgment and merits reproduction here:

The matter before me is a simple one. Mr. KS Chung for

the plaintiff has raised five serious points. I need only deal

with the last one, the fifth point that on the subject of

delay.

First, I accept the decision in Plimmer Bros v. St Maur

[1906] 26 NZLR 294. In that case, Stout, CJ in New

Zealand, on an application to remove a caveat, on facts

similar to present case, where the defendant had commenced

no action against the plaintiff relating to the land in respect

of which a caveat was lodged, referred to several reported

cases and said –

It was his duty to commence an action promptly if

he considered himself entitled to specific performance

…

Here nothing was done for nearly sixteen months,

and then a caveat was lodged. More than a month

has elapsed since then, and still no action has been

commenced. In my opinion an action for specific

performance under such circumstances must be

deemed vexatious … in my opinion, to prevent a

man dealing with his property after such a long delay

is so inequitable that the court will not lend its

assistance to such a proceeding.

Next, there is a Singapore decision of the learned

Chief Justice in OS No. 192 of 1979 where he held

that a delay of 2½ months was sufficient for a

caveat to be removed forthwith.

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The importance of timeous action by the caveator is also seen in

the judgment of Kang Hwee Gee J (as he then was) in Megapillars

Sdn Bhd v. Loke Kwok Four [1996] 4 CLJ 82 where, in removing

the caveat of the applicant for his inordinate delay, his Lordship

said at p. 93:

The object of a caveat like that of an interlocutory

injunction is to provide interim protection to the interest of

the applicant who can show that he has a genuine claim on

that interest and that the status quo between the parties

should be maintained pending the final disposal of his claim

at a later date. It follows therefore, that the applicant must

pursue his claim timeously in the Court and failure to do

so will defeat the privilege of having his caveat being

applied against the inalienable right of the registered

proprietor to enjoy his land. Thus, where there has been

an inordinate delay on the part of the caveator to prosecute

his claim against the caveatee, the Court will not lend its

assistance to allow him to maintain this caveat to the

detriment of the registered proprietor “as to prevent a man

dealing with his property after such a long delay is so in

inequitable.” Per Stout, CJ in the New Zealand case of

Plimmer Bros v. St. Maur [1906] 26 NZLR 294 cited and

approved in the Singapore High Court in Teo Ai Choo v.

Leong Sze Hian [1982] 2 MLJ 12, and see Hew Sook Ying

v. Hiw Tin Hee [1992] 2 SCR 257.

Limitation

In connection with the question of delay, we must not forget that

a claim can be barred by the statute of limitation. Under s. 6 of

our Limitation Act 1953, a claim based on contract is time barred

after six years from the date of accrual of the cause of action. See

judgment of Vernon Ong Lam Kiat JC (as he then was) in Sime

Hok Sdn Bhd v. Soh Poh Sheng [2009] 9 CLJ 848, which was

affirmed by the Court of Appeal in Sime Hok Sdn Bhd v. Soh Poh

Sheng [2012] 1 LNS 641; [2012] 6 MLJ 557, where, in delivering

the unanimous judgment of the Court of Appeal, Abdul Wahab

Patail JCA said at p. 562:

[13] We accept that the imposition of time limits within which an

action is to be taken, without regard to its inherent merits, arises

from the Legislature having to draw a balance between the costs

and standard of justice of the judicial system that it could provide

and the access to justice it seeks to provide. The time limitation

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within which actions for certain classes of claims can be made

would ensure that actions are brought in timely manner, while the

evidence is available and the defendant has a fair opportunity to

answer and to defend himself, and thereby make possible a high

standard of justice with decisions based on facts that parties can

satisfy themselves as to the correctness thereof with evidence they

can check and verify. These must be a definite end point to

potential legal liability. It eliminates the injustice of claimants who

wait many years to spring an action upon a defendant, who not

expecting an action, may have disposed of the evidence he could

have relied upon to defend himself.

A claim for recovery of immovable property like land, limitation sets

in after 12 years from the date when the cause of action accrued.

See s. 9 of the Limitation Act and Wu Shu Chen & Anor v. Raja

Zainal Abidin Raja Hussin [1997] 3 CLJ 854, CA at p. 883 where

the appellants’ claim for the land was held to be filed 14 long

years out of time. The appellants’ leave application No. 08-107-

1996 (J) to appeal to the Federal Court was dismissed on

13 October 1997 in Penang by the Federal Court (Eusoff Chin

CJ, Lamin PCA, and Zakaria Yatim FCJ).

Lien-Holder’s Caveat

Creation Of Lien-Holder’s Caveat

A lien is not defined under the NLC. A lien under the NLC may

be described as a statutory lien which may be governed by the

terms and conditions of a loan agreement and any other security

document executed between the proprietor and the lender.

Section 281(1) of the NLC provides for the entry of a statutory

lien as follows:

281(1) Any proprietor or lessee for the time being may deposit

with any other person or body, as security for a loan, his

issue document of title or, as the case may be, duplicate

lease; and that person or body –

(a) may thereupon apply under Chapter 1 of Part

Nineteen for the entry of a lien-holder’s caveat; and

(b) shall, upon the entry of such a caveat, become entitled

to a lien over the land or lease.

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Nature And Effect Of A Lien

The legal nature and effect of a lien have been explained by the

courts in reported cases. In Hong Leong Finance Bhd v. Staghorn

Sdn Bhd [2005] 2 CLJ 1 where James Foong J (as he then was),

in delivering the judgment of the Court of Appeal, said at p. 17:

Thus it is material in the creation of a lien holder’s caveat under

s. 281 NLC to have the registered proprietor to deposit the

document of title to the lender for it is the registered proprietor

who intends to surrender his rights to the lender to deal with the

said land in the event of default in repayment of the loan which

he obtained from the lender. As a borrower, no other person can

substitute the registered proprietor in performing this task of

depositing the document of title with the lender for the creation

of this statutory instrument. To allow this would defeat the

concept of the right of the registered proprietor to deal with his

own land. Section 281 NLC is intended for a registered proprietor

to raise money on loan, speedily, by depositing the document of

title registered in his name with the lender as compared with the

more complex process of registering a legal charge over the land.

But as the law demands, it is only available to a registered

proprietor who borrows money and deposits his title with the

lender. It does not extend a beneficial owner who is yet to

become a registered proprietor. Since this facility is only available

to the registered proprietor, in the event of default in repayment

of the loan, judgment must be obtained against the registered

proprietor, as borrower. The wordings in s. 281(2) NLC of a

“holder of any lien has obtained judgment for the amount due to

him” is clear to this effect for there can be no one else other than

the registered proprietor who is the borrower.

The lien-holder, ie, the person with whom the document of title

or duplicate lease is deposited, may then apply under s. 330(1)

and (2) of the NLC in the duly attested Form 19D to the

Registrar, accompanied by the relevant title or lease and the

prescribed fee, for the entry of a lien-holder’s caveat. If at the time

of receipt of such an application, there is no prohibition by a

Registrar’s caveat, private caveat, trust caveat or prohibitory order,

the Registrar shall enter the caveat under s. 330(3)(a) of the NLC

and serve notification in Form 19A on the proprietor or lessee.

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Section 330(4) of the NLC provides as follows:

330(4) The entry of a lien-holder’s caveat on any register

document shall be effected by the endorsement thereon,

under the hand and seal of the Registrar, of the words

“Caveat (Lien)”, together with a statement specifying –

(a) whether the caveat binds the land itself, or a lease

thereof only;

(b) the person or body on whose application it was

entered;

(c) the time from which it is effective (being the time of

receipt of the application, as noted thereon pursuant to

sub-section (3)); and

(d) the reference under which the application is filed.

Section 281(1)(b) of the NLC provides that the lien-holder “shall

upon the entry of such a caveat, become entitled to a lien over

the land or lease”. Therefore entitlement to the statutory lien takes

effect only upon entry of a lien-holder’s caveat. It is the author’s

opinion that omission or failure to enter a lien-holder’s caveat does

not necessarily mean that the depositee of the issue document of

title will lose his priority to a right to a lien in equity, provided he

retains possession of the issue document of title and has not done

any act prejudicial to his right. Thus, a purchaser or chargee of

land, the issue document of title to which the vendor/proprietor

cannot produce or account for, is put on notice because the

document of title may be deposited with a lien-holder who omits

or fails to enter a lien-holder’s caveat.

Effect Of Lien-Holder’s Caveat

The effect of a lien-holder’s caveat is provided under s. 330(5) of

the NLC which reads as follows:

330(5) A lien-holder’s caveat shall, so long as it continues in

force, have the like effect as that specified in sub-

section (2) to (5) of s. 322 in relation to a private

caveats, but as if the references in the said sub-section

(5) to the person or body at whose instance the caveat

was entered were references to the person or body for

the time being entitled to the benefit of the lien; and

sub-sections (6) and (7) of the said s. 322 shall also

apply in relation to a lien-holder’s caveats as they apply

in relation to private ones.

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Nature Of Lien-Holder’s Caveat

There is substantially no difference in principle between a lien

under NLC or under s. 134 of the repealed F.M.S. Land Code.

In Zeno Ltd v. Prefabricated Construction Company (Malaya) Ltd &

Anor [1967] 1 LNS 221; [1967] 2 MLJ 104, Raja Azlan Shah J

(as he then was) said of the creation of a lien under the F.M.S.

Land Code at p. 106:

The law regarding the creation of a lien under the Land Code is

well settled. Under s. 134 of the Code a lien over any land can

only be created by the deposit of the relevant issue document of

title by the proprietor followed by a caveat by the holder of the

lien which requires delivery of the issue document of title with the

caveat for a memorial thereto be made. (See Das’ Torrens System

in Malaya, p. 348). In my view, since intention is always a matter

of inference from all the relevant circumstances, once the issue

document of title is deposited with the depositee that is evidence

of intention to create a statutory lien for the purposes of the

section.

The learned judge continued speaking on the nature of the

interest at p. 107 as follows:

What does the caveat mean? To me, it cannot mean anything else

than exactly what it says, that is, a lien on the ground that the

first defendant had deposited with the plaintiffs the issue document

of title and that is substantial evidence of an intention to create a

lien. Therefore, the nature of the plaintiff’s interest in the land is

a lien, which has been held in Ngan Khong v. Bamah as

“analogous to an equitable mortgage”. It is an equitable interest

in land capable of being caveated. (See also Arunasalam Chetty &

Ors. v. Peah Ah Poh & Ors.). The ground on which the claim is

based is also evident from the caveat. It is in effect in the nature

of collateral security for the loan.

Enforcement

Between a statutory lien and a legal charge, financial institutions

prefer a legal charge under s. 242 of the NLC as a better form of

security. A lien-holder is not entitled to apply to the court for an

order of sale of the land or lease in question unless and until he

has obtained judgment for the amount due to him under the lien,

as provided under s. 281(2) of the NLC. If the lien-holder is

unable to obtain judgment summarily, sale of the land or lease will

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have to be delayed after judgment is obtained after the trial. It is

significant to note that judicial decisions on the repealed F.M.S.

Land Code still serve as useful guides. On the question of

postponement of a prior equity, Raja Azlan Shah J (as he then

was) said in the Zeno Ltd. case [1967] 1 LNS 221; [1967] 2 MLJ

104 at p. 107:

An act which postpones a prior equity arises where a proprietor

by his conduct had given a duly executed registrable instrument

to the transferee who subsequently mortgaged the land to a bona

fide mortgagee. (See Barry v. Heider; Great Western Permanent Loan

Co. v. Friesen). In Abigail v. Lapin, the Privy Council held that

where the proprietors of land in New South Wales had transferred

them to the nominee of the creditor together with the certificates

of title but had lodged no caveat, their equity should be postponed

to that of the mortgagee because the proprietors had armed their

transferee with power to deal with the lands as owner.

In the Federal Court case of Paramoo v. Zeno Ltd [1968] 1 LNS

95; [1968] 2 MLJ 230 Suffian FJ (as he then was) said of a lien

and a charge as follows at p. 232:

Here a lien is a separate legal-statutory-lien. It has an independent

existence apart from a charge. So if a charge is avoided for non-

compliance with some law or other, the lien (not being ancillary

to it) is not avoided also, provided of course it complied with the

law.

Liens over land owned by a company do not have to comply

with section 80 of the Companies Ordinance, because that section

applies only to charges. Charges are not liens. The charges

subject to section 80 are enumerated in subsection (2) and liens

are not included in the list.

Wan Hamzah J (as he then was) in Poomani v. Associated Finance

Corporation Sdn Bhd [1974] 1 LNS 115; [1975] 1 MLJ 277 held

that the defendant finance company, which gave a loan of $7,000

to the plaintiff to discharge the charge and which had possession

of the issue document of title, was entitled to the lien. The

learned judge said at p. 278:

From the evidence I have no doubt that the plaintiff as proprietor

had deposited (or caused to be deposited) the title deed with the

defendants, and while she did so she intended it to be a security

for the repayment of the sum advanced by the defendants. In my

opinion “loan” in that section includes any sum which the

proprietor has not repay such as the sum advanced by the

defendants in this case.

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I think the defendants should succeed also on a ground in equity.

Since the money had been advanced by the defendants in order

to pay off the money lent by the society as mortgagees, the

defendants had become equitable assignees of the mortgagees’

rights hereunder. For this view support can be found in the

judgment in the case of Coptic Ltd. v. Bailey and Another [1972] 1

All ER 1242.

In Mercantile Bank Ltd. v. The Official Assignee of the Property of

How Han Teh [1969] 1 LNS 106; [1969] 2 MLJ 196 the bank

had failed to enter a caveat but continued to retain possession of

the issue document of title. In holding that the bank’s failure to

lodge a caveat under the F.M.S. Land Code did not prejudice its

right in equity, Raja Azlan Shah J (as he then was) said at p. 197:

In other words, although failure to lodge a caveat does not entitle

the depositee with whom the issue document of title is deposited,

to a lien under the Code, he still possess a right to it in equity.

He can exercise that right be registering the caveat under section

134 at any time.

His Lordship, after referring to the authorities, concluded that the

bank had done nothing to forfeit its priority. His Lordship said

further at p. 198:

Therefore, prima facie the applicants who are prior in time must

succeed unless it can be shown that he had relied on something

tangible and distinct having grave and strong effect to accomplish

the purpose: see Shropshire Union Railway and Canal Co. v. The

Queen. In the present case the substantial complaint against the

applicants is that they had failed to register the caveat before the

act of bankruptcy was committed. That, as had been perceptively

said in Shropshire Union case is not conduct of a character “which

would operate and enure to forfeit and take away the pre-existing

equitable title.” The applicants had not parted with the documents

of title. They retained possession of them all the time and it is

open to them to register the caveat at any time. In my judgment,

they had done nothing to forfeit their priority.

In Standard Chartered Bank v. Yap Sing Yoke & Ors [1989] 1 CLJ

530; [1989] 2 CLJ (Rep) 500, where the parties thought to effect

a registered charge, but due to the absence of a quit rent receipt

the charge could not be registered. The documents were returned

to the chargee’s solicitors where a clerk kept them safe, although

neither the chargee nor the solicitors knew of the non-registration.

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A third party then caveated the land in respect of a judgment

debt obtained for a debt over goods, subsequently prohibitory

orders were entered at the instance of the caveator. The solicitors

discovered the unregistered documents and an attempt to register

them was prevented by the presence of the caveat. In allowing

priority to the chargee on the basis that it had a lien, Lamin J said

at p. 507:

On the other hand, the person with whom a issue document of

title is deposited like the plaintiff in this case, immediately upon

such deposit he acquires an equitable interest. It is not affected

by the absence of a caveat. Raja Azlan Shah J, (as he then was)

in the case of Mercantile Bank Ltd. v. Official Assignee of the

Property of How Han Teh [1969] 2 MLJ 196 at p. 197 said:

The registration of a caveat does not confer priority nor

does it create new rights.

At the worst I would say that a depositee of an issue document

of title like the plaintiff must have a better claim to the land than

a person without that document in his hand.

Assuming that I am right in my understanding of s. 323(1)(a) of

the National Land Code in particular with respect to the phrase

‘any right to such title or interest’ and that the second defendant

was not entitled to lodge the caveat on 11 June 1985, then the

plaintiff’s charge in equity remains good and unaffected by the

action of the second defendant. It follows, therefore, that any

prohibitory order issued at the instance of the second defendant

was of no effect because a prohibitory order upon entry has a

similar effect to that of a private caveat and neither can it affect a

prior claim (see Tenure and Land Dealings in the Malay States by

David Wong, p. 469 and Karuppiah Chettiar’s case [1971] 2 MLJ

116 where it was decided that the prohibitory order did not affect

the equitable interest prevailing first in time). On the other hand

the plaintiffs caveat on 4 March 1987 was properly lodged and

registered to protect his interest. The question of delay in this

connection is therefore not relevant. The result would be the same

if reliance is placed on my second observation that at the worst

the plaintiff must have a better claim to the land as he had the

issue document of title all the time in his possession.

In Bank of Tokyo Ltd v. Mohd Zaini Arshad & Anor [1991] 2 CLJ

989; [1991] 2 CLJ (Rep) 341, Lim Beng Choon J also dealt with

the question of priority resulting from the failure of the bank as

lender and assignee of a parcel in a building assigned absolutely

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by the original purchaser who sold it, without the knowledge or

consent of the bank, to the intervenor who entered a private

caveat in respect of the land over which the parcel was erected.

Following the Federal Court decision in Nouvau Mont Dor (M) Sdn

Bhd v. Faber Development Sdn Bhd [1985] 1 CLJ 56; [1985] CLJ

(Rep) 231, the learned judge held that the bank had a better

equity and that its failure to enter a caveat, as in the Mercantile

Bank’s case, did not affect its priority over the intervenor.

Accordingly, the learned judge found in favour of the bank and

ordered that the assignment be enforced by sale by auction of the

strata parcel, much to the relief of banks and finance companies.

Determination Of Lien-Holder’s Caveat

A lien-holder’s caveat may be determined by the lien-holder, the

Registrar, or the court depending on the circumstances of the

case.

A lien-holder may by a written notice given to the Registrar

withdraw his lien-holder’s caveat at any time as provided under

s. 331(1) of the NLC. Section 331 sub-ss. (2) and (3) of the

NLC read as follows:

331(2) Where any land or lease subject to a lien-holder’s caveat

is sold pursuant to an order of the Court made by virtue

of sub-section (2) of section 281 –

(a) any certificate of sale presented for registration by

the purchaser thereof shall be deemed for the

purposes of this Chapter to have been presented

with the consent of the lien-holder; and

(b) upon the registration of the certificate, the caveat

shall lapse, and the entry thereof be cancelled

accordingly by the Registrar.

331(3) The Registrar may cancel any lien-holder’s caveat upon

proof to his satisfaction that all sums due under the lien

have been duly paid.

Trust Caveat

Meaning Of Trust

The NLC does not define what a trust is. Section 5 of the NLC

excludes a wakaf created under the principles of Muslim law.

Under s. 3 of the Trustee Act 1949, “trust” and “trustee” extend

to implied and constructive trusts, and to cases where the trustee

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has a beneficial interest in the trust property and to the duties

incidental to the office of a personal representative and where the

context admits, “trustee” includes a personal representative.

The meaning of a trust as given in Halsbury’s Laws of England (4th

edn, vol. 48, para. 51) is as follows:

Meaning of ‘Trust’. Where a person has property or rights which

he holds or is bound to exercise for or on behalf of another or

others, or for the accomplishment of some particular purpose or

particular purposes, he is said to hold the property or rights in

trust for that other or those others, or for that purposes or those

purposes, and he is called a trustee. A trust is a purely equitable

obligation and is enforceable only in a court in which equity is

administered.

The trustee holds the property or must exercise his rights of

property in a fiduciary capacity, and stands in a fiduciary

relationship to the beneficiary.

The property affected by a trust, called the ‘trust property’ or

‘trust estate’, must be vested in the trustee, whether the property

is a legal estate, a legal right or an equitable interest where the

legal title is vested in some other person.

A trust need not be in writing provided the words are clear and

unequivocal and irrevocable. In Wan Naimah v. Wan Mohamad

Nawawai [1972] 1 LNS 164; [1974] 1 MLJ 41 where Suffian CJ

(as he then was), in delivering the judgment of the Federal Court

upholding the High Court’s decision that the appellant held the

half share of the land in trust for the respondent, said at p. 41:

The law is that a declaration of trust may be made quite

informally, provided that the words used are clear and

unequivocal. As was stated by Romilly M.R. in Grant v. Grant 55

ER 776, words declaring a trust

need not be in writing … They must be clear, unequivocal

and irrevocable, but it is not necessary to use any technical

words, it is not necessary to say, ‘I hold the property’ in

trust for you,’ nor is it necessary to say, ‘I hold the same

for your separate use.’ Any words the donor means, at the

time he speaks, to divest himself of all beneficial interest in

the property are, in my opinion, sufficient for the purpose

of creating the trust. I think that it is also sufficient for the

purpose of showing that the trust has been created, if he

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afterwards states that he has so created the trust, though

there was no witness except the done present at the time

the trust was created (Page 777).

His Lordship further held in Wan Naimah’s case that the English

Statute of Frauds 1677 does not apply to land matters.

Nature Of Trust Caveat

The “trust” referred to in s. 332(1) and s. 333(1) of the NLC

(read together with s. 344 of the NLC) means an express trust.

An express trust occurs where the owner of property transfers the

legal ownership to a trustee and the beneficial interest to a

beneficiary. A common example of an express trust is seen in an

appointment of a person as a trustee by fellow members of their

clubs or societies to hold the land of the clubs or societies on

trust for them. Another example of an express trust is seen in the

case of a parent purchasing or transferring land to his child below

the age of majority. Hence, the land is transferred to a person

holding the land as trustee for the benefit of the minor beneficiary

pursuant to a declaration of trust or trust deed. When the

beneficiary attains the age of majority, the trustee will transfer the

land to the beneficiary. A beneficiary of an express trust must use

the private caveat to protect his interest, whereas a minor

beneficiary whose trustee is acting fraudulently can request the

Registrar to enter a Registrar’s caveat.

A trust caveat is inappropriate for use in cases of a resulting trust,

implied trust or constructive trust. This is because in a resulting

trust, there is no trust deed to be deposited with the Registrar

for safe-keeping as required by s. 344(3) of the NLC. In the case

of a constructive trust, the beneficiary may apply to the High

Court for an order vesting the land in his name as the beneficial

owner. The beneficiary of a resulting or a constructive trust can

caveat his interest by way of private caveat.

Effect Of Trust Caveat

Section 332(2) of the NLC requires that the effect of any trust

caveat must be precisely stated and the caveator must spell out

the extent to which the land or interest is to bound. The caveator

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in addition can spell out the conditions in which or terms on

which the property may be dealt with. Section 332(2) of the NLC

essentially reads as follows:

332(2) The effect of any trust caveat shall be precisely stated

therein, and may be to prohibit, either absolutely or except

subject to conditions, the registration, endorsement or

entry of all or any of the following -

(a) any instrument of dealing, or class or description of

instrument of dealing, directly affecting the trust

property;

(b) any claim to the benefit of any tenancy exempt from

registration granted directly thereout; and

(c) any lien-holder’s caveat in respect thereof:

Provided that no such caveat shall prohibit the registration of any

instrument which was presented prior to the time from which it

takes effect, or the endorsement or entry of any claim or lien-

holder’s caveat where the application for endorsement or entry

was received prior to that time.

A trust caveat prohibits dealings effected under the NLC such as

transfers (s. 214 to 220 of NLC), leases (s. 221 to 240 of NLC),

charges (s. 241 to 281 of NLC) and easements (s. 282 to 291 of

NLC) which directly affect the trust property. A tenancy exempt

from registration may be granted over trust property in accordance

with the terms or conditions set out in the trust caveat. In respect

of a lien-holder’s caveat, a lien may be entered notwithstanding

the presence of the trust caveat if that latter caveat does not so

prohibit. The proviso of s. 332(2) of NLC provides that the trust

caveat is not effective to prohibit the registration of a dealing or

the endorsement of the tenancy or entry of the lien-holder’s

caveat if the instrument was presented for registration or the

application for endorsement or entry received prior to the trust

caveat. A trust caveat will not prohibit the entry of a private

caveat, as a private caveat is not an instrument of dealing.

Entry Of Trust Caveat

Section 332(1) of the NLC provides that in order to enter a trust

caveat, the person claiming to be a trustee must have first

registered himself as the trustee of the land. The plaintiff in Bank

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of Tokyo Ltd lwn. Registrar of Titles, Selangor [1990] 1 CLJ 740;

[1990] 1 CLJ (Rep) 344 applied to the High Court for the

removal of a trust caveat entered by the defendants on the land

in question. The second defendant had alleged that he was the

trustee of the land. However, there was no endorsement on the

register document of title of any evidence of him being a trustee.

Abdul Razak J in his judgment held at p. 347 that before a trust

caveat can be entered by the first defendant, the second

defendant should have first registered himself as the trustee of the

land pursuant to s. 344 of the NLC. The second defendant had

failed to prove that he had the locus standi to enter the caveat,

thus the court ordered the caveat to be removed as the entry was

premature.

Who May Apply For The Entry Of Trust Caveat?

By virtue of s. 333(2) of NLC, an application for the entry of a

trust caveat shall be in the prescribed Form 19E, duly attested

and accompanied by a statutory declaration and prescribed

registration fee to the Registrar. Section 333(1) of the NLC

prescribes who may apply for the entry of a trust caveat reading

as follows:

333(1) The Registrar may enter a trust caveat on the application

of:

(a) the trustee for the time being of any land or interest;

or

(b) the person or body by whom any land or interest is

first transferred to trustees; or

(c) the person or body by whom any interest is created

in favour of trustees;

Provided that no application made by virtue of paragraph (b) or

(c) shall be entertained unless it is presented to the Registrar with

the instrument transferring or creating the land or interest in

question.

The trustees referred to in paragraph (a) above are those in whom

the legal estate or the legal interest is vested. The section implies

that all or any of the present trustees may jointly apply to enter

the caveat. In respect of s. 333(1) (b) and (c) of the NLC, this

may refer to the settlor of the trust (the person who created the

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trust). It may also be a person or body dealing with trustees who

knows that a trust has been created by another. The proviso of

s. 333(1) of the NLC requires that the applicant seeking to caveat

under this paragraph must produce the instrument by which the

land or interest is transferred by way of trust.

There are relatively few cases reported on trust caveat. A case of

relevance is Khoo Teng Seong v. Khoo Teng Peng [1990] 2 CLJ 233;

[1990] 2 CLJ (Rep) 242 where Lim Beng Choon J in delivering

his judgment directed the caveats to be removed and held that a

trustee and beneficiary of a trust property may enter a caveat

pursuant to s. 323(1)(b) of the NLC, but that a beneficiary

entitled only to a share of the residue of any estate, has no right

to enter a caveat against the property where no part of the

property has been devised and bequeathed. The learned judge said

at p. 248:

From the commentaries of the authors of these textbooks and

from my reading of para. (b) of s. 323(1), I am of the view that

a trustee of property held in trust as well as a beneficiary of any

trust property is entitled to enter a caveat pursuant to the said

para. (b). But a beneficiary, who is only entitled to a share of

the general residue has no right to enter a caveat against the

property of the estate when no part of the property of the estate

has been expressly or impliedly devised and bequeathed under a

trust created for his benefit. The words ‘any such land or interest’

appearing in the said para (b) seems to relate back to the land or

interest mentioned in para (a) of s. 323(1); otherwise the word

‘such’ is meaningless. That being the position a beneficiary in

order to be a person entitled or beneficially interested (must show

that he is a person entitled or beneficially interested) in the land

held under trust for him.” In Wu Shu Chen [1997] 2 MLJ 487

appellants claimed by a trust instrument dated 2 July 1963

executed by one Mr. Long, he held the land in question on trust

for Mingshu Syndicate, but the registration of Long as trustee

and the deposit of the trust instrument were never done. No trust

caveats were entered. The appellants entered private caveats. On

the application of the respondent as bona fide purchaser for the

land and having the full purchaser price and as the person

aggrieved under s. 327(1) of the NLC, the private caveats were

removed by the courts.

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Duration And Cancellation Of Trust Caveat

Section 333(5) of the NLC provides that “a trust caveat shall

continue in force until cancelled by the Registrar on an application

in that behalf by the trustees for the time being and all persons

and bodies beneficially entitled under the trust”. Before cancelling

the trust caveat, the Registrar may conduct an inquiry to satisfy

himself, after hearing the trustees and all the beneficiaries, that it

is proper to do so.

Prohibitory Order

Meaning Of A Prohibitory Order

A prohibitory order is not an instrument of dealing under the

NLC. Unlike a private caveat which can be entered by a person

on his own action, a prohibitory order is issued by the High

Court on the application supported by an affidavit made ex parte

under O. 47 r. 6(a), (b) and (c) by the judgment creditor who has

obtained a money judgment against the judgment debtor in

execution of the judgment or order against the land or interest

therein of the judgment debtor.

Sections 334-339 of the NLC deal which prohibitory orders, read

in conjunction with O. 47 on writs of seizure and sale under the

Rules of Court 2012. As we are dealing with land under the

NLC, we need only concern ourselves mainly with the provisions

of O. 47 rr. 6 and 7 of these Rules dealing with the sale of

immovable property. These provisions are more comprehensive

than those of O. 47, r. 7 of the now repealed Rules of the High

Court 1980, which in turn under O. 93 thereof repeal the Rules

of the Supreme Court 1957 and the Probate and Administration

Rules 1961.

Section 334 of the NLC defines a prohibitory order as follows:

In this Chapter “prohibitory order” means, where land or an

interest in land held by a judgment-debtor is to be sold in

execution proceedings, an order made pursuant to rules of court

by court of competent jurisdiction prohibiting the judgment-debtor

from effecting any dealing therewith or from effecting such dealing

therewith as may be specified in the order.

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It may be noted that under s. 335 of the NLC a prohibitory

order is ineffective until it has been entered or registered by the

Registrar. It should also be noted that under s. 336(3), any

instrument like a transfer in Form 14A or a charge or a lien-

holder’s caveat presented earlier than the prohibitory order shall

not be affected or prohibited from registration.

Effect Of Prohibitory Order

These effects are provided in s. 336(1) and (2) of the NLC

reading as follows:

(1) The effect of any prohibitory order duly entered on any

register document of title and expressed to relate to the land itself

shall, subject to sub-section (3) of this section and to sub-section

(2) of section 337, be to prohibit so long as it continues in force

the registration, endorsement or entry thereon of -

(a) any instrument of dealing executed by or on behalf of the

proprietor thereof (but not any certificate of sale relating

thereto);

(b) any claim to the benefit of any tenancy exempt from

registration granted by the said proprietor; and

(c) any lien-holder’s caveat in respect thereof.

(2) The effect of any such order duly entered as aforesaid and

expressed to relate to a particular interest only shall, subject to

sub-section (3) of this section and to sub-section (2) of section

337, be to prohibit so long as it continues in force the

registration, endorsement or entry on the register document of -

(a) any instrument of dealing, other than a certificate of sale,

directly affecting that interest; and

(b) where that interest is a lease or sub-lease -

(i) any claim to the benefit of any tenancy exempt from

registration granted directly thereout; and

(ii) any lien-holder’s caveat in respect thereof.

Life Span Of Six Months

Under s. 338 of the NLC, the life span of a prohibitory order is

six months, unless extended by the court on application.

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Ceasure Of Effect

Under s. 339(1), a prohibitory order shall cease to have if

withdrawn by order of court. See 339(2) of NLC provides for the

ceasure as follows:

(2) A prohibitory order shall cease to have effect, and the entry

thereof be cancelled accordingly, on the registration of –

(a) any transfer executed by an officer of a court as mentioned

in sub-section (1) of section 337; or

(b) any certificate of sale given under sub-section (3) 259 or

sub-section (4) of section 265 and relating to the land or

interest affected by the order.

Prohibitory Order Set Aside

In Temenggong Securities Ltd & Anor v. Registrar of Titles, Johore &

Ors [1974] 1 LNS 175; [1974] 2 MLJ 45, the Federal Court

heard together the three appeals brought by Temenggong

Securities Ltd and another against the Registrar of Titles, Johore,

to cancel the Registrar’s caveat and against the Comptroller of

Inland Revenue, Malaysia, to set aside the two prohibitory orders

on the lands obtained by the Comptroller based on two judgments

for unpaid income tax against the vendor who had sold the lands

to the appellants who as purchasers had paid the full purchase

price and obtained the transfers, issue documents of title to the

lands, and possession of the lands. The vendors were held to be

bare trustees of the lands for the benefit of the appellant

purchasers. In setting aside the prohibitory orders, Ong Hock Sim

FJ, in delivering the unanimous judgment of the Federal Court,

said at p. 48:

As we are of the view that the caveat was wrongly entered, we

are also of opinion that the Registrar ought to have registered the

documents when presented on December 14, 1972 and the

prohibitory orders lodged on December 27, are therefore

inconsequential and ineffective, and must be set aside.

Order 47 r. 6 Of The Rules Of Court 2012

Where the seizure involves immovable property or any registered

interest therein the provisions of O. 47 r. 6(a) to (k) must be

observed. Order 47 r. (a) provides for seizure by order of the

court to which an application may be made ex parte by a notice

of application under O. 47, r. 6(b), supported by an affidavit giving

the relevant particulars.

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Order 47 r. 7(f) Sale Of The Immovable Property

Order 47 r. 7 provides for the sale of the immovable property or

any interest therein to be subject to the conditions stated

thereunder. Order 47 r. 7(f) provides for the sale to be set aside

on the ground of a material irregularity or fraud. Order 47 r. 7(g)

provides for the purchase to make application to the court to set

aside the sale on the ground that the judgment debtor had no

saleable interest in the property sold.

Injunction In Aid Of Caveats

Nature And Effect Of Injunction

An injunction does not give statutory protection of the purchaser’s

interest under the NLC. There is no provision in the NLC for it

to be registered on the register document of title to the land and

an injunction is not registrable or indorsable on the register

document of title to the land. In Heng Bak Teong & Anor v. Ng

Ah Seng [1987] 1 LNS 115; [1988] 1 MLJ 406, Mohamed

Dzaiddin J (as he then was) held at p. 408 that:

In my judgment, an injunction does not accord statutory

protection of the purchaser’s interest under the National Land

Code and therefore is not registrable or indorsable on the title to

the said property. The protection which the respondent has in the

present case is for lodgment of a private caveat or, if he is a

judgment creditor, to apply to court for a prohibitory order under

Section 335 of the National Land Code. In the case of the former,

it is for him to establish that he has a caveatable interest in the

said property. As none of the above applies in the present case, I

find that the Registrar of Land Titles was wrong in registering

the said order of court as a prohibitory order nor is there any

provision in the National Land Code for an injunction order to be

registered on the title to the said property binding against all and

sundry.

As such, it would be more appropriate to apply for the entry of

the two kinds of restraint of dealings provided under the NLC,

namely (i) caveats or (ii) prohibitory order, to act as a restraint

against dealings under NLC. Nevertheless, injunctive relief may still

be 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. I will deal with this later with

some reference to the reported cases.

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The nature of an injunction was stated by KC Vohrah J in MBF

Holdings Berhad v. East Asiatic Company (Malaysia) Berhad [1995]

4 CLJ 73 where his Lordship explained that an injunction is an

order of the court forbidding the initiation or the continuance of

some act or state of affairs or commanding that an act be done.

The learned judge said at p. 75:

An injunction, which forbids doing or going on doing an act, for

example trespass on the plaintiff’s land by parking cars there, is

prohibitory. An order which directs the defendant to do something

to repair an omission, or, to restore the prior position by undoing

a wrongful act such as building in breach of a restrictive covenant,

is a mandatory injunction.

Injunction In Aid Of Caveats

A plaintiff, having failed to resist the removal of a caveat by one

party, may in appropriate circumstances, obtain an order with the

object of ensuring interim preservation of the subject matter of the

litigation. A plaintiff may be entitled to both a caveat and an

injunction. In Manilal & Sons (M) Sdn Bhd v. M Majumder [1988]

1 LNS 16; [1988] 2 MLJ 305, Lee Hun Hoe CJ (Borneo), in

delivering the unanimous judgment of the Supreme Court, held at

p. 308:

It is not uncommon for caveat and injunction to exist side by

side. Together, they give a complete safeguard. In Walsh v.

Alexander [1913] 16 CLR 293 where the defendant agreed to sell

the plaintiff a certain homestead selection but subsequently

repudiated the agreement, an order for specific performance was

made and an injunction in terms was also granted. On appeal

Barton ACJ said at p 303:

It is urged that the respondent’s caveat sufficiently protects

him, and therefore he cannot have an injunction. I do not

agree. The caveat does not give the purchaser relief as

comprehensive or as direct as he gains by the jurisdiction

in personam, and therefore it cannot be held to be the

exclusive remedy …

Isaacs J put it in another way at p 305:

... Mr. Loxton argued that as the legislature has provided

for a caveat which effectually prevents a ‘dealing’ being

registered contrary to the agreement, that ousts the ordinary

jurisdiction of the court to grant an injunction. There are

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two answers to that. The narrow one is that a dealing by

way of transfer or lease or mortgage is not the only

method of transgressing the contract. Retention and user

and alteration of the property by the defendant himself

could not be prevented by a caveat, and these are equally

within the dominion claimed by him. But the broader

ground is this: that where rights and liabilities are not

created by a statute, but arise by common law, then, even

though they are affirmed by a statute which gives a special

and peculiar form of remedy different from the remedy

which existed by common law, yet, unless the statute

expressly or by necessary implication excludes the common

law remedy, the latter still remains.

The granting of an injunction is always in the discretion of the

judge or the court. An injunction is available, in appropriate

circumstances, to the plaintiff to ensure interim preservation of the

subject matter of a civil suit even though the plaintiff had failed to

resist the removal of a caveat (at the instance of the chargee)

which he had earlier entered. In Tan Lay Soon v. Kam Mah Theatre

Sdn Bhd [1992] 4 CLJ 1922; [1992] 3 CLJ (Rep) 657 where

Edgar Joseph Jr J (as he then was) held at p. 663 that:

Accordingly, in my view, the purchaser, having failed to resist the

chargee’s attempt to remove the caveat is not prevented from

seeking a separate and distinct remedy as against the chargor for

interim preservation of the subject matter in order to preserve the

status quo until his claim is adjudicated upon. If, in certain

circumstances, as against the same party, a plaintiff may be

entitled to both a caveat and an injunction (see Manilal & Sons

(M) Sdn Bhd. v. M Majumder [1991] 3 CLJ (Rep) 264 305), I

fail to see why, having failed to resist removal of a caveat by one

party, a plaintiff may not, in appropriate circumstances, obtain an

order whose object is to ensure interim preservation of the subject

matter of the litigation against another party.

Eventually, the plaintiff, Mr. Tan Lay Soon, lost his case in the

Supreme Court in the appeal by the vendor in Kam Mah Theatre

Sdn Bhd v. Tan Lay Soon [1994] 1 CLJ 1 on the ground that

there was no binding contract. Peh Swee Chin SCJ, in delivering

the judgment of the Supreme Court making observation on the

expression ‘usual terms and conditions’, said at p. 6:

We were of the view that there was no contract at all, because

we found that the said document was dependent on the signing

of a formal contract to be further negotiated and approved by

both parties. On this ground alone, we would allow the appeal.

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There was another ground on which we would have equally

allowed the appeal.

That other ground for finding that there was no contract at all

was that the words in the said proviso – “usual terms and

conditions” failed to reveal certainty they were too ambiguous.

In Foo Poh Sang & Ors. v. Yuen Lum Sdn Bhd & Intervener [1989]

1 CLJ 440; [1989] 1 CLJ (Rep) 547, an interlocutory injunction

in the form of a Mareva injunction designed to stop the defendant

from dissipating its assets, which included the land in question,

was allowed by the High Court even though a caveat entered by

the plaintiff had been removed in earlier proceedings. While the

right of a registered chargee to apply for an order for sale will be

protected by varying an injunction obtained subsequently in

relation to the charged land, the court will not set aside the

injunction wholly where to do so would be to prejudice the rights

which are sought to be protected. In the concluding paragraphs

of his judgment, Peh Swee Chin J (as he then was) said at p. 551:

In view of what has been stated above and especially the fact that

both parties appeared and professed to treat the injunction in

question as one of Mareva’s type with which I also agreed, the

submission about the removal of the caveat in question involving

ipso facto the discharge of the interlocutory injunction fell to the

ground.

I therefore as stated earlier, varied the injunctive order so as not

to prejudice in any way the intended foreclosure proceedings at

instance of the intervener/chargee, but dismissed his application to

set it aside wholly.

Differences Between A Private Caveat And An Injunction

The similarities and differences between a caveat and an injunction

were explained by Lord Diplock in delivering the judgment of Privy

Council in the case of Eng Mee Yong & Ors v. Letchumanan [1979]

1 LNS 18 as follows:

Their Lordships accept this as an apt analogy with its corollary

that caveats are available, in appropriate cases, for the interim

protection of rights to title to land or registrable interest in land

that are alleged by the caveator but not yet proved. Nevertheless

their Lordships would point out that the issue of a caveat differs

from the grant of an interlocutory injunction in that it is issued ex

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parte by the Registrar acting in an administrative capacity without

the intervention of the Court and is wholly unsupported by any

evidence at all.

Their Lordships have already noted the analogy between the effect

of a caveat and that of an interlocutory injunction obtained by the

plaintiff in an action for specific performance of a contract for the

sale of land restraining the vendor in whom the legal title is vested

from entering into any disposition of the land pending the trial of

the action. The Court’s power to grant an interlocutory injunction

in such an action is discretionary. It may be granted in all cases

in which it appears to the Court to be just and convenient to do

so. Similarly in s. 327 it is provided that “the Court ... may

make such order on the application as it may think just”. The

guiding principle in granting an interlocutory injunction is the

balance of convenience; there is no requirement that before an

interlocutory injunction is granted the plaintiff should satisfy the

Court that there is a “probability”, a “prima facie” case or a

“strong prima facie case” that if the action goes to trial he will

succeed; but before any question of balance of convenience can

arise the party seeking the injunction must satisfy the Court that

his claim is neither frivolous nor vexatious; in other words that

the evidence before the Court discloses that there is a serious

question to be tried (American Cyanamid v. Ethicon Ltd. [1975]

AC 396).

In the case of a refusal by the vendor to complete a contract for

the sale of land the normal remedy of the purchaser as plaintiff in

an action is an order for specific performance of the contract; and

in the absence of special circumstances, if it were shown that the

vendor threatened to dispose of the land while the action was still

pending, the balance of convenience would be in favour of granting

an interlocutory injunction to prevent his doing so, provided that

the plaintiff would be in a position to satisfy his undertaking as

to damages if the action should fail at trial.

Likewise, Peh Swee Chin J (as he then was) in Foo Poh Sang &

Ors v. Yuen Lum Sdn Bhd & Intervener [1989] 1 CLJ 440 at

pp. 444-445 said:

Finally, I will deal now with the major submission of intervener

that that the injunctive order in question was a caveat in the guise

of an injunction and once the caveat was removed, the injunctive

order could not remain.

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The Court could not accede to this submission. In my judgment,

there are real though subtle, differences between the two. A

caveator, when called upon to justify his caveat, would have to

satisfy the Court, (when he is not a registered owner), that he

has a caveatable interest in the land in question. Please see Eng

Mee Yong v. V. Letchumanan [1979] 2 MLJ 212; Nanyang

Development v. How Swee Poh [1970] 1 MLJ 145. Caveatable

interest is, of course, very fortunately and conclusively though

compendiously set out in s. 323(1) of the National Land Code.

…

On the other hand, an injunction can restrain a person from doing

anything, not just concerning land. When it applies to land, it is

not dependent on the presence or absence of any caveatable

interest for it to issue, such as a Mareva injunction, the

requirements of which were discussed earlier. A caveatable interest

is, of course, a relevant but by no means sine qua non for an

injunction to issue.

Just to mention another difference mentioned by the learned Lord

Diplock himself in Eng Mee Yong, a caveat is registered by a

Registrar of titles always ex parte acting in an administrative

capacity and not, if I may myself add, in a judicial or quasi-

judicial capacity.

The similarities between a caveat and an interlocutory injunction

concerning land lie mainly in the matter of the balance of

convenience which was itself explained by learned Lord Diplock

in American Cyanamid v. Ethicon Ltd. [1975] AC 396. The matter

of balance of convenience arises when a court hears an application

until final trial for example, for extending a caveat or continuing

or applying for an interlocutory injunction.

Again, apart from and before the balance of convenience spoken

of above arises, an applicant for an interlocutory injunction or for

continuing it must satisfy the Court that there is a serious

question to be tried; a question that is not frivolous or vexatious,

as regards his claim at the trial for a permanent injunction or

other remedy in aid of which the interlocutory injunction is sought.

Similarly, an applicant (caveator) for extending a caveat would

have to satisfy the Court that there is a similarly serious question

for trial as regards his claim to a registrable interest in the land

etc. under s. 323 of the National Land Code. Please see His

Lordship’s elucidation of the same in Eng Mee Yong’s case.

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Thus, unlike a caveat or a prohibitory order, there are no express

provisions for an injunction to be registered under the NLC as a

restraint against dealings. An injunction is therefore not registrable

under the NLC as a restraint against dealings. It is a form of

preventive relief granted in the discretion of the court. Depending

on the facts of each case, the court may grant an injunction to

restrain the sale and charge of a land to a third party when the

vendor has already agreed to sell it to the plaintiff, until after the

trial of the action or further order of the court.

Undertaking As To Damages

In an ex parte application for the issue of an injunction order

restraining the defendant from doing a certain thing, such as the

sale or disposal of land or any interest therein, the plaintiff/

applicant is required to give an undertaking to pay damages in the

event he fails in his action. In such a situation, the applicant must

exercise care and ensure that, on the law and facts of the case,

his prospects of success are reasonably good; otherwise, when it

was eventually shown that the applicant to the ex parte injunction

has misled the court or has acted mala fide, he may end up paying

huge damages based on his undertaking in the event, for example,

the land is not sold at the high price bargained for in the contract,

and on the final disposal of the civil suit or appeal, the land has

depreciated substantially in value.

The purpose of an undertaking as to damages in an application for

injunctive relief was well explained by Abdul Malik Ishak J (as he

then was) in the case of TSC Education Sdn Bhd v. Kolej Yayasan

Pelajaran Mara & Anor [2002] 2 CLJ 581 at p. 615:

Indeed if the interlocutory mandatory injunction was later found

to be wrongly granted, the effects on the defendants would be far

reaching in view of the nature of the said agreement. Shankar J

(as he then was) in Cheah Theam Swee & Anor v. Overseas Union

Bank Ltd & Ors [1989] 1 CLJ 157; [1989] 1 CLJ (Rep) 386

emphasised the importance of the applicant to show that he was

able to pay damages should the injunction be found to be wrongly

granted. At pp 179 to 180 (at pp. 409-410) of the report, his

Lordship Shankar J (as he then was) had this to say:

In the light of the material before me I was satisfied that

the undertaking as to damages given by the first plaintiff

was a barren one because although challenged, he had not

responded with any evidence of means. The defendants’

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evidence was that the delay resulting from the ex parte

injunction had coincided with a drastic fall in values in the

property market which they put at about $20 million. There

is no evidence before me that the market had bottomed out.

In this state of affairs it seemed to me that it would have

been an exercise in futility for the assistant registrar to

embark upon an inquiry as to damages if the plaintiffs were

in no position to satisfy them.

If they were, then the issue would have arisen as to

whether they should pay these damages before the

conclusion of the trial or whether they should merely give

security for their payment in any event. Once again, unless

there was some evidence of means the inquiry would have

been an exercise in futility.

A bare undertaking as to damages may be ‘usual’ as to

form, but useless as to content unless the plaintiffs are

worth powder and shot. I therefore hold it to be the right

of the defendants to be told what the undertaking is worth

in real terms.

What is the real purpose of an undertaking as to damages? It is

simply to vest the court with the jurisdiction to make an

appropriate order to recompense the loss suffered by the party

who was restrained when it is subsequently established that the

applicant was not entitled, in the first place, to the injunction. It

is always possible that a wrong decision would be made at the

interlocutory stage …

To me, an undertaking as to damages must be given because if

the person is wrongly enjoined, he will hardly have any recourse

against the applicant (Attorney-General v. Albany Hotel Company

[1896] 2 Ch 696 at p. 699).

Appeals

Civil Appeal To The Court Of Appeal

Subject to the provisions of s. 68 of the Courts of Judicature Act

1964 (the CJA), any party dissatisfied with the decision of the

High Court in any judgment or order in civil proceedings has the

right of appeal to the Court of Appeal, normally consisting of

three judges or such greater uneven number of judges as

determined by the President of the court (see s. 67 of the CJA).

Except with leave of the court, s. 68 of the CJA provides for non-

appealable matters and reads as follows:

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68(1) No appeal shall be brought to the Court of Appeal in any

of the following cases:

(a) when the amount or value of the subject-matter of the claim

(exclusive of interest) is less than two hundred and fifty

thousand ringgit, except with the leave of the Court of

Appeal;

(b) where the judgment or order is made by consent of parties;

(c) where the judgment or order relates to costs only, which by

law are left to the discretion of the Court, except with the

leave of the Court of Appeal; and

(d) where, by any written law for the time being in force, the

judgment or order of the High Court is expressly declared

to be final.

It may be noted that under s. 68(1) of the CJA, no conditions

are stated for the granting of appeals to the Court of Appeal,

unlike s. 96(a) of the CJA where an applicant must cross the

threshold of one of the two limbs, or both limbs thereof.

Principles Involved In Leave Application

Where the value of claim is less than RM250,000 (exclusive of

interest), leave to appeal is required. The application for leave is

made by notice of motion in Form 4 under Rule 27 of the Rules

of the Court of Appeal 1994, supported by affidavit. The Court

of Appeal does not give leave to appeal lightly, unless it can be

shown that the court below had erred. The Court of Appeal has

the discretion whether or not to grant leave to appeal. Note the

wording of s. 68(1)(a), ie, “the amount or value of the subject-

matter of the claim (exclusive of interest) is less than two hundred

and fifty thousand ringgit” (previously less than RM100,000 before

amendment). So if the claim is over RM250,000 and the actual

award made by the court is less than RM250,000, no leave of the

Court of Appeal is required. This is the decision in Yai Yen Hon

v. Teng Ah Kok & Sim Huat Sdn Bhd & Anor [1997] 2 CLJ 68,

where Chong Siew Fai CJ (Sabah and Sarawak), in delivering the

judgment of the Federal Court, said at p. 76:

Having regard to the wording in proviso (a) of s. 68(1) of the

Courts of Judicature Act 1964 and in the light of the authorities

cited above, I am of the view that since the claim of the first

plaintiff/appellant was well over RM100,000, he was entitled to

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appeal without leave even though the trial Court had awarded

RM62,400. In my view, the effect of s. 68(1)(a) of the Courts

of Judicature Act 1964 (as it was then in force) was that if the

amount or value of the subject matter without leave. To render it

necessary that leave should obtained, the amount or value would

have to be less than RM100,000. There might well be cases

where the sums adjudged may be validly taken into account; the

instant appeal before us, however, is not one such case.

In United Oriental Assurance Sdn Bhd v. Penang Medical Centre Sdn

Bhd [1999] 2 CLJ 583, Abu Mansor JCA, in delivering the

judgment of the Court of Appeal on the principles involved in an

application for leave to appeal to the Court of Appeal, said at

p. 588:

It is trite law and very well settled that an appellate court will not

lightly interfere with the finding of the court below unless it can

be shown the lower court had erred. In an application to the

Court of Appeal where leave is sought, the matter is still dealt

with by the principles enunciated in Pang Hon Chin v. Nahar Singh

[1986] 2 MLJ 145 where Edgar Joseph Jr J (as he then was)

held that leave can only be given ‘where the applicant is able to

demonstrate a prima facie case of error.’ We find no such error.

If leave to appeal is refused by the Court of Appeal, that will be

the end of the road for the applicant. The Federal Court has no

power to grant leave to appeal to the Court of Appeal. See Auto

Dunia Sdn Bhd v. Wong Sai Fatt & Ors [1995] 3 CLJ 485, FC,

where Hj Lamin bin Hj Mohd Yunus PCA said at p. 492:

But the case before us was in the nature of an application to the

Federal Court and not an appeal from the Court of Appeal. The

applicant/appellant in the said application was asking the Federal

Court for leave to appeal to the Court of Appeal. There is

nothing in the Courts of Judicature Act making provision for such

an application. To put it simply that if an appeal is to be lodged

in the Court of Appeal in the circumstances falling within the

terms of s. 68(1)(a) leave must first be obtained from the same

Court. Likewise s. 96(a) dictates that before a notice of appeal

can be filed in the Federal Court, its leave must first be obtained.

The Federal Court has no power to grant leave for the purpose

of lodging an appeal in the Court of Appeal.

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More recently in 2010 in Harcharan Singh Sohan Singh v. Ranjit

Kaur S Gean Singh [2010] 3 CLJ 29, the Court of Appeal

dismissed the application for leave to appeal. What Tengku

Baharudin Shah JCA said at pp. 38 and 39 deserves our

attention:

[14] The phrase ‘amount or value of the subject matter of the

claim’ in s. 68(1)(a) CJA was considered by the Supreme Court

in Yai Yen Hon v. Teng Ah Kok & Sim Huat Sdn Bhd & Anor

[1997] 2 CLJ 68 FC and it was held that it must be read as the

amount or value of the claim filed in the civil suit and not the

judgment amount appealed against, that would be the determinant

factor in deciding whether leave was necessary. That was a case

where the appellant claimed damages totalling RM4,000,000 arising

from an accident but only RM62,400 was awarded and it was held

that leave of the court was not required for his appeal. The

determinant factor is the value of the subject matter as disclosed

in the claim when filed. Applying that test the appellant must

necessarily obtain leave of this court to pursue his appeal.

[15] As to whether leave was required in the case of claim for

specific relief, as in this case for a declaration, s. 68(1)(a) CJA

makes no exception for such a case. The said provision is clear

and unambiguous – see Mohd Tahir Mohd Shariff v. Ramlah

Abdullah [2004] 1 CLJ 865. In Amer Mohideen Dawood v. Sneh

Bhar (supra) the High Court ordered specific performance of a

contract for sale of land against the appellant. His appeal was

challenged for being incompetent for failure to obtain leave

although the value of the subject matter was less from

RM250,000. The appeal was dismissed by this court for being

incompetent as the value of the subject matter of the order of

specific performance was the purchase price of the land which

was RM99,000 and no leave was obtained from the Court of

Appeal. Our case is no different except the relief sought was for

a declaration.

Abdul Malik bin Ishak JCA said in his supporting judgment at

p. 44:

[32] Again, this court in Mohd Tahir Mohd Sheriff v. Ramlah bt

Abdullah [2004] 1 CLJ 865, where the value of the land, after

the initial payment, left a balance of RM98,320 and where the

appeal was filed without leave of this court pursuant to s.

68(1)(a) of the Courts of Judicature Act 1964, forthwith struck

out the appeal.

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[33] The notice of motion in encl. 10a for leave to appeal under

s. 68(1)(a) of the Courts of Judicature Act 1964 filed at the

eleventh hour not be entertained and it should be dismissed

forthwith. For these reasons, I will now make those orders as

made by my learned brother Tengku Baharudin Shah bin Tengku

Mahmud JCA.

The Harcharan Singh case went up for decision in the Federal

Court in Harcharan Singh Sohan Singh v. Ranjit Kaur S Gean Singh

[2011] 3 CLJ 593. In dismissing the appeal, Hashim Yusoff FCJ

said in delivering the judgment of the Federal Court at pp. 599

and 600:

[12] We agree with the Court of Appeal’s decision in Mohd Tahir

Mohd Sheriff v. Ramlah Abdullah [2004] 1 CLJ 865 that

s. 68(1)(a) of the Act is unambiguous. It clearly states that no

appeal shall be brought to the Court of Appeal when the amount

or value of the subject matter of the claim (exclusive of interest)

is less than RM250,000, except with leave of the Court of Appeal.

[13] This appeal therefore hinges on the value of the disputed

property. The phrase “amount or value of the subject matter of

the claim.” Section 68(1)(a) of the Act was considered by the

Supreme Court in Yai Yen Hon v. Teng Ah Kok & Sim Huat Sdn

Bhd & Anor [1997] 2 CLJ 68 where it was held that it must be

read as the amount or value of the claim filed in the civil suit

and not the judgment amount granted against. That would be the

determinant factor in deciding whether leave was necessary.

…

[16] However the value of the subject matter of the claim (half

share of the disputed property) as pleaded in the amended

statement of defence was RM248,500, which was the same value

assessed for estate duty in the schedule to the Letters of

Administration issued to the respondent (see p. 417/451 appeal

record vol. 5) dated 26 August 1997. This valuation had been

accepted by the learned trial judge and subsequently by the Court

of Appeal. As this would be the concurrent findings of facts by

the courts below we would be slow to interfere with such

findings.

[17] This court in Lam Kong Company Ltd. v. Thong Guan Co. Pte.

Ltd. [2003] 3 CLJ 769 held that the legal authority to decide

whether leave is required or not under s. 68(1)(a) of the Act is

the Court of Appeal and it follows that the decision of the Court

of Appeal is final.

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Finally, the Federal Court answered the two questions framed as

follows at p. 600:

[20] For the above reasons, we would answer Question No. 1,

in the affirmative in that s. 68(1)(a) of the Act still applies when

the amount or value of the subject matter of the claim (exclusive

of interest) is less than RM250,000.

[21] The time for determining the current value of the subject

matter of the claim (exclusive of interest) as raised in Question

No. 2, would be the time of filing the claim. (See Yai Yen Hon v.

Teng Ah Kok & Sim Huat Sdn Bhd & Anor, supra).

Matters Where No Leave To Appeal Required

Practice Direction No. 1 of 2008 of the Court of Appeal directs

that certain matters do not require leave of the Court to appeal.

These are:

(3) Matters where leave to appeal is not required

Leave to appeal is not required in the following matters:

(a) Certiorari – in respect of any appeal involving a decision

of the Industrial Court, decision of the Disciplinary

Board or any body exercising “quasi judicial” function

involving the application of the principles of natural

justice.

(b) Declaration – to declare that the grant of a licence, act

omission or decision of a legally authorized body or

person is null and void.

(c) Injunction.

(d) Company Winding-up Petition – except an application

made under sec. 218(1)(e) and sec. 218(1)(g)(i) of the

Companies Act 1965 that involve a total debt which is

less than RM250,000.

(e) Bankruptcy Proceedings.

(f) Matters connected with marital proceedings under Law

Reform (Marriage and Divorce) Act 1976.

(g) Judgment for unliquidated damages/unliquidated amount.

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Rules Of The Court Of Appeal 1994 Amended

Note the Rules of the Court of Appeal (Amendment) 2012 made

by the Rules Committee came into operation on 1 August 2012

(P.U. (A) 234). It is essential to comply with the Rules of the

Court of Appeal 1994 (as amended) in the filing and service of the

notice of appeal, payment of the appropriate filing fees and

deposit, preparation, filing and service of the appeal record within

eight weeks from the filing of the notice of appeal. Among the

several amendments, the new r. 4 now reads as follows:

4. Where no other provision is made by any written law or by

these Rules, the procedure and practice in the Rules of Court

2012 shall apply mutatis mutandis.

Attention should be drawn to the amendment of r. 18 of the

principal Rules as follows:

(a) in sub-rule (7), by deleting the words “or within such further

time as the Court may”, and

(b) by inserting after sub-rule (7) the following sub-rule:

(7A) Notwithstanding sub-rule (7), if any copy of the

documents specified in paragraph (4)(b), (d) or (e) is not

available within eight weeks after the entry of the appeal, the

appellant shall file the copy of the documents together with

the memorandum of appeal as supplementary records of

appeal within three weeks of being notified of its availability.

Court Of Appeal Practice Direction No. 2 Of 2012

In appeals to the Court of Appeal, the appellants and their

solicitors should take note of the court’s Practice Direction No. 2

of 2012, issued by the Registrar on 15 October 2012 under

reference (3) MR/U/03/1/2012, which states, inter alia, that the

application for extension of time to file the appeal record has

become irrelevant. The appeal record must be filed within eight

weeks after the filing of the notice of appeal. Presumably, after the

expiry of the prescribed period stated in the new sub-rule (7A),

extension of time may be applied for under O. 3 r. 5 of the Rules

of Court 2012, or under the inherent jurisdiction of the court. My

rule of caution is to act fast and not to delay till the last day.

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Appeal To The Federal Court

There is no right of appeal from the Sessions Court and the

Magistrate’s Court to the Federal Court. See Abdul Ghaffar Md

Amin v. Ibrahim Yusoff & Anor [2008] 5 CLJ 1, FC. An appeal

from the Court of Appeal to the Federal Court is not as a matter

of right. The Rules of the Federal Court 1995 (RFC) and the

Practice Directions of the court issued from time to time must be

observed. In order to appeal, the applicant must first obtain the

leave of the Federal Court on certain questions of law which must

be properly framed. The Federal Court need not answer the

questions framed (see Ungku Suleiman Abd Majid & Anor v.

Pengarah Tanah Dan Galian Johor & Anor [2012] 2 CLJ 273 FC)

The applicant for leave to appeal must, as provided under

s. 97(1) of the CJA file his application (by notice of motion in

Form 6 under r. 66 of the RFC and supported by affidavit) within

one month from the date of the decision appealed against or

within the extended time allowed by the court, as provided under

s. 97(1) of the CJA reading as follows:

97. Leave to appeal

(1) An application under section 96 for leave to appeal to the

Federal Court shall be made to the Federal Court within one

month from the date on which the decision appealed against was

given, or within such further time as may be allowed by the

Court.

If leave is granted, the notice of appeal must be filed within the

period ordered, and the appeal record must be filed under r. 57

within six weeks after the filing of the notice of appeal (Form 3).

Notice of cross-appeal in Form 4 may be filed within the

prescribed time. The applicant must satisfy the requirements of

s. 96(a) of the CJA, reading as follows:

96. Subject to any rules regulating the proceedings of the Federal

Court in respect of appeals from the Court of Appeal, an appeal

shall lie from the Court of Appeal to the Federal Court with the

leave of the Federal Court –

(a) from any judgment or order of the Court of Appeal in

respect of any civil cause or matter decided by the High

Court in the exercise of its original jurisdiction involving a

question of general principle decided for the first time or a

question of importance upon which further argument and a

decision of the Federal Court would be to public advantage.

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Note s. 96(a) of the CJA contains two limbs and the word or,

indicating there are two different situations or alternatives. To

cross the threshold for leave the applicant must satisfy the first

limb on “a question of general principle decided for the first time”,

or the second limb on “a question of importance … and a

decision of the Federal Court would be to public advantage”. The

case of the applicant for leave will be stronger if he satisfies both

the limbs. In the often cited case of Datuk Syed Kechik Syed

Mohamed & Anor v. The Board of Trustees Of The Sabah Foundation

& Ors [1999] 1 CLJ 325, Edgar Joseph Jr FCJ, in delivering the

judgment of the Federal Court, said in his summing up at p. 335:

To sum up, without prejudice to the generality of what we have

thus far said, the Federal Court exercises its sensitive power to

grant leave to appeal in civil cases sparingly and will not grant

such leave unless both of the following criteria are satisfied by an

intending appellant:

(1) the judgment of the Court of Appeal has raised a point of

general principle which the Federal Court has not previously

decided or a point of importance upon which further

argument and a decision of the Federal Court would be to

public advantage; and

(2) if the point is decided in favour of the intending appellant,

there is a prima facie case for success in the appeal.

The recent judgment of the Federal Court in the landmark case

of Terengganu Forest Products Sdn Bhd v. Cosco Container Lines Co

Ltd & Anor and Other Applications [2011] 1 CLJ 51 provides the

most up to date authoritative guidelines on leave applications. This

five-member Federal Court was set up to resolve the

inconsistencies in the two earlier judgments of the Federal Court

in Datuk Syed Kechik Syed Mohamed & Anor v. The Board of Trustees

Of The Sabah Foundation & Ors [1999] 1 CLJ 325 and Joceline Tan

Poh Choo & Ors v. V Muthusamy [2009] 1 CLJ 650. The five-

member Federal Court in the Terengganu Forest case refused to

follow the judgment of the three-member Federal Court (Nik

Hashim, Augustine Paul and Zulkefli FCJJ) in Joceline Tan’s case

and rejected the additional conditions imposed therein. (See paras

[26] and [33] of the Terengganu Forest judgment cited later in this

article.)

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It may be noted that earlier in 2007 the five-member Federal

Court (Richard Malanjum CJ (Sabah & Sarawak), Alauddin, Abdul

Aziz Mohamad, Hashim Yusoff and Azmel FCJJ) in Joceline Tan’s

case [2007] 6 CLJ 1 reviewed decision made in 2005 which

allowed the appeal of the appellant. The Federal Court set its

own decision upon review under r. 137 and ordered the appeal

be reheard by another panel of the Federal Court. See the Federal

Court’s decision in Joceline Tan Poh Choo & Ors v. V Muthusamy

[2007] 6 CLJ 1, which opened the door for disputes or

inconsistencies when the Federal Court reheard the same appeal

in [2009] 1 CLJ 650, and dismissed the appeal of Joceline Tan

which she had won in 2005 based on its interpretation of

s. 96(a) of the CJA. The background facts are stated by

Augustine Paul JCA in Joceline Tan’s case in [2009] 1 CLJ 650:

[1] This appeal raises for consideration the nature and manner in

which questions ought to be framed for the purpose of an appeal

to this court pursuant to s. 96(a) of the Courts of Judicature Act

1964 (“s. 96(a))”.

[2] This appeal was previously heard by this court which had,

on 13 May 2005, allowed the appeal of the appellants with costs.

Upon an application for a review of the judgment by the

respondent under r. 137 of the Rules of the Federal Court 1995

the orders made were set aside and the appeal was ordered to be

reheard. This is the rehearing of the appeal. The first, second and

third appellants are the staff reporter, editor and publisher

respectively of The New Straits Times. The respondent is an

advocate and solicitor practicing under the name and style of

Messrs V Muthusamy & Co and was at one time a member of

the Penang State Assembly.

In 2010, the 2008 decision of the three-member Federal Court in

Joceline Tan’s case [2009] 1 CLJ 650 was in a way “overruled”

by the five-member Federal Court in the Terengganu Forest case,

which refused to follow it but instead followed the principles laid

down in Datuk Syed Kechik’s case. In his well considered and

researched judgment, Zaki Azmi CJ (since retired) referred to

similar comparable provisions in several foreign jurisdictions and

stated the law and principles involved at pp. 73-76 as follows:

[22] To obtain leave it must be shown that it falls under either

of the two limbs of s. 96(a) but they can also fall under both

limbs. The argument out that leave should be more liberally

allowed to enable the law to be developed would defeat the

limitation set by the two limbs of s. 96(a). The purpose of s. 96

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is not to allow for correction of ordinary errors committed by the

lower courts as would in an appeal as of right, particularly where

the relevant laws are well settled. When a case comes to the

Federal Court the case would already have been reviewed on the

merits by three experienced judges at the Court of Appeal. So

once an issue has been decided by the trial judge, and the appeal

decided by a panel of three at the Court of Appeal, that is final

unless it can be shown that the case falls within the scope of

s. 96(a).

[23] It is also clear from the section that the cause or matter

must have been decided by the High Court in its original

jurisdiction. The legal issue posed to this court may have arisen

from the decision of the High Court in exercise of its original

jurisdiction or in the Court of Appeal in the course of its giving

its judgment or making its order under the first limb and must

be questions of general principles. Under the first limb, that

decision by the Court of Appeal must however have raised a

question of law which is of general principle not previously

decided by this court. If it has been so decided then that decision

become a binding precedent in which case there is no need for

leave to be given on that question. Alternatively the applicant must

show that the decision would be to public advantage. In my

opinion the fact it would be public advantage must necessarily

involve further arguments before this court. Also because it is to

be decided by this court the words ‘further argument’ and a

decision of the Federal Court used in that subsection are, to me,

superfluous. There must necessarily be further arguments and the

Federal Court must also make a decision. What is important is

that the decision answering the questions would be to the public

advantage. In England, they use the term ‘a point of law of

general public importance’ (s. 1 of the Administration of Justice

Act 1960). What is important to the public must also necessarily

be an advantage to be decided by this court.

[24] If leave is required in the second limb of s. 96(a) the novelty

of the issue need not be shown because the limb requires further

argument on the issue. So if further argument is required it cannot

be a novelty issue. The applicant has to show that it is for public

advantage.

[25] Of course the fact that a High Court decision in exercising

its original jurisdiction has been reversed by the Court of Appeal

or that decision of the Court of Appeal is by majority with a

dissenting judgment are matters to be taken into consideration but

they do not bind this court to grant leave. There have been

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instances where leave were granted even though there was a

concurrent finding by the High Court and Court of Appeal. But

those are rather exceptional.

[26] I find that the guidelines set by Joceline Tan rather too strict

which may defeat the objective of s. 96(a). In any case I do not

agree with the interpretation given in that case that there must

have been two inconsistent judgments of the Court of Appeal

before leave could be given. In my opinion there need not had

been two or more previous decisions of the Court of Appeal on

the same issue. In my experience to find such a situation is going

to make it extremely difficult for the intended appellant to obtain

leave to appeal. Section 96(a) does not impose such a restriction

and it is not for the court to do so.

[29] Interpretations of statutory provisions are important but again

in such a case leave is not to be given as a matter of course.

When a statutory interpretation is in issue, it raises questions such

as how important those provisions are to the public, or whether

the interpretations are so obviously right that the Federal Court

can only uphold the Court of Appeal’s decision. These are

pertinent questions to be asked when considering leave. Also, are

questions as to whether the interpretation of such statutory

provisions are likely to be relevant to only the particular set of

facts and to the particular parties, described as ‘a particular fact

situation’ in Syed Kechik (see Beverley Rawleigh). If they are only

relevant to the parties, leave should not be granted.

...

[33] The upshot of all what I had said above, I therefore accept

the principles in Syed Kechik and reject those additional conditions

set by Joceline Tan.

Rule 137 Application

Further reference should also be made to applications under r. 137

of the Rules of the Federal Court 1995 with a view to set aside

or vary the order made by the Federal Court in the appeal proper.

Rule 137 reads:

137. For the removal of doubts it is hereby declared that nothing

in these Rules shall be deemed to limit or affect the inherent

powers of the Court to hear any application or to make any order

as may be necessary to prevent injustice or to prevent an abuse

of the process of the Court.

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The Federal Court dealt briefly in passing on the power of the

Court under r. 137 in an application made by the respondent

Anvest Corporation Sdn Bhd for settlement of the terms of the

order of the Federal Court in Wong Siew Choong Sdn Bhd v. Anvest

Corporation Sdn Bhd [2004] 4 CLJ 89 at 102. The judgment of the

Federal Court on r. 137 was delivered by P.S. Gill FCJ at [2004]

6 AMR 185 at p. 188 as follows:

Finally, in passing, learned counsel for the respondent alluded to

r. 137 of the Federal Court Rules 1995 to convince us that this

court has inherent powers to redress a wrong as justice of the

case requires. In the first place we do not see any wrong to

redress in the present case. Secondly, r. 137 does not empower

the court to review, vary or alter the judgment of the court.

In 2005, in Chan Yock Cher v. Chan Teong Peng [2005] 4 CLJ 29,

the Federal Court (consisting of Ahmad Fairuz FCJ (as he then

was), Abdul Hamid bin Mohamad FCJ (as he then was), and PS

Gill FCJ) unanimously dismissed a r. 137 application. In delivering

the judgment of the Federal Court, Abdul Hamid Mohamad FCJ

(as he then was) said on the law at p. 35:

Regarding the law, it must be noted that neither the Federal

Constitution nor the Courts of Judicature Act 1964 (CJA 1964)

provides that this court has jurisdiction to set aside its earlier

decision or judgment and to direct that the case (or appeal) be

reheard, reconsidered and re-decided. The provision that is usually

relied on, as in this case, is r. 137 of the RFC 1995.

His Lordship continued at p. 45:

On the other hand, no leave to review should be given where the

previous order is challenged on its merits, whether on facts or in

law. Merely because the panel hearing the application is of the

view that an important piece evidence had not been given

sufficient weight or that the current panel disagrees with the

interpretation or application of a certain provision of the law is not

a sufficient reason for the court to set aside its previous order.

The reasons have been amply stated by this court in Adorna

Properties Sdn Bhd, supra, with which we fully agree. The only

other reason we would like to add is that to freely allow previous

orders to be reviewed would lead to “panel shopping”. An

unsuccessful party in an appeal my try its luck before another

panel that may disagree with the view of the earlier panel. If he

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is successful in having the order reversed, the other party will do

the same thing again. Certainly, we would not like to see this

apex court becoming a circus that repeats the same show again

and again.

The prevailing view of the Federal Court is that r. 137 does not

confer the Federal Court with unlimited power to review its earlier

decisions. Rule 137 should remain to prevent injustice in an

exceptional and deserving case like quorum failure or lack of

jurisdiction. The safeguard against abuse of r. 137 rests solely with

the Federal Court which will only exercise its power under r. 137

in a rare and exceptional case to prevent an injustice. In 2009 in

the Federal Court case of Ong Thye Peng v. Loo Choo Teng & Ors

[2009] 4 CLJ 515, Zulkefli FCJ (as he then was), citing the Asean

Security Paper Mills case [2008] 6 CLJ 523 had made reference

at p. 523 to cases in which the Federal Court had invoked r. 137

as follows:

It must be noted at the outset that r. 137 of the RFC does not

actually confer jurisdiction on the Federal Court to hear any

application or to make any order to prevent injustice or abuse of

the process of the court. Rule 137 cannot be construed as

conferring upon the Federal Court unlimited power to review its

earlier decision for whatever purpose. The court only has the

limited ‘inherent’ power or ‘inherent jurisdiction’ in order to

maintain its character as a court of justice. His Lordship Zaki

Tun Azmi PCA (as he then was) in the case of Asean Security

Paper Mills Sdn Bhd v. Mitsui Sumitomo Insurance (Malaysia) Bhd

[2008] 6 CLJ 1 has succinctly laid out the limited or exceptional

circumstances where the court has exercised its discretion to

invoke r. 137 at pp 15-16 as follows:

(a) That there was a lack of quorum eg, the court was not

duly constituted as two of the three presiding judges had

retired (Chia Yan Tek & Anor. v. Ng Swee Kiat & Anor.

[2001] 4 CLJ 61).

(b) The application had been denied the right to have his

appeal heard on merits by the appellate court (Megat

Najmuddin bin Dato’ Seri (Dr.) Megat Khas v. Bank

Bumiputra (M) Bhd [2002] 1 CLJ 645).

(c) Where the decision had been obtained by fraud or

suppression of material evidence (MGG Pillai v. Tan Sri

Dato’ Vincent Tan Chee Yioun [2002] 3 CLJ 577).

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(d) Where the court making the decision was not properly

constituted, was illegal or was lacking jurisdiction, but the

lack of jurisdiction is not confined to the standing of the

quorum that rendered the impugned decision (Allied

Capital Sdn Bhd v. Mohd Latiff bin Shah Mohd & Another

Application [2004] 4 CLJ 350).

(e) Clear infringement of the law (Adorna Properties Sdn Bhd

v. Kobchai Sosothikul [2005] 1 CLJ 565).

(f) It does not apply where the findings of this court are

questioned, whether in law or on the facts (since these

are matters of opinion which this court may disagree

with the earlier panel) (Chan Yock Cher @ Chan Yock Kher

v. Chan Teong Peng [2005] 4 CLJ 29).

(g) Where an application under r. 137 has not been heard

by this court and yet through no fault of his, an order

was inadvertently made as if he had been heard (Raja

Prithwi Chand v. Sukhraj Rai AIR 1941 FC 1).

(h) Where bias had been established (Taylor & Anor v. &

Anor [2002] 2 All ER 353).

(i) Where it is demonstrated that the integrity of its earlier

decision had been critically undermined eg, where the

process had been corrupted and a wrong result might

have been arrived at. (Re Uddin [2005] 3 All ER 550).

(j) Where the Federal Court allows an appeal which should

have been consequentially dismissed because it accepted

the concurrent findings of the High Court and Court of

Appeal (Joceline Tan Poh Choo & Ors. v. V. Muthusamy

[2007] 6 MLJ 485; [2007] 5 AMR 725). (Writer’s note:

In this 2007 Joceline Tan’s case, the Federal Court set

aside its decision made earlier in 2005 and ordered the

appeal be reheard by another panel of the Federal Court.

In 2008 the new panel of the Federal Court (Augustine

Paul FCJ delivered the judgment of the Court, the other

two judges being Nik Hashim FCJ and Zulkefli FCJ)

reheard this appeal and dismissed the appeal with costs

(see Joceline Tan Poh Choo v. Muthusamy [2008] 6 MLJ

621, FC). In 2010, the Federal Court in the Trengganu

Forest case [2011] 1 MLJ 25 refused to follow its

judgment in the 2008 Joceline Tan’s case and instead

followed the earlier Federal Court judgment in the Datuk

Syed Kechik case [1999] 1 MLJ 257.)

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[15] Similar view was expressed by Heliliah Mohd Yusof FCJ in

Dato’ Seri Anwar Ibrahim v. PP [2010] 7 CLJ 397 at p. 488:

The rule itself is been framed as deeming provision. The

words ‘… nothing shall be deemed to limit or affect’ means

also nothing in the rules shall be regarded as limiting or

affecting the inherent powers of the court. The ‘court’ of

course is a reference to the Federal Court. The SG seems

troubled by the source of the power. Is the deeming

provision a legal fiction or statutory hypothesis? The term

‘inherent power’ refers to the judicial powers of the Federal

Court itself. ‘Inherent’ means it is intrinsic or organic to the

judicial powers of the Federal Court and hence being so the

Federal Court draws upon it in the limited circumstances

prescribed in r. 137 namely to address injustice or abuse of

processes. A certain reserve of powers intrinsically remains

with the court for the simple reason that the Federal Court

is created by the constitution as a judicial organ at the apex

of the judiciary. Hence by virtue of being at the apex it is

only the Federal Court (and no other non judicial branch)

that has to be the organ to deal with ‘injustice’ or ‘abuse of

processes’. It is in that limited sense that the jurisdiction

itself stems from the inherent powers, for the powers being

intrinsic and organic to the judicial power of the Federal

Court, those powers may therefore be drawn upon as and

when circumstances require. It therefore constitutes a

separate exercise and more of rectifying process. The

exercise of that inherent power will only be triggered by an

application made to it, upon which the court could said to

become seized of it. In that sense it could be said to

exercise an inherent jurisdiction.

In Harcharan Singh Piara Singh v. PP [2011] 6 CLJ 625, Richard

Malanjum CJ (Sabah and Sarawak), in a r. 137 application heard

by a 5-member panel of the Federal Court, said at p. 152:

[16] Simply put, the rule is nothing more than to declare the

obvious that is the inherent power of this court being the

apex court of this country “to prevent injustice or to prevent

an abuse of the process of the court”. A court of final

instance must be equipped with residual jurisdiction to rehear

and reopen its own earlier decision in a fit and proper case

(See Taylor v. Lawrence [2002] 2 All ER 353, and Re Uddin

[2005] 3 All ER 550). But the rule does not create or

provide additional power or new jurisdiction to this court

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(see Asean Security Paper Mills v. Mitsui Sumitomo Insurance

(Malaysia) Bhd [2008] 6 CLJ 1). Such must be the legal

position as there should be finality in any decision of this

court (see Allied Capital Sdn Bhd v. Mohd Latiff Shah Mohd

& Another Application [2004] 4 CLJ 350, Adorna Properties

Sdn Bhd v. Kobchai Sosothikul [2005] 1 CLJ 565; PP v.

Denish Madhavan [2010] 5 CLJ 635).

[17] Accordingly, where the Court of Appeal is the apex court of

any particular case in view of s. 87 of the Courts of

Judicature Act 1964 (‘CJA’) then it is also clothed with such

inherent power (see Ramanathan Chelliah v. PP [2009] 6 CLJ

55). And if the High Court is similarly positioned it too has

the inherent power (see PP v. Abdullah Idris [2009] 5 CLJ

445).

[18] With respect we are not inclined to agree with some of the

earlier views expressed in some judgments of this court and

those of the Court of Appeal on the futility of the rule. In

our considered view it has its function in view of its

declaratory effect.

[19] Having said the above we hasten to add that in exercising

such power this court must be extremely cautious and to do

so only in rare and exceptional cases. (See: Raja Petra Raja

Kamarudin v. Menteri Dalam Negeri [2010] 4 CLJ 25; Lim

Lek Yan v. Yayasan Melaka [2009] 4 CLJ 665; [2009] 6

AMR 393 and Chu Tak Fai v. PP [2006] 4 CLJ 931). Each

application must be scrutinized carefully and thoroughly to

determine if indeed there is any issue to be considered under

the rule or for the exercise of the inherent power of the

court. (See: Sabah Forest Industries Sdn Bhd v. UNP Plywood

Sdn Bhd [2010] 3 CLJ 779).

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