Chapter17.ppt

All Rights Reserved
BUSINESS LAW (THIRD EDITION)
© Oxford Fajar Sdn. Bhd. (008974-T), 2018 17–3
OBJECTIVES
This chapter:
• examines the relevant and related aspects of land law,
in particular, the law on charges over land

All Rights Reserved
PREVIEW
• Introduction
• System Based on
Registration
• Effects of Registration –
Indefeasibility
• Exceptions to
Indefeasibility
• Effect of Non-registration
• Procedure of Registration
• Stamping
• Alienation of Land
• Forms of Title
• Conditions and
Restrictions on Titles
• Dealings
• Restraints on Dealings

All Rights Reserved
INTRODUCTION
• land laws in Malaysia:
1. National Land Code 1965
2. National Land Code (Penang and Malacca Titles)
Act 1963
3. Sarawak Land Code
4. Sabah Land Ordinance
• National Land Code 1965 – applies in Peninsular
Malaysia
• National Land Code (Penang and Malacca Titles) Act
1963 – applies only to Penang and Malacca
• Sarawak Land Code and the Sabah Land Ordinance –
are applicable to the States of Sarawak and Sabah
respectively

All Rights Reserved
INTRODUCTION (cont.)
• based on the Torrens system of title registration in
Malaysia:
– invented by an Australian, Sir Robert Torrens
– basic principle that all dealings in land must be
registered in order to be effective: section 206 of the
NLC 1965
• see Sime Bank Bhd v Mohd Hassan Sulaiman
• in the absence of any express provision to the contrary,
if any provision in the NLC 1965 is inconsistent with any
provision of any of the following laws, the NLC 1965
provisions shall, to the extent of the inconsistency, be
void:

All Rights Reserved
a) any law for the time being in force relating to
customary tenure
b) any law for the time being in force relating to Malay
reservations or Malay holdings
c) any law for the time being in force relating to mining
d) any law for the time being in force relating to sultanate
lands
e) any law for the time being in force relating to wakaf or
baitul-mal
f) the Terengganu Settlement Enactment 1356
g) the Padi Cultivators (Control of Rent and Security of
Tenure) Ordinance 1955

All Rights Reserved
h) the Kelantan Land Settlement Ordinance 1955
i) the Land (Group Settlement Areas) Act 1960
j) any law for the time being in force relating to
exemptions from the payment of land revenue

All Rights Reserved
Definition of Land
• see section 5, NLC
• two tests for establishing whether an item is a fixture or
a chattel:
a) degree of annexation
b) the purpose or object of annexation tests
• see Holland v Hodgson, Re De Falbe, Goh Chong Hin &
Anor v The Consolidated Malay Rubber Estates Ltd,
The Shell Company of the Federation of Malaya Ltd v
Commissioner of the Federal Capital of Kuala Lumpur,
Socfin Co Ltd v Chairman, Klang Town Council, Ahmad
Bin Sidek And Anor v Raseli Bin Jaten And Anor

All Rights Reserved
• the general rule is that all fixtures attached to the land
form part of the land  see BBMB Kewangan Bhd v
Kueh Teck Swee
• exceptions to this rule, see Re Tiambi bte. Ma’Amin,
Kiah bte. Hanapiah v Som bte. Hanapiah

All Rights Reserved
SYSTEM BASED ON
REGISTRATION
• registration of an instrument of dealing is effected by the
making of a memorial of the dealing on the register
document of title under the hand and seal of the
registering authority, i.e. the Registrar or Land
Administrator concerned – see section 304, NLC 1965,
Mohammad bin Buyong v Pemungut Hasil Tanah,
Gombak & Ors
• provisions declaring the conclusiveness of the register
as regards matters therein, see:
– section 89 of the National Land Code 1965
– sections 115 and 133 of the Sarawak Land Code

All Rights Reserved
SYSTEM BASED ON
REGISTRATION (cont.)
• provisions on the indefeasibility of title or interest of the
registered proprietor or of any person in whose name
the interest is registered are also to be found in:
– sections 92(1) and 340 of the National Land Code
1965
– section 132 of the Sarawak Land Code (Cap. 81)

All Rights Reserved
EFFECTS OF REGISTRATION—
INDEFEASIBILITY
• effect of registration of land dealings is provided under
section 340, NLC 1965
• the effect of registration is to defeat all prior
unregistered claims
• indefeasibility also prevails over claims of native
customary rights over land ‒ see TH Pelita Sadong Sdn
Bhd & Anor v TR Nyutan ak Jami & Ors and other
appeals

All Rights Reserved
EXCEPTIONS TO
INDEFEASIBILITY
• indefeasibility is not absolute – see section 340(2),
National Land Code 1965
• cases – Teh Bee v K. Maruthamuthu Ong Chat Pang &
Anor v Valliappa Chettiar
• exceptions to indefeasibility:
1. Fraud
 see section 340(2)(a)
 definition of the word ‘fraud’ – see Assets Co Ltd v
Mere Roihi & Ors, Lian Keow Sdn Bhd (In
Liquidation) v Overseas Credit Finance (M) Sdn
Bhd

All Rights Reserved
EXCEPTIONS TO
INDEFEASIBILITY (cont.)
2. Misrepresentation
• ‘misrepresentation’ within the context of section 340(2),
NLC would mean ‘fraudulent misrepresentation’ and is
a species of fraud – see Loke Yew v Port Swettenham
Rubber Co Ltd, Datuk Jagindar Singh & Ors v Tara
Rajaratnam, Malaysia Land Properties Sdn Bhd v
Waldorf & Windsor Joint Management Body
• instances of fraudulent misrepresentation:
a) The suggestion, as to a fact, of that which is not true
by one who does not believe it to be true
b) The active concealment of a fact by one having
knowledge or belief of the fact
c) A promise made without any intention of performing it

All Rights Reserved
EXCEPTIONS TO
d) Any other act fitted to deceive
e) Any such act or omission as the law specially
declares to be fraudulent
3. Forgery
• see section 340(2)(b), National Land Code 1965
• see Chew Lip Seng v Perwira Habib Bank (M) Bhd,
Boonson Boonyanit v Adorna Properties Sdn Bhd,
Doshi v Yeoh Tiong Lay
4. Insufficient or Void Instruments
• see section 340(2)(b), National Land Code 1965

All Rights Reserved
EXCEPTIONS TO
• examples of instruments which are insufficient:
1. The instrument has failed to comply with certain
procedures or formalities as laid down by the
National Land Code
2. The instrument of dealing was signed by an attorney
pursuant to an invalid or insufficient power of
attorney – see Puran Singh v Kchar Singh & Anor
• examples of instruments which are void:
a) Dealings effected in favour of or by minors. The laws
prohibiting such dealings are section 43(1)(a), NLC
1965 and section 11, Contracts Act 1950 – seeTan
Hee Juan v Teh Boon Keat

All Rights Reserved
EXCEPTIONS TO
b) Transactions made in contravention of the
Moneylenders Ordinance 1951 – see Appoo s/o
Krishnan v Ellamah d/o Ramasamy
c) Transactions made in contravention of Malay
Reservation Enactments
5. Position of Subsequent Purchaser Taking
Defeasible Title/Interest
• where a registered title or interest is rendered
defeasible by reason of any of the circumstances
provided under section 340(2) of the NLC, it is liable
to be set aside not only in the hands of the immediate
registered proprietor or holder but also in the hands
of any subsequent purchaser – section 340(3), NLC

All Rights Reserved
EXCEPTIONS TO
• indefeasibility will, however, attach to the title or
interest once it is acquired by a subsequent
purchaser in good faith and for value or by any
person or body claiming through or under such
purchaser – proviso to section 340(3), NLC
• see Doshi v Yeoh Tiong Lay, Datuk Jagindar Singh
& Ors v Tara Rajaratnam, Boonson Boonyanit v
Adorna Properties Sdn Bhd, Tan Ying Hong v Tan
Sian San & Ors, Kasai Reiko v Annie Lor Lee Fong
& Ors (Public Bank Bhd, intervener), Tan Ying Hong
v Tan Sian San & Ors

All Rights Reserved
EFFECT OF
NON-REGISTRATION
• ineffective in vesting title or interest
• nevertheless, it is still good as a contract so long as it
does not purport to attempt to transfer, charge or
otherwise deal with the land itself – see Haji Abdul
Rahman v Mohamed Hassan
• section 206(3), NLC provides that the provisions of the
Code requiring dealings to be effected in the manner as
prescribed do not affect the contractual operation of any
transaction relating to alienated land or any interest
therein – see Inter-Continental Mining Sdn Bhd v
Societe des Etains de Bayas Tudjuh

All Rights Reserved
EFFECT OF
NON-REGISTRATION (cont.)
• see Margaret Chua v Ho Swee Kiew & Ors, Siew Soon
Wah v Yong Tong Hong, Ooi Siew Eng @ Ooi Siw
Eng(F) & Ors v Link Ventures Sdn Bhd (in liquidation)
and another appeal, Bachan Singh v Mahinder Kaur &
Ors

All Rights Reserved
PROCEDURE OF
REGISTRATION
• executed by the parties, duly attested, and presented
for registration by lodging it at the Registry or Land
Office
• presentation must be accompanied by the prescribed
registration fees and, in the case of a charge or a
discharge or a lien-holder’s caveat, the relevant issue
document of title
• the date and time of presentation and the nature of the
instrument presented for registration are recorded in the
Presentation Book – date of registration will be the date
of presentation of title

All Rights Reserved
PROCEDURE OF
REGISTRATION (cont.)
• the dealing is recorded on the register document of title
and the issue document of title and the Registrar or
Collector will sign and seal against such indorsement
• duplicate copy of the instrument of dealing will be
returned together with the issue document of title

All Rights Reserved
STAMPING
• in a case where the charge is a principal instrument (i.e.
primary security for the loan), ad valorem stamp duty
will be payable thereon
• such stamp duty shall be calculated at the approximate
rate of 0.5 per cent on the principal amount secured
under the charge
• In practice, normally the charge is a secondary
instrument (while the Facilities Agreement or Debenture
being the primary Instrument and stamped ad valorem),
nominal stamp duty or RM10.00 is payable

All Rights Reserved
ALIENATION OF LAND
• see section 40 of the National Land Code
• section 76, NLC 1965 provides that the alienation of
State land shall consist of its disposal by the State in
perpetuity or for a term not exceeding ninety-nine years
1. Freehold Land
• when State land is disposed of by the State Authority
to an individual in perpetuity, the land vests in such
individual and his successors in title for an indefinite
period
• its duration is indefinite

All Rights Reserved
ALIENATION OF LAND (cont.)
2. Leasehold Land
• when State land is disposed by the State Authority
to an individual for a term of years, the land vests in
such individual and his successors in title for that
period of years as originally granted
• the duration of the lease cannot, by virtue of section
76, NLC 1965, exceed ninety-nine years
• upon expiry of the period of the lease, the land
should revert to the State

All Rights Reserved
3. Tenancies
• a tenancy cannot exceed three years unless
renewed
• a tenancy need not be registered and it may be
created by word of mouth or in writing
• a tenancy is not a right capable of registration and
therefore is not a title as such
• it may only be indorsed on the title
• tenancies are therefore never taken as security for
loans granted by banks and financial institutions

All Rights Reserved
CLASSIFICATION OF LAND AND QUALITY OF TITLES

All Rights Reserved
FORMS OF TITLE
1. Final Titles

All Rights Reserved
FORMS OF TITLE (cont.)
Private Lands
• state lands which have since been alienated to individuals
• divided into two classes:
– those which come under metropolitan administration
– those which come under the ambit of local administration
• titles thereto are grouped into two classes – Registry title
and Land Office title
• registry titles:
– may either take the form of Grants or of State Leases
– registered respectively in two series of books – ‘Register
of Grants’ and ‘Register of State Leases’

All Rights Reserved
• Land Office titles:
– the Collector (i.e. the local registering authority)
maintains for each mukim within his district two
series of books (Mukim grants and Mukim leases)
known collectively as the Mukim Register

All Rights Reserved
2. Qualified Titles
• a qualified title confers upon its holder similar rights
in every respect as those conferred by a final title,
save and except that:
a) The boundaries of the land shown on the
document of title shall be provisional only except
in so far as any of them may have been
established by any earlier survey
b) The land shall not be capable of being
subdivided, partitioned or included in any
amalgamation nor any building thereon be
capable of subdivision

All Rights Reserved
3. Register Document of Title and Issue Document of
Title

All Rights Reserved
CONDITIONS AND
RESTRICTIONS ON TITLES
1. Restrictions in Interest
• prohibition against the landowner’s transfer or charge
or lease of the land alienated save and except with the
consent of the Ruler in Council, the Collector or the
relevant State Authority
• the designation of land as Malay Reservation Land.
Such land cannot be transferred or charged to any
person other than a Malay and is subject to the
provisions of the Malay Reservation Enactment
• although a breach of a restriction in interest does not
result in the land being liable to forfeiture by the State,
any instrument of dealing registered in contravention
of a restriction in interest would, however, be a void
instrument (see section 340(2)(b), NLC 1965)

All Rights Reserved
CONDITIONS AND
(cont.)
2. Conditions of Land Use
• categories of land use:
– Agriculture
– Building
– Industry
3. Quit Rent
• annual rent
• a nominal sum

All Rights Reserved
CONDITIONS AND
(cont.)
• in the event that quit rent is in arrears, the State may
serve a notice on the landowner and, if applicable,
1.Any person having a registered interest
2.Lien-holders
3.Tenants
4.Claimant – caveators
and demand for the payment of the arrears within a
specified period of time
• in the event of non-compliance with the notice, the land
may be forfeited to the State

All Rights Reserved
CONDITIONS AND
(cont.)
4. Check-list for Examination of I.D.T./Duplicate Lease
a) Particulars
b) Restrictions in interest
Examples:
– cannot deal with the land without consent of
Ruler-in-Council, Collector or State Authority
– Malay reservation land (Subject to Malay
Reservation Enactment)
c) Categories (Conditions) of land use
– agriculture
– building (residential and commercial)
– industry

All Rights Reserved
DEALINGS
• dealings that are capable for being effected under NLC:
a) Transfers
b) Leases
c) Tenancies
• dealings which necessitate registration:
a) transfers
b) leases
• only tenancies and liens do not require registration
d) Charges
e) Liens
f) Easements
c) charges
d) easements

All Rights Reserved
DEALINGS (cont.)
• dealings in land may be effected in favour of the
following persons and bodies:
a) Natural persons other than minors
b) Corporations having power under their constitutions
to hold land
c) Sovereigns, governments, organizations and other
persons authorized to hold land under the provisions
of the Diplomatic and Consular Privileges Ordinance
1957
d) Bodies expressly empowered to hold land under any
other written law

All Rights Reserved
DEALINGS (cont.)
1. Transfers
• under section 214, NLC the following shall be
capable of transfer:
a) the whole, but not a part only, of any alienated
land
b) the whole, but not a part only, of any undivided
share in alienated land
c) any lease of alienated land
d) any charge
e) any tenancy exempt from registration

All Rights Reserved
DEALINGS (cont.)
• see Standard Chartered Bank v Central Wood Tiles Sdn
Bhd
• unless the instrument of transfer otherwise provides, the
following terms are implied on the part of the transferee
in favour of the transferor:
a)That the transferee will duly perform and observe the
provisions of the lease, charge or tenancy
b)That the transferee will indemnify the transferor
against all claims arising in respect of the lease,
charge or tenancy after the transfer takes effect, and
all expenses properly incurred by the transferor in
connection with any such claim

All Rights Reserved
DEALINGS (cont.)
2. Leases
• in West Malaysia – a letting of land for a term
exceeding three years; in Sabah and Sarawak – a
lease, which is referred to as a sublease, is one
exceeding one year
• defined as an interest in land granted by the leaser,
whether he is the owner of the land or not, to a
lessee for a certain period
• characteristics of a lease:
a) The leasee is given the right to exclusive
possession of the demised premises

All Rights Reserved
DEALINGS (cont.)
b) The parties must have intended to create a lease
and not a licence. This intention may be evidenced
by a written agreement or even by the conduct of
the parties
c) A lease must be granted for a definite period or for
a period which is capable of being ascertained
• see Siew Soon Wah v Yong Tong Hong
• section 230, NLC 1965 provides that the following
agreements shall be implied:
a) That the leasee or subleasee will pay the rent
reserved by the lease or sublease and observe and
perform all express or implied conditions to which the
land is subject

All Rights Reserved
DEALINGS (cont.)
b) That the leaser will pay all rent due or falling due,
to the State Authority in respect of the property
c) In cases of subleases, the subleaser will pay the
rent reserved by the lease or sublease under which
he holds; and that if the subleasee pays any of the
said rent, he shall be entitled to set off the sum so
paid against the rent payable by him under the
sublease
• section 232, National Land Code 1965 provides that in
the of the leaser and subleaser are to be implied into
every lease absence of any express provisions to the
contrary, the following agreements on the part or
sublease:

All Rights Reserved
DEALINGS (cont.)
a) That the leasee is allowed peaceful and quiet
possession and enjoyment of the property without
disturbance from the leaser
b) Where the lease relates to a part only of any
building, that the leaser will keep in repair the roof,
the main walls and main drains, and any common
passages or installations
c) To abate the rent where the property is rendered
unfit for occupation or use by any event not caused
by the negligence of the leasee

All Rights Reserved
DEALINGS (cont.)
• a lease is determined in any one of the following
circumstances:
a) The term of the lease has expired
b) The lease is surrendered
c) A valid notice to quit is served
d) The lease is forfeited by the leaser where there has
been a breach of any provision of the lease or where
the lessee has been adjudicated a bankrupt or in the
case of a company gone into liquidation

All Rights Reserved
DEALINGS (cont.)
3. Tenancies
• a letting of land for a term not exceeding three years
• not a registrable interest
• is called a ‘tenancy exempt from registration’ in the
NLC
• in Sabah and Sarawak – a tenancy is substantially a
sublease not exceeding one year which need not be
registered in order to be valid
• essential characteristics of a tenancy:
a) The tenant is given the right to exclusive
possession of the demised premises

All Rights Reserved
DEALINGS (cont.)
b) The parties must have intended to create a tenancy
and not a licence
c) A tenancy must be granted for a definite period or for
a period which is capable of being ascertained
• see Than Kok Leong v Low Kim Hai

All Rights Reserved
DEALINGS (cont.)
• a tenancy is determined when:
a) The term under which the tenancy is held has
expired
b) The tenancy is surrendered to the person for the
time being entitled to the reversion expectant
thereon
c) A valid notice to quit is served
d) The tenancy is forfeited by the landlord where there
has been a breach of a term of the tenancy or where
the tenant has been adjudicated a bankrupt or in the
case of a company gone into liquidation

All Rights Reserved
DEALINGS (cont.)
4. Charges
• method of taking security over land:
– charges by registration
– liens by deposit of title document and entry of a-
lien-holder’s caveat over the land
• see Ho Giok Chay v Nik Aishah
• lands whether held under freehold title or leasehold
title and leases of land may be capable of being
charged – section 241, NLC

All Rights Reserved
DEALINGS (cont.)
Forms of Charge
• section 242 of the National Land Code 1965 provides
for the forms of charges:
a)charge to secure the repayment of a debt, or the
payment of any sum other than a debt (in either case,
whether the amount in question is to be paid as a
lump sum or by instalments) – Form 16A
b)charge to secure the payment of an annuity or other
periodic sum – Form 168

All Rights Reserved
DEALINGS (cont.)
Registration and Procedure
• a charge has to registered with the appropriate Land
Registry or Land Office in order to be effective
• see Mahadevan s/o Mahalingam v Manilal & Sons (M)
Sdn Bhd
• when a charge instrument is presented for registration,
it has to be duly executed and stamped and is to be
accompanied by the appropriate registration fees

All Rights Reserved
DEALINGS (cont.)

All Rights Reserved
5. Rights and Duties of the Chargor
DEALINGS (cont.)

All Rights Reserved
DEALINGS (cont.)
Duties of the Chargor
1. That the chargor will comply with the provisions of the
charge as regards payment of the sum or sums secured
and interest thereon
2. Where the subject-matter charged is land, that he will
pay all rents due to the State Authority and all rates,
taxes and other outgoings relating thereto
3. That he will observe and perform all conditions, express
or implied to which the land is subject
4. Where the subject of the charge is a lease, that the
chargor will pay the rent reserved by the lease, and duly
observe and perform all other provisions thereof

All Rights Reserved
DEALINGS (cont.)
6. Rights and Duties of the Chargee
Power of Sale
• the chargee has the right to force a sale under charge
for the purpose of recouping the monies due to him –
section 253(1), NLC
• see Nira Sdn Bhd v Malayan Banking Bhd Bank Bumiputra
Malaysia Bhd v Esah bte. Abdul Ghani, Lesco Development Corp.
Sdn Bhd v Malaysia Building Society Bhd, Co-operative Central
Bank Bhd v Belaka Suria Sdn Bhd, Gordon Grant & Co v F.L. Boos,
Keng Soon Finance Bhd v M.K. Retnam Holdings Sdn Bhd & Anor,
Perwira Habib Bank Malaysia Bhd v Oon Seng Development Sdn
Bhd, Tai Lee Finance Co Sdn Bhd v Official Assignee & Ors, Bank
Kerjasama Rakyat Malaysia Bhd v Emcee Corporation Sdn Bhd,
Low Lee Lian v Ban Hin Lee Bank Bhd

All Rights Reserved
DEALINGS (cont.)
Right to Possession
• is expressly limited to charges over land not held under
a Land Office title, or in the case of any other town or
village land, if the land is not occupied by the chargor
• only the first chargee has the right to take possession
• arises when the chargor is in breach of any express or
implied agreement on his part
• can only be exercised on a number of conditions:
(a) prior to taking possession, the chargee is required
to serve various notices to the chargor and the
tenant or lessee in occupation of the land

All Rights Reserved
DEALINGS (cont.)
(b) the chargee is liable to the chargor for any act
whereby the capital value of the land is impaired or
the chargor is otherwise put to any loss
(c) a chargee in possession is accountable to the
chargor not only for all sums actually received by him
but also for any additional sums which he might
reasonably have been expected to receive by the
prudent exercise of his powers
(d) the sums received by the chargee in possession
must be applied in the order provided under section
277 NLC unless there is any contrary provision in the
instrument of the charge

All Rights Reserved
DEALINGS (cont.)
 because of the above onerous obligations and duties
imposed by the NLC upon a chargee in possession, the
power to enter into possession is therefore seldom
exercised by chargees which are financial institutions
Right to Transfer the Charge
• see section 214(1)(d), NLC
• must be in accordance with Form 14B
• the interest of the chargee vests in the transferee upon
registration of the transfer of charge
Right to Custody of Issue Document of Title of
Duplicate Lease
• the chargee has the right to keep the issue document
of title or the duplicate lease – section 244(1), NLC

All Rights Reserved
DEALINGS (cont.)
Right to Tack
• section 246, NLC specifically limits the right of tacking
so that an earlier chargee may make further subsequent
advances ranking in priority to any charge created after
the earlier charge in two situations only:
1.Where the making of the advance or advances is
expressly authorized by the prior charge, or where the
purpose of the prior charge was to secure a balance
due to the chargee under any current or continuing
account
2.Where the advances are made by the prior chargee
with the consent of the subsequent chargee

All Rights Reserved
DEALINGS (cont.)
Discharge of Charge
• using Form 16N
• should the chargee refuse to discharge upon full
settlement of the monies secured under the charge, the
chargor has the statutory right to apply to the Registrar
to discharge the charge by way of cancellation of the
charge upon proof that he has fully paid to the chargee
all the sums secured under the charge
The Charge Annexure
• accompanies Form 16 for registration with the Land or
Registry Office

All Rights Reserved
DEALINGS (cont.)
Priority between Charges
• the order of priorities between registered charges will,
subject to any agreement to the contrary, depend on the
order of registration thereof
• the chargees under various registered charges may
mutually agree upon the order of the priorities of their
charges
• an earlier registered charge may be postponed in order
of priority so as to rank after a subsequently registered
charge by registering an instrument known as a
Postponement of Charge under Form 16C – section 247

All Rights Reserved
DEALINGS (cont.)
7. Liens
• usually used when the borrowing is short term or
where it is felt that the lender, despite having a first
legal charge of another piece of land, would require
‘collateral’ security of a lien of title of another piece of
land
• unlike the Sabah Land Ordinance and the Sarawak
Land Code, the National Land Code 1965 recognizes
the concept of a lien over the title

All Rights Reserved
DEALINGS (cont.)
• see Paramoo v Zeno Ltd, Perwira Affin Bank Bhd v
Selangor Properties Sdn Bhd & Ors, Perwira Affin
Bank Bhd (formerly known as Perwira Habib Bank
Malaysia Bhd) v Selangor Properties Sdn Bhd &
Ors, United Overseas Bank (M) Bhd v UJA Sdn Bhd
• created only by a proprietor or lessee of land
depositing the issue document of title or the
duplicate lease, as the case may be, with the lender
as security for a loan

All Rights Reserved
DEALINGS (cont.)
• the lender must then apply for
the entry of a lien-holder’s
caveat, (Form 19D) and he
becomes entitled to a lien over
the land or lease only upon the
entry of such a caveat
• a lien-holder’s caveat will
continue to subsist until the
caveat is withdrawn
• normally, the deposit of the issue
document of title is accompanied
by a Memorandum of Deposit of
Title to create a lien

All Rights Reserved
DEALINGS (cont.)
Rights and Duties of the Parties
• the only remedy given to the lien-holder is that of a
judicial sale – section 281
• the Memorandum of Deposit of Title will cover most
of the provisions that are found in the Charge
Annexure
• see United Asian Bank Bhd v Personal
Representative of Roshammah (decd.) & Ors
8. Easements
• a form of dealings
• see sections 282–291, NLC

All Rights Reserved
DEALINGS (cont.)
• a right granted by a proprietor of the servient land to the
proprietor of the dominant land for the beneficial
enjoyment of the latter’s land
• arise by way of express grant under section 284 of the
said Code
• characteristics of an easement at common law:
a) there must be a dominant and a servient tenement
b) an easement must ‘accommodate’ the dominant
tenement
c) dominant and servient owners must be different
persons
d) a right over land cannot amount to an easement unless
it is capable of forming the subject-matter of a grant

All Rights Reserved
RESTRAINTS ON DEALINGS
• two kinds of restraints on dealings:
a) Caveats
b) Prohibitory orders
1. Caveats
• types of caveats under the NCL:
a) Private caveats
b) Trust caveats
c) Lien-holder’s caveats
d) Registrar’s caveats

All Rights Reserved
(cont.)
Private Caveats
• does not confer upon the caveator any power of sale
and is therefore not a form of security
• Niffira Pertama Sdn Bhd v Lembaga Kemajuan Johor
Tenggara & 2 Ors, Eu Finance Bhd v Siland Sdn Bhd
(M & J Frozen Food Sdn Bhd, Intervener), Asia
Commercial Finance (M) Bhd v Development & Realty
Sdn Bhd), Affin Bank Bhd v Dato’ Mohamed Embong
• a private caveat prohibits:
a) the registration of any instrument of dealing and any
certificate of sale relating to the land

All Rights Reserved
(cont.)
b) the indorsement of any claim to the benefit of any
tenancy exempt from registration (i.e. a tenancy for a
period not exceeding 3 years) granted by the
proprietor of the land
c) the entry on the register of any lien-holder’s caveat in
respect of the land affected
• see Eng Mee Yong v Letchumanan, Luggage
Distributors (M) Sdn Bhd v Tan Hor Teng & Anor, Bank
Utama (Malaysia) Bhd v Periamma Vellasamy, Quill
Construction Sdn Bhd v Tan Hor Teng & Anor,
Thevathason v Kwong Joon, Onn Yee Kien & Anor (as
personal representatives of the estate of Ong Ku @
Hong Poe, deceased) v On Giin Chuang

All Rights Reserved
(cont.)
Trust Caveats
• protect the interests of beneficiaries under a trust
• trust caveats are not a form of security normally
acceptable to lenders
Lien-holder’s Caveats
• may only be lodged by a person with whom the
document of title has been deposited as security for a
loan
• see section 281

All Rights Reserved
(cont.)
• a lien-holder’s caveat may be withdrawn by the
caveator. It may also be cancelled by the Registrar
upon proof of the satisfaction of all sums due under the
lien. It may also be withdrawn or may be cancelled by
the court upon application, if its entry or continuance is
not authorized
• a lien-holder’s caveat subsists until it is withdrawn
• see Perwira Affin Bank Bhd v Selangor Properties Sdn
Bhd & Ors

All Rights Reserved
(cont.)
Registrar’s Caveats
• may be entered in respect of any land wherever such
appears to the Registrar to be necessary or desirable:
1. for the prevention of fraud or improper dealing
2. for protecting the interests of:
a) the Federation or the State Authority
b) 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

All Rights Reserved
(cont.)
3. by reason of some error appearing to him to have
been made in the RDT or IDT to the land or any
other instrument relating thereto
• the court’s power to direct the registrar to enter a
registrar's caveat is provided for under s 417 of NLC

All Rights Reserved
(cont.)
2. Prohibitory Order
• for the purpose of imposing restraint on dealings over
land owned by their judgment-debtors
• takes effect from the time it is entered by the
Registrar on the register document of title
• has a life-span of six months from the date the order
is granted by the court
• once the judgment-creditor obtains the order, he
would cause it to be entered on the register
document of title and then apply for the order for sale
of the land to be declared absolute

All Rights Reserved
(cont.)
• see UOB Kay Hian Pte Ltd v MA Boon Lan, Gale Force
Sdn Bhd v Ling Yun Yoke (Malayan Banking Bhd,
intervener), Ting Sieh Chung v Hock Peng Realty Sdn
Bhd, Vision Region Sdn Bhd lwn Chua Yap Teck dan
seorang lagi, Bank Bumiputra Malaysia Bhd & Ors v
Safuan Holdings Sdn Bhd & Ors (Allied Bank Malaysia
Bhd, intervener)

All Rights Reserved
REVIEW
• Introduction
• System Based on
Registration
• Effects of Registration –
Indefeasibility
• Exceptions to
Indefeasibility
• Effect of Non-registration
• Procedure of Registration
• Stamping
• Alienation of Land
• Forms of Title
• Conditions and
Restrictions on Titles
• Dealings
• Restraints on Dealings

Chapter17.ppt

More Related Content

More from EllyanaFarina1

Recently uploaded

Chapter17.ppt