Private caveat

Ainul Jaria Maidin 1

PRIVATE CAVEAT


Introduction

PC referred as a general or personal caveat

Entered on RDT to any land by Registrar upon application by persons seeking to protect the title or interest they are trying to protect or establish.


Meaning of Caveat caveat is likened to an injunction that

is aimed at keeping the disputed property in status quo.

Syed Agil Barakbah in Damodaran v Vasudeva [1974] 1 MLJ 128, at p.129 said that:

“a caveat is nothing more than a statutory injunction to keep the property in status quo until the court has had an opportunity of discovering what are the right of the parties…”


Meaning of caveat…

It’s general process is to suspend the process of registration until conflicting claims have been settled.

It is a unilateral act and no person can create rights in his own favour nor enlarge or add to his existing proprietary rights by means of a caveat.”


Miller v Minister of Mines [1963] 1 AER 109, Lord Guest at p.103

“an interim procedure designed to freeze the position until an opportunity had been given to a person claiming a right to an unregistered instrument to regularise the position by registering the instrument.”


Effect of Private Caveat S.322(2) & (3) NLC


Effect of private caveat is to bind the land itself or a particular interest in the land.


Private caveat is effective as a temporary injunction & effect of:

i) preventing registration of any dealings including a certificate of sale on the land

ii) preventing entry of Lien- Holders Caveat

iii) preventing endorsement of Tenancy exempt granted by registered proprietor


Exceptions However, S.322(5)(a) & (b) NLC

provides Private Caveat shall not prohibit the registration or endorsement of any instrument or claim where:

i. instrument was presented or application for endorsement was made by the person or body at whose instance the caveat was entered; or

ii. the instrument is accompanied by a consent in writing from the caveator consenting to the registration of the instrument


Macon Engineers Sdn. Bhd. v Goh Hooi Yin [1976] 2 MLJ 53 Gill CJ, p.55.

“the effect of a caveat is that no instrument effecting the land can be registered while it is in force. The entry of the caveat does not make the claim or right either better or worse.”


Wong Kim Poh v Saamah Bt Hj. Kasim [1987] 1 MLJ 400 at p.402

“so long as a caveat is in force, it shall have the effect of prohibiting the registration of any instrument of dealing. The effect of the Private Caveat expressed to bind the land itself is to prevent any registered disposition of the land except with the caveators consent until the caveat is removed. In Torrens system registration is everything, the prohibition of the section must be complied with. The Registrar is statutorily obliged to refuse the registration and if he allows registration, he is in violation of the express provisions of the Code.”


In Khaw Poh Chhuan v Ng Gaik Peng [1996] 1 MLJ 761

“one function of the caveat is to ‘freeze’ the register until the claim being caveated has been perfected by registration of an instrument, or it has been adjudicated as not being entitled to priority by the Court.”

“Another function is to act as an injunction to the Registrar warning him against registering subsequent dealings, a transaction duly registered in violation of a caveat is without protection of indefeasibilty of title under s.340 of the NLC and such a transfer can be challenged and set aside.”


Eng Mee Yong v Letchumanan [1979] 2 MLJ 212

A private caveat does not have the effect of altering the ownership of the land or interest. It merely functions as a notice of a claim and priority of a claim. There is no restriction as to the number of caveats that may be entered on a title. The priority is accorded according to the order of endorsement.


Procedures Entry of Private

Caveat S.324 NLC


Private Caveat is entered by filling in the prescribed statutory Form 19B stating expressly whether the Caveat is to bind the land itself or only a particular interest in the land.

If the caveat is to bind only a particular interest in the land, the Caveator must attach a plan of the affected area.


Application Form 19B supported by a Statutory

Declaration affirmed by person seeking to enter Caveat (Caveator) and

prescribed fees.


Registrar’s Powers

S.322(1)(a) NLC - Registrar “may” enter private caveat upon application by persons in S.323

Registrar in entering a private caveat is acting purely in administrative capacity.

Registrar is obliged to enter caveat on RDT to disputed land upon receiving an application from any person or body.


Registrar has to check if application is in order as follows:

The statutory form 19B is duly completed, executed and attested;

Accompanied by a Statutory Declaration made by the caveator;

Prescribed fees payable to Land Office.


Upon examining application form, Registrar is required to ensure that caveatable interest is clearly shown on application form

Registrar must make endorsement as provided in S.324 NLC by specifying:– Time and Date of Making Entry.


Limited Powers of RegistrarRegistrar has no discretion to refuse to

enter a private caveat if it fulfils all prescribed requirements.

Nanyang Development (1966) Sdn. Bhd. v How Swee Poh [1970] 1 MLJ 145 Suffian LP at p.146: “The role of the registrar in entering the caveat is purely administrative, he must grant the application by making the necessary endorsement on the register.”


Time PC take effect –s.324 NLC

PC is effective form time of receipt of application and not from time of endorsement on RDT

PROSPECTIVE not RETROSPECTIVE


Effect of PC on instruments of dealing – S.322(6) NLC

Registrar must reject instruments presented for registration if PC is entered to bind land and will have to inform parties pursuant to S. 298 or 317 NLC procedures.


Who can Enter PC-s.323(1)(a)(b)&(c)

A person or body can apply to enter a private caveat if he has a ‘caveatable interest’:

any person or body claiming title to, or any registrable interest in, any alienated land or any right to such title or interest;


any person or body claiming to be beneficially entitled under any trust affecting any such land or interest; and

guardian or next friend of any minor claiming to be entitled under any trust affecting any such land or interest.


person or body seeking to enter PC must be parties capable of affecting dealings with land or interest with land pursuant to:

a.S.43 NLC clearly specifies capacity of persons allowed to deal with alienated lands;

b.S.205(2) NLC -persons capable dealing with land

c.S.433A NLC provision also is relevant in providing for dealings with Non-citizens.

To be caveatable, the claim must represent a claim that can lead to the making of a substantive entry on the register, either because the interest will become registrable or because it is one for which equitable relief by way of specific performance can be sought to enable ultimate registration. If the claim does not represent a transaction capable of potential registration, then the claim is not caveatable as the caveat procedure.


A personal claim, enforceable against proprietor and not land, cannot be caveated.

There is a distinction between an in personam interest which is purely personal and which cannot by court relief bind the land, and an in rem or in personam and ad rem interest which can bind the land without the need to resort to court assistance.


“any person or body claiming title to, or any registerable interest in any alienated land.”

First limb ‘any right to such title and interest’ refers to the interest which can be caveated is that of a person claiming to have an unregistrable interest, that is a claim which is in its present form capable of causing a substantive entry to be made on the register.

Claimant does not have an instrument in a registerable form.

'title in alienated land' refer to statutory or legal estate and illustrate that claimant expects to become proprietor of land on completion of transaction behind the caveated claim.


It is an interest which is supported by consideration and it results from the entry into a valid and enforceable contract of sale; alternatively, the right comes from a completed gift, or a perfectly constituted trust, or by way of succession


Second limb that is worded as “any right to such title or interest”

This refers to interest which can be caveated under this heading is that of the claimant who has an unregistrable interest, i.e. a claim which is not in its present form capable of causing a substantive entry to be made on the register.

Eg. claimant does not have an instrument in registrable form, or it is unclear whether his interest would be registrable, and so on.


claim must represent a claim that can lead to making of a substantive entry on register, either because the interest will become registrable or because it is one for which equitable relief by way of specific performance can be sought to enable ultimate registration.

If claim does not represent a transaction capable of potential registration, then claim is not caveatable as caveat procedure is actually an interim procedure designed to freeze register until an opportunity has been given to a person claiming a right under an unregistered instrument to regularize position by registering instrument.



Failure to fulfil requirements, and even in circumstances where parties have a caveatable claim, PC cannot be retained and can be removed by:

Registrar -S.326 NLC By Court - S.327 NLC


To be caveatable, the claim must represent a claim that can lead to the making of a substantive entry on the register, either because the interest will become registrable or because it is one for which equitable relief by way of specific performance can be sought to enable ultimate registration.


If the claim does not represent a transaction capable of potential registration, then CLAIM is not caveatable

A personal claim, enforceable against

the proprietor and not the land, cannot be caveated.


distinction between an in personam interest which is purely personal and which cannot bind land without court order


EM Buxton & Anor v Packaging Specialists Sdn Bhd [1987] 1 MLJ 342 at 344

Caveator agreed to buy caveated land but defaulted, resulting forfeiture of deposit.

caveator refused to continue because 56% of land is subejct to land acquisition

it denied the right of vendor to forfeit deposit and wanted refund.

Proprietor to remove PC saying that caveator had no caveatable interest caveator claimed that although his interest was an unsecured debt, it had arisen out of a land transaction and so should be caveatable.


However, the caveator was '... seeking a refund of deposit paid to account and other sums alleged to have been incurred.

It is not claiming specific performance of agreement and by so doing, caveator has clearly shown an intention that it was no longer interested in purchasing the property ... .


To that end, it cannot be said that it had any interest in the land capable of being registered.

From the nature of the civil suit, the caveator has only a claim in personam against the proprietor for which a caveat is not the proper remedy as a means of protecting such a claim.

Such claim originated from agreement but it is not capable of being registered under Torrens system'.


S.323(1)(a) NLC - is construed as referring to two different circumstances giving rise to caveatable interests

First limb – “any person or body claiming title to, or any registerable interest in any alienated land.”

situation where claimant has unregistrable interest. However, the claim in its present form is capable of causing a substantive entry be entered in RDT title.

Unregistered BUT Registrable interest or title


Second limb - any right to such title or interest.

This is a situation where a claimant has an unregistrable interest. The claim in its present form is not capable of causing a substantive entry be entered in the register document of title.

Unregistered and unregistrable title or interest.


A caveatable interest exists if there is a right to title or registrable interests in land where the holder of such right acquires immediate right or a right, which will arise upon completion of registration of dealing.

E.g. A purchaser of a land who has paid full purchase price and obtained a registrable memorandum of transfer (Form 14A) and the original issue document of title to the said land. His interest is not available only for failure to register and the mere act of registration only can grant him the right.


Krishna Kumar v UMBC Bhd [1983] 1 MLJ 106, proprietor charged land for funds for benefit of companies of which he was MD.

On default, a 3rd party agreed to provide additional security, subject to consent of 1st chargee.

However, consent was refused on basis that the second chargee had delayed in sending the documents to the first chargee. The second chargee then caveated the land.


Goo Hee Sing v Will Raja & Anor [1993] 3 MLJ 610

Permission of State Authority was necessary to enable vendor to sell; as this had not been received, it was held that potential purchaser had no valid contract and thus no registrable or caveatable interest.


Second limb - any right to such title or interest.

Miller v Minister of Mines [1963] AC 484

“Indeed it is axiomatic” (clear on its face / self evident) that a personal claim enforceable only against the registered proprietor but not the land cannot be caveated.”


Caveatable interest of beneficiary under an Express Trust S.323(1)(b) NLC provides that person or

body claiming to be beneficially entitled under any trust affecting any such land or interest may make an application to enter a private caveat to protect interests in land held under trust by a trustee. The beneficiary must show the existence of a trust affecting the land or interest therein and that the claimant is beneficially entitled thereunder, otherwise the entry of the caveat will not be sustained.


If the beneficiary is a minor, then the application to enter a caveat can be made by his guardian or next friend.

Protection for the minor beneficiary can also be given by a registrar's caveat

A trustee can seek to enter a Trust caveat if the circumstances require him to prevent any dealings on the trust property.


PC by beneficiary under express trust

Khoo Teng Seong v Khoo Teng Peng [1990] 3 MLJ 37 at 41, per Lim Beng Choon J. the caveators were two of several residual beneficiaries of the testator's land of which the applicant was the trustee and executor. It was observed that '... a trustee of property held in trust as well as a beneficiary of any trust property is entitled to enter a caveat.


Whether a Registered Proprietor can apply to caveat his own land


Private caveat available to persons or body specified in S.323 (1) NLC.

A registered proprietor is not a party to a transaction which seeks to confer title to him since he cannot prove the existence of a claim he has against his own land.

registered proprietor is prohibited from caveating his own land, unless he can show the existence of an interest to that arising beyond his legal proprietorship.

Re An Application by Haupiri Courts (No.2) [1969] NZLR 353,

a proprietor cannot lodge a caveat against dealings under the New Zealand Land transfer Act 1952 merely because he is the registered proprietor.



EU Finance Bhd v Siland Sdn Bhd (M&J) Frozen Foods Interveners [1989]1 MLJ 195

a registered owner could not seek to enter a caveat over his own land because a registered proprietor is a person who relies on his status as a registered proprietor must necessarily be a person already possessing title or interest in land and not merely a person claiming title to or any interest in that land and must as a matter of logic be excluded by the language of S.323(1) NLC.

registered proprietor must go further and establish some set of circumstances which affirmatively gives rise to a distinct interest in the land distinguishable from that which he holds as registered proprietor.



Syarifah Mastura bte. Tuanku Ibrahim v Wan Aziz Ibrahim [1994] 3 AMR 38

Abdul Kadir Sulaiman J view that having a serious issue to be tried in a pending action does not clothe a person with a caveatable interest but that it is only relevant when considering whether a proper and valid caveat ought to be removed pending the disposal of the action relating to the caveat.


Hiap Yiak Trading Sdn Bhd & Ors. v Hong Soon Seng SB [1990] 2 MLJ 155, a contrary view - a registered proprietor may caveat his own land.

A registered proprietor may seek the discretion of Registrar to enter a Registrars Caveat.

See Boonsom Boonyanit v Adorna Properties [1990] 3 MLJ 444;

Lim Ah Hun v Pendaftar Hakimilik Tanah Pulau Pinang & Anor [1990] 3 MLJ 34


Can a person or body who has an interest or right on a specific portion part of a land lodge a private caveat to protect his interest over such portion.

Compare provisions of Ss.5 and 214 (1)(a) with S.322(1) NLC.


N. Vangedasalam v Mahadevan & Anor [1976] 2 MLJ 161

FC – issue whether a person or body who has an interest or right on a specific portion part of a land lodge a private caveat to protect his interest over such portion.

Appellant had claimed an interest in a portion in a piece of land and brought an action for specific performance against the registered proprietor so that the portion in question could be transferred to him.

He had also entered a caveat against the land. When the registered owner of the land died, his personal representatives applied to court to have caveat removed and trial judge allowed application.



On appeal to the Federal Court, the court in allowing the appeal held that a person who claims an interest in a specific portion of land may caveat the whole land. However, he must state expressly that the effect of his caveat is to cover only the particular interest claimed.

In 1985, the amendment to S.322 (1) NLC brought about the additional proviso, which states that, “provided that such a caveat shall not be capable of being entered in respect of part of land.”


Tan Heng Poh v Tan Boon Thong & Ors. [1992] 2 MLJ 1, the appellant was a beneficiary of one-sixth share in the estate of his father who left a will bequeathing his properties to his six sons. Dispute arose between the beneficiaries and pending the resolution of the dispute, the appellant had entered a private caveat against all the eight parcels of land in the estate of the deceased. The respondents applied to remove the caveat and the trial judge allowed the application.


Appellant appealed to the Supreme Court and in dismissing the appeal, Mohammed Azmi CJ said that by virtue of the amendment to S. 322(1) of the NLC a caveat cannot be entered by the Registrar against any land where the caveator’s interest is only in respect of a specific portion even if the application to enter the caveat expressly provides that the effect of the caveat is intended to be limited to a specific portion only. This amendment led to uncertainties and affected severally the conveyancing practices especially when dealing with sale and purchase and also loans relating to properties, which have yet to be subdivided.


This was finally settled by the Federal Court in Chor Phaik Har v Farlim Properties Sdn Bhd. [1994]3 AMR 41:2103. Edgar Joseph Jr. FCJ referred to the decision of Suffian LP in N. Vangedasalam v Mahadevan & Anor [1976] 2 MLJ 161 said, “true it is that the proviso to s 322(1) prohibits the entry of a caveat over part of land, yet it says nothing about the validity of a caveat over the whole land but whose effect is limited to protect claim to a registerable interest in a portion or an undivided share thereof.” At present this controversy appears to be resolved since the proviso to s 322(1) NLC has been resolved.


The amendment to the Land Code in Jun 2001 enabled a private caveat entered over the whole of the land but expressly specified to bind only a specific interest in the land to be permitted statutorily.


Duration or Life Span of Private Caveat – S.328(1) NLC


A Private Caveat remains in force for a period of six (6) years after which duration the caveat will lapse and cease to have any effect.

In Goh Keng How v Raja Zainal Abidin bin Raja Hussin [1995] 3 MLJ 6, observed that the statutory life of a caveat is six years, and any decision of the court to extend the life of the caveat should not do so for a period greater than the statutory six years. In considering the extension of the caveat by the earlier court order, it was observed that the extension '... would throw the net wider by extending the private caveat which was scheduled to expire by statute (s 328 of Land Code) on 13 January 1995 to an indefinite term.


REMOVAL OF

PRIVATE CAVEATS


Lifespan of a private caveat is for a period of six years unless it is sooner withdrawn by the Registrar under s 325 or lapses under s 326(1B) or is withdrawn by the Registrar pursuant to an order of the court under s 327.

The High Court has the power to extend the lifespan of a private caveat. However, such extension should not extend beyond the duration of six years.


In Goh Keng How v Raja Zainal Abidin bin Raja Hussin [1995] 3 MLJ 6, observed that the statutory life of a caveat is six years, and any decision of the court to extend the life of the caveat should not do so for a period greater than the statutory six years. In considering the extension of the caveat by the earlier court order, it was observed that the extension '... would throw the net wider by extending ... the private caveat which was scheduled to expire by statute (s 328 of Land Code) on 13 January 1995 to an indefinite term.


Private Caveat can be removed before expiry of the 6 years in the following circumstances

S.325 –Withdrawal by Caveator S.326 –Removal by Registrar S.327 –Removal by Court


Withdrawal of the PC by Caveator – s.325 A private Caveat may be withdrawn by

the Caveator at any time by serving a notice in Form 16G on the Registrar together with the prescribed fees.

The Registrar upon receipt of the Notice in Form 16G shall cancel the entry of the Caveat and note his reasons for the cancellation and notify the registered proprietor of the land as prescribed in s 325(2) NLC.


Removal of Private Caveat by Registrar – S.326 NLC This right is only available to any person or

body having a registered title or interest in the land who is aggrieved by the entry of the caveat entered on the land.

Thus, right is restricted to a Registered proprietor; Registered chargee; Lessee and sub-lessee. Tan See Hock v D&C Bank Bhd. & Anor.[1993] 3 MLJ 350 –it was held that a chargee who has lost his interest over the disputed land cannot seek to remove a caveat by making an application to the Registrar.


S.326 NLC makes provision for the registered proprietor of the land or interest to apply to the Registrar for removal of the caveat. Section 327 allows a 'person aggrieved' by the existence of the caveat to apply to the court for its removal. Under s 326(1), the Registrar serves notice on the caveator (ss(2)), and if no action is then taken the caveat lapses after two months (ss(1B)).

Under s 327, the court makes an appropriate order and the Registrar removes the caveat in accordance with the terms of that order pursuant to s 417;


Application for removal of a private caveat can be made in Form 19C, by a person whose title or interest is affected by the presence of the caveat. An Application must be made before the registration of a dealing by the caveator or by another party with the consent of the caveator (see s 322(5)). The application is unnecessary where the caveat has lapsed under s 328.


Procedure – S.326 NLC 1. The caveatee can make an

application in Form 19H accompanied by the requisite fee. The Registrar shall cancel the entry of the private caveat and note the reasons for cancellation and notify the registered proprietor of the same.


2. Registrar will issue a Notice of Intended Removal of the Private Caveat in Form 19C to the caveator – informing him that the private caveat will be cancelled upon the expiry of 2 months from the date of service of the Notice on him. Upon receipt of this notice, the caveator may apply to the High Court and obtain an order to sustain the private caveat and serve the order on the Registrar. The Registrar in the situation where the caveator obtains an order for sustaining the private caveat cannot remove it.


S.326(2)NLC provides that “from time to time extend the period of 2 months. This means that the caveator can seek the courts discretion to extend the caveat from time to time. This order from the court granting the extension must be served on the Registrar who is required to endorse the register document of title with the details of the order. Failure to serve the order of the court on the registrar within in time, Registrar can remove the private caveat.

Hong Keow Tee v Alkhared & Khoo Holdings Sdn. Bhd. [1982] 2 MLJ 42


Rights of Chargee or Interest Holder to Apply to Registrar to Remove Private Caveat The provision use the word ‘interest’

refer to a registered interest, which would include a registered charge. As such, this section can only be utilized by a registered owner or a person with a registered interest which would include a registered chargee;


Unregistered interest holders does not have the right to seek to apply to remove the PC.

Tan See Hock v Development & Commercial Bank [1993] 3 MLJ 250 at p.255, per James Foong J:'in this case, the first defendant is not a registered chargee and has no legal right to proceed by way of this section [s.326]. By doing so, it would render the acts of the Registrar including the issuance of Form 19C ultra vires.


When such acts are ultra vires, Form 19C has no legal effect on the plaintiff [proprietor] and the caveats should remain where they are the Code, has by itself already determined the life span of a caveat. The caveats lodged remain until their life-span expire, under s 328 (unless extended) or until any other application to have it set aside before its expiry.'


Ss(1A)-Serve upon the person or body the notice in Form 19C. It was held in Alagarsamy v Tai Phaik Kee [1992] 1 MLJ 665, that service of Form 19C notice need not be personal, the special provisions of s431 regarding the mode of service of notices can be invoked.


In this case the registered proprietor (as a personal representative of the deceased proprietor) contracted to sell the land to the caveator; the caveat was entered. It was then withdrawn by the caveator. The parties again contracted, and again a caveat was entered. The registered proprietor then applied to the Registrar to cancel the second caveat, claiming defects in the contract.

The Registrar issued notice in Form 19C which was served at the caveator's residence on an adult member of the caveator's family.


The Registrar removed the second caveat. The caveator then entered a third caveat on grounds similar to those of the second caveat. The proprietor then applied under s 329(2) for its removal.

The caveator in that action claimed that he had no actual knowledge of the Form 19C. However, the court said that service in the manner achieved was adequate; in the circumstances, as the second caveat had been removed by the Registrar, s.329(2) did operate to prevent a further caveat on the same or similar grounds.


The fact that the title to Form 19C was omitted from the Gazette Notification (under s 432(1)(b)) was of no consequence as such notification itself stated that notice to cancel the caveat was being given; see Diljit Kaur Puran Singh v Pentadbir Tanah Gombak & Ors [1999] 1 CLJ 883 (HC).


From time to time extend the said period of two months. Where the caveator wishes to object to the

removal of the caveat, he can apply to the court for an extension of the two-month period, bearing in mind that there can be successive actions but that all actions must be made within the extended period.

This proposition was recognised in the case of Ding Poi Kooi v Nazaruddin bin Sahie [1999] 6 MLJ 274 (HC) where the court held that the word 'extend' merely enlarges or gives further duration to any existing right rather than re-vests an expired right.


When the court grants the extension, the order is served on the Registrar who is required to endorse the register with the details of that order. This application does not test the validity or 'caveatability' of the claim protected, but is merely designed to extend the time for retention of the caveat on the register.

In considering whether the caveat should be extended, the court will look to any other action taken by the caveator; for example, if the caveator is seeking specific performance of an agreement between himself and the proprietor, the court would be more likely to extend the time than where the caveator merely applies for extension.


In Hong Keow Tee & Anor v Alkhared & Khoo Holdings Sdn. Bhd.[1982]2 MLJ 42 at p.43, per Arulanandom J, it was observed that by the provisions of this subsection, '... it is incumbent on any person on whose application the caveat is extended to serve the order of court on the Registrar of Titles, who on being duly served is enjoined not to remove the said caveat'. In this case, the caveators obtained a court order extending the time for removal but failed to serve it on the Registrar in time to prevent removal of the caveat.


As a result they were unable to enter another caveat on the same ground. Where the only parties to an application under s 327 below are the caveatee and caveator, there is no difference between what the caveator must establish to obtain an extension of the caveat under s 326 and what he must establish to defeat the caveatee's application for removal of the caveat under s 327 below; see Eng Mee Yong v Letchumanan; & Federal Jaya Sdn Bhd v Darus Din [1999] 1 CLJ 518 at p. 524 (HC).



Law

Private caveat