REMOVAL OF CAVEATS -...
Transcript of REMOVAL OF CAVEATS -...
Introduction
Malaysia utilises the Torrens system, the principles which are embodied in the
provisions of the National Land Code 1965 (“NLC 1965”), where title to or
interest in land vest and divests only upon registration. However, unregistered
interest in a land is protected by lodging of caveats. A caveat is a formal notice
of unregistered interest in land.
There are four (4) types of caveats under the NLC 1965, namely –
1. Private Caveats (Sections 322 – 329)
May be entered by the Registrar at the instance of any of the person or
bodies claiming title to or any registrable interest in any alienated land,
any person or body or guardian of any minor claiming to be beneficially
entitled under any trust affecting any such land or interest.
Introduction
4. Trusts Caveats (Sections 332 – 333)
May be entered by the Registrar in respect of any land or interest
which is expressed to be held by any persons or bodies as trustees.
Private Caveat
Private Caveat is the most common form of caveat used to protect
interests in land.
It is entered by the Registrar upon application by a person or a body who
has a “caveatable interest”.
It is in a nature of statutory injunction which has the effect of protecting
claim to an existing unregistered registrable interest in land.
Private Caveat
Effect of Private Caveat –
A notice to the world at large that the caveator has a claim to an alleged
interest in the disputed land.
Preserves the status quo of the land pending resolution of the dispute by the
court.
Restrains the caveatee from dealing with the land in dispute pending the
determination of the caveator’s interest in the land by the courts.
Private Caveat
Who can apply for Private Caveat?
S. 323 NLC 1965 specifies 3 categories of persons:
a) Any person or body claiming title to, or any registrable interest in any
alienated land, or any right to such title or interest. (2 limbs)
b) Any person or body claiming to be beneficially entitled under any trust
affecting such land or interest;
c) The guardian or next friend of any minor claiming to be entitled under any
trust affecting such land.
Private Caveat
Interpretation of the First Limb of S. 323 (1)(a) – can be divided into 2:
“Person of body claiming title to land.”
E.g. A prior registered proprietor challenging the title of a new
registered proprietor is a body claiming title to the land under S. 323(1)(a)
and has a caveatable interest
“Person and body claiming a registrable interest in land”
E.g A chargee could enter a private caveat where the charge document
had been signed but had yet to be registered.
Private Caveat
Interpretation of the Second Limb of S. 323 (1)(a) :
The second limb “person or body claiming ANY RIGHT to such title or
interest” may cover those who have signed contracts relating to land and
have an equitable or “in personam” right to have such contract enforced.
This would include a purchaser who has signed the SPA and has paid the
deposit towards the purchase.
However, an intended purchaser at negotiation stage who has not yet
concluded a contract does not have any caveatable interest.
Private Caveat
How to enter a Private Caveat?
a)Fill in the prescribed statutory Form 19B
b) Accompanied by:
i. Prescribed fee; and
ii. Statutory declaration of applicant or solicitor to verify the claim.
c) Upon receipt of Form 19B, Registrar will note on the application the time it
was received.
Private Caveat
d) Registrar will endorse on the Register Document Title (“RDT”) the word
“private caveat” together with a statement specifying 4 things:
i. Whether the caveat binds the land itself or a particular interest.
ii. Name of caveator.
iii. Time it is effective – time the application was received
iv. The reference under which it is filed
e) The Registrar will notify the proprietor in Form 19A or any other person
vested with the interest caveated
Private Caveat
Duration of a Private Caveat?
S. 328(1) provides that a private caveat lapses after 6 years
Once a caveat has lapsed, the caveator will not be able to rely on any claim
to a caveatable interest in the land anymore.
Can a Private Caveat be withdrawn?
Yes, S.325 provides that a Private Caveat can be withdrawn by filling in
From 19G and a prescribed fee.
Private Caveat
Can a Private Caveat be removed?
Yes, this is provided under S. 326 and S. 327.
How can a Private Caveat be removed?
A caveatee can apply to the Registrar for removal of the Private Caveat
under S. 326. Caveat will be removed after 2 months unless the caveator
obtains a court order to extend the duration of the caveat.
“Any other person or body aggrieved by the existence of the private
caveat” may apply to the High Court under S. 327 for an order to remove
the caveat.
The purposes and procedure under S. 326 and S. 327 differs.
Private Caveat
Removal of Private Caveat by Registrar - S. 326 NLC 1965
“Any person whose land or interest is bound by a Private Caveat” may
apply
This would mean:
1) The registered proprietor
2) A registered chargee
3) Registered lessee or sub-lessee
Private Caveat
Procedure under S. 326
Caveatee applies for removal of caveat by presenting Form 19H
accompanied by prescribed fee.
Registrar will serve the caveator with a Notice of Intended Removal in
Form 19C and endorse the RDT that Form 19C has been served.
Under S. 326(IB), the caveat will lapse after 2 months specified in the
notice, unless the caveator obtains a court order to extend the said
caveat.
Private Caveat
Extension of Private Caveat under S. 326
It is the caveator who applies to the court for extension.
He is to satisfy the court that there are sufficient grounds in fact and in law
for continuing the caveat in force.
The court will not usually test the validity of the claim/interest protected by
the caveat but will consider whether or not the caveator had taken any other
court action to determine his claim. (E.g. Claim for specific performance of
the agreement)
Private Caveat
Effect of removal of Private Caveat under S.326
The caveator cannot enter another private caveat on the same grounds.
(S.329(2))
Private Caveat
Removal of Private Caveat by the Court – S. 327
A “person aggrieved” may apply to the court for the Private Caveat to be
removed
This refers not only to the registered proprietor but to any party who is
claiming interest in the land but is unable by virtue of the caveat to register
his interest.
Private Caveat
Meaning of “aggrieved party” in S. 327 not defined in NLC
The word was taken by the court to mean “something wrongful in law
which has been done to a person or body that affects their title to the
property”.
The courts has taken the view that whether a person is aggrieved by the
existence of a caveat will depend on whether he will suffer loss if the
caveat is not removed.
Private Caveat
Two approaches for the Court to decide in S. 327:
Traditional approach in Macon Engineers S/B v Goh Hooi Hin [1976]
(Federal Court decision)
The guidelines set by the Privy Council in Eng Mee Yong & Ors v
Letchumanan [1979]
Private Caveat
Macon Engineers’ Approach
In an application under S. 327, the court is to ask first, “Whether the
caveator has a “caveatable interest”
If no, caveat will be removed.
If yes, caveator must show that his claim is not frivolous or vexatious
Courts have therefore equated “caveatable interest” with “serious question
to be tried”.
Private Caveat
Guidelines in Eng Mee Yong
If the applicant has no registered interest on the land, he must first satisfy
the court that he is a person aggrieved by the existence of the caveat.
If he is not, his application to remove the caveat will be dismissed.
If the applicant manages to prove he is a person aggrieved, then the onus
shifts to the caveator.
The caveator must then satisfy the court that on the evidence presented to
it, his claim to an interest in the land does raise a serious question to be
tried and show that on a balance of convenience, it would be better to
maintain the status quo until the trial of the action.
Private Caveat
“Serious question to be tried”
The claim is neither frivolous nor vexatious
The Caveator must establish a sufficient likelihood of success to justify the
preservation of the status quo pending the trial.
Private Caveat
“Balance of convenience”
The courts weigh one need against another and determine where "the
balance of convenience" lies in allowing or refusing the removal of a
Private Caveat.
Significant factor in assessing where the balance of convenience lies is
the extent to which the disadvantages to each party would be incapable of
being compensated in damages in the event of his succeeding at the trial.
Usually, if the Caveator has met the first requirement of satisfying the
court that the claim on which his caveat is based does raise a serious
question to be tried, the balance of convenience would in the normal way
and in the absence of any special circumstances be in favour of leaving
the caveat in existence until the trial.
Private Caveat
Current approach of the courts?
• The courts in more recent cases favours the approach in Eng Mee Yong.
(See Murugappa Chettiar v Lee Teck Mook and Soon Seng Co. v Toko
Palayakat Jamal (M) S/B)
Private Caveat
Compensation for Wrongful Caveat
S. 329(1) provides that any person or body who, wrongfully or without
reasonable cause, secures the entry of, or fails to withdraw, any private
caveat shall be liable to pay compensation to any person or body who
suffers any damage or loss.
The court will determine whether there is a property value loss (decrease in
the price of the said property) after the land is offered for sale subsequent to
the removal of the caveat.