Chapter 2: Lease and Tenancy

2.0 Introduction to Lease

 Definition: Lease – an interest in land granted by the lessor (whether owner/not) to a lessee for
a certain period.
 Under 221(2) a lease must be at least a minimum of 3 years and a maximum of 99 years for
whole alienated land and 30 years to a part of it only.
 Registration shall be in Form 15A (s.221(4))
 Definition of ‘lease’ in s 5 & s 221(2) vs definition of ‘tenancy exempt from registration’ in s 5 & s
213
 - Registrable interest, s 227 vs non-registrable interest, s 223
 - More than 3 years, s 221(2) vs less than 3 years, s 223(1)
 - Proprietor, lessee, sub-lessee ss 221 & 222 vs s 223
 - Whole/part of alienated land, s 221(1) vs s 223
 - Form 15A & Form 15B, s 221(4) & (5) vs oral/written agreement, ss 223(2), 213(2)(a) & (b)
 Any unregistered lease can be enforcing contractually under s.206(3).**

# Margaret Chua v Ho Swee Kiew [1961] 1 MLJ 173

F: Appellant borrowed money from respondent to build a house. In condition, the appellant will give a
lease to Respondent for 25 years. Later appellant sold the land and the new purchaser sent a notice to
quit to the Respondent. Respondent requested injunction to retain the land from selling the land but the
land was already sold. Therefore, Respondent request compensation from appellant.

Held: Although the agreement was void as a lease for lack of registration, it is still a good and valid
agreement for lease – can be enforced in equity by a decree of specific performance. Failure to comply
with which was clearly a breach of contract. Appellant is liable for damages.

2.1 Introduction to Tenancy

 Tenancy or ‘Tenancy exempt from registration’ means, any tenancy or sub-tenancy

for a term not exceeding 3 years, s213(1)(a) or not exceeding one year pursuant to
any previous land law, s213(1)(b).
 S.213(2)(a): Tenancy can be in oral or writing.
 S.213(2)(b): Written tenancy does not and cannot be registered under the NLC.
 Interest of Tenancy can only be enforced if it is endorsed, s.213(3).
 If the land is sold, the new land-owner is bound by the tenancy but only if it is
endorsed s.213(4).
 There are two types of tenancy which are;
i. Fixed Term Tenancy: fixed period of up to 3 years
ii. Periodic Tenancy: granted for a short period with automatic renewal unless
terminated by notice to quit.
  Tenancy at will is when a person’s lease or tenant has expired but they remained on
the land without paying and no action was taken by the land-owner. However as soon
as any rental is made, it shall become a periodic tenancy.

2.2 Characteristics of Lease/Tenancy

2.2.1 Right to exclusive possession

 Once the land is leased/tenanted, it gives the lessee and tenant an exclusive right of
possession – may exclude everyone from the land including the landlord himself
 If the landlord retains right to enter/remains in general control of the premises, the person is
only a licensee
2.2.3 Payment/Rental
 There must be payment.
2.2.4 Intention to create lease/tenancy

3 Types of leases & tenancies

3.1 Lease for a fixed term

- For the whole of the land, not exceeding 99 years
Siew Soon Wah v Yong Tong Hong [1973] 1 MLJ 133
- For a part of the land, not exceeding 30 years

3.2 Tenancy for a fixed term

- Not exceeding 3 years
- Periodic tenancies

3.3 Tenancy at will

3.4 Tenancy at sufferance

3.5 Tenancy by estoppel

3.6 Tenancy coupled with equity

Wee Tiang Yap v Chan Chan Brothers [1986] 1 MLJ 47
Cheok Lek San v Yong Kam Chin [1970] 2 MLJ 179
Tan Khien Toong & Ors v Hoong Bee & Co [1987] 1 MLJ 387
Inwards v Baker [1965] 2 QB 29
Ahmad Shazily Ismail Bakti v Nik Salma Zaidah [2014] 5 CLJ 817
Devi v Francis [1969] 2 MLJ 169
Mok Deng Chee v Yap See Hoi [1981] 2 MLJ 321
4 Restrictions of a lease or tenancy

4.1 In whose favour

- ss 43 & 433B

4.2 Cannot be granted to 2 or more persons other than as trustees or representatives

- s 25

4.3 Consent of chargeee

- s 225(2)
- if subject to a charge, s 226

5 Effect of non-registration of a lease

- s 206(3)
- void as a lease but good & valid as an agreement for a lease
Margaret Chua v Ho Swee Kiew & Ors [1961] MLJ 173
S&M Jewellery Trading Sdn Bhd v Fui Lian-Kwong Sdn Bhd [2015] 8 CLJ
- the court will look into the intention of the parties
Siew Soon Wah v Yong Tong Hong [1973] 1 MLJ 133
- an unregistered lease does not bind a subsequent registered proprietor
Ho Ying Chye v Teh Cheong Huat [1965] 2 MLJ 261

6 Endorsement of Tenancy
- s 213(3)
Than Kok Leong v Low Kim Hai [1983] 1 CLJ 95
Hotel Ambassador v Seapower Sdn Bhd [1991] 1 CLJ 656
- ss 316 & 317 application and procedure for endorsement

7 Rights and obligations of parties

- By way of agreement; or expressly provided or implied by law
- s 229(1)
- implied agreements, ss 230, 231 & 232

8 Termination of leases/tenancies
- Relief under s 7 SRA
- Surrender, s 239
- Forfeiture, ss 234-238

2.3 License

 A license does not grant a person interest in land like lease or tenancy.
 It merely makes an act lawful (without which, it would have been unlawful)
 Licensor is entitled to evict an occupying licensee without court order.
 Licensee is not entitled to sue a third party for nuisance.
 There are two test to determine whether it is a lease/tenancy or a license.
 Exclusive possession test
- It is a tenancy when the grantee is given the exclusive possession for a
certain period of time and in return receives payment. However, this test
is not definitive.
  Expressed intention test
- The parties must have intended to create a lease/tenancy and not a mere
license. i.e. whether a person is granted exclusive possession of the
premise. Intention may be gleaned from the terms of the agreement.
# Woo Yew Chee v Yong Yong Hoo [1979] 1 MLJ 131
F: Appellant had shophouse and entered into an agreement where the Respondent can live at a
portion of the 1st floor for 10 years. Later appellant installed a cupboard and cause obstruct the
passageway. Respondent asked to remove it and request front keys also. Appellant claimed
that it was a the respondent’s stay was on license and not tenancy.
Held: Exclusive possession is no longer a decisive test. The ultimate test is the nature and
quality of the occupancy: whether it is intended that the occupier should have a stake in the
premises sub-let or whether he should have only a personal privilege. In this case, the
agreement used the words ‘chief tenant’ and ‘sub-tenant.’ There were also restrictions in the
agreement such as the chief-tenant can to enter the premise to check the condition. there was
a term for termination of the tenancy upon breach of covenant, and for continuation of the
tenancy on giving six months' notice before expiry of the current tenancy. There was also a
covenant for quiet and uninterrupted enjoyment. As a whole, the court held that there was
intention to make tenancy.

2.4 Effect of lease on Third Party

2.4.1 Registered Lease

 S. 216(1)(a) – the new proprietor will be bound by the express/implied provisions of the
lease
 Lessor is not obliged to obtain consent of lessee/tenant prior to transferring the land to
another BUT lessor should ensure that he does not breach the covenant for quiet
enjoyment in S. 232(1)(a)
2.4.2 Unregistered Lease
 Unregistered lease – not binding on the subsequent proprietor [general rule]
 It can still be enforced as a contract or agreement. S.206(3) [Maragaret Chua v Ho Swee
Kiew]
 If the lessee has gone into possession pursuant to the agmt, the court of equity will not
hesitate to grant specific performance [(Lin Nyuk Chan)
 May be treated as a tenancy-at-will and then revert to a periodic tenancy (Cheng Hang
Guan v Perumahan Farlim)
# Walsh v Lonsdale
Held: If the lease is not registered and the tenant gone into possession, he obtained an
equitable lease – the agreement is still valid as an agreement for lease and can be enforced in
equity for specific performance – mode of payment in equity is payment in advance

2.5 Effect of Tenancy on Third Party

 If an endorsement is made, the tenancy will bind the new proprietor.

 Without endorsement, actual or constructive notice is immaterial as it shall not bind the
new proprietor s.213(3).
 In a judicial sale, tenancy created prior to the registration of a charge (but not endorsed)
will not bind the purchaser – s. 267(2)
# Than Kok Leong v Low Kim Hai [1983] 1 MLJ 187
Held: the said oral agreement came under s.213 of the NLC and was therefore not binding on
the plaintiff. S.213(3) impliedly excludes the question of knowledge or notice actual or
constructive because it says that "unless prior to the date on which the dealing referred to, the
tenancy has become protected by an endorsement on the registered document of title". The
defendant's contention that "actual notice of occupation of possession amounts to constructive
notice of the extent and interest of the person in possession" must therefore fail. The principle
of equitable notice as found in English law has no application in land dealings in Malaysia:
section 6 of the Civil Law Ordinance 1956;

2.6 Tenancy Coupled with Equity

 Tenant is in possession of land/premise based on the encouragement of the landlord

 Relying on this encouragement, the tenant spends his money to improve the land with
the exception of being able to remain on the land.
 This will become tenancy coupled with equity.
# Wan Salimah v Mahmood bin Omar [1998] 5 MLJ 162
F: The Plaintiff entered into a written agreement with the Defendentft. Dft agreed to lease his
share of the land to the Plf for 15 years at 1.8k a year. Plf then built 2 houses on the land. Lease
was not registered because the Dft refused to sign Form 15A. In the meantime, Dft entered into
S&P with the intervener. Plf applied for an order for Form 15A to be executed by the Dft
Held: In the present case, the doctrine of equitable intervention, the agreement would be treated
as an agreement for a lease and since it had been partly executed by possession having been
taken under it and two buildings had since been built on it, the equitable remedy of specific
performance would be undoubtedly an appropriate remedy. The plaintiff certainly had a remedy
against the defendant and a court of equity will strain its power to enforce full performance of
the agreement in favour of the plaintiff. Accordingly, the court ordered the defendant to execute
the lease instrument in Form 15A to grant lease to the plaintiff for a period of 15 years with
respect to the land in accordance with the agreement
2.6.1 Elements of Tenancy Coupled with Equity
1. Assurance (active/passive encouragement)
2. Reliance (belief in representation, reasonable man test)
3. Detriment (acted in good faith and it would be unjust to go back on it)

# Holee Holdings (M) Sdn Bhd v Chai Him & Ors [1997] 4 MLJ 601
Held:
First defendant: No equity with tenancy. Lim Low Tiew (LLT) had only allowed the first defendant
to occupy the land and build the house. However, there is no evidence that LLT had led the first
defendant into belief or expectation that upon him expending money in building the house he
could remain there for as long as he liked or for a considerable length of time.
Third Defendant: With LLT’s consent, agreement and encouragement, a temple was built. The
encouragements were (portion of the land shall always remain property of the temple, (2) the
rights of temple shall not be effected if the land is sold, (3) Temple was expended with LLT’s
encouragement and (4) LT affirmed that nor rent and temple has permanent possession.
However, even if equitable charge is proved, s.226 prohibits LLT from granting any lease without
the chargee’s consent. An equitable estoppel cannot contravene a direct prohibition under the
NLC. Therefore, equity is not binding.
# Ooi Ai Seng v Chan Lin Lam [1973] 2 MLJ 20
F: The plaintiff had entered into a tenancy agreement in December 1958 with the defendant's
father. The agreement was that the plaintiff was to rent out a portion of his land for the tenant
to construct a wooden shed. The defendant was recognized as the new tenant upon his father's
death. In May 1966, the plaintiff issued a notice to the defendant to vacate the land within one
month. When the defendant failed to do so the plaintiff brought the present suit. The defence
was that the defendant had an equitable interest coupled with a tenancy or license and hence
he was entitled to stay as long as he liked.
Held: Appealed was allowed. If there was anything at all suggesting the duration of the tenancy,
the very nature of the construction of the wooden shed would indicate a tenancy of a temporary
nature. First of all, the agreement was that the tenancy shall be permanent. Further more
- Pursuance of the written agreement Ex. P.1, appellant allowed the
respondent's father to erect the shed on the said land,
- He has expended money in doing so (wooden shed)
- That the shed was not demolished after the death of the respondent's
father but the respondent was allowed to take over the tenancy which
included the use of the shed on the same terms and conditions of the
agreement in Ex. P.1.
 - That he has been paying the rents which have been accepted by the
landlord.

2.7 Rights and obligations of parties

 All rights and obligations are laid done expressly in agreements or impliedly by the law.
 Under the Sixth Schedule, the provisions for lease/ sublease may be modified as parties
think fit
 Some implied provisions include;
o s.230: rent must be paid at the times in the manner therein specified and will duly
observe and perform all conditions express or implied to which the land is
subjected.
o s.231: Pay rates, taxes and other outgoings, to keep demised property in repair,
allow the lessor to enter at reasonable times, not to transfer the property without
prior consent.
 s.228, option of renewal may be exercisable at any time before the expiry at any time
before the expiry of the term.
# Luggage Distributors (M) Sdn Bhd v Tan Hor Teng & Anor [1995] 1 MLJ 719
Held: Although there is no mention of an option anywhere else in the tenancy agreement save
in the recital, objectively tested, it was the intention of the parties that the respondents should
have an option to renew the tenancy for a further two-year period. The recital, in the
circumstances of the present case, created a right in the respondents to such an option and in
the appellant, and all those who take the land subject to the tenancy, a corresponding obligation
to honour that option. The recital being silent as to the time frame for the exercise of the option,
it could be exercised by giving notice a reasonable time before the expiry of the first term.

2.8 Termination of Lease/Tenancy

2.8.1 Expiry of term under lease/tenancy

 Court order must be made to recover possession when lease/tenancy comes to an end.
(specific Relief Act ss.7 & 8)
 S. 8 of Specific Relief Aact – if any person is dispossessed without his consent of
immovable property otherwise than in due course of law, he may recover possession
2.8.2 Lease/Tenancy is surrendered to the person entitled to reversion expectant
 s.239(1) of NLC state that any lease, sub-lease or tenancy exempted from registration,
with agreement of the original lessor be surrendered to that person or body.
 Vacating premise without consent does not amount to surrender.
 Application must be made in form 15C
 S. 239(3) – Surrender of tenancy can be effected either by word of mouth/written
instrument
 S. 239(3) – if tenancy is endorsed, apply for cancellation of endorsement
  S. 239(4) – Chargee’s consent is necessary before surrender of lease [to be indicated in
Form 15C]/tenancy can be effected [in writing signed by the chargee/his authorised
agent]

2.8.3 Valid notice to quit

 Notice to quit must be (1) unambiguous, (2) sufficient in length and (3) properly saved.
 Type of tenancy is necessary to determine the period of notice
o i.e. weekly tenancy= a week’s notice
# Lee Ah Low v Cheong Lep Keen [1970] 1 MLJ 7
F: In this case certain premises in Malacca had been let by one Toh Kim Soon to the appellant
for a term of 80 years on a monthly rent of $100. The agreement was not by deed nor was it
registered. The appellant went into occupation and paid the monthly rent.
Held: the learned trial judge was correct in holding that on the proper construction of the
tenancy agreement the tenancy was a monthly tenancy and that this had been terminated by a
valid notiie to quit.

Chapter 3: Charge

3.0 Introduction

 Charges and Lien are recognized in NLC

 Jual janji transaction is not recognized as security transactions under the NLC, but have
been recognized by the courts as pure contract of sale.
 Definition: Transaction whereby the proprietor of alienated land/ of a lease of alienated
land pledges it as security for repayment of a loan/payment of annuity/ other periodical
payment.
 Legal chargee = chargor executes a formal instrument of charge in statutory form in
favour of the chargee. This instrument (+ IDT/duplicate lease) are handed to the
chargee. On registration, the chargee obtains a legal charge over the chargor’s
land/lease [s. 243]

3.1 Common Law Mortgage vs Charge

Common Law Mortgage Charge

Not recognized under the NLC Part XVI on the NLC
Legal title and ownership is transferred to Title is not transferred
mortgagee
Mortgagor has equitable right to redeem the Chargee acquires an interest in the land
land from mortgagee upon repayment of
loan
 Upon default, mortgagee may Upon default, chargee may enforce his
sell/foreclose/take possession of the land. security by way of sale of land [s.253] or
possession [s.271]
Chargee: Orang te meri duit loan + ngambi
tanah as security
Chargor: Orang te ngambi duit + meri tanah
as security

3.2 Equitable charge

 Equitable charge = similar as legal charge BUT the instrument of charge is not registered.
A chargee under equitable charge may enter caveat to protect his interest pending
registration/if the chargor defaults, the chargee can register the instrument and
subsequently sell the land [s. 206(3)]
 If the lender holds an instrument of charge but does not register it, they cannot claim
the remedies under the NLC.
 They should attempt to register the charge and take the remedies given by the NLC.
 They can do so by relying on s.206(3).
# Mahadevan s/o Mahalingam v Manilal & Sons (M) Sdn Bhd [1984] 1 MLJ 266
Held: Although no charge has been executed/created under the NLC, an agreement to secure a
debt (using the debtor’s land) in favour of the creditor may create an equitable charge giving rise
to equitable rights. There is no provision in the National Land Code prohibiting the creation of
equitable charges or liens. Therefore, equitable charges and liens are permissible under our land
law. The words "other charge on land" in section 21(1) of the Limitation Act must be construed
to include equitable charges and liens as well.
# Tan See Hock v Development & Commercial Bank Bhd & Anor [1993] 3 MLJ 250
Held: Unregistered chargee had no legal right to apply for a removal of private caveat under s326
– by removing the private caveat, it would render the acts of the Registrar ultra vires. The word
‘interest’ in s326 refer to a registered owner – therefore, s326 can only be used by registered
owner which includes registered charge. Any other category of persons aggrieved but not
registered – can apply under s327 for an order of court to remove the caveat. Conclusion – no
protection of indefeasibility.

3.2.1 How Equitable Charge is formed

1. Where a charge instrument has been executed but not presented for registration.
# Standard Chartered Bank v Yap Sing Yoke [1989] 2 MLJ 49
Held: The plaintiff had acquired a title in equity over the land.
2. Where no separate title has been issued, a loan agreement and a deed of assignment
are entered into to secure a loan.
# Malayan Banking Bhd v Zahari bin Ahmad [1988] 2 MLJ 135
F: The defendant owed the plaintiff a certain amount of money. Pursuant to the loan, a loan
agreement and a deed of assignment were executed on 16 March 1974. The defendant defaulted
on the repayment of the loan. The plaintiff applied to the court for an order, inter alia, that they
be at liberty to issue a writ of possession in respect of the charged property and for an order that
they be at liberty to sell.
Held: The loan agreement and the deed of assignment created an equitable charge both in form
and substance.

3.3 Legal Charge

 A legal charge can be made by virtue of s.241.

 The purpose of a legal charge under s.241(1)(aa)/(bb) are;
o Repayment of debt
o Payment of any sum other than a debt
o Payment of any annuity or other periodic sum.
 s.242(1)- Form 16A (to secure repayment of a debt)
 s.242(2)- Form 16B (to secure payment of annuity)
 s. 243 – takes effect as security for the loan upon registration
 s. 241(2) – registered proprietor may create 2nd and subsequent charges on the same
piece of land (as charge is merely interest in land).
 s. 244(1) – 1st chargee (chargee who is first in registering) is entitled to the custody of the
IDT/duplicate lease as long as any liability subsists under the charge.
 s. 244(2) – Chargee required to produce the document within a reasonable period at any
Registry/Land Office on the written request of the registered proprietor for any purposes
under the NLC
 s. 244 – to ensure that the registered proprietor does not create subsequent charges
without the 1st chargee’s knowledge
 s. 249 – Implied agreements in all registered charges
 s. 250 – Implied agreements which can be negative

3.3.1 Effect of Registration of Charge

 Chargor can sell the land and the charge shall be transferred to the transferee
 Charge’s priority based on “first come- first served”
 Chargor may only lease subject to consent by charge.
  Can request order of sale under s.253 and under s.251, the chargee will not without
reasonable cause withhold his consent to the granting of the chargor of any lease or
tenancy.
 Chargee has an interest which he can assign to another person.

3.7 Remedies

3.7.1 Order of Sale

 Enable chargee to recoup his loss if default is made in paying interest or principal.
 Any chargee may apply to sell the charged land.
 If the applicant is a second chargee (chargor is not in default of first charge), court may
refuse OFS and order chargor to pay. BUT if chargor is unable to pay, court may order a
sale. First chargee will first receive the amount due to him and only then second chargee
can receive what is due.

a. Notice of Demand
 Before an order of sale could be applied, notice must be served to the chargor.
 There are two types of notice which are;
a) Form 16D (s.254): Notice given in case of breach of provisions of charges. Specifying the
breach and requires it to be remedied within one month or alternative period as agreed
in the charge, or else judicial sale will be taken.
b) Form 16E (s.255): Notice given in case of the sum is payable by the chargor on demand.
The sum shall be payable within one month (no alternative period) and in the event of
failure to do so, judicial sale will be taken without having to serve Form 16D.
 A defective notice will render the notice void.

# Syarikat Kewangan Melayu Raya v Malayan Banking Bhd [1986] 2 MLJ 253(PC)/[1984] 1 MLJ
115 (FC)
Held: A notice of default in From 16D where 2 charges are cited and the sums due under both
charges are lumped together is not defective if the chargor had not been prejudiced/misled by
any defect in the notice

# Kwan Chew Holdings Sdn Bhd v Kwong Yik Bank Bhd [2010] 6 MLJ 157
Held: A notice of demand which does not state the exact and precise amount owing does not
render the notice invalid unless it demands payment of a sum to which the chargee is not
entitled.
# Jacob v OCBC Ipoh [1974] 2 MLJ 161
F: The Appellant (Jacob) had charged his land to the respondent bank (OCBC Bank) to secure the
repayment of an overdraft, which covers an amount of $6, 000 and interest. The appellant
defaulted and the respondent had made a demand for payment via demand letter. Later, the
respondent served a notice of default under form 16D as prescribed by the National Land Code.
Respondent then applied for an order that the land be sold by public auction and the application
was allowed by the High Court. The appellant argued against the order by stating that Form 16E
was not served prior to Form 16D.The issue is which form should be used in an event of a breach
by the charger and demand by the charge for payment.

Held: The interest can be claimed either by 254 or 255.

b. Application to the Court for an Order of Sale
i. Land Office Title
 Application for land administrators order for sale is made with instrument of Form 16G under
s.260.
 Upon receiving, the administrator shall hold and enquiry to the Chargor to present himself
and show cause under s261
 If chargee fails to appear, the application will be dismissed [s.62(2)]
 If Chargor fails to appear, see whether sufficient notice has been given or not – if it had, may
continue with the hearing – if not, adjourn the hearing and serve new summons. [s262(3)]
 At the conclusion of the enquiry, the court shall order for the sale of the land or lease to which
the charge in question relates unless he is satisfied of the existence to the cause to the
contrary. (s263(3)) Such order shall be made under Form 16H.
Powers of Land Administrator
 Suppiah v Ponnampalam: Collector was bound to accept the register and once he was
satisfied that the charge was on the register, the only question for him to decide was
whether or not there had been default in the payments provided for. If he was not so
satisfied, he could make no order. If he was so satisfied, he was obliged to make an order
LA has no power to go behind the Register to investigate allegations of
fraud/misrepresentation.
 Gurpal Sigh v Kananayer: The collector has no power to hear pleadings and defense.
 Government of Malaysia v Omar bin Haji Ahmad: The payment of loans should have
been made by deduction from the monthly salary but did not due to technical issues.
Respondent requested to pay via monthly instalments. The issue was whether Collector
has power to order that the Resp continue to pay his monthly installments and grant a
period of 4 years for the resp to settle arrears of instalments. The court held the negative
and the collector must give an order for sale.
  Lim Yoke Foo v Eu Finance: Once the order of sale is granted by the LA, they become
functus officio and the LA have no power to set aside the order.
 S. 264A – L.A may postpone OFS only once for a period not exceeding 3 months OR cancel
OFS upon application of charge with chargor’s consent [Form 16O]
ii. Registry Title
 For Registry title, an application for Order of Sale must be made in accordance with Order
83 of Rule of Courts 2012. (s.256).
 Order 83 applies when a claim for payment of monies secured by a charge (legal and
equitable), sale of the charged properly and foreclosure.
 The order shall be made by Form 16H (s.257) which will provide (a) sale shall be made by
auction. (b) sale shall be made no less than one month from the day order of sale is made,
(c) specify the amount due to the charge (d) fix reserved price and etc
 Failure to comply with s.257 would render the order of sale invalid Maimunah bte Megat
Montak v Maybank Finance Bhd.
 S.258(1)(b): sale must be publicly advertised


c. Cause to Contrary

 Under s.256(3), the court shall order the sale of the land unless it is satisfied of the
existence of any cause to the contrary.
# Low Lee Lian v Ban Hin Lee Bank Bhd [1997] 1 MLJ 77:
Held: Court held that there are only 3 cause to the contrary which are.
1. The case of the chargor fells within the vitiating factor of indefeasibility of title
under s340(2),
2. Chargee had failed to comply with the conditions precedent to the application for
an order of sale (example, did not give notice); and
3. The order of sale will be contrary to the ROL and equity.

(failure to give proper account of the sums due does not amount to cause to the contrary)
# Keng Soon Finance Bhd v MK Retnam Holdings [1989] 1 MLJ 457

Held: ‘Shall’ in s. 256(3) is mandatory – court SHALL order a sale unless there is cause to the
contrary. Feeling sorry for the borrower/ the lender was being arrogant/boorish/unmannerly
is not cause to the contrary. In the case, clause 3 of the Sales and purchase agreement allowed
the vendor to subject the land to encumbrances. The vendor charged the land and later
defaulted which lead to order for sale. Clause 3 of the S&P is valid and effective authority
given by the purchasers to the respondent to charge the land. The appellant’s charge was
 furthermore duly registered. (s. 340) On the argument of equity, the purchaser has expressly
consented to the creation of the chargee’s interest and equity could not prevail over
registered interest.
# Public Finance Bhd v Hock Seng Housing [1992] 1 MLJ 442
Held: The chargee must not only come to court with proof that the chargor has defaulted,
but also with proof that the chargee himself is free of fault and that he was not guilty of any
unreasonable conduct, and that there was no right of innocent third parties to be affected by
the order. This finding stands despite the fact that the chargee has priority over the
purchasers by virtue of s 340 of the National Land Code 1965.BUT the high-handedness of
the plaintiffs in trying to get more than what they ought to receive from innocent purchasers
can only amount to cause to contrary.
# Tai Lee Finance v OA [1983] 1 MLJ 81
Held: The respondents had not proved beyond reasonable doubt that the appellant had acted
dishonestly, willfully and consciously disregarding or violating the right of the respondents or
in any way in collusion with the chargor.

e. Effect of sale
1. Certificate of sale (Form 16F) will be treated as an instrument of dealing capable of being
registered

2. Upon registration of the certificate of sale, the title of the chargor will pass and vest in
the purchaser – chargor will be freed and discharged from the charge and any subsequent
charge – s267(1)

3. Tenancy exempt from registration granted by the chargor after the date of the charge will
not bind the new purchaser unless the tenant had the RDT endorsed – s267(2), see Hotel
Ambassador v Seapower Sdn Bhd

4. The purchase money resulted from the sale will be distributed as followed

a) Payment of rent, taxes, etc to the State/local authority/lessor

b) Payment of expenses incurred due to the making and executing the order of sale
c) Payment of the amount due under the charge at the time of sale
d) Payment of subsequent charges, in the order of priority (s268)

5. Upon the receipt in writing from the court/LA/charge that the full amount of purchase
money has been paid by the purchaser, the purchaser shall be discharge of his further
obligation to pay for the purchase money – under no obligation to make sure that the
purchase money will be distributed according to s268 and shall not be liable for any loss
due to the failure – s269
3.7.2 Possession

 In case of default by chargor, chargee can opt to enter into possession of the land
charged instead of obtaining an order to sell the land. (s.271)
 Possession is only limited to registry title and only for the first chargee. (s.270).
 Possession is by two methods which are;
a) By receipt of rent - Not occupying the land, but continue receiving rent payable to
chargor OR granting new lease and receiving rent – chargee have to serve notice to
the lessee/tenant in Form 16J in order for the rights to receive rent of the chargor to
be vested in the chargee – s272(1)(a).
b) By occupying the land – the chargee have to serve notice to chargor in Form 16K –
s272(1)(b).
 A chargee in possession of any land by occupation shall be entitled to manage the land
and take all the profits thereof, but shall be 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. (s.274)
 Section 275: Power of the chargee to grant leases after taking possession
 Section 277: Application of the rents/profits gained due to the possession

3.8 Discharge of Charge

 Section 278 – section 280

 3 ways to discharge a charge;
1. Payment of all the amount due to the chargee
2. Discharge make by the chargee himself in Form 16N (s278)
3. Death, absence or legal disability of the chargee – if it is proven that the chargee had
died or is nowhere to be found or unable to trace the person who is authorized to
receive the payment AND the amount of money due, the chargor can deposit the
money with the Registrar 1st – after doing so, he will be discharge of the charge
The money will then be claimed by person entitled to it within 6 years, or else it will
be paid into the Consolidated Fund of the State.
Chapter 4: Lien

4.0 Introduction

 Another form of security transaction

 Created by any proprietor/lessee by depositing IDT/duplicate lease with lender
 Deposit entitles person holding the title/duplicate lease to apply for the entry of a lien-
holder’s caveat over the land/lease – lien is then created
 Entry of lien-holder’s caveat provides lender with statutory but non-registrable interest in the
land/lease.
 S. 281(2) – lien-holder needs to obtain judgment debt, and only then he is entitled to apply
for OFS (cf charge).

4.1 Requirements of Liens

(a) Deposit of IDT

 If a person surrenders the title, he no longer has the right to retain caveat as essential feature
of lien.

# ORMORM Manickavasagam Chetty v TJ McGregor [1933] MLJ 295

Held: Lien created under the provisions of section 134 of the Land Code is not necessarily
destroyed when the lien-holder loses possession nor does the loss of possession prove an
intention on the part of the Respondent to abandon his lien. Some stress was laid upon a letter
dated 2nd December, 1931, a copy of which marked "SC9" is attached to the Applicant's affidavit
of the 17th January, 1933, and it is argued that it is an irresistible inference from that that the
Respondent did at that time intend to withdraw his caveat against the undivided interest of S. L.
S. and lodge another caveat against the land which was to become the sole property of S. L. S.
Mr. Will has explained the circumstances under which this letter was written.
# Hong Leong Bank Bhd v Staghorn [2008] 2 MLJ 622
Held: s.281 does not specify the borrower and neither does it restrict the loan to a loan to the
registered proprietor. The loan may be a loan to a third party. Where the loan is to a third party.
It enables or empowers the registered proprietor to deposit his issue document of title with any
person or body as security for a loan. It does not lay down the procedure for or the manner of
depositing. The registered proprietor need not need to personally deposited the IDT as long as if
he wills it.

(b) Deposited as security for loan

 IDT must have been deposited with the lender as security for loan (not for eg
safekeeping/facilitate subdivision of land).
# Perwira Habib Bank v Tin Siang Sdn Bhd [1992] 3 CLJ 263

Held: Once it was deposited as security for a loan, the lender was entitled to a lien despite the
absence of an agreement for the entry of a lien-holder’s caveat.

# Nallammal & Anor v Karuppannan & Anor [1993] 3 MLJ 476

Held: The deposit of title had never been authorized by the first plaintiff, the proprietor of the
disputed land. It was done by fraud or misrepresentation. There was insufficient proof of the
alleged Torrens lien or statutory lien purported to be created by the first plaintiff. On the contrary,
the plaintiffs had discharged the burden of proving that the title of the disputed land had been
wrongfully taken from the first plaintiff. Therefore, the lien-holder's caveat was likewise
wrongfully lodged on the disputed land.

(c) Lien-holder’s caveat

 S. 330
 Lien is created upon entry of lien-holder’s caveat and not before
 Lender is entitled to exercise his right to enter lien-holder’s caveat at any time.
 In cases of conflicting equities, a lender who is prior in time and with whom the IDT has been
deposited will not lose his priority merely on account of his failure to enter caveat
 Failure to enter a lien-holder’s caveat does not prevent the lender from acquiring a right to
an equitable lien under the loan agreement – s. 206(3)
# Mercantile Bank Ltd v OA of the Property of How Han Teh [1969] 2 MLJ 196
Held: Although no lien under NLC is created until the entry of lien-holder’s caveat, lender has a
right to lien in equity.
# Standard Chartered Bank v Yap Sing Yoke [1989] 2 MLJ 49
F: Clerk negligence so lupa ka register. After 7 months ka register tapi D2 dah enter caveat for a
judgement debt obtained against D1. D2 then entered prohibitory order.. is there caveatable
interest?
Held: IDT was at all time in the custody of the bank, and bank therefore has acquired a lien in
equity over the land. The bank has the right to lodge a caveat and may do so at any time. at the
time when 2nd defendent lodged his caveat, he had no legal/equitable interest over the land (i.e
no caveatable interest). On the other hand, upon the deposit of the IDT to secure a loan, the bank
immediately acquires an equitable interest. Retrospective. Assuming that D2 had equitable
interest, then does he has the priority of equity as against P? No. reffered to cases on uncaveated
lien
# Paramoo v Zeno [1968] 2 MLJ 230
Held: Charge is distinct from lien. Lien has an independent existence apart from a charge, so
that if a charge is avoided for non-compliance with the law, lien is not avoided also provided of
course it complies with the law.

4.2 Right Against third party

 In a case of conflicting equities, a lender who is prior in time AND with whom IDT has
been deposited, will not lose priority merely due to his failure to enter lien-holder’s
caveat
 Right of lender prevails over JC who enters a PO against the land (provided he is first in
time and has IDT)

4.3 Remedies

 Lien-holder entitled to apply for OFS

 S. 281(2) – must first obtain judgment debt
 If right to recover debt secured under lien is statute barred, lien-holder loses his right to
enforce lien by way of OFS

4.4 Equitable Lien

 Absence of lien-holder’s caveat gives the lender a right to lien in equity

 Lien-holder must retain the IDT (if he fails, he loses the right in equity to the lien)

Chapter 5: Caveat

5.0 Introduction

 There are categories of restraints on dealing

 Caveat and Prohibitory Order are restraints provided under the NLC
 Lis Pendes and Injunctions are restraints provided outside the NLC
 Caveat preserves the statuts quo of contending parties by suspending the process of
registration until conflicting claims to the title to/an interest in the land have been
resolved.
 A caveat does not enhance a caveator’s interest/claim to the land nor does it create legal
interest in the land.
# Macon Engineers Sdn Bhd v Goh Hooi Yin [1976] 2 MLJ 53
Held: The entry of the caveat does not make the claim or right either better or worse

5.1 Registrar’s Caveat

 It is also known as the official caveat.

 Registrar’s Caveat can be entered into by instrument of 19F under s.321.
  Under s.321(3), a Registrar’s Caveat does not have a lifespan. It shall continue to stay into
force as long as needed.
 s.319(1)(b)- Prohibits the entry of all other caveat, lease, charge or tenancy.
 s.319(2)- Prohibition is retrospective in nature in regards to all other registration/entry
that has not come into force.
 s.319(3)- Registrar may waive the prohibition if he is satisfied that the interest of his
caveat is protecting would not be harmed by the registration of the dealing/ endorsement
of tenancy exempt from registration/ entry of lien-holder’s caveat
 The purpose is to: (s.320)

1. Prevent fraud/improper dealing.

- Registrar is to examine the allegations of fraud/improper purpose.
- It is sufficient that there is evidence raising suspicions of such dealings
# Seet Soh Ngoh v Venkateswara [1976] 1 MLJ 242
F: The plaintiff purchased a piece of land from the first defendant, the developer, who
contracted to build a house on it. It was agreed between the plaintiff and the first defendant
that progress payments were to be made by the plaintiff at various stages of the building. At
the material time, the plaintiff had paid to the first defendant more progress money than it
was entitled to. The first defendant sought to repudiate the agreement on the ground that
the plaintiff had no money to complete the purchase.
Held: Section 320(1)(a) of the National Land Code empowers the Registrar of Titles to enter
his caveat to prevent fraud and improper dealing, and if such a possible dealing is brought to
the notice of the court and the Registrar is before the court, the court can order him to do so.
The first defendant had no right to repudiate the agreement and rely on a cause (that the
purchaser had no money to complete the purchase) which had not arisen;
# Agrimal Project v Pendaftar Hakmilik, Pejabat Tanah Dan Galian, Johor & Ors [1998] 5
MLJ 673
Held: The information relayed by the police to the registrar constituted in law sufficient
material for the registrar to exercise his discretion to enter the Registrar's caveat which
should remain until investigations had been completed by police. Information relayed by
PDRM is sufficient material for the Registrar to exercise his discretion to enter RC and the RC
should remain until investigations have been completed.
2. Protect interest of the federation.

- i.e beneficial interests in land arising under trusts

# Registrar of Titles, Johore v Temenggong Securities Ltd [1976] 2 MLJ 44
 F: The Revenue department had learned that Li-Ta Company was proposing to sell its land at
Johore. It had started an action for recovery of the tax on September 24, 1972. On October
2,1972, the Department of Inland Revenue wrote a letter to the Registrar of Land Titles
requesting him to enter a Registrar's caveat in respect of the land and this was done on
October 11, 1972.
Held: the interests which the Registrar of Titles was empowered to protect under section
320(1)(b) were confined to interests in the land that were recognised by the Land Code as
being either registrable or otherwise entitled to protection. An unsecured creditor of the
proprietor of the land had no such interest in the land;
2. Secure debt due to government.
3.

# Development & Commercial Bank Bhd v Land Administrator, WP [1991] 2 MLJ 180
F: In this case, the registered proprietor of a piece of land had executed a third party charge
to secure the indebtedness of his company to the appellant bank. Subsequently, some four
years after the charge was registered, the first respondent entered a registrar's caveat on the
charged land at the request of the Inland Revenue Department.
Held: – there is nothing unlawful in the entry of RC on a land with an existing charge. Remedy
for chargee then is to remove the disputed caveat.
5.1.1 Procedure to enter a Registrar’s Caveat:
 s.321
 Form 19F + endorse on any document of title the words ‘Registrar’s Caveat Entered’ +
statement of time of entry.
 Form 19A served on relevant parties.
 Enables chargee/any aggrieved person to appeal against entry of RC within 3 months from
the date of communication of the entry
 Registrar is not obliged to enter caveat even if circumstances under s. 320 occur
(discretionary).
 However, the court under s.417 can direct the Registrar/LA to do all such things necessary
to give effect to any judgement in any proceedings relating to land and it shall be the duty
of the Registrar/LA to comply with the order.
# Tan Soo Bing v Tan Kooi Fook [1996] 3 MLJ 547
Held: A person cannot go straight to court to apply for RC to be entered. Court has no jurisdiction
to entertain such an application. He must apply to the Registrar. Registrar then has a duty to
decide whether or not to enter RC (i.e whether it is necessary or desirable as per s. 320). If
registrar refuses his application, his remedy is to appeal to the court against the refusal (s. 418).
5.1.2 Cancellation of Registrar’s Caveat (s.321(3))
 On the Registrar’s own motion
 Proprietor’s application (s.321(3)(b))
 Court order resulting from appeal against Registrar’s Declaration (s.321(3)(c))
 Proprietor’s application was refused, hence appeal (s.418.)

5.2 Private Caveat

 s.322- private caveat entered by Registrar on RDT upon application of persons specified
in s. 323 (registrable interest, trust, guardian of minor claiming trust)
 S. 324 – ‘ … shall as soon as may be [upon receiving the application] (and without being
concerned to enquire into the validity of the claim on which the [private caveat] is based)
give effect to [the application]…’
 Registrar has no discretion in deciding whether or not to enter a caveat provided caveat
application is in the correct form.
# Nanyang Development (1966) Sdn Bhd v How Swee Poh [1970] 1 MLJ 145
Held: Upon receiving application of PC, the administrative body exercise a purely administrative
function. Under 324(1), it shall not concern itself with the validity of the claim on which the
application is based and must grant the PC when everything is in order.
# Chng Sin Poey v Quek Lian Meng [1979] 1 MLJ 98
Held: Although under section 324(1) of the National Land Code the Registrar was not required to
enquire into the validity of the claim, this did not mean that he could not reject an application
for entry of a caveat when it did not comply with the substance of the form, or, as in this case,
when the application did not specify whether the caveat was to bind the land itself or a particular
interest. Failure to express the scope of the private caveat (i.e bind the land itself/undivided
share/a particular interest only) is fatal to the entry of the caveat and may be a valid ground for
its removal.
# Ong Chat Pang v Valliappa Chettiar [1971] 1 MLJ 224
Held: So, long as all the formalities are complied with, the Registrar has no power to reject a
caveat. He cannot require the caveator to establish his claim. He merely determines whether, on
the facts stated in the caveat and verified by the caveator’s affirmation, there is possibly an
interest in land accruing to the caveator.

# Sing Lian Express Sdn Bhd v Soh Kim Tee [1974] 2 MLJ 24
F: Whether the respondent has caveatable interest.
Held: The option to purchase provided by the applicant is unconditional and binding contract.
There is conclusive evidence that respondent is willing to purchase the land at the stated price
(offered 10% deposit, draft S&P prepared, applicant invited to state when balance purchase price
to be paid, forfeiture of deposit if balance was not paid in stipulated time). Respondent has a
caveatable interest.
5.2.1 Entry of Private Caveat (s.323(2)
 Form 19B
 Must be attested per s.211
 State the nature which his application is based on
 Prescribed fee
 Form 19A served on relevant parties

5.2.2 Effect (s.322(2))

 Prohibits registration of any instrument of dealing

 Prohibits endorsement of tenancy exempt from registration
 Prohibits of lien-holder’s caveat (others can)
 Non-retrospective s.322(4)
 There is no reason to prohibit multiple caveats entered

# Woon Kim Poh v Sa’amah bte Hj Kasim [1987] 1 MLJ 400

Held: under s. 322 of NLC, so long as a caveat is in force, registration, endorsement/entry on RDT of any
instrument of dealing shall be prohibited. The effect of a private 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

5.2.3 Removal of Private Caveat

1. Withdrawal of Private Caveat (s.325)

- Form 19G
- Prescribed fees
- Presented to Registrar by caveator/personal representative.
- Registrar receives notice of withdrawal
- Cancel entry of caveat on RDT and note the reason
- Gives notice of withdrawal to proprietor

2. Removal of Private Caveat by Registrar (s.326)

- Application by any person whose interest is bound by private caveat may apply. (s.327(1))
- The applicant must have registrable interest and s affected by the caveat
- Form 19H + fees
- Registrar serves Form 19C to caeator
- Registrar makes an endorsement on the RDT that Form 19C has been served
- Caveat shall lapse at the expiry of 2 months as specified under 19C
 - Registrar shall cancel the PC unless served with court order to extend the time provided.

# Alagarsamy v Tai Phaik Kee [1992] 1 MLJ 665

Held: By reason of s 431 of the Code, service of Form 19C need not be personal. Even if the caveator
had not in fact received or had brought to his attention Form 19C, its service must be deemed good
if s 431 of the Code was complied with.

Aggrieved Party

- Unable to affect a sale of the land as the caveat prevents registration of certificate of sale.
- A Lessee is prevented from subletting the land
- A co-propritor is unable to perform his obligation under S&P

3.