Judgment

Ahmad Fairuz, JCA

(delivering the judgment of the court)

1. The appellant is the purchaser of a piece of land held under GM 7965, Lot 2400, Mukim Kuala Kuantan ("the land"). The vendors namely, Mohamed Naim Ahmad, Che Mah Rahaman and Mohd Nasir Hj Ahmad are the registered owners of the land. Both the appellant and the vendors signed a sale and purchase agreement ("the SPA") on November 5, 1996.

2. The agreed price of the sale was RM392,222.95. A sum of RM45,607.32 was paid by the appellant to the vendors as deposit. In compliance with the requirement of the SPA, the balance sum of RM346,615.63 was paid by the appellant to its solicitors on February 4, 1997.

3. The appellant, however, has been unable to register the land in its name due to the presence of a private caveat lodged by the respondent on January 21, 1997.

4. Consequently, by an originating summons dated February 17, 1997, the appellant applied for the removal of the caveat. On November 28, 1997, the learned Judge dismissed the appellant's application. Hence this present appeal.

5. We heard this appeal on April 29, 1999 and we allowed it with costs. At the same time we ordered the deposit to be refunded to the appellant. We now give our reasons.

6. The respondent claims title to, or a registrable interest in, a portion measuring 100 feet by 40 feet of the land. This portion was purchased by the respondent from one Omar Mohamad Aris (deceased) who was then the registered proprietor of the land.

7. The respondent had paid the full purchase price of RM8,000 to the deceased. The original issue document of title of the land was handed over to the respondent who, immediately after the execution of the sale and purchase agreement dated January 22, 1973 ("the 1973 SPA") pertaining to the sale of the portion ("the said portion"), entered into possession of the said portion and had exercised the right of ownership to the said portion by renting the same out to various persons. The respondent had also paid all relevant quit rents and assessments due on the said land.

8. The respondent has, however, not as yet registered his interest in the said portion of the land. Learned counsel for the respondent highlighted the fact that the 1973 SPA was prepared by the then Mr. V Balendran, a solicitor practising with the firm of Messrs Maxwell Kenion Cowdy & Jones, Kuantan.

9. The respondent was unable to produce a copy of the 1973 SPA as he was never handed a copy by the said solicitors despite his numerous requests for the copy. A copy of a letter dated January 20, 1978 from Messrs Balendran & Chong (formerly known as Messrs Maxwell Kenion Cowdy & Jones) was produced as evidence of the existence of the 1973 SPA.

10. Before us, learned counsel for the appellant contended that the respondent's caveat is procedurally bad in that it fails to expressly limit its protection only to his claim of the said portion. Consequently, counsel submitted that the caveat must, on that ground alone, be cancelled. The appellant further argued that the evidence produced by the respondent are inherently weak and unreliable to support his claim of ownership to the said portion. No sale and purchase agreement had been produced. Only quit rents and assessment receipts were tendered as exhibits.

11. The first assertion of ownership by the respondent was the lodging of the caveat some 24 years after the purchase transaction in 1973. These evidence, according to the appellant, show that there are no serious issues to be tried. As such, the caveat ought to be removed. It was also contended by the appellant that the claim of the respondent can be quantified in damages. Thus, the balance of convenience and justice would favour the removal of the caveat.

12. It is clear that, on the authority of Eng Mee Yong v Letchumanan [1979] 2 MLJ 212 PC the appellant has to satisfy the trial Judge that there are sufficient grounds in fact and law for treating him as a person claiming such an interest in the land as would, if it were established, make him aggrieved by the existence of the caveat (See [1979] 2 MLJ 212 (PC) at p 215 FG [column 1]).

13. Thus, the appellant, through its affidavit of February 13, 1997, produced the SPA dated November 5, 1996 which shows that the appellant bought the land from the registered owners of the land. The appellant had paid the full purchase price. The only obstacle to the transfer of the land title to itself is the respondent's caveat. The title of the registered owners was never challenged by the respondent. By s 340 of the National Land Code (NLC), the registered owners' title to the land is indefeasible. It is therefore obvious that the appellant has shown that he is entitled to be registered as owner of the land.

14. As to whether the appellant is an aggrieved party under s 327 of the NLC, this court had, in the case of Wu Shu Cheng v Raja Zainal Abidin [1997] 3 AMR 2186 at p 2198 lines 5-10, said:

    The Code contains no definition on who is an aggrieved person. To my mind, the word 'aggrieved' must be given its ordinary meaning. To be aggrieved means one is dissatisfied with or adversely affected by a wrongful act of someone. An aggrieved person is therefore a person whose legal right or interest is adversely affected by the wrongful act or conduct of another person or body. The category of aggrieved persons is never closed.

15. On whether the act or conduct of the respondent in registering the caveat was a wrongful act or conduct, the appellant drew the attention of this court to the following matters:

    1. the respondent purported to purchase the said portion in January 1973 vide the 1973 SPA (which the respondent was unable to produce as evidence);

    2. the respondent waited for about 24 years to enter a private caveat on the land on January 21, 1997 whilst the appellant had already entered its caveat on November 8, 1996;

    3. the respondent's affidavits do not show that reasonable attempts had been made to secure the 1973 SPA and to register his title to the said portion;

    4. the respondent tendered quit rent and assessment receipts to support his assertion of his ownership of the land.

16. These aforementioned matters, according to the appellant, are evidence which are inherently weak, unreliable and incapable of raising serious issues to be tried. We agree with the appellant. The evidence presented by the affidavits are insufficient, on the balance of probabilities, to show that the respondent's claim to an interest in the said portion has raised any serious questions to be tried. Consequently the conduct or act of the respondent in registering the caveat must be a wrongful conduct or act. Hence, the appellant has proven that he is an aggrieved party under s 327 of the NLC and as envisaged by the case of Wu Shu Cheng (supra).

17. On the issue of serious questions to be tried the Privy Council in Eng Mee Yong (supra) held that the caveator, in an application by the caveatee under s 327 of the NLC for removal of a caveat, must:

    1. satisfy the court that on the evidence presented to it his claim to an interest in the property does raise a serious question to be tried; and having done so he must -

    2. go on to show that on the balance of convenience it would be better to maintain the status quo until the trial of the action, by preventing the caveatee from disposing of his land to some third party.

18. As we had held that the evidence tendered in support of the respondent's claim to the said portion failed to raise any serious questions to be tried, the appellant, on the strength of Eng Mee Yong, is consequently entitled to remove the caveat entered by the respondent.

19. The appellant also contended that the respondent's caveat is procedurally bad in that it fails to expressly limit its protection only to his claim of the said portion and on that ground alone the appellant is entitled to remove the caveat. He relied on the case of Chor Phaik Har v Farlim Properties Sdn Bhd [1994] 3 AMR 2103. Edgar Joseph Jr, FCJ in delivering the judgment of the Federal Court made reference to the case of Tan Heng Poh v Tan Boon Thong [1992] 2 MLJ 1 wherein the then Supreme Court held that the caveat was invalid because it was expressed to bind the whole of the lands whilst the caveator's interest in the lands was limited to the eight parcels of land only. The Supreme Court also said (at p 8):

    In our view, the fact that the caveator was entitled until the will of a one-sixth share in the eight parcels of land, did not mean that his share was ascertainable before administration was complete... As such, until the administration was complete, the value or extent of the residue on which his one-sixth share depended, remained uncertain. On established authorities, clearly the caveator in the present appeal had no caveatable claim or interests in any of the property when the caveat was entered. There was no evidence that the administration of the estate was already complete to ascertain the actual worth of the residue for final distribution.

    As to the proviso, the Supreme Court said (at pp 8 and 9):

    The nature and effect of private caveats under s 322 is now subject to an omnibus proviso that, 'such a caveat shall not be capable of being entered in respect of a part of the land'. Thus, notwithstanding the fact that a person can bring himself under one of the categories of persons under s 323 (1) at whose instance a private caveat may be entered, the Registrar is now prevented from entering a caveat whether expressly intended to bind the land or merely a particular interest therein, if the caveator's claim or interest under s 323(1) relates to only part of the land. In our opinion, this is the only reasonable interpretation of the new proviso. Any other interpretation would appear to make it meaningless, and inconsistent with the Torrens system of giving certainty and indefeasibility to registration of land title, save for fraud or misrepresentation in the transfer or registration itself.

20. Referring to the aforementioned part of the Supreme Court's judgment on the proviso, the Federal Court in Chor Phaik Har, said (at p 2144):

    These remarks as to the effect of the proviso to s 322(1) were unnecessary to the conclusion and therefore are really obiter dicta.

21. The Federal Court in Chor Phaik Har was considering a preliminary point of law which resolves itself into the question of the true meaning and ambit of the proviso to s 322(1) of the National Land Code 1965. On that point the Federal Court held that the proviso prohibits the entry of a caveat over part of the land. It also endorsed the following passages in the judgment of Suffian LP in N Vangedaselam v Mahadevan [1976] 2 MLJ 161 at pp 162-163:

    I am of the opinion .... you either caveat the whole land or not at all, and that if you claim a registrable interest in a portion you may caveat the whole land, provided that you expressly limit the effect of your caveat to protect only your claim .... In that event when applying for entry of a caveat he should so state in Form 19B in paragraph I, and in paragraph 2 he should give the grounds of his claim. (He should not claim a caveat to be expressed to bind the land itself.) He should also cause to be inserted in Form 19A a description of the particular interest claimed and a description of the effect of the caveat.

22. As pointed out by the appellant, Form 19B which is found at p 188 of the record of appeal, discloses an application for caveat of the whole land. There is nothing in paragraph 1 of the form to indicate that the caveat is to protect the caveator's interest in the said portion. Under the circumstances, we are compelled, on the basis of the above quoted authorities, to agree with the appellant that on that ground too, the appellant is entitled to remove the respondent's caveat.

23. We would now refer to the respondent's affidavit of August 12, 1997 wherein the respondent affirmed that he had filed one suit against Messrs Balendran Chong & Bodi and another suit against the registered owners of the land that had sold the land to the appellant (hereinafter referred to as "the registered owners").

24. Both the suits were filed on July 7, 1997 i.e. about six months after the respondent's caveat was lodged (which is on January 21, 1997). In the suit against the registered owners, the respondent claims for specific performance of the 1973 SPA. In this connection we wish to refer to the case of Kumpulan Sua Betong Sdn Bhd v Dataran Segar Sdn Bhd [1992] 1 MLJ 263 which is case No 18 in the respondent's bundle of authorities.

25. The Supreme Court in that case referred to the case of Teo Ai Choo v Leong Sze Hian [1982] 2 MLJ 12 which in turn referred to the case of Plimmer Bros v St Maur (1907) 26 NZLR 294. The Supreme Court held that Teo Ai Choo does not involve a delay of lodging a caveat but involves delay in the commencement of an action by the defendant in respect of their dispute. As such the Supreme Court was of the view that Teo Ai Choo did not avail the respondent (in Kumpulan Sua Betong Sdn Bhd).

26. Plimmer Bros, like Teo Ai Choo, involves an application by summons to remove a caveat against the land in question in the case. The summons was taken out on July 30, more than a month after the caveat was lodged. Up to the time of hearing the summons, the defendant had commenced no action against the plaintiff for the performance of the relevant contract. Stout, CJ held that it was the defendant's duty to commence an action promptly if he considered himself entitled to specific performance. The learned Chief Justice referred to the case of Glasbrook v Richardson (23 WR 51) which held that a delay of two months and a half was too long. In Plimmer Bros, nothing was done for nearly 16 months and then a caveat was lodged. More than a month had elapsed since then and still no action has been commenced. On this, the learned Stout, CJ then said:

    In my opinion an action for specific performance under such circumstances would be hopeless, and a caveat under such circumstances must be deemed vexatious.

27. The learned Chief Justice was also of the opinion that it is inequitable to prevent a man dealing with his property after such a long delay and the court will not lend its assistance to such a proceeding. The Chief Justice consequently removed the caveat.

28. In Plimmer Bros (supra) the caveat was lodged after 16 months. In the appeal before us, the caveat was lodged 24 years after the 1973 SPA. In Glasbrook v Richardson (supra) a delay of 2½ months in instituting action for specific performance was held to be too long. The respondent in the appeal before us took six months after lodging his caveat to institute action for specific performance. Under such circumstances and in the light of Plimmer Bros and Glasbrook we are satisfied that the learned trial Judge was plainly wrong in the exercise of his discretion in refusing to remove the caveat.

29. Finally, we would like to refer to the case of Chua Hee Hung v QBE Supreme Insurance Bhd [1990] 1 MLJ 80 SC [case No 33 in the respondent's bundle of authorities]. The Supreme Court in this case made reference to the case of United Malayan Banking Corporation Bhd v Goh Tuan Laye [1976] 1 MLJ 169 ['UMBC case']. The Federal Court in UMBC was considering, inter alia, the priority of two parties with equitable interests. The UMBC case is therefore relevant to the appeal before us.

30. The respondent in our appeal claims to have bought the said portion from the registered owner. He had paid the purchase price. Assuming these facts are proven, the respondent, consequently is the equitable owner of the said portion [Karuppiah Chettiar v Subramaniam [1972] 2 MLJ 116]. Similarly, the appellant had bought the land and paid the purchase price to the registered owners of the land. The appellant, therefore, is the equitable owner of the land which includes the said portion. When considering which equitable interest the court should protect, the Federal Court, in UMBC said (at p 171):

    The law applicable was declared by the Full Court of New South Wales in Butler v Fairclough, in terms which were explicitly approved by the Privy Council in Abigail v Lapin. These are the words of the Australian court which were approved: It must now be taken to be well settled that under the Australian System of registration of titles to land the courts will recognise equitable estates and right except so far as they are precluded from doing so by the statutes. This recognition is, indeed, the foundation of the scheme of caveats which enable such rights to be temporarily protected in anticipation of legal proceedings. In dealing with such equitable rights the court in general act upon the principles which are applicable to equitable interests in land which is not subject to the Act. In the case of a contest between two equitable claimants the first in time, all other things being equal is entitled to priority. But all other things must be equal, and the claimant who is first in time may lose his priority by any act or omission which had or might have had the effect of inducing a claimant later in time to act to his prejudice ....

31. The Federal Court in UMBC followed the above-cited principles in the Australian case of Butler v Fairclough 23 CLR, 78, 91. We would do the same in this appeal before us. Applying the abovementioned principles to this appeal, we hold that the respondent, although being the first in time in acquiring the equitable ownership to the said portion, has lost his priority by his indolence and omission to register his title to the said portion or to enter a caveat within reasonable time. This conduct of the respondent certainly had caused prejudice to the appellant. If the appellant had known about the respondent's equitable interest in the said portion, the appellant might have not bought the land or might have bought the land at a cheaper price. Under these circumstances, the appellant is entitled to priority. As such the caveat should have been removed.

Cases

Butler v Fairclough 23 CLR 78; Chor Phaik Har v Farlim Properties Sdn Bhd [1994] 3 AMR 2103; Eng Mee Yong v V Letchumanan [1979] 2 MLJ 212 PC; Glasbrook v Richardson 23 WR 51; N Vangedaselam v Mahadevan [1976] 2 MLJ 161; Plimmer Bros v St Maur (1907) 26 NZLR 294; Tan Heng Poh v Tan Boon Thong [1992] 2 MLJ 1; Teo Ai Choo v Leong Sze Hian [1982] 2 MLJ 12; United Malayan Banking Corporation Bhd v Goh Tuan Laye [1976] 1 MLJ 169; Wu Shu Cheng v Raja Zainal Abidin [1997] 3 AMR 2186; Kumpulan Sua Belong Sdn Bhd v Dataran Segar Sdn Bhd [1992] 1 MLJ 263; Chua Hee Hung v QBE Supreme Insurance Bhd [1990] 1 MLJ 80 SC; Karuppiah Chettiar v Subramaniam [1972] 2 MLJ 116;

Legislations

National Land Code 1965: s.322(1), s.327, s.340, Form 19B

Representations

David Morias, Bodipalar and Sunita Nathan (David Morias) for Appellant

Joseph Au (Omar & Joseph Au) for Respondents

Notes:-

This decision is also reported at [2000] 2 AMR 1811