Hong

- vs -

Tey

Judgment

HB Low, J

PLAINTIFF'S CLAIM

1. This is the plaintiffs claim as registered proprietor against the defendant for an order that the lien-holder's caveat Jilid No 202 Folio 18 entered by the defendant on February 7, 2001 against all that piece of land held under HS(D) 28908, PT No 659, KB XXXIX Daerah Melaka Tengah Negeri Melaka ("the property") be removed, and for damages and costs.

   FINDINGS OF FACTS

2. The matter before me was commenced by way of a writ and a full trial was proceeded, during which two witnesses gave evidence for the plaintiff while the defendant gave his own evidence.

3. So far as relevant to this case, the evidence showed that the plaintiff Hong Gay Seang has been and was at the material time a partner of a firm known as Ong Hao Curtain and Furnishings at No 30 & 32, Jalan Taman Melaka Raya, 75000 Melaka with effect from April 26, 1999. She ran the business with her sister PW2 Hong Kim Hwa for two months only. After the registration of the firm the plaintiff left for the United States on June 29, 1999 and returned to Malaysia on January 28, 2002. The actual date on which the plaintiff left for the United States was December 4, 1990 and after some 11 years, she is now a permanent resident there. Her sister PW2 managed the business in the firm.

4. The plaintiff bought and became the registered proprietor of the property in April 1999. Although in her evidence, the plaintiff testified that after the said purchase she has not been given the issue document of title ("title") yet, in paragraph 8 of her statement of claim, dated April 27, 2001, she averred as follows:

   Plaintif tidak pernah memberi salinan asal Suratan Hak-milik Harta-tanah Tersebut kepada Defendan atau kepada mana-mana pihak ketiga dan sehingga sekarang salinan asal Suratan Hak-milik masih dalam simpanan Plaintif. [Translation: The Plaintiff has never given the original Document of Title to the said Property to the Defendant or to any third party and until now the original Document of Title is still in the custody of the Plaintiff.]

5. In her evidence, plaintiff further testified that she has entrusted to her sister PW2 the responsibility of obtaining the title and that the title has not been in the plaintiffs custody before. Under cross-examination, when paragraph 8 of the plaintiffs statement of claim was referred to her, the plaintiff could not answer the question as to whether the said paragraph 8 is untrue but said she never had the title.

6. Pausing here for a moment, it is necessary to state the fundamental principle that parties are bound by their pleadings. This means that the court is not entitled to decide on this suit or matter which is not pleaded and hence, the trial of this suit is confined to pleadings: Yew Wan Leong v Lai Kok Chye [1990] 2 MLJ 152 at 154.

7. That being the case, the plaintiff is bound by her own averment in paragraph 8 of her own statement of claim that the title has been in the plaintiffs custody. In this context, it is an irresistible inference that her evidence that the title has not been in her custody does not appear to reflect the truth and so is not the credible version, especially when there has been no attempt by the plaintiff or her learned counsel to apply for leave to amend the said paragraph 8. In the circumstances, I am constrained to reject that evidence. In view of paragraph 8 of the plaintiffs own statement of claim, it is more probable that the title was at the material time in her custody and by necessary inference, she was in a position to give it to any person including her sister PW2.

8. The plaintiff's evidence further demonstrates that the plaintiff has always been and is still a partner in the said firm. Although legally represented by counsel, she said she did not know that the defendant has in Melaka Sessions Court No 2-52-103-2001 obtained judgment against the firm for a sum of RM100,000 by way of a loan from the defendant on the basis of three cheques drawn on the said firm's account which upon presentation for payment were dishonoured. The plaintiff testified that she did not know that the title has been deposited with the defendant as security for the said loan.

9. The plaintiff's sister PW2 knew of a male Singaporean by the name of Hong Cheng Hock ("the said Singaporean") whom PW2 described as her boyfriend, and denied under cross-examination that the said Singaporean is her husband. The said Singaporean was appointed as manager of the said firm and therefore is in my view undoubtedly an agent of the said firm. In July 2000, PW2 gave the said Singaporean the title as the plaintiff had wanted to sell the property for which the said Singaporean could possibly find a buyer. It is significant to observe here that PW2's ability to hand over the title to the said Singaporean must have been made possible by the plaintiff giving PW2 the same, and that is consistent with paragraph 8 of the plaintiffs statement of claim staling that the title had been in the plaintiffs custody. This is strengthened by the plaintiffs own evidence that the plaintiff has been residing in the United States for the past 11 years, save and except two months and so she would not want to bring it to the United States but to give it to her sister PW2.

10. Although PW2's evidence was to the effect that the said Singaporean was to procure a purchaser for the property, contemporaneous documents viz the three cheques drawn on the firm's account, do not seem to support PW2's evidence, but instead confirm that the loan of RM100,000 has been given by the defendant to the said firm through its manager i.e. the said Singaporean who was admittedly PW2's boy friend to whom PW2 has given the title as security for the said loan for the purposes of business expansion in the said firm. The nexus between the three persons in the plaintiffs case has been established by PW1 and PW2 who arc sisters and business partners in the said firm, while the said Singaporean is PW2's boy friend.

11. The issue on the said loan no longer remains an issue as it has been crystallized as a judgment against the said firm after a full trial. The denial by PW1 and PW2 of any knowledge of the said loan can hardly be sustained.

12. This is a civil case in which the burden of proof cast on the plaintiff or the defendant may be discharged by establishing each party's case on a balance of probabilities. In the instant case, on a balance of probabilities, it is my specific finding of fact that the said firm has taken a loan of RM100,000 from the defendant who has obtained judgment against the said firm and that the plaintiff has given or entrusted the title to PW2 who in turn has given it to the said Singaporean for the purposes of obtaining and did obtain the said loan from the defendant who has entered the said lien-holder's caveat by way of security for the said loan.

    SUBMISSION FOR PLAINTIFF

13. Mr. Peter CS Gan, learned counsel for the plaintiff, in seeking to remove the said lien-holder's caveat relied on s 281 of the National Land Code 1965 as the sole ground i.e. the defendant's failure to comply with the statutory requirements therein. A reference to a section hereinafter shall, unless otherwise stated, be a reference to that section in the National Land Code 1965. He proceeded on the basis that s 331(4)(a) casts a burden of proof on the defendant as depositee to begin and satisfy the court that there are sufficient grounds in fact and in law to support or justify the continuous presence of his lien-holder's caveat on the Torren's register i.e. the statutory requirements under s 281 have been fulfilled by the defendant. He added that these statutory requirements are: first element of proprietorship i.e. only a proprietor may deposit his title; the second is the element of deposit which must be accompanied by the third element i.e. the element of intention to borrow money from the depositee. He stressed that upon a strict construction of s 281, the plaintiff has failed to fulfil the three requirements and so in his view the lien-holder's caveat should be removed.

    CASE FOR DEFENDANT

14. Mr. Yau Jiok Hua, learned counsel for the defendant, submitted that the said Singaporean had represented to the defendant that he was authorised by the plaintiff to deposit the title as security for the said loan, for which judgment has been given in favour of the defendant after a full trial. He added that there was representation by conduct that the said Singaporean was her agent or the firm's agent who was duly authorised to borrow the said loan from the defendant and to deposit the plaintiffs title as security thereof. He contended that the term "any proprietor" in s 281 includes any duly authorised agent and the plaintiff as registered proprietor of the said land was free to employ an agent for the purposes of s 281. He is of the view that the defendant was entitled to enter the lien-holder's caveat.

    DECISION OF THE COURT

    1. Question for determination

15. The question for determination by me may be stated as follows:

    Upon a proper construction of s 281(1)(a) read with s 5 of the National Land Code 1965, does the term "any proprietor" include an authorised agent of the proprietor in order to justify the entry of a lien-holder's caveat?

    2. Burden of proof

16. As an initial step, it is necessary to deal with the burden of proof i.e. who has the burden to satisfy the court that the lien-holder's caveat should remain. In this respect, it is to be noted that the plaintiff has invoked s 331(4)(a) for the purpose of obtaining an order from this court to cancel the lien-holder's caveat. Section 331(4)(a) which is called into question reads as follows:

    (4)	Where the Court is satisfied that any lien-holder's caveat ought not to have been entered, or ought to have been withdrawn, it may order - (a) the cancellation thereof by the Registrar;

17. The question concerning the burden of proof in the matter before me has been dealt with by Mr. SY Kok in his article "The Nature and Application of the Torrens Liens and Lien-holders ' Caveats in Malaysia" [1983] I MLJ xl which has been cited in support of the plaintiff. I agree with the view of the said learned author that in the case of an application being made by a proprietor to a court for an order to cancel an entry of a lien-holder's caveat under s 331 (4)(a), the registered proprietor can rely upon his registered title as prima facie evidence of his unfettered proprietary right to deal with his own land as he pleases and the burden of proof is on the depositee i.e. the defendant herein to demonstrate that he has the right to continue with the lien-holder's caveat.

    3. Meaning of "proprietor"

18. Having disposed of the burden of proof, it is necessary to consider the meaning of the word "proprietor". In this respect, the critical provision in s 281(1)(a), where relevant, merits reproduction as follows:

    (1)	Any proprietor ... for the time being may deposit with any other person or body, as security for a loan, his issue document of title ... and that person or body - (a) may thereupon apply under Chapter I of Part Nineteen for the entry of a lien-holder's caveat:

19. Conjunctively, s 5 contains the definition of "proprietor" as "any person or body for the time being registered as the proprietor of any alienated land". It is common ground that s 281(1)(a) makes no mention of "agent" but expressly refers to "proprietor".

20. In Peter P'Chient v SRMAL Ramasamy Chetty VAAR Muthiah Chetty [1923] 3 FMSLR 220, CA, on which the parties herein rely, the Court of Appeal considered s 80 of the then Registration of Titles Enactment 1911 which read as follows:

    A lien may be created by deposit of the Grant or Certificate of Title. The holder shall have the power at any time during the existence of his lien to enter a caveat in manner set forth in Part XII hereof to prevent all dealing with the land, and when he has obtained a judgment of the Court for the actual sum due, he shall be entitled to apply for and obtain an immediate order of sale of the land.

21. It is pertinent to point out that the said s 80 unlike s 281(1)(a) made no mention whatsoever of "proprietor" in the first sentence concerning the deposit of the grant or certificate of title. The then Court of Appeal held that a lien can only be created under the said s 80 by the proprietor of the land and that the said s 80 should be strictly construed and applied, otherwise the security of tenure which the Enactment sought to set up would be seriously undermined: per Watson JC who at p 232 added that e.g. a chargee or trustee could not have deposited the grant with any third person, nor dealt with it in any way without the express authority of the proprietors (Emphasis added). It would appear by necessary implication that such express authority if established by evidence would be sufficient to enable an agent to step into the shoes of the proprietor.

22. Farrer-Manby, JC (another Judge in the Court of Appeal) observed at p 237 that:

    The deposit under that section has always been by the proprietor. The section does not say that it must be so but these courts have always held that only the proprietor can make a good deposit of his grant or certificate of title.

23. Peter P'Chient, supra, was judicially considered by KC Vohrah, J (now JCA) in Perwira Habib Bank Malaysia v Loo & Sons Realty Sdn Bhd [1996] 1 AMR 809, which was cited in support of the plaintiff's case.

24. There, the facts relevant to the issue of a lien holder's caveat showed that in August 1984, the plaintiff agreed to lend money to MAA Holdings Sdn Bhd (MAA) and the second defendant provided security by charging the said land to the plaintiff. Two charges in escrow were executed and the issue document of title to the said land was deposited with the plaintiff. The latter lodged a lien-holder's caveat over the said land in 1984 after the first lien-holder's caveat was withdrawn. The plaintiff obtained judgment against MAA for the outstanding loan of RM1,491,466.34. The plaintiff now claims for a declaration that the lien-holder's caveat lodged over the said land is valid and enforceable, and for an order that the said land be sold under the National Land Code 1965 to satisfy the sum of some RM2 million due to the plaintiff from MAA which was not a party to the proceedings.

25. The relevant issue before the court was whether the plaintiff had a right to realise the security pursuant to its rights under the lien-holder's caveat. After considering s 5 and s 281(1)(a) and also the Court of Appeal decision Peter P'Chient, supra, the learned Judge held that "only a registered proprietor of land has the power or right to deposit the title to land to create a lien". The appeal to the Court of Appeal was dismissed with costs in Perwira Habib Bank (M) Bhd v Loo & Sons Realty Sdn Bhd (No 1) [1996] 3 AMR 3484; [1996] 3 MLJ 409, CA, which is the authority from which both the plaintiff and the defendant now seek support. The Court of Appeal, while upholding the said decision of KC Vohrah, J (now JCA) went a step further by making the following observation at p 418H (MLJ):

    There was no evidence to show that the first respondent (i.e. the first defendant) had authorised the second respondent (i.e. the second defendant) to deposit the title deed. [This is the translation contained in the head note at p 414]

26. The principle that may be culled from the judicial pronouncements in the aforesaid cases, is that for the purposes of s 281(1)(a) and s 5, only a registered proprietor of land has the power or right to deposit the title to land to create a lien. In addition, it is imperative to stress that from the respective statements of Watson, JC in Peter P'Chient, supra, and Ahmad Fairuz JCA (now CJ(M) and acting PCA) in Perwira Habib Bank (M) Bhd, supra, pertaining to the situation in which authority may be given by the registered proprietor to deposit the title, it appears to me that such authority if established by evidence on a balance of probabilities must not be disregarded but instead be considered by the court for the purposes of determining the ambit of the word "proprietor" in s 281(1)(a) read with s 5.

27. This leads me to the question of the employment of an agent which is provided under s 136 of the Contracts Act 1950 in the following words:

    136.	Who may employ agent Any person who is of the age of majority according to the law to which he is subject, and who is of sound mind, may employ an agent.

28. Hence, the plaintiff who is sui juris is obviously entitled to employ or appoint an agent such as the said Singaporean. The employment or appointment of an agent or the conferment of authority on an agent may be effected e.g. in the instant case by way of the said Singaporean's representation by conduct in that the said Singaporean was at the material time the agent of the firm of which the plaintiff and her sister PW2 were at the material time partners who pursuant to s 11 of the Partnership Act 1961 are jointly and severally liable for the liability of the firm, so that the said Singaporean has the authority to act and conduct the firm's business, including the authority to act on behalf of the plaintiff and PW2 in entering into contracts with the defendant i.e. by depositing the title as security for the said loan which was used for the expansion of the firm's business. In my view such conduct is considered to be the conduct of PW1 or PW2 or both, in line with the Latin maxim qui facit per alium facit per se (he who does a thing by means of an agent does it himself).

29. To my mind, the facts and circumstances prevailing in each particular case is of decisive importance. By way of illustration, a registered proprietor is competent to instruct an advocate and solicitor to deposit his title with any person or body for the purposes of s 281(1)(a) and such deposit shall be treated as the deposit by the proprietor who acts through the advocate and solicitor as the agent of the proprietor. That being the case, the depositee may enter a lien-holder's caveat.

30. Therefore on the finding of facts as alluded to above, I hold that the defendant has discharged the burden of proof by establishing the elements of proprietorship, deposit and intent against the plaintiff for the purposes of s 281(1)(a) read with s 5 and that the facts do justify the continuation of the lien-holder's caveat.

31. In the circumstances, I answer the aforesaid question in the affirmative, and order that the lien-holder's caveat be sustained. Hence, the plaintiff s action by way of a writ for the removal of a lien-holder's caveat is hereby dismissed with costs.

Perwira Habib Bank Malaysia v Loo & Sons Realty Sdn Bhd [996] 1 AMR 809; Perwira Habib Bank (M) Bhd v Loo & Sons Realty Sdn Bhd (No 1) [1996] 3 AMR 3484; [1996] 3 MLJ 409, CA; Peter P'Chient v SRMAL Ramasamy Chetty VAAR Muthiah Chetty and ARRMN Alagappa Chetty [1923] 3 FMSLR 220, CA; Yew Wan Leong v Lai Kok Chye [1990] 2 MLJ 152

Legislations

Contracts Act 1950: s.136

National Land Code 1965: s.5, s.281, s.281(1)(a), s.331(4)(a)

Partnership Act 1961: s.11

Registration of Titles Enactment 1911: s.80

SY Kok, The Nature and Application of the Torrens Liens and Lien-holders ' Caveats in Malaysia [1983] 1 MLJ xl

Representation

Peter CS Gan (Hock & Assoc) for Plaintiff.

Yau Jiok Hua (Yau Jiok Hua & Co) for Defendant.

This decision is also reported at [2002] 2 AMR 2483