PYQ July 2022 B

Part B: Landlord Questions and Probate

Question 5: Caveats and Restraint on Dealings

Scenario:
  • Rick sold his house to Arif and Lily.
  • Sale and Purchase Agreement (SPA) dated 1st February 2022.
  • Arif and Lily were to pay 10% deposit.
  • Balance to be paid within 90 days, or agreement terminates, and deposit forfeited.
  • Arif entered a private caveat.
  • Arif and Lily failed to secure financing within 90 days.
  • Rick terminated the SPA and forfeited the deposit.
  • Arif refused to withdraw the caveat.
  • Registrar's caveat entered due to Rick's unpaid income tax (Form 19A).
  • Rick's application to remove registrar's caveat rejected.
Question:
  • Can Rick successfully remove Arif's private caveat? Advise Rick on the process.
Analysis and Advice:
Arif's Caveatable Interest:
  • Arif, as a purchaser in the SPA, has a caveatable interest (referencing the case of Mecan).
  • However, since the SPA was terminated due to Arif and Lily's failure to secure financing, Arif no longer has an interest in the land.
Removal Process (Section 326 NLC):
  • Rick can apply to the registrar in Form 19H to remove the private caveat (Section 326(1) of the National Land Code (NLC)).
  • Registrar serves Arif a notice of intended removal in Form 19C (Section 326(1)(a)).
  • Registrar makes an endorsement on the register document (Section 326(1)(b)).
Three-Stage Test for Caveat to Remain:
  • Referencing case law, Arif must satisfy a three-stage test:
    • Caveatable interest.
    • Serious question to be tried.
    • Balance of convenience favors Arif.
  • Since Arif no longer has a caveatable interest, the registrar shall remove the caveat (Section 326(3)).
  • Cancellation shall be signed and sealed (Section 326(4)).
Registrar's Refusal:
  • If the registrar does not remove the caveat, Rick can apply to the court (Section 327).
Caveat Study Approach:
  • Who can apply? (e.g., private caveat: Section 323).
  • Procedure: How to enter the caveat.
  • Circumstances: When can a caveat be entered?
  • Effect: What is the impact of the caveat?
  • Removal: How can the caveat be removed?
  • Wrongful Entry: What is the effect of wrongful entry?

Question 5B: Second Caveat by Lily

Scenario:
  • Rick successfully removes Arif's private caveat.
  • Can Lily enter another private caveat based on the same SPA?
Analysis:
  • Lily cannot enter a second caveat for the same reason (citing the case of Downsview).
  • Lily is also a party to the original SPA, making it even less likely that a second caveat would be allowed.
  • Alagar Sami can also be used as reference.
  • Gemini case: Application to launch a second caveat was refused, because it was on the same grounds as the first caveat.

Question 5C: Removal of Registrar's Caveat

Scenario:
  • Rick seeks advice on whether the registrar's caveat (due to unpaid income tax) can be removed by court order.
Analysis:
  • The registrar's caveat was entered subject to Section 320(1)(b) and (ba).
  • Rick must first apply to the registrar (Section 321(3)(b)).
  • Only if the registrar refuses, Rick may appeal to the court (Section 418) within three months.
  • Only if Rick succeeds in the appeal can the court order the removal.
  • The chargor has no right to apply to cancel or remove the registrar's caveat.
Caveatable Interest:
  • Before Temenggong Securities, commercial debt was not considered grounds for a caveat.
  • After Temenggong Securities, Section 320(1)(b)(a) was amended to allow registrar's caveat for debt owing to the government.

Question 6: Indefeasibility of Title & Bona Fide Purchaser

Scenario:
  • Harry borrowed 500,000500,000 from Musa.
  • Document of title to Harry's shop house deposited as security, valued at approximately 800,000800,000.
  • Harry signed documents requested by Musa without receiving copies.
  • Four months later, Harry wanted to repay the loan but Musa disappeared.
  • Harry discovered his shop house had been transferred to Bubo, now the registered owner.
  • One of the forms Harry signed was Form 14A (MOT) which Musa never disclosed.
  • Signature witnessed by "Mr. Tipu," an advocate and solicitor from "Messrs Tipu and Partners."
  • The bar council confirmed no such law firm or advocate exists.
Question A: Does Bubo have an indefeasible title?
Analysis:
Indefeasibility Defined:
  • Explain what indefeasibility of title means.
  • Explain whether Malaysia practices immediate or deferred indefeasibility. (Deferred indefeasibility is applied in Malaysia).
  • Exceptions to indefeasibility must be discussed.
Vitiating Factors:
  • Harry would argue the transfer was tainted by fraud and misrepresentation by Musa and Harry signed the document under false assumption.
  • The transfer from Harry to Musa is defeasible under Section 340(2)(a).
    • Fraud must be actual, not constructive (Datuk Jaginder Singh & Ors v Tara Rajaratnam).
  • False representation that the document was for loan purpose.
  • Bogus law firm and lawyer.
  • MOT would be an insufficient or void instrument under Section 340(2)(b) due to insufficient or void instrument.
Bubo's Title:
  • Bobo's title falls under Section 340(3).
  • The phrase "any purchaser" in Section 340(3) refers to any subsequent purchaser.
  • Cite the case of Tan Ying Hong v Tan Sian San & Ors.
  • Boobo's title is defeasible.
  • The court may take the approach in M Bang v CIMB or Kamarulzaman.
Musa's Actions:
  • Musa did not act in good faith, Musa decided to cheat Harry into signing Form 14A without telling him he’s signing the MOT.
  • Was there a duty on Harry's part to verify the document?
  • Since Musa did not act in good faith Bubo cannot be considered subsequent purchaser and Bubo's title is defeasible.
Question B: Can Bubo claim to be a bona fide purchaser for value?
Bona Fide Purchaser Criteria:
  • Both immediate and subsequent purchasers must act in good faith and provide valuable consideration.

Question 6C: Concept of Bare Trust in Land Law

Question: Judicial approach to the concept of bare trust in Malaysia.
Bare Trust:
  • Mention Section 3 of Civil Law Act 1956.
  • Mention Section 6 of Civil Law Act 1956.
  • Cite case of Chin Choy v Collector of Stamp Duties.
  • Cite case of Borneo Housing Mortgage Finance Bhd v Time Engineering Bhd.
  • Application of bare trust doctrine has been adopted by the courts.
  • Cite case of Karuppiah Chettiar v Subramaniam.
  • Cite case of Standard Chartered Bank v UMBC. Right?
  • Cite case of Temenggong Securities.

Question 7: Foreclosure Proceedings and Tenancy

Scenario:
  • Toto charged his property to Manju Bank for a loan of 500,000500,000.
  • Toto defaulted.
  • Manju Bank commenced foreclosure proceedings and obtained an order for sale.
  • Upin was the successful bidder at auction for 400,000400,000.
  • A 10% deposit was paid to the court.
  • The proclamation of sale stated the balance was due within 120 days.
  • Upin discovered Toto had rented the property to his friend Pinjam.
  • The proclamation did not mention the tenancy, and there was no endorsement on the document of title.
Question A: Is the judicial sale to Upin subject to the tenancy?
Analysis:
  • Section 267(1) NLC: Effect of sale after issuance of certificate of sale.
  • Section 267(2) NLC: No tenancy exempt from registration is binding on the purchaser unless protected by endorsement.
  • The judicial sale is not subject to the tenancy, meaning Pinjam will have to vacate the property.
  • Cite case of Hotel Ambassador.
Question B: If Upin cannot pay the balance within 120 days, can Manju Bank grant an extension?
Analysis:
  • Section 263(g) NLC:
  • The 120 days is absolute.
  • Cite case of Chile Holdings.
  • No extension is allowed unless the chargor has been given an opportunity to be heard on the application for an extension of time.

Question 7C: Third Party Charge

Scenario
  • Azi obtained a loan from Money Bank.
  • Azi's father, Mamat, created a third-party legal charge on his land in favor of Money Bank.
  • Due to an error by the bank's solicitor, the charge was registered as a first-party legal charge instead of a third-party legal charge.
  • "The charge annexure accompanying the instrument of charge containing the terms of loan clearly stated that the loan was a third party charge."
Analysis of this situation.
  • It can be rectified person to Section 380 Sub-section one, Section A.
  • Cite MBSB v KCSB
  • Cite Island & Peninsula