Land Law

PP Land - Exam Preparation

Generally, there will be three questions from the land area in Part B of the professional practice paper. Key areas to focus on for exam preparation include:

1. Indefeasibility

• Primarily focus on understanding the exceptions to the indefeasibility principle.

• The Torrens system differs from the English land system, emphasizing that the registry reflects the title 100% (mirror principle).

• The main legislation is the National Land Code 1965 (NLC). Ensure you have the updated version, possibly from 2021.

• Key features of the Torrens system include the conclusive nature of the registry and the infeasibility of the registered title/interest.

• There is no adverse possession concept in the Torrens system.

• Malaysia practices deferred indefeasibility, unlike jurisdictions like Australia and New Zealand, which practice immediate indefeasibility.

  • In Malaysia, if exceptions to indefeasibility are successfully raised, the title reverts to the original owner.

  • Refer to cases like Fraser and Walker to understand immediate vs. deferred indefeasibility.

1.1. Exceptions to Indefeasibility (Section 340 of the National Land Code)

• Registration is the cornerstone.

• Section 340(1) states that the registered proprietor has an indefeasible title subject to vitiating factors.

• Registered title refers to the registered person or proprietor of the land.

  • Cases: PBB v. Murugamotul, Bangbumiputra v. Mahamud bin Mohamad.

  • It provides immunity against adverse attacks, as stated in Fraser and Walker.

1.1.1. Section 340(2)(a): Fraud and Misrepresentation

• Being able to demonstrate fraud and misrepresentation can set aside a transfer.

• Fraud must be actual fraud, not equitable or constructive fraud.

• Since fraud isn't defined in NLC, refer to case laws.

  • Ongthin v. Seremban Motor Garage: Mere knowledge of a prior unregistered claim may not amount to actual fraud; there must be a deliberate and dishonest attempt to deprive the unregistered party of their interest.

  • Fraud must be between parties privy to the contract (sales and purchase agreement).

  • Thyly Finance states fraud must be prior to or at the time of registration, not subsequent.

  • The standard of proving fraud in civil cases is based on the balance of probabilities (Sineya v. Dhamma Sathya).

  • Another case to consider is Abu Bakar, where the defendant was an advocate and solicitor, addressing the imputation of knowledge and actual fraud.

• Misrepresentation must be fraudulent, not innocent or negligent.

1.1.2. Section 340(2)(b): Forgery and Insufficient/Void Instrument

• Forgery involves falsifying signatures and details of the registered proprietor.

• Distinguish between fraud and forgery: fraud requires the person to be party or privy, while forgery does not.

  • Case: Aduna Properties v. Penthouse (M) Sdn Bhd

  • Forgery results in the instrument of transfer being null and void.

• Insufficient/Void Instruments:

  • Contracts with infants are void.

  • An invalid Power of Attorney.

  • Contravention against acts such as the Moneylenders Act 1951 (as seen in Allied Petroluem v. Paramount United Sdn Bhd).

1.1.3. Section 340(2)(c): Ultra Vires Act

• The title was unlawfully acquired or obtained by a person/body exceeding their statutory or legal authority.

  • Pembangunan Leasing Corp Sdn Bhd v Arab-Malaysian Finance Bhd: The High Court held that the Registrar exceeded his power as there was non-compliance to statutory requirements, rendering the charges as being defeasible.

  • UMBC v. Syarikat Perumahan Luas Sdn Bhd: The registrar registered a charge without written consent from state authority.

  • Boonsom Boonyanit v Adorna Properties Sdn BhdThe Federal Court held that a state authority acted ultra vires by alienating land when the approval had lapsed.

  • M&J Frozen Food Sdn Bhd v Siland Sdn Bhd: A judicial sale was conducted without complying with NLC requirements, making the certificate of sale ultra vires.

1.1.4. Section 340(3): Bona Fide Purchaser for Value

• Sections 340(2)(a), (b), and (c) are subject to Section 340(3), concerning bona fide purchasers for value.

• This is a critical area for exams.

• Section 340(3) states that the title or interest can be set aside in subsequent transfers unless the subsequent purchaser is a bona fide purchaser for valuable consideration.

• Purchaser Definition (Section 5): A person who in good faith and for valuable consideration acquires the title or interest is a subsequent purchaser.

• Malaysia practices deferred indefeasibility. Courts have differed (Adorna Properties suggested immediate indefeasibility, but Tan Yin Hong clarified deferred indefeasibility).

  • Tan Yin Hong v Tan Sian San: the Federal Court held that the concept of immediate indefeasibility is not applicable in Malaysia.

  • Refer to CIMB Bank to understand protection for subsequent interest holders.

• Examine the relationship between Sections 340(2) and 340(3).

  • OCBC Bank (Malaysia) Bhd v Pendaftar Hakmilik, Negeri Johor: the Proviso only takes effect after the immediate registered proprietor has transferred their defeasible title to someone else.

1.1.5. Section 340(4)(b): Operation of Law

• States that nothing in Section 340 shall prevent the determination of any title or interest by operation of law.

  • Refer to case laws like Khoo Nee Soon v OCBC, which imports the concept of breach of duty (either by law or equity).

  • Krishnadas v. Maniyam is another relevant case.

  • Abdul Hamid v. Ali Yakub highlights obligations to re-transfer land based on law or equity.

1.1.6. Sections 380(1) and 417: Powers of the Registrar and the Court

• Section 380(1) gives the registrar power to rectify errors under specified conditions.

  • Island & Peninsular Development Bhd v. Legal Advisor, Kedah: This section is confined to errors made by the registry, not by parties in the instrument of transfer.

  • Hassan bin Seman v. Jusoh bin Awang: Indefeasibility isn't affected if the correction relates to a mere technical mistake.

• Section 417 grants the court the power to direct the registrar or land administrator to carry out actions to give effect to any judgment or order.

  • Refer to the same cases as above: Hassan bin Seman v. Jusoh bin Awang, Sunai Biat Tin Mines

2. Restraint on Dealings

• Includes caveats and prohibitory orders.

2.1. Types of Caveats:

• Registrar's Caveat

• Private Caveat

• Landholder's Caveat

• Prohibitory Order

2.2. Questions to Address When Studying Caveats:

• Who can apply?

• What is the procedure?

• What circumstances allow these caveats to be entered?

• What is the effect of the caveat on the land?

• How can the caveats be removed?

• What happens if a caveat is wrongfully entered?

2.3. Registrar's Caveat

• Who Can Apply: The registrar has the discretion based on Section 320.

  • Case: Eng Mee Yong v Letchumanan: Anyone wanting to enter a registrar's caveat must apply to the registrar first. If refused, they can appeal to the court (pursuant to Section 418 of NLC). Cannot go directly to the court.

• Circumstances (Section 320):

  • To prevent fraud or improper dealing.

    -Cases such as Sithambaram v Venkateswara Sdn Bhd can be examined. In this case, it was ruled that the registrar had the power to enter a registrar's caveat to prevent fraud.

  • To protect the interest of the government.

    -Case of Mongkol Securities (M) Sdn Bhd v Official Assignee (1995) can be examined.

  • To correct errors in the title or related instruments.

• Effect: Prohibits all dealings in the land (Section 319(1)(b)). Supersedes all other caveats (Section 319(2)).

• Removal (Section 321(3)): Enforced until canceled by registrar, registered proprietor, or by court appeal.

2.4. Private Caveat

• Examiners have a 90% chance of testing this.

• Who Can Enter (Section 322(1)(a)): A person or body specified in Section 323 (claiming interest in land, claimable registerable interest, person claiming right to title).

• Procedure (Section 323(2) and 323(3)): Must be in Form 19B with fees. (Section 324) Registrar must serve notice on the proprietor in Form 19A.

• Caveatable Interest: This needs to be addressed.

  • Arises from a valid agreement of sale and purchase (Mekon Engineering).

  • Option to purchase (Xinyuan Resources) can be a Capable interest.

  • Director of a company may be able to protect the company from being dealt with contrary to the law (Aitken Ming v QGQ Construction Pte Ltd).

  -Cases such as Million Group Credit Sdn Bhd v Lee Shoo Khoon [2002] can be examined to determine if there is a valid Capable Interest. If it is still under negotiation, then there is no Capable Interest.

  -If monetary loss is the source, it will most likely be deemed that there is no Capable Interest. (Urethane System Sdn Bhd v Pengarah Tanah dan Galian Johor [2003]

  -In Luggage Distributors Sdn Bhd v Tan Hor Teng & Ors [1995] it was ruled that judgment for goods sold and delivered does not amount to capable interest, and should have been obtained through a prohibitory order. The same ruling was determined in Standard Chartered Bank. (Standard Chartered Bank. v Yap Sing Yoke & Ors [1989]

• Effect: Prohibits all dealings (Section 322(2) and 322(4)). Will not prohibit dealings presented prior.

• Removal:

  • Withdrawal: Caviator can withdraw via Form 19C.

  • Removal by Registered Proprietor (Section 326): Can be removed by RP with interest via Form 19H. The registrar serves notice in Form 19C. The caveat will lapse after two months if the caviator does nothing.

  • Removal by Court (Section 327): An aggrieved person may apply to the court. Test given in Luggage Distributors, showing caveatable interest. Claim raises serious question to be tried, and the best solution on a balance of convenience is to allow the caveat to remain until trial.

  • Lapse (Section 328): Automatically lapses after six years.

• Wrongful Entry: Caviator is liable to compensate (Section 329). Cannot be re-entered except with new grounds.

2.5. Landholder's Caveat

• Definition: When an IDT to any land or duplicate lease has been deposited as security (Section 330). Landholder retains IDT as security for loan.

• Procedure (Section 330(2)): Form 19D, registrar serves notice in Form 19A.

• You can examine the case of Hong Kong Bank v Staghorn Bhd [2000] under Section 281; can IDT be obtained as security for loan being taken by somebody else?

• Effect: Prohibits dealings (Section 330(5)).

• Removal: Can only be removed by subject to an order of the court. (Rasa Sayang Plantation Sdn Bhd v Malayan Banking Bhd [2000] Can be removed with order of compensation from court. (Section 331(4)(b))

2.6. Prohibitory Order

• Prohibits any subsequent dealing in the land (Section 336).

• Who Can Apply (Section 334): Judgment creditor to prevent the judgment debtor from dealing with the land; must be a judgment.

• Procedure: Follow rules of court.

• Removal:

  • Lapses after six months unless extended by the court (Section 338).

  --Case of Banhin Lee v Uttam Compueter Centre [1994]. Court can only renew a prohibitory order upon proof of certain conditions.

  • Can be withdrawn by the court order. (Section 339).

  -- Case Example from Karuppiah Chettiar v Subramaniam [1971], where the judgment of order should be set aside as the judgment of death as no interest in the land.

3. Order for Sale and Cause to the Contrary

3.1. Preliminary Requirements for Order for Sale

• Show default in payment.

• Charger serves the charger with a notice. In Form 16D and Form 16E specifying the proceeding for order of sale will be done. (Section 254).

  -16D: Breach of agreement by charger.

  -16E: Sum is payable on demand.

• When: Make an application after the 1 month notice. (Section 254(1))

3.2. Application for Order for Sale

• Based on order 83 in rule three.

3.3. Examination in Hearing

• This is when the proprietor can ensure cost to the contrary. In Section 340, failure in order of payment will allow for the side of the other order of sale. (Section 256(3))

  --Case of **Lao Li Lien v Ban Hin Lee Bank ** can be examined in order to determine how charges need to be met in order to show cost in contrary. They include:

  -Charger Failed to Meet all of the conditions precedent.

  -Exception to indefeasibility.

  -Contrary to the law of equity.

  --For Land Office Title examine (Supaya v Kandasami)

3.4. Actions after application (Assuming no Cost of the Contrary)

• Court will give order. (Form 16H)

• Examine requirements set in Section 257. There must be requirements A,B,C, and D.

• Actions on section follow after. (Section 258)

• Registrar will send copy to bank and charger.

• Property must then be auctioned under officer of court. (Two Fifty Nine. 1, 1/3 value of land is required to ensure that the land will be bought.)

• Auctions can only be sold under official court (order for sale given by judge but managed by registrar). Valuation Price Reduced Every Auction.

• Successfull bidder will take property using certification of sale. If house is to be tenanted, they will proceed tenancy.