Pencala Properties (M) Sdn Bhd (dalam Likuidasi) v Mohd Nazrul Izad Bin Mohd Arsad (BA-24NCvC-2816-12/2025)

PENCHALA PROPERTIES (M) SDN BHD (No. Syarikat: 402609-U) (Dalam likuidasi)

HRK HOLDINGS SDN BHD … PLAINTIF (No. Syarikat: 173239-P)

MOHD NAZRUL IZAD BIN MOHD ARSAD (K/P No.: 790209-06-5577)

MUHIBBAH ASET BERHAD … DEFENDAN (No. Syarikat: 202202022808) GROUNDS OF DECISION (REMOVAL OF PRIVATE CAVEAT)

Enclosure 1 is the Plaintiffs’ application by way of an Originating Summons (“OS”) to remove a private caveat lodged by the First Defendant (“D1”) on behalf of the Second Defendant (“D2”) on 3 22.10.2025 via presentation no. 06B7137/2025 (“Private Caveat”) on a piece of land registered as No. Hakmilik GM 6252 Lot 11298 of Mukim Hulu Langat, Selangor Darul Ehsan (“Land”). RELEVANT LAW ON THE NATIONAL LAND CODE Applicable Law: NLC 1965 or ACT 828?

In this OS, the Plaintiffs’ application to remove the Private Caveat was made under Section 323, 327 and 329 of the National Land Code 1965 (“NLC 1965”).

It is important to note that NLC 1965 was superseded by the National Land Code (Revised 2020) Act 828 (“Act 828”) upon its coming into force on 15 October 2020.

Therefore, reference should be made to Act 828 and not NLC 1965, although Sections 323, 327(1) and 329 of Act 828 and Sections 323, 327(1) and 329 of NLC 1965 carry similar provisions.

In Eng Mee Yong v Letchumanan [1979] 1 MLRA 143; [1979] 2 MLJ 212 PC, Lord Diplock explained the three-stage inquiry in a removal of private caveat application as follows: “This is the nature of the onus that lies upon the caveator in an application by the caveatee under s 327 for removal of a caveat: he must first 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 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.” [Emphasis added]

Hashim Yeop A. Sani FJ (as he then was), in delivering the decision of the Federal Court in Wong Kuan Tan v. Gambut Development Sdn. Bhd. [1984] 1 CLJ Rep 441; [1984] 2 MLJ 113 FC, explained further about the removal of a private caveat: “To put it more simply, the caveator in this case must first satisfy the Court that he has ‘caveatable interest’ in the land. Only if he has such an interest can he qualify to lodge caveat under s. 323(1) of the National Land Code...” [Emphasis added]

Based on the foregoing authorities, the caveator must satisfy the following three-stage inquiry:

whether the caveator has a caveatable interest in the land (“First-Stage Inquiry”);

if a caveatable interest is established in the First-Stage Inquiry, the Court will then consider whether, based on the affidavit evidence, the claim discloses a serious question meriting a full trial (“Second-Stage Inquiry”); and

whether on the balance of convenience, the caveator can show that it would be better to maintain the private caveat until the full trial of the action (“Third-Stage Inquiry”). ISSUE

Should the Private Caveat lodged by the Defendant be removed?

The First Plaintiff (“P1”) is the developer of a construction project known as ‘Cadangan Membina Dan Menyiapkan 110 Unit Rumah Pangsapuri Yang Dikenali Sebagai Taman Impian Langat Yang Terletak Di Lot 11298 (GM6252), Lot 11299 (GM4372) Dan Lot 11300 (GM4273), Hulu Langat, Selangor’ (“Project”).

P1 had financial difficulties and failed to complete the Project.

On 13 July 2015, the Kuala Lumpur High Court allowed Maybank Islamic Berhad’s winding-up petition No.: 28NCC- 361-05/2015, resulting in a Winding-Up Order being made against P1.

On 18 December 2017, Augustine a/l L.T.K James was appointed as the Liquidator of P1 (“Liquidator”) via the Kuala Lumpur High Court post Winding-Up Order proceeding no.: WA-

The Liquidator subsequently appointed AP Land Construction Sdn Bhd (“AP Land Construction”) as the main contractor for the rehabilitation of the Project, subject to the terms of the letter of offer dated 5 July 2019 (“LO”), including clause 1.2.3, which states that AP Land Construction is responsible for all costs related to the Project’s rehabilitation.

However, AP Land Construction faced difficulties in completing the Project’s rehabilitation.

So, on 28 September 2022, both the Liquidator and AP Land Construction had a meeting on ‘Penyelarasan Teknikal Pemulihan Projek Perumahan Swasta Terbengkalai Taman Impian Langat’ with the Kementerian Perumahan dan Kerajaan Tempatan (“KPKT”).

Following the meeting with KPKT, D2 provided financial assistance to AP Land Construction.

D2 made two payments totalling RM586,000.00 on behalf of AP Land Construction to the Liquidator through Zakaria Augustine Kang Consultancy (“ZAKC”) on 3 and 4 October 2022.

On 14 October 2022, ZAKC transferred RM586,000.00 into the Liquidator’s account for P1.

The payments were allocated for preliminary works and works related to the strata titles as follows:

on 17 October 2022 and 12 January 2023, the Liquidator paid RM500,000.00 to Syarikat Infra Dagang Resources; and

on 1 December 2022, the Liquidator paid RM85,716.48 to the Lembaga Jurukur Tanah for the survey fee deposit.

On 22 October 2025, D1, on behalf of D2, lodged the Private Caveat on the Land.

On 11 December 2025, the Plaintiffs filed this OS to remove the Private Caveat. ANALYSIS AND FINDINGS

Once the Plaintiffs challenged the Private Caveat, D1 and D2 must demonstrate that they have a caveatable interest in the Land (Wong Kuan Tan v. Gambut Development Sdn. Bhd. [1984] 1 CLJ Rep 441; [1984] 2 MLJ 113 FC; Luggage Distributors (M) Sdn Bhd v Tan Hor Teng & Anor [1995] 1 MLRA 496; [1995] 1 MLJ 719; [1995] 3 CLJ 520; [1995] 2 AMR 969 COA (paragraphs [92]-[101])).

The Learned Counsel for the Defendants contended that the Private Caveat should not be removed for the following reasons:

since P2 is the registered proprietor of the Land, P2 is not an aggrieved person under Section 327 of Act 828;

the Private Caveat will not prevent the Liquidator from carrying out his duties for the Project.

the balance of convenience lies in favour of maintaining the Private Caveat;

the Land is a Malay Reserved Land;

the Private Caveat was registered with the land office’s approval. Before lodging the Private Caveat, it was attested by the District Officer, and if there had been no caveatable interest, the Private Caveat would not have been approved for registration; and

without the payment of RM586,000.00, the Project could not proceed.

I disagree with the Learned Counsel for the Defendants’ arguments for the reasons set out below.

Section 327(1) of Act 828, provides that: “(1) Any person or body aggrieved by the existence of a private caveat may at any time apply to the Court for an order for its removal, and the Court (acting, if the circumstances so require, ex parte) may make such order on the application as it may think just.”

The Learned Counsel for the Defendants argued that, since P1 can still proceed with the construction works and P2 is the registered proprietor of the Land, both P1 and P2 are not aggrieved persons under Section 327(1) of Act 828.

As regards whether the Plaintiffs are aggrieved persons under Section 327(1) of Act 828, I am guided by the interpretation of the words ‘aggrieved person’ by the Court of Appeal in Wong Kok Leong & Anor v. RHB Bank Berhad [2014] 7 MLRA 482. It was held that: “Section 327(1) of the Code clearly shows it does not require an applicant to be a person who has a registrable interest to qualify him to apply for the removal of the caveat. It need only be a person aggrieved by the existence of a private caveat …”. [Emphasis added]

Considering the Court of Appeal’s interpretation of the words ‘aggrieved person’ in Wong Kok Leong & Anor v RHB Bank Berhad [2014] 7 MLRA 482, I am of the view that both Plaintiffs qualify as aggrieved persons under Section 327(1) of Act 828.

Under Section 323 of Act 828, the reason for lodging a private caveat must be stated in Form 19B of Act 828 (“Form 19B”).

The Court should concentrate solely on the grounds for lodging a private caveat as specified in Form 19B and not consider any other grounds not listed in Form 19B (Goh Paik Swan v Ng Choo Lum [1996] 3 MLJ 437, CA; Chen Sook Peng v. Wee Phean Yung [2004] 5 MLJ 116).

I now reproduce Form 19B lodged by D1.

The same reason for lodging the Private Caveat was further explained in D1’s statutory declaration attached to the Form 19B.

According to the Form 19B and the Statutory Declaration, the reason for lodging the Private Caveat is that D2 made a payment of RM586,000.00 to ZAKC for preliminary works and works related to the strata titles of the Project.

Neither D1 nor D2 demonstrated any caveatable or registrable interest in the Land through the Form 19B or the Statutory Declaration.

In paragraph 29 of Enclosure 11, the Learned Counsel for the Defendants argued as follows: “Berdasarkan keterangan-keterangan yang dinyatakan di dalam afidavit Defendan-Defendan, adalah jelas bahawa Defendan Ke-Dua (terdahulunya KMDI Harta Berhad) telah membelanjakan wang berjumlah RM586,000-00 bagi memastikan kewajipan kontrak Plaintif Pertama dan kontraktor AP Land Construction dapat disempurnakan bagi tujuan untuk meneruskan dengan kerja-kerja berkaitan projek tersebut.” [Emphasis added]

Based on the above, the reason for D1 lodging the Private Caveat on behalf of D2 was purely monetary.

In Score Options Sdn Bhd v Mexaland Development Sdn Bhd [2012] 6 MLRA 216; [2012] 6 MLJ 475; [2012] 7 CLJ 802; [2012] 5 AMR 485 FC, Arifin Zakaria CJ (as he then was) explained the terms ‘caveatable interest’ and ‘registrable interest’ as follows: “[25] A caveat is a creature of statute namely, the NLC and hence it can only be lodged by a claimant who has a caveatable interest under the NLC… … [35] It is our considered view, therefore, that based on the provisions of NLC and the authorities cited above, the only parties who are authorised to lodge a private caveat are those who may effect dealings in the particular interests in the land. Those parties may either have a claim to the title to the land or a claim to a registrable interest in the land or a claim to any right to such title or registrable interest. [36] Emphasis should be given to the words “registrable interest” in s 323(1)(a) of the NLC. To be caveatable, the interest must be an interest in the land and that interest must be capable of registration. In short, it must represent a transaction that can ultimately lead to its registration on the register.” [Emphasis added]

In Ahmad Faez bin Yahaya v Nur Azleen Soliha Bt Abdul Waris & Anor [2025] MLJU 1128; [2025] MLRHU 730, Ros Mawar J said this about monetary interest: “[7] The Federal Court in Score Options Sdn Bhd v. Mexaland Development Sdn Bhd [2012] 6 MLRA 216; [2012] 6 MLJ 475; [2012] 7 CLJ 802; [2012] 5 AMR 485 ruled that a caveatable interest must relate to ownership or a registrable interest in the land and not merely a monetary entitlement. Similarly, in Tan Heng Poh v. Tan Boon Thong & Ors [1992] 1 MLRA 324; [1992] 2 MLJ 1; [1992] CLJ (Rep) 1 316, the Court held that a claim to the proceeds of sale of land does not constitute a caveatable interest because it does not confer a proprietary interest in the land. [8] The Court of Appeal in Ib Capital Sdn Bhd v. Ivory Indah Sdn Bhd & Anor [2021] MLRAU 148; [2022] 1 MLJ 860 reaffirmed that a caveat operates as a protection of an alleged interest in the land itself, not as a security for monetary claims. [9] … The NLC and case laws consistently exclude monetary claims from caveatable interests. Since the 1st Defendant’s claim is purely for monetary compensation, she does not satisfy the legal requirements to lodge private caveats on each of the respective 4 properties.” [Emphasis added]

Monetary interest is not a caveatable interest under Section 323 of Act 828 (Score Options Sdn Bhd v. Mexaland Development Sdn Bhd [2012] 6 MLRA 216; [2012] 6 MLJ 475; [2012] 7 CLJ 802; [2012] 5 AMR 485; Tan Heng Poh v. Tan Boon Thong & Ors [1992] 1 MLRA 324; [1992] 2 MLJ 1; [1992] CLJ (Rep) 1 316; Ib Capital Sdn Bhd v. Ivory Indah Sdn Bhd & Anor [2021] MLRAU 148; [2022] 1 MLJ 860; Ahmad Faez bin Yahaya v Nur Azleen Soliha Bt Abdul Waris & Anor [2025] MLJU 1128; [2025] MLRHU 730).

Therefore, D2 has no caveatable interest in the Land.

D1 lodged the Private Caveat in his capacity as the managing director of D2.

There is nothing in the Form 19B or the Statutory Declaration indicating that D1 has any caveatable or registrable interest in the Land.

Even if the Land was registered in D2’s name, D1 still has no caveatable interest in the Land in his capacity as the director of D2 (Hew Sook Ying v Hiew Tin Hee [1992] 2 MLJ 189, SC; Suntrack Development Sdn Bhd v. Deepark Jaikishen a/l Jaikishan Rewachang [2021] MLJU 1624).

In this case, the Land is not registered in D2’s name.

It is registered in P2’s name.

Based on the aforementioned factors, D1 also has no caveatable interest in the Land.

Since neither D1 nor D2 has a caveatable interest in the Land, I need not consider the Second-Stage Inquiry or the Third-Stage Inquiry (Luggage Distributors (M) Sdn Bhd v Tan Hor Teng & Anor [1995] 1 MLRA 496; [1995] 1 MLJ 719; [1995] 3 CLJ 520; [1995] 2 AMR 969, CA, paragraph [44]).

The Plaintiffs’ prayer (iii) in Enclosure 1 to prevent the Defendants from filing private caveats on the Land and two other lands in the future is not justified because:

the right to lodge a private caveat is provided by Section 323 of Act 828;

the burden of proof lies with the Defendant or any other caveator to satisfy the Three-Stage Inquiry, particularly with respect to the caveatable interest. If no caveatable interest exists, the private caveat will be removed; and

in this OS, there is no evidence indicating that the Defendants have previously lodged the same Private Caveat on the Land.

Since the Defendants have no caveatable interest in the Land, the Private Caveat must be removed, and damages must be assessed in accordance with Order 37 of the Rules of Courts 2012 (Sayang Plantation Bhd v Koh Siak Poo [2006] 1 MLJ 230; Infra Elite Development Sdn Bhd v Pacific Treasure Land Sdn Bhd [2002] 6 MLJ 565; Labuan Ferry Corp Sdn Bhd v Chin Mui Kien (Trading Under The Name and Style Of Econ Focus Enterprise) & Ors and Other Appeals [2018] 3 MLJ 256; Rathnavel s/o Packirisamy & Ors v Koperasi NLFCS Bhd [2022] 3 MLJ 319).

For the foregoing reasons, the Defendants do not have a caveatable interest in the Land.

Therefore:

prayer (i) of Enclosure 1 is allowed with costs of RM10,000.00 subject to the allocatur fee;

concerning prayer (ii) of Enclosure 1, the Private Caveat must be removed by the Pendaftar Hakmilik Tanah Selangor upon the service of the sealed Order of this Court and in accordance with Kaedah-Kaedah Tanah

concerning prayer (iv), damages to be assessed in accordance with Order 37 of the Rules of Courts 2012;

prayers (iii) and (v) of Enclosure 1 are dismissed. Dated this 3rd day of May 2026 SGD HELMI BIN HAMZAH JUDICIAL COMMISSIONER HIGH COURT IN MALAYA AT SHAH ALAM NEGERI SELANGOR Counsel for the Plaintiffs : Mr. Kumaresun Chandrarajan (David Charles) (Messrs Francis Pereira & Shan) Counsel for the Defendants : Mr. Muhammad Nazrin bin Mohd Seth (Messrs Toriq Seth & Partners)