Zulkeffle bin Kasmuri v 1. ) Jayanthi a/p Surinarayana (BA-24NCvC-1164-07/2022)

JAYANTHI A/P SURINARAYANA

SRI LATA A/P ANRAJ @ NOOKARAJA (IDENTITY CARD NO. : 870303-02-5846) ….. DEFENDANTS GROUNDS OF JUDGMENT (O.S. for Removal of Caveat) Introduction [1] The Plaintiff filed this Originating Summons (Enclosure 1) for cancellation and removal of the private caveat which the 1st Defendant has lodged on the title to the subject property in respect of which the Plaintiff is the registered proprietor. [2] Before 6 August 2020, the 1st Defendant was the original registered proprietor of the subject property [Exhibit “ZK-3” to the Plaintiff’s Affidavit-in-Support in Enclosure 2]. [3] On or about 23.1.2022 the 1st Defendant lodged a private caveat on the title to the subject property [Exhibit “ZK-4” to the Plaintiff’s Affidavit-in-Support in Enclosure 2]. Background Events leading to this Originating Summons [4] There was a Sale and Purchase Agreement dated 23.10.2019 signed between the 1st Defendant as the Vendor and the Plaintiff as the Purchaser whereby the Plaintiff agreed to buy the subject property from the 1st Defendant at a price of RM180,000.00 [Exhibit “ZK-1” to the Plaintiff’s Affidavit-in-Support in Enclosure 2]. 2 [5] On or about 6 August 2020 the subject property was transferred in favour of the Plaintiff’s name [Exhibit “ZK-2” to the Plaintiff’s Affidavit-in-Support in Enclosure 2]. [6] In her Affidavit-in-Reply (Enclosure 5) the 1st Defendant avers that the Plaintiff obtained the registration of transfer by fraud and wrongfully before paying the balance price: see paragraphs 10, 11 and 14 thereof. [7] The Defendant also avers that time is of the essence of the contract: see paragraph 14 of the 1st Defendant’s Affidavit-in-Reply (Enclosure 5). [8] In paragraph 16 of the 1st Defendant’s Affidavit-in-Reply (Enclosure 5) the Defendant avers that there was a Loan Agreement signed between the Plaintiff and the Defendant on the same day as the signing of the Sale and Purchase Agreement, that the so-called Deposit of RM160,000.00 was a moneylending transaction as a hidden transaction. Law on Private Caveat [9] The law on removal of private caveat is well-settled and the locus classicus is the Court of Appeal's decision in Luggage Distributors (M) Sdn Bhd v. Tan Hor Teng & Anor [1995] 3 CLJ 520; [1995] 1 MLJ 719. [10] In the case of Luggage Distributors (M) Sdn Bhd v. Tan Hor Teng & Anor [1995] 3 CLJ 520; [1995] 1 MLJ 719, the Court of Appeal laid down the principle and procedure of application to remove a private caveat as follows:- 'In considering an application for the removal of a caveat, the procedure to be adopted should be a simple and summary one. At the first stage, the court will examine the grounds expressed in the application for the caveat to see whether they show a caveatable interest. Once the court is satisfied that the caveator's claim amounts in law to a caveatable interest, it must then go on to consider whether the claim discloses a serious question meriting a trial. After these two stages have been crossed, the court must decide where the balance of convenience lies.' 3 [11] From the Court of Appeal's decision in Luggage Distributors (M) Sdn Bhd v. Tan Hor Teng & Anor, a private caveat will only be allowed to be continued if all the three (3) following requirements are fulfilled:

the caveator's claim expressed in the grounds for caveat application amounts in law to a caveatable interest;

(ii) the caveator's said claim discloses a serious question meriting a trial; and

(iii) the balance of convenience is in favour of allowing the private caveat to continue. 1st Stage: Whether the Defendants have, or either of them has, caveatable interest [12] Section 323 of the National Land Code provides as follows:

The persons and bodies at whose instance a private caveat may be entered are—

any person or body claiming title to, or any registrable interest in, any alienated land or undivided share in any alienated land or any right to such title or interest;

any person or body claiming to be beneficially entitled under any trust affecting any such land or interest; and

the guardian or next friend of any minor. [13] The Federal Court in Score Option Sdn Bhd v. Mexaland Development Sdn Bhd [2012] 6 MLJ 475, [2012] 7 CLJ 802 held as follows: “CAVEATABLE INTEREST [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. The purpose of a caveat is to protect an interest in a land, or a right to an interest in that land (see Yeong Ah Chee v Lee Chong Hani & Anor and other appeals [1994] 2 MLJ 614 at p 624) and to preserve the status quo of the land pending the enforcement of such interest or right (see Registrar of Titles, Johore v Temenggong Securities Ltd [1976] 2 MLJ 44 at p 46) . [26] It serves as a substitute for the equitable doctrine of notice under the English land law (see Eng Mee Yong & Ors v 4 Letchumanan [1979] 2 MLJ 212 at p 214; Nanyang Development

Sdn Bhd v How Swee Poh [1970] 1 MLJ 145; [1969] 1 LNS 116; Haroon v Nik Mah [1951] MLJ 209; Jit Kaur v Pari Singh [1974] 2 MLJ 199; [1974] 1 LNS 57 and Butler v Fairclough & Anor (1917) 23 CLR 78 at p 91). [27] In a New Zealand case of Miller v Minister of Mines and Attorney General of New Zealand [1963] AC 484 at p 497, the Privy Council observed that: The caveat procedure is an interim procedure designed to freeze the position until an opportunity has been given to a person claiming right under an unregistered instrument to regularise the position by registering the instrument. … [35] It is our considered view, therefore, that based on the provisions of the 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) [14] The 1st Defendant, as the previous proprietor who alleges that her transfer to the Plaintiff was a camouflage or cloak for a moneylending transaction and who thereby challenges the validity of the transfer, is now asserting 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 within the meaning of section 323(1)(a) of the National Land Code. In the circumstances, the 1st Defendant has a caveatable interest in the land pending the court’s decision on and disposal of the challenge against the Plaintiff’s registered proprietorship. 5 [15] The 2nd Defendant, as a purchaser who allegedly bought the Property from the 1st Defendant by having paid a deposit, is a person who has a claim to registrable right to the land. In the premises, the 2nd Defendant also has a cavetable interest by reason of the 1st Defendant’s challenge against the validity of the transfer to the Plaintiff. 2nd stage: whether the Defendant's said claim discloses a serious question meriting a trial [16] In our present case the affidavit evidence shows inter alia that:

Recital II of SPA dated 23.10.2019 stated the Property is free from encumbrances, but clause 2 stated Deposit of RM160,000 as being the Redemption Sum payable to the

(ii) letter dated 23.10.2019 signed by the 1st Defendant talked about acknowledgement of receipt of Deposit of RM160,000 and also the “option” for Vendor to terminate SPA over 4 months with each month of duration with an addition of RM8,000 to the Deposit as refund, and RM8,000 per month is equivalent to 5% per month;

(iii) there is no documents to show the payment of the Deposit or redemption Sum of of RM160,000;

(iv) there is no document to show what happened between the parties shortly after the end of 4 months from the SPA date. [17] By virtue of the matters summarised in the immediately foregoing paragraph there are serious triable issues in the present case. 3rd Stage: whether the balance of convenience is in favour of allowing the private caveat to continue [18] In our present case the Plaintiff’s name has been registered as the proprietor of the said land, and despite the caveat there is nothing the Defendants can do to sell, transfer or dispose of the title to the land. [19] The Plaintiff has not shown it will suffer damage or prejudice which cannot be compensated by monetary compensation. In the 6 circumstances, even if the Plaintiff were to succeed in the trial of the action regarding the validity or invalidity of the transfer from the 1st Defendant to the Plaintiff, the Plaintiff would still have his title after the removal of the caveat plus an order of damages for any wrongful entry of caveat. [20] On the other hand, if the caveat were to be removed before the Court’s decision on the validity or invalidity of the transfer from the 1st Defendant to the Plaintiff, the Plaintiff would have most probably sold, dispose of and transferred the title of the property to a third person. The Plaintiff’s production of an impugned Sale and Purchase Agreement with a third person is evidence of the Plaintiff to sell, dispose of and transfer out the title of the property to another person. If such transfer to a third person were to happen before the Court’s final decision on the question of title ownership, the Court’s final decision would become a paper judgment in the event that the Plaintiff has transfer of the title to a third person before the final decision of the Court on the question of title ownership. [21] In the circumstances, the balance of convenience is in favour of preserving the status quo with the continuation of the caveat pending a final court decision on whether or not the SPA is genuine SPA or a moneylending transaction. Summing up of this Court’s findings and conclusions [22] In summary, this Court finds that all the three (3) following requirements are fulfilled in our resent case:

the caveator's claim expressed in the grounds for caveat application amounts in law to a caveatable interest;

(ii) the caveator's said claim discloses a serious question meriting a trial; and

(iii) the balance of convenience is in favour of allowing the private caveat to continue. Conclusion [23] In conclusion this Court on 19.10.2022 dismissed the Plaintiff’s Originating Summons with costs. Costs was assessed at RM2,000, subject to allocator. 7 Dated this : 29th November 2022. Signed ….............................................................. TEE GEOK HOCK JUDICIAL COMMISSIONER HIGH COURT OF MALAYA AT SHAH ALAM (NCVC 10) To the parties’ solicitors:

For the Plaintiff : Chang Kai Ping Messrs Christopher Yeo & KP Chang (Kuala Lumpur)

For the Defendants : Jayanthi a/p Surinarayana & Sri Lata a/p Anraj @ Nookaraja (Defendant acting in person) (Kuala Lumpur)