A lien-holder's caveat, established prior to bankruptcy, protects the lien-holder's interest in property; amendments to a consent judgment can exclude properties from such claims.

Introduction

[1] On 29 July 2025, this Court dismissed the Plaintiffs application in Enclosure 1. The following are the reasons for the decision.

Background Facts

[2] Briefly, the background facts leading to encl 1 are as follows. The Plaintiff entered into a consent judgment with one Chan Kok Leong (NRIC No: 530304-02-5169) (Chan), a bankrupt, and other defendants in suit no: KB-22NCVC-14- 04/2021 on 28 August 2022.

[3] The terms of the consent judgment included that Chan and the other defendants agreed to be jointly and severally liable to pay the Plaintiff a sum of RM300,000.00 within 12 months of the date of the consent judgment. In the event of default, the Plaintiff would be entitled to enforce their lien-holder's caveats over properties held under the description of:

(i) Lot 14328, Geran No 59913 (dahulunya dipegang di bawah Geran No. 10400), Bandar Sungai Petani, Daerah Kuala Muda, Negeri Kedah Darul Aman bearing address No: 578, Lorong 12, Taman Bandar Baru, 08000 Sungai Petani, Kedah Darul Aman (Property 578);

(ii) Lot 9154, Geran No 79167, Bandar Sungai Petani, Daerah Kuala Muda, Negeri Kedah Darul Aman bearing address No: B42, Jalan Baiduri 1, Taman Baiduri, 08000 Sungai Petani, Kedah Darul Aman (Property B42); and

(iii) Lot 9155, Geran No 79185, Bandar Sungai Petani Daerah Kuala Muda Negeri Kedah Darul Aman bearing address No: B43, Jalan Baiduri 1, Taman Baiduri, 08000 Sungai Petani, Kedah Darul Aman (Property B43).

[4] On the Plaintiffs application, the consent judgment was amended to omit Property B43 from the default clause.

[5] Needless to say, Chan and the other defendants failed to comply with the terms of the consent judgment. The Plaintiff sought to enforce the lien they hold over Property B43.

[6] The reliefs the Plaintiff sought in encl 1 included:

(i) a declaration that the Defendant does not administer Property B43 as part of Chan's bankruptcy estate;

(ii) an order that the Defendant's consent is not required to deal with Property B43;

(iii) an order that Property B43 does not vested in the Defendant under s 8 of the Insolvency Act 1967 (Act 360);

(iv) an order that the Plaintiff be allowed to enforce the lien-holder's caveat over Property B43 by effecting a transfer of the property into their name or that of their nominees;

(v) an order that the Defendant execute all documents necessary to effect the transfer of Property B43 within 7 days of a request by the Plaintiff's solicitors to do so; and

(vi) in default an order that the Senior Assistant Registrar be empowered to execute the documents for the Defendant.

Plaintiff's Contention

[7] The Plaintiff contended that the lien they hold over Property B42 is an equitable interest; that prevailed over the Defendant's rights to Chan's estate as it was created before his bankruptcy.

[8] In support of this argument, the Plaintiff cited the case of Perwira Affin Bank Bhd v. Selangor Properties Sdn Bhd & Ors ; [2010] 3 MLJ 43 ; wherein Abdul Malik Ishak JCA held at 55:

"A lien is said to be similar to an equitable mortgage where the lien-holder retains the issue document of title together with the duplicate of the registered lease or a copy of the issue document of title issued under s 343(3) of the NLC. And in such a situation, the interest secured would be akin to that of a co-proprietor. The deposit of the issue document of title must have been made with the intention that the deposited document would serve a