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2021 MarsdenLR 1961
HIGH COURT MALAYA SHAH ALAM
LIM KIAN SENG – Appellant
Versus
ALIFF SYUKRI KAMARZAMAN – Respondent
[Originating Summons No: BA-24NCVC-1088-10/2020]
A party cannot maintain a private caveat without a valid caveatable interest; failure to comply with payment terms in a sale agreement results in the termination of any such interest.
Headnote:(A) National Land Code – Section 327(1) – Caveat – Removal of private caveats by the Court – The Defendant’s private caveat was lodged on grounds of a sale and purchase agreement but failed to demonstrate a caveatable interest after non-payment of the balance purchase price. The Plaintiff’s application for removal was granted. (Paras 17, 24, 28)
(B) Contract Law – Caveats – A party must establish a caveatable interest to maintain a private caveat, failing which it will be removed. (Paras 18, 34)
Facts of the case: The Plaintiff sought the removal of the Defendant's caveat due to the Defendant's failure to pay the balance purchase price as stipulated in their Sale and Purchase Agreement, leading to the termination of the agreement. (Paras 7, 28).
Findings of Court: The court found the Defendant did not prove a caveatable interest in the property post-termination of the Sale and Purchase Agreement. (Paras 31, 42).
Issues: Whether the Defendant had a caveatable interest remaining after the termination of the Sale and Purchase Agreement. (Paras 20, 28).
Ratio Decidendi: The court ruled that the Defendant’s failure to comply with the payment terms of the agreement extinguished any caveatable interest he claimed, reaffirming the principle that only genuine interests can maintain a caveat. (Paras 28, 41).
Result: Plaintiff's application allowed to remove the private caveat, with costs. (Para 43)
JUDGMENT
Introduction
[1] By an originating summons dated 6 October 2020 the Plaintiff sought an order for the removal of a private caveat lodged by the Defendant on his property on 18 September 2019.
[2] The application was resisted by the Defendant mainly on the ground that he had a beneficial interest in the property.
[3] The property in question is Geran GM207, Lot 3552, Mukim Batu, Daerah Gombak, Selangor (the said property).
Summary Of The Plaintiff's Claim
[4] The Plaintiff in his Affidavit in support of the OS application claimed that he and the Defendant had entered into a Sale and Purchase Agreement (SPA) dated 17 July 2019 to sell the said property for the purchase price of RM1,500,000.00.
[5] The Defendant paid a deposit of RM150,000 and thereafter lodged a private Caveat to protect his interest on the property. Parties also signed a Power of Attorney dated 17 July 2019.
[6] Pursuant to cl 2.1 of the SPA the Defendant was required to pay the balance purchase price on or before the completion date which is 180 days after the execution of the SPA ie on or before 13 January 2020 (cl 2(a) SPA).
[7] The Defendant failed to do so and the Plaintiff thereafter through his solicitors sent a notice of termination ('notis pemberhentian') dated 16 June 2020 to the Defendant.
[8] Clause 7 of the SPA provides that in the event of any default in payment of the balance purchase price on or before the completion date the Defendant would have to return the documents of transfer that were earlier executed between the parties and the Defendant would have to remove the private caveat that was lodged against the property.
[9] The Plaintiff has contended that the Defendant does not have a caveatable interest to justify any reason for the continual lodgement of the private caveat on the said property.
Summary Of The Defendant's Objections
[10] The Defendant denied the veracity of the Plaintiff's narration of the reasons leading to the lodgement of the private caveat against the said property.
[11] According to the Defendant the Private caveat was lodged as a consequence of a friendly loan in the sum of RM1,500,000 given by the Defendant to the Plaintiff on 16 July 2019.
[12] According to the Defendant the parties executed a Friendly Loan Agreement dated 16 July 2019 whereby among the terms agreed between the parties were that the agreement is not to be construed to be in contravention of the Moneylenders Act, that there was no interest payable and repayment would be within 3 months from the date of the agreement.
[13] In consideration of the friendly loan it was contended that the Plaintiff agreed to deliver to the Defendant the said property as collateral for the repayment of the amount owed.
[14] It was agreed that in the event the Plaintiff was unable to repay the amount owed, the property would be transferred to the Defendant.
[15] The Plaintiff and the Defendant executed a Power of Attorney and a Memorandum of Transfer Form 14A on 16 July 2019 and 12 December 2019. Stamp duty was paid.
[16] The Defendant contended that as a result of the above transactions he has clearly shown that the Plaintiff has no more interest in the property and that he (the Defendant) had acquired a caveatable interest in the said property by virtue of the above said documents executed by the parties.
The Law
[17] The law governing the removal of a private caveat is contained in s 327(1) of the National Land Code ( NLC ) which provides as follows:
"Removal of private caveats by the Court
(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 required ex parte) may make such order on the application as it may think just."
[18] It is trite that the caveator must establish interest to justify the lodgement and maintenance of the private caveat, otherwise the caveat will be removed.
[19] In the Privy Council case of Eng Mee Yong v. Letchumanan , , Lo
