Mohd. Jemuri Serjan CJ (Borneo):

At the conclusion of the hearing of this appeal the Court allowed the appeal but took time to give reasons for allowing the appeal. Here are our reasons. (Datuk Haji Mohammed Jemuri Serjan CJ (Borneo) and Datuk Charles N.C. Ho J. and Tan Sri Datuk Gunn Chit Tuan, SCJ dissenting.)

This is an appeal from a judgment of the High Court at Kuala Lumpur in proceedings under s. 327(1) of the National Land Code 1965, claiming the removal of a private caveat which had been entered on the register document of title to the land under s. 322 of the Code. The learned Judge granted the application and ordered the removal of the caveat. He gave his reasons in a written judgment which was delivered on 3 December 1990. From this judgment and order of the High Court the appeal was brought before us.

By a sale and purchase agreement dated 20 March 1980 the appellant, the defendant in the Court below, agreed to sell to one Ezan Sdn. Bhd., a parcel of land held under document of Title Grant No. 4125, Lot No. 849 situate in the Mukim of Port Dickson, District of Coast, Negeri Sembilan at the price of RM972,000 subject to the terms and conditions stipulated in the agreement. The appellant also agreed to hand over to Ezan Sdn. Bhd., a valid and registrable memorandum of transfer in favour of Ezan Sdn. Bhd. or its nominee within two months of the payment of the full purchase price. Subsequent to the signing of the agreement, Ezan Sdn. Bhd., resolved to sell the said land together with another piece of land held under Grant No. 17065, Lot 1421, to the respondent for a purchase price of RM1,994,442.

Thereupon, Ezan Sdn. Bhd., notified the appellant by a letter dated 13 August 1981 of its intention to nominate the respondent as its nominee, pursuant to Clause 2 of the agreement. Apparently, the appellant raised no objection to the letter, and delivered to the solicitors of the respondent a duly executed memorandum of transfer of Lot 849 in favour of the respondent upon the respondent's solicitors' undertaking to effect payment to the appellant of the balance of the purchase price upon presentation of the memorandum of transfer for registration. On 20 August 1981 the respondent's solicitors wrote to the appellant to inform it that a portion of Lot 849 had been compulsorily acquired by the authorities and thereby the purchase price had to be adjusted and reduced to RM942,000. On 22 September 1981 the full purchase price was duly paid to the appellant. Thereupon, the memorandum of transfer of Lot 849 in favour of the respondent was duly presented for registration on 22 September 1981. In the events that happened, the respondent received a letter from the appellant on 3 February 1987, some six years later, objecting to the transfer of the said land to the respondent on the ground that no approval from the Estate Land Board for such transfer had been obtained. Later, it came to the notice of the respondent that a private caveat had been entered on the Register document of title by the appellant on 8 November 1989.

The appellant in its affidavit in opposition to the application for the removal of the caveat averred that the land held under Lot 849 was but a portion of the appellant's Lukut estate which comprised several contiguous lands totalling 1,400 acres all told. That being the case, it was expressly stipulated in Clause 2 of the agreement that the sale and purchase agreement was conditional upon the Estate Land Board, either certifying that on or about 22 September 1981, in breach of Clause 2 of the agreement, Ezan Sdn. Bhd. caused a transfer of Lot 849 be registered in the name of its nominee, the respondent, despite the fact that no application had been made to the Estate Land Board. Thereupon, since Lot 849 was a portion of the bigger Lukut estate, an estate land within the meaning of s. 214A of the Code, it was within the purview of this section, and prior approval of the Estate Land Board must be obtained, f