An option not exercised in a timely manner does not constitute a caveatable interest under applicable land law.

[1] The appeal herein is against the decision of the High Court dismissing the plaintiff's application to remove the defendant's private caveat lodged over a piece of land. In this judgment the parties shall be referred to as they were in the Court below.

Salient Background Facts

[2] Pursuant to a friendly loan agreement dated 19 June 2015 ("the Loan Agreement"), the defendant agreed to lend to one Malarkodi Maratha Muthu ("the Borrower") the sum of RM257,000.00. Insofar as this appeal is concerned, the salient terms of the Loan Agreement are as follows:

(i) The loan is repayable within one month of the date of the Loan Agreement ("the Payment Due Date");

(ii) The Borrower granted to the defendant an option to purchase the Borrower's land held under HSD 40161, Lot 26988, Mukim Petaling, Daerah Kuala Lumpur, Negeri Wilayah Persekutuan Kuala Lumpur ("the Land") at the prevailing market price; and

(iii) In the event the loan sum is not repaid by the Payment Due Date, the defendant shall have the right to exercise the option to purchase the Land at the purchase price of RM275,000.00.

[3] Meanwhile on 22 October 2015, the Borrower entered into a sale and purchase agreement with the plaintiff to sell the Land to the plaintiff for the purchase price of RM500,000.00. The purchase price has been paid in full. However, the Land could not be transferred to the plaintiff as a land search conducted on 28 March 2016 showed that a private caveat had been lodged by the defendant over the Land. As such, the duly executed and stamped memorandum of transfer could not be presented for registration.

[4] The defendant had lodged a private caveat over the Land on 17 March 2016. According to the Application for Entry of Private Caveat (Form 19B) lodged by the defendant, his claim to the Land is grounded in the following terms:

"Pada 19 June 2015 saya telah membuat satu Perjanjian ('Friendly Loan Agreement") dengan MALAKODI A/P MARATHA MUTHU (NO K/P: 631116-01-6460). Beliau telah meminjam wang sebanyak (RM275,000.00) daripada saya pada 19 June 2015. Alasan-alasan selanjut adalah di surat akuan yang dilampirkan bersama. Oleh itu saya ingin memasukkan kaveat ini ke atas tanah sepetimana dalam jadual untuk memelihara kepentingan saya terhadap hartanah ini yang dikenali sebagai Geran 58829, Lot 26988, Mukim Petaling."

[5] For completeness, the defendant's statutory declaration verifying the claim is reproduced below:

Findings Of The High Court

[6] The learned Judicial Commissioner (JC) dismissed the application on the following grounds:

(i) The Borrower had given the option to purchase the Land under the Loan Agreement and that without the option the defendant would not have given the loan to the Borrower. As such the defendant had a caveatable interest over the land;

(ii) There was a serious question meriting a trial relating to the bona fides of the sale and purchase transaction between the plaintiff and the Borrower; and

(iii) The balance of convenience lies in favour of maintaining the status quo.

Submission Of Parties

[7] Learned counsel for the plaintiff took 2 main points. First, the defendant does not have any right to enter a caveat on the Land as the defendant is not claiming title to the Land or any registrable interest or any right to such title or interest to the Land nor is the defendant claiming any beneficial interest under any trust affecting the Land. The defendant only has a monetary claim against the Borrower. A monetary claim does not amount to caveatable interest Luggage Distributors (M) Sdn Bhd v. Tan Hor Teng, [1995] 1 MLJ 719; Kundang Lakes Country Club Bhd v. Garden Masters (M) Sdn Bhd; [1999] 2 MLJ 537; [1999] 2 CLJ 633; [1999] 2 AMR 2440; Trans-Summit Sdn Bhd v. Chun Nyook Lin; [1995] 3 MLJ 247; [1996] 3 CLJ 502; [1995] 2 AMR 1889 (CA); s 323(1)(a) & (b) of the National Land Code 1965).

[8] Secon