(delivering the judgment of the court): The only issue in this appeal is whether the respondent had a caveatable interest in the appellants lands. The learned judge resolved that issue in the respondents favour. We disagreed with the learned judge, and held that there was no caveatable interest.

Indeed, having read the record provided with great care, we formed the view that the judge was clearly wrong and, for that reason, called upon counsel for the respondent to support the judgment appealed from without requiring counsel for the appellant to argue the appeal. Having heard arguments from counsel for the respondent, we were satisfied that the preliminary view which we had formed of the matter was entirely correct. We therefore reversed the learned judge. The reasons for our decision now follow.

The brief facts of this case are as follows.

The appellant is the registered proprietor of two pieces of land held under Geran Mukim No GM 169 for Lot No 578 and Geran Mukim No GM 170 for Lot No 579 in Daerah Seberang Perai Selatan (the said lands). On 4 May 1995, the appellant executed a document which reads as follows:

I, Goh Phaik Swan I/C No 8383203 of 12, Bunga Raya Satu, off Jalan Raja

Uda, 13000 Butterworth, PW hereby agree to sell two pieces of land,

Lots 578 and 579 Mk 9 Transkrian Sek Perai, to Mr Ng Choo Lum @ Ng Poon

Lum at the price of RM45,000 per acre.

Hereby I received RM8,000 as deposit. Deposit for RM8,000 will be

forfeited if agreement is not made within two weeks date hereof.

Thank you.

Yours faithfully,

--Sgd--

On 17 May 1995, Messrs JB Lim & Associates, a firm of advocates and solicitors, wrote to the appellant a letter which reads as follows:

Dear Sir/Madam,

Re: Lot Nos 578 and 579 Mukim 9, Transkrian, Daerah Seberang Perai

Selatan

We refer to the above and inform you that pursuant to your letter dated

4 May 1995 the intending purchaser Ng Chu Lum @ Ng Poon Lum has

deposited a sum of RM35,611.30 being the balance of the deposit sum

with us with the purpose of proceeding with the purchase of the subject

properties.

We are in the process of preparing the sale and purchase agreement for

your execution and shall be pleased if you could attend at our office

for us to settle the terms and conditions for the sale and purchase

agreement.

The appellant did not respond to this letter.

On 19 May 1995, the respondent entered a caveat against the titles to the said lands. The application for the caveat was supported by a statutory declaration by the respondents solicitor, Mr Lim Jit Boo. In his application for the entry of a caveat in Form 19B, the respondent stated, among other things, that he had paid a sum of RM35,611.30 to Messrs JB Lim & Associates in accordance with the document dated 4 May 1995, which he described as an option. There was, however, no sale and purchase agreement either negotiated or executed by the parties.

On 11 July 1995, the appellant moved the High Court under s 327 of the National Land Code 1965 (the Code) for the removal of the respondents caveat. That application was refused by the learned judge upon the sole ground that the respondent had a caveatable interest because the document of 4 May 1995 was an enforceable agreement by which the parties had bound themselves on the subject of the sale.

Although the learned judge referred to the decisions of this court in Luggage Distributors (M) Sdn Bhd v Tan Hor Teng & Anor [1995] 1 MLJ 719 and Murugappa Chettiar Lakshmanan v Lee Teck Mook [1995] 1 MLJ 782 , it would appear that he did not sufficiently appreciate the propositions established by these cases. Nor did he properly apply them to the facts of the case before him. All that the learned judge did was to find that the respondent had a caveatable interest. And on that basis, he held that the caveat ought to remain. He went no further. Ac