In property law, a purchaser must have paid the full purchase price to acquire beneficial ownership; otherwise, they hold only contractual rights.

Introduction

[1] This is an appeal by the appellant (the plaintiff in the High Court) against the decision of the Court of Appeal in allowing the respondent's (the 1st defendant in the High Court) appeal. The Court of Appeal ruled that the 1st defendant was a bona fie purchaser for value without notice, hence is clothed with the statutory protection accorded by s 340 National Land Code 1965 ("NLC"). That being the case, the Court of Appeal held that the 1st defendant has acquired an indefeasible title to the property.

[2] The 2nd defendant named in the High Court proceeding was a developer company known as Juara Aspirasi (M) Sdn Bhd (the 2nd defendant in the High Court), is not a party before us. For ease of reference, we shall refer to the parties as they were cited in the High Court.

Question Of Law

[3] On 19 May 2014, this Court granted leave to the plaintiff to appeal against the decision of the Court of Appeal on the following two questions of law:

(a) Whether the principle of beneficial ownership established by the decision of the Federal Court in Borneo Housing Mortgage Finance Berhad v. Time Engineering Berhad , [1996] 2 MLJ 12 applies to the statutory form of contract prescribed by the Housing Developers legislation.

(b) Whether s 340(1) of the National Land Code applied to immovable strata property in respect of which no register document of title has been issued by the appropriate authority.

Background Facts

[4] The subject matter of the dispute is an apartment unit known as Unit 15-6, Level 15, Building No Block A, Villa Mas Ewani Apartments, Bandar Jelutong, Penang ("the property"). At all material times, prior to its liquidation, the 2nd defendant was a licensed housing developer undertaking the construction and development of the property.

[5] On 3 July 1996, a sale and purchase agreement was entered into between the 2nd defendant as the vendor, the plaintiff as the purchaser and Goldencolt (M) Sdn Bhd as the proprietor of the land that was being developed. Among the terms of the sale and purchase agreement ("the fist SPA") were:

(i) the agreed purchase price of the property was RM35,000.00; and

(ii) the purchase price is to be settled in the manner spelt out in the fourth schedule to the agreement.

The fist SPA was in the statutory format prescribed under the Housing Developers (Control And Licensing) Act 1966 ("the Act").

[6] On 1 November 2002, the 2nd defendant entered into a fresh sale and purchase agreement in respect of the property with one Mohd Ismail Md Ibrahim ("Mohd Ismail") ("the second SPA"). The agreed purchase price was RM50,000.00 which was fully settled. Thereafter, on 31 May 2004, Mohd Ismail sold the property to the 1st defendant vide a sale and purchase agreement entered into and signed on the same day ("the third SPA"). Upon obtaining vacant possession of the property, the 1st defendant commenced renovation work on the property.

[7] On 20 January 2006, the plaintiff claimed he visited the property and discovered that the 1st defendant was carrying out renovation works on the property. He then lodged a police report alleging that he was the owner of the property and that someone had trespassed into the property.

[8] The plaintiff, through his solicitor, issued a notice of demand dated 10 March 2006 to the solicitor of the 1st defendant. The solicitor for the 1st defendant responded, in which it was categorically stated that the 1st defendant was the beneficial owner of the property, having purchased the property from Mohd Ismail for a valuable consideration. It was also pointed out in the letter that if there was any grain of truth in the allegation made by the plaintiff, his griev