Gill CJ (Malaya):

[1] This is an appeal from the decision of Arulanandom J dismissing the appellants' application for an order to set aside a private caveat entered at the instance of the respondent on the register document of title to land comprised in holding

[2] No 456, Town Subdiv 20, North East District, Penang with a building thereon known as premises No 53 King Street Penang (hereinafter called "the property").

[3] The caveat was lodged by the respondent pursuant to an agreement in writing dated 9 July 1973 whereby he had agreed to purchase the said property from Weng Lye Development Sdn Bhd (hereinafter called "the Vendors") for a sum of $175,000 and paid a deposit of $17,500 towards the purchase price. He was to say the balance of the purchase price on or before 6 November 1973, whereupon the vendors were to execute in his favour a valid and registrable transfer of the said land in National Land Code Form 14A. In the event of his failure to pay the balance purchase price within the stipulated time, the vendors were to be at liberty to determine the agreement and forfeit the deposit. It was stated in the recital in the agreement that the vendors were the registered proprietors of the said property.

[4] On 6 November 1973 the vendors' solicitors wrote to the respondent's solicitors to give notice that the balance purchase price was to be paid by that day, and to say that unless they received the money immediately the deposit would be forfeited in accordance with cl 7 of the sale agreement. On 23 November 1973 the respondent's solicitors wrote to the vendors' solicitors pointing out that, contrary to the recital in the agreement, on the date of the agreement and even on that date the vendors were not the registered proprietors of the said property. The letter went on to state, however, that the purchaser was prepared to complete the purchase within two days if the vendors were the registered owners of the property, failing which be would rescind the contract and sue for the recovery of the deposit and damages. On 27 November 1973 the vendors' solicitors wrote to the purchaser's solicitors to state, inter alia, no question of recission of the agreement by the purchaser could arise as the agreement had been determined on his failure to comply with the provision of cl 3 of the agreement and the deposit forfeited.

[5] In December 1973 the respondent attempted to register a caveat to protect his right and interest under the agreement, but he did not succeed in doing so until 21 November 1974. On 25 June 1974 he issued a writ of summons against the vendors claiming specific performance of the agreement and damages for breach of contract in lieu or in addition to specific performance.

[6] The application by the appellants for the removal of the caveat lodged by the respondent was made on the grounds that they had agreed to purchase the said property from the vendors for a sum of $195,000 by an agreement dated 15 June 1974, and that on full payment by them of the agreed purchase price the vendors had executed in their favour a legal transfer of the said property which could not be registered because of the respondent's caveat.

[7] At the hearing of the application before the learned Judge the main argument by Counsel for the appellants was that, as the respondent had acquired no registrable interest in the land under his sale agreement, his caveat should not have been registered under s 323(1) of the National Land Code. For this argument he relied on the case of Chin Cheng Hong v. Hameed & Ors, [1954] MLJ 169 in which it was held that an agreement only passes a contractual interest and not a registrable interest. It was further argued on behalf of the appellants that as they were bona fide purchasers without notice of the respondent's rights, the respondent's contractual rights under the sale agreement could not override their registrable interest under the transfer.

[8] The learned Judge rejected an those arguments on behalf o