Compensation under section 329(1) of the National Land Code is discretionary and contingent upon proof of actual damages.

[1] This appeal deals with a very defined and narrow point and that is, whether the order to pay compensation under s 329(1) of the National Land Code is mandatory or otherwise. Upon hearing both learned counsel, we decided the issue in the negative. Consequently, we unanimously allowed the appeal and set aside the order of the High Court on the order for payment of damages. These are our reasons.

[2] The appellant purchased from Md Anwar Shawkat Afser and Farzana Afsar ('original owners'), a service apartment ('said property') located in a development known as "231 TR". For this purpose, the parties entered into a sale and purchase agreement dated 20 December 2013 ('the SPA'). At that time, the said property was charged to United Overseas Bank (M) Berhad as the original owners had taken a loan from UOB. The appellant paid the original owners a total sum of RM67,200.00 comprising earnest deposit and retention sum, the latter for the purpose of compliance with tax regulations. The appellant herself secured the financing of RM553,450.00 from CIMB Bank Berhad in order to purchase the said property. The sale was however, not completed and the appellant sued the original owners for breach of the SPA. Prior to the filing of the action, the appellant lodged a caveat against the said property on 8 July 2014. On 22 May 2015, the appellant entered summary judgment against the original owners following an action filed on 14 November 2014. That judgment remained unsatisfied.

[3] Meanwhile, UOB commenced foreclosure proceedings when the original owners defaulted on the loan. This led to a public auction on 9 July 2015, and that was where the respondent came in. The respondent was successful in his bid and he paid RM73,000.00 to UOB with the balance of the purchase price to be paid within 120 days. The respondent, too, secured a loan for the purchase, this time; it was from RHB Bank Berhad.

[4] After his successful bid, the respondent conducted a search with the Land Office [Wilayah Persekutuan] on 27 August 2015. His search yielded the existence of the caveat lodged by the appellant back on 8 July 2014. On 14 September 2015, the respondent wrote to the appellant requiring the appellant to remove the caveat that she had lodged. The appellant refused. The respondent then applied to Court for its removal. The respondent claimed that as a result of the appellant's refusal to remove the caveat, he was unable to complete the sale within the stipulated time and that his deposit might be forfeited [kebarangkalian kehilangan wang deposit].

[5] The appellant contested the respondent's application. The learned High Court Judge ruled in the respondent's favour finding that the appellant had no caveatable interest under s 323(1) of the National Land Code . Amongst Her Ladyship's reasons are that the sale of the said property was subject to a condition precedent in that the approval of the State Authority was required given that the original owners were foreigners. According to Her Ladyship, should that approval be not forthcoming, then, there would be no sale and consequently no caveatable interest in the said property. Next, although she was aware of UOB's rights and UOB's intention to foreclose, the appellant failed to take any action to intervene or halt the auction. The learned High Court Judge suggested that this was probably because the appellant was aware that her purchase of the said property was subject to a condition precedent which ultimately, was not