JUDGMENT

Noradura Hamzah JC:

Introduction

[1] This is the Plaintiffs' claim for a declaration that the charge registered over their property (Presentation No 75625/2018 endorsed on PN 76047, Lot 170282, Mukim Pulai, Johor Bahru ("the Property")) by the defendant, is null and void and ought to be set aside.

[2] The full trial was conducted on 2 October 2025. For the plaintiff, only the 1st Plaintiff (SP1) testified on behalf of both plaintiffs. The defendant called Edward Yong Thau Soong (SD1), its former Head of Banking Division.

[3] Both parties filed written submissions and orally submitted on 3 October 2025. The decision was fixed for today (21 October 2025).

Background

[4] On 4 January 2016, the plaintiffs (both Singaporean), entered into a Sale and Purchase Agreement (SPA) with GST Realty Sdn Bhd ("the developer") to purchase a three-storey cluster house at D'Carlton Heights @ Taman Bukit Skudai for RM1,438,000.00. Vacant possession was delivered in or about November 2017. The State Authority consent to transfer was issued on 10 April 2018. The plaintiffs thereafter paid the full purchase price by 12 April 2018.

[5] Notwithstanding this, the developer executed a Form 16A charge on 18 September 2018 in favour of the defendant as project financier, which was registered on 14 October 2018 (Presentation No 75625/2018).

[6] The plaintiffs were unaware of the charge until their solicitors attempted to register the transfer and discovered the encumbrance. The defendant had earlier been notified of the SPA by the plaintiffs' solicitors on 19 January 2016 and it issued a redemption statement dated 26 January 2016.

[7] The Developer was subsequently wound up on 12 March 2019.

Court Analysis

[8] Parties filed their own issues for trial in encls 21 and 25. However, upon perusing the pleadings, the cause papers, evidence and submissions, this Court has incorporated their issues for determination as below:

(a) whether the charge (Presentation No 75625/2018) in favour of the defendant is indefeasible or defeasible under s 340 of the National Land Code 1965;

(b) whether the developer, having received full payment and delivered vacant possession, held the Property as bare trustee for the plaintiffs and had any authority to create the said charge;

(c) whether the defendant's rights as charge are subject to the plaintiffs' prior beneficial ownership; and

(d) whether the plaintiffs' remedy lies against the defendant or solely against the developer.

[9] Section 340 of the National Land Code 1965 [Act 828] ("NLC") reads:

"(1) The title or interest of any person or body for the time being registered as proprietor of any land, or in whose name any lease, charge or easement is for the time being registered, shall, subject to the following provisions of this section, be indefeasible.

(2) The title or interest of any such person or body shall not be indefeasible:

(a) in any case of fraud or misrepresentation to which the person or body, or any agent of the person or body, was a party or privy; or

(b) where registration was obtained by forgery, or by means of an insufficient or void instrument; or

(c) where the title or interest was unlawfully acquired by the person or body in the purported exercise of any power or authority conferred by any written law.

(3) Where the title or interest of any person or body is defeasible by reason of any of the circumstances specified in subsection (2):

(a) it shall be liable to be set aside in the hands of any person or body to whom it may subsequently be transferred; and

(b) any interest subsequently granted thereout shall be liable to be set aside in the hands of any person or body in whom it is for the time being vested:

Provided that nothing in this subsection shall affect any title or interest acquired by any purchaser in good faith and for valuable consideration, or by any person or body claiming through or under such a purchaser.

(4) Nothing in this section shall prejudice or prevent:

(a) the exercise in respect of any land or in