A chargee is classified as a purchaser under s 340(3) of the National Land Code, and thus entitled to protection as a subsequent purchaser.

[1] This is an appeal against the decision of the Court of Appeal given on 30 September 2015 in reversing the decision of the High Court. The High Court had on 8 July 2014 found in favour of the appellant (CIMB) in respect of competing claims with the 1st respondent (AmBank) over their respective charges on the same piece of land.

[2] Leave to appeal to this Court was granted to the appellant on 17 September 2016 on a single question of law which reads:

"Whether a chargee comes within the meaning of 'purchaser' under the proviso to s 340(3) of the National Land Code 1965."

[3] For ease of reference, we will refer the parties in this appeal as they were referred to at the High Court.

Background Facts

[4] Chin Ting Seng and Chin Chong Lup (the Chins) were at the material time, owners of a piece of land situated at Seksyen 21, Mukim Bandar Klang, District of Klang, State of Negeri Selangor (the Property). On 23 March 2006, the Chins had executed a charge on the Property in favour of Southern Bank Berhad (SBB) as security for a banking facility. On 6 September 2006, the banking business of SBB was vested with CIMB.

[5] On 4 November 2008, one Wong Chee Keong (Wong) applied for a loan from AmBank to finance the purchase of the Property which would be used as a security for the loan (the AmBank charge). AmBank appointed Messrs KK Lim & Associates (KKL) as their solicitors to prepare the necessary documentation including the creation of the charge over the Property in favour of AmBank. KKL conducted the relevant property searches, made the appropriate enquiries and also obtained all the necessary undertakings and confirmations from the solicitors acting in the sale and purchase transaction between the Chins and Wong.

[6] The firm of solicitors acting for Wong was Messrs Ku Abdul Rahman & Associates (KAR). On 11 February 2009, by way of a letter, KAR informed KKL of the followings:

(a) the differential sum between the balance purchase price and the loan sum had been settled by Wong;

(b) the vendors ie the Chins had settled the outstanding loan due to CIMB and they were awaiting the original title deed and duly executed discharge of charge to be released by CIMB; and

(c) KAR undertook to forward to KKL the duly adjudicated and stamped memorandum of transfer (the MOT) together with the original title deed and the discharge of charge.

[7] On 10 March 2009, KKL received from KAR:

(a) the original deed of the Property (IDT Version 6);

(b) the duly stamped MOT; and

(c) the discharge of charge of the CIMB Charge.

[8] On 17 March 2009, KKL received from KAR the duplicate of the CIMB Charge forwarded on a letter dated 16 March 2009. On 19 March 2009, KKL presented, inter alia, the Discharge of CIMB's Charge, the MOT, and the AmBank Charge together with the IDT Version 6 (the Security Documents), at the Land Office.

[9] On 7 April 2009, KKL on behalf of AmBank forwarded a Cashier's Order No: 724209 for RM1,910,000.00 being the balance purchase price to KAR. On 7 April 2009, KAR credited the balance purchase price into their account maintained with Al-Rajhi Bank.

[10] On 25 November 2009, the Land Office effected the discharge of CIMB's Charge and registered Wong as the registered proprietor of the Property. Thereupon AmBank was registered as the chargee of the Property.

[11] It was d