JUDGMENT

RK Nathan J:

Facts

The plaintiff had granted banking facilities to the defendant. The said banking facilities were renewed from time to time and were secured by a third party charge dated 3 June 1982 over land held under Lot 2785 HS(D) 10750 Negeri

Sembilan (the said land). The third party who is the owner of the land is Tee Hup Seng Holdings Sdn Bhd (the proprietor). On 18 October 1994, some 12 years after the creation of the charge, the defendant caused to be entered a private caveat on the register document of title, claiming to be the beneficial owner of the land and alleging that the proprietor is its trustee. However, nowhere in the land title is the proprietor described as a trustee. Upon the default of the defendant/borrower under the banking facilities, the plaintiff commenced foreclosure proceedings by way of Originating Summons No. 24- 189-98 against the proprietor, culminating in an order for sale issued on 4 January 1999.

This is the plaintiff's application under s. 327(1) of the National Land Code (the NLC)for the removal of the private caveat lodged by the defendant.

Findings Of The Court

Section 322(3)(a) of the NLCstates that the legal rights of the plaintiff, the chargee herein, who has obtained an order for sale, will be affected by the private caveat which prohibits the registration of any certificate of sale. In Soon Seng Co Sdn Bhd v. Toko Palayakat Jamal (M) Sdn Bhd[1999] 6 CLJ 397I summarised the duty of this court as laid out by the Court of Appeal in Luggage Distributors (M) Sdn Bhd v. Tan Hor Teng & Anor[1995] 3 CLJ 520when considering a case of this kind. This is what I said at p. 401:

The Privy Council through Eng Mee Yongdecided that once an applicant has shown that he is an aggrieved party, it is the caveator's duty then to prove that he has a caveatable interest. In Luggage Distributors (M) Sdn Bhd v. Tan Hor Teng & Anor[1995] 3 CLJ 520, the Court of Appeal set three stages for this court to consider before ordering the removal of a caveat. First, the court is to examine the caveat itself, that is, to look into Form 19B and the reasons stated therein for imposing the caveat. If no caveatable interest has been shown, the caveat ought to be removed without the need to consider the remaining two stages. If Form 19B shows a caveatable interest, the court then moves on to the second stage. The second stage is when an aggrieved party applies to remove the caveat. The court then examines the affidavit evidence of the caveator to find out if the evidence supports the caveatable interest claimed in the Form 19B or shows that the claim to a caveatable interest raises a serious issue to be tried. The court is to examine the evidence in detail and closely. If the evidence does not support the claim to a caveatable interest or that there is a serious issue to be tried on this point, the court is to remove the caveat without going to the third stage. Once the first two stages are satisfied, then the court must decide as a third stage, where the balance of convenience lies. It must be noted that at the second stage the caveator is not allowed to justify the retention of the caveat on a ground different from that set out in his Form 19B and the court is required to subject the caveator's affidavit evidence in support of the caveatable interest, to 'meticulous scrutiny'

(see GOH PAIK SWAN v. NG CHOO LUM [1997] 1 CLJ 77). In Murugappa Chettiar Lakshmanan v. Lee Teck Mook[1995] 1 MLJ 782, the Court of Appeal held that the caveator must show an enforceable contract to have a caveatable interest. In Wu Shu Chen, the caveat was removed because the caveator had merely stated in the Form 19B that they had a caveatable interest 'by virtue of certain document' which they did not exhibit. Mokhtar Sidin JCA said at p 503:

As can be seen in the said para 2 above, Goh had not disclosed what that so-called 'certain document' was. He chose to hide it from the world at large and it was as good as having nothing at all