Johor High Court: Chua Chee Weae, Chua Chee Liang Denied Damages Under Section 329 NLC

Johor High Court: Chua Chee Weae, Chua Chee Liang Denied Damages Under Section 329 NLC

In a decision that underscores the compensatory nature of the National Land Code’s caveat regime, the Johor Bahru High Court has denied damages to registered proprietors Chua Chee Weae and Chua Chee Liang, even though a private caveat lodged against their property was wrongfully entered. Judicial Commissioner Manira Mohd Nor dismissed the claim for RM40,000 in legal fees, ruling that the applicants failed to prove actual loss under Section 329 (1) of the National Land Code 1965 (NLC).

A Caveat That Came and Went

The dispute involved a piece of land at No. 110, Jalan Dato Sulaiman, Taman Abad, Johor Bahru. The applicants, Chua Chee Weae and Chua Chee Liang, were the joint registered proprietors. In June 2025, a private caveat was lodged by one Chin Kim Huat, who claimed to have contributed money toward a deposit for the property and asserted a business venture arrangement.

The applicants disputed any caveatable interest, pointing to the absence of any written agreement or payment records. They filed an originating summons on 28 November 2025 seeking removal of the caveat, a permanent injunction, and damages under Section 329 NLC. The respondent withdrew the caveat on 9 January 2026—after proceedings had begun—but the case proceeded on the question of compensation.

The Claim for Damages

The applicants argued that the caveat had interfered with their right to deal with the property and that they were forced to engage solicitors to remove it. They claimed RM20,000 each in legal fees, totalling RM40,000, supported by a solicitors’ letter stating they had “agreed to pay” those amounts.

The respondent did not file written submissions but relied on his affidavit evidence. The court heard oral arguments from both sides.

Why Compensation Was Refused

The High Court accepted that the caveat was wrongfully entered and granted protective orders—including cancellation of the caveat and a permanent injunction. However, the claim for damages was dismissed because the statutory threshold under Section 329 (1) NLC was not met.

“ Section 329 (1) does not provide that every wrongful caveat automatically attracts an award of damages,” the judge stated. The provision requires proof of two distinct elements: first, that the caveat was entered wrongfully or without reasonable cause; and second, that the claimant suffered damage or loss by reason of that act.

On the claim of interference with property dealings, the court found no evidence of any failed sale, rejected financing, lost rental income, or other quantifiable financial loss. “The burden rests on the Applicants to prove real and actual loss that was reasonably foreseeable as a consequence of the caveat,” the judgment noted.

As for the legal fees, the court held that the evidence was insufficient. The applicants merely stated they had “agreed to pay” the amounts, without producing receipts, cheques, or bank records showing actual payment. Moreover, both applicants sought RM20,000 each from the same solicitors for the same proceedings, with no breakdown of work or explanation of why double the amount was needed. “Absence of opposition is not proof of loss,” the judge emphasised.

The court also distinguished this case from MD Biomedical Engineering (M) Sdn Bhd v Goh Yong Khai , where RM70,000 in legal fees was proved through cheques and official receipts. Here, comparable proof was absent.

Damages Are Not a Penalty

The applicants had argued that a substantial award was necessary to deter misuse of the caveat mechanism. The court rejected this, clarifying the statutory purpose.

“ Section 329 NLC is compensatory in nature, not punitive,” the judgment reads. “An award made merely to deter the misuse of the caveat mechanism, without proof of loss, would amount to a penalty and is not a function the Court may perform under Section 329 (1).”

The court also noted the risk of double recovery, as the applicants had separately sought costs of the proceedings on a solicitor-and-client basis. The RM5,000 in lump-sum costs already awarded was considered fair, reflecting the applicants’ substantive success in obtaining protective relief.

The Final Order

On 6 February 2026, the court ordered: - Cancellation of the private caveat (Prayer 1) - A permanent injunction restraining further caveats (Prayer 2) - A direction to the Registrar of Titles Johor under Section 417 NLC to give effect to the order (Prayer 3) - Dismissal of the claim for damages under Section 329 NLC (Prayer 4) - Costs of RM5,000 in one lump sum, not on a solicitor-and-client basis (Prayer 5)

Implications

The decision serves as a reminder that obtaining a court order to remove a wrongful caveat is not enough to secure compensation. Claimants must adduce concrete evidence of actual financial loss—whether from failed transactions, lost opportunities, or legal expenses actually paid—before damages will be awarded. The ruling reinforces the principle that Section 329 NLC compensates proven loss, not misconduct.