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Assoc Prof Teo Keang Sood*

Copyright © 1991 LexisNexis (a division of Reed Elsevier (Singapore) Pte Ltd).
Reprinted or Adapted or Excerpted from Teo Keang Sood's
Caveating One's Own Land: Cold Comfort for the Registered Proprietor [1991] 1 MLJ xxxiv
with permission of the Publisher. All rights reserved.

The right of a registered proprietor to enter a private caveat against his own land under the National Land Code 1965¹ was considered in two recent decisions of the High Court, namely, Eu Finance Bhd v Siland Sdn Bhd (M &J Frozen Food Sdn Bhd, Intervener)² and Hiap Yiak Trading Sdn Bhd & Ors v Hong Soon Seng San Bhd.³ The court, in each case, took a differing view of the matter. The main thrust of this article is to determine whether a registered proprietor comes within the categories of persons and bodies entitled to enter a private caveat under s 323(1)(a) of the Code. It also examines the extent to which the protection, if any, afforded by the system of private caveats is made available to him. Where the above protection is not available, the effectiveness of alternative remedies, which can be availed of by the registered proprietor, will be considered.

Persons and bodies entitled to enter private caveats

The categories of persons and bodies at whose instance a private caveat may be entered are specified in s 323(1) of the Code. For the purpose of this article, the relevant provisions of s 323(1) read as follows:

The question which arises for consideration is whether, under the above provision, a registered proprietor of land may enter a private caveat against his own land so as to prohibit dealings in respect of it. Before considering the Malaysian position in the context of s 323(1)(a), it is proposed to consider the position in other Torrens jurisdictions, namely, Australia, New Zealand and Singapore, to which references have been made by Malaysian courts in dealing with this particular issue. This will enable a better appreciation of the discussion on the Malaysian position which follows.

Position in other Torrens jurisdictions

(a) Australia

In Australia, a registered proprietor of land has been regarded as competent to enter a caveat against his own land.⁵ In Barry v Heider,⁶ the registered proprietor, Barry, executed a transfer of his land in favour of S and the transfer, induced by fraud, was not registered. S then applied for a loan from Heider on the security of the land and provided the transfer together with an order from the transferor to the Registrar General to deliver the certificate of title to Heider's solicitor. Subsequently, a caveat was lodged by Barry who claimed as unpaid vendor. S sought to raise a further mortgage from G, the, solicitor to Heider, who was aware of the caveat. During these negotiations, the caveat was withdrawn by the solicitor acting for S, the purchase moneys remained unpaid and the advance was made by G. G was aware that the purchaser's solicitor was acting for both Barry and S. On the application of Barry to set aside the transfer, the High Court of Australia held that Heider, who granted the loan without notice of Barry's right to have the transfer set aside, was entitled to have the transfer from Barry to S registered and consequent upon it, to register S's mortgage to herself. Barry was, accordingly, not entitled to any relief against Heider except as against G, whose mortgage must be postponed to Barry's vendor's lien. The High Court made no adverse comment on the right of Barry to lodge the caveat to forbid registration of the transfer which he claimed was induced by fraud and should be set aside. In the later case of Sinclair v Hope Investments Pty Ltd,⁷ the Equity Division of the Supreme Court of New South Wales also upheld the right of the registered proprietor to enter a caveat against his own land. In the instant case, the defendant was the registered proprietor of the land in question. The plaintiff was the trustee of the estate of G pursuant to a deed of arrangement under the Bankruptcy Act 1966 (Cth), Pt X. G was registered on the defendant's title as a mortgagee. At the material time, P was notified on the title as the then mortgagee. The mortgagee had, pursuant to a power of sale, entered into a contract to sell the land to a third party. The defendant claimed that, in entering into that contract, the mortgagee had sacrificed the defendant's interests. The defendant lodged a caveat against its own title and the plaintiff applied for, inter alia, the removal of the caveat. Needham J held that although the defendant, as mortgagor, remained the registered legal proprietor, it, nevertheless, had a caveatable interest in the subject land sufficient to support the entry of the caveat. As his Lordship said:

In his Lordship's opinion, the right was no less an equitable claim in the true sense '... than if the right existed shorn of the registered estate.⁹ In the result, his Lordship took the view that a registered proprietor of land, whose mortgagee has entered into a voidable contract for the sale of the land, has a proprietary right to restrain, by the entry of a caveat, the completion of that contract which is an equitable interest. As the caveat had been legitimately lodged by the defendant in the instant case, the plaintiff’s application was dismissed by the court.

It may be noted that the above two cases were decided under the provisions of the then s 72(1)) of the Real Property Act 1900 of New South Wales which provided to the effect that any person claiming an estate or interest in land under the Act by virtue of any unregistered dealing, instrument or otherwise, may by caveat forbid the registration of any interest affecting such land, estate or interest. Section 74(F)(1), which repeals s 72(1)), now provides that any person who, by virtue of any unregistered dealing or by devolution of law or otherwise, claims to be entitled to '... a legal or equitable estate or interest ...' in Torrens title land, may lodge a caveat prohibiting the registration of any dealing affecting the estate or interest claimed. In fact, by the provision of s 74F(2), a caveat may now be lodged by a registered proprietor who, because of the loss of the relevant certificates of title or for some other reason, fears an improper dealing with his registered interest. In this connection, it may be noted that even before the introduction of s 74F(2), there are already provisions in s 12(1)(e) of the Act by which the registrar may enter a registrar's caveat for the same purpose.¹⁰

(b) New Zealand

In New Zealand, the position is laid down in the case of Re An Application by Haupiri Courts Ltd (No 2),¹¹ a decision of the Supreme Court of New Zealand. In the instant case, C Ltd, as the registered mortgagee, had bought the land in question at a sale conducted by the registrar. Owing to a caveat entered by Haupiri Courts Ltd (in liquidation), as the registered proprietor, the transfer of the land could not be registered in favour of C Ltd. Haupiri Courts Ltd had alleged that the exercise of the power of sale by C Ltd was void under ss 223 and 226 of the New Zealand Companies Act 1955 as there was a failure by C Ltd to comply with certain requirements of the Property Law Act 1952. C Ltd applied for the caveat to be removed. The relevant section of the New Zealand Land Transfer Act 1952, which was dealt with in the case, is s 137(a) which, so far as is relevant, provides that any person '... claiming to be entitled to or to be beneficially interested in any land, estate, or interest under this Act by virtue of any unregistered agreement or other instrument or transmission, or of any trust expressed or implied, or otherwise howsoever ...' may at any time lodge a caveat with the registrar to protect the land, estate or interest claimed.

Richmond J, in delivering the judgment of the court, expressed the view that a registered proprietor, assuming he could be a person claiming to be entitled to land under the Act, founding his claim to caveat solely on his position as registered proprietor, could not be said to claim an interest in the land by virtue of any unregistered agreement or other instrument or transmission, or of any trust expressed or implied, or otherwise howsoever.¹² His Lordship added:

His Lordship considered as inconclusive the case of Barry v Heider¹⁴ and the other Australian authorities¹⁵ in which the validity of the caveat entered by the registered proprietor did not appear to have been argued. His Lordship was also of the view that the statutory provisions considered in the Australian authorities, such as the then s 72 of the New South Wales Real Property Act 1900, differed materially from s 137 of the New Zealand Land Transfer Act 1952 and were more apt to confer the right to caveat upon a registered proprietor than the language of s 137, the New Zealand counterpart.¹⁶ In regard to an alternative submission put forward on behalf of the registered proprietor, namely, that it could lodge a caveat by virtue of the fact that it was putting forward a claim to the land adverse to that of its mortgagee, his Lordship in disposing of this submission said:

In the result, his Lordship held that Haupiri Courts Ltd, as registered proprietor, could not protect itself against the registration of the alleged improper dealing by caveating against its own title.¹⁸

(c) Singapore

The position in Singapore follows that of the decision of the High Court of Australia in Barry v Heider.¹⁹ This can be seen from the Singapore High Court case of Societe Generale v Good Property Land Development Pte Ltd.²⁰ In the instant case, the defendants were the registered proprietors of the property in question. The plaintiffs were the equitable mortgagees of the property by virtue of an assignment of a building agreement made by the defendants in favour of the plaintiffs to secure the repayment of all moneys covenanted to be paid by the defendants under a loan agreement. The plaintiffs were members of, and also the agent for, a syndicate of banks which had provided a loan facility under the loan agreement to the defendants to purchase the said property. When the defendants defaulted in paying the instalments due under the loan agreement, the plaintiffs, acting as agent for the syndicate of banks, notified the defendants of the default and declared the loan to be immediately due and payable pursuant to the loan agreement. The plaintiffs commenced serious negotiations with prospective purchasers in regard to the property. The property was eventually sold to HPL. However, prior to the sale to HPL, the defendants had lodged a caveat against the property prohibiting the registration of any instrument affecting the property without their consent. The plaintiffs applied for the caveat to be removed. One of the substantive issues which arose for the consideration of the court was whether the defendants had a caveatable interest to enable them to lodge the caveat. It was the plaintiffs' contention that where the caveator is the registered proprietor, the words '... interest in land ...' in s 104(1) of the Land Titles Act (Cap 157, 1985 Ed) refer to his interest distinct from that as registered proprietor and as such, the defendants were not entitled to lodge a caveat under the said section.²¹ In support of their contention, the plaintiffs relied on the decision of Richmond J in Re An Application by Haupiri Courts Ltd (No 2).²²

Chan Sek Keong J, before whom the matter was argued, declined to follow the New Zealand decision, distinguishing it from the case before him on the following grounds:

In his Lordship's opinion, a more relevant decision is that of Barry v Heider²⁴ where the High Court of Australia held that a registered proprietor is entitled to lodge a caveat against his own land by virtue of the then s 72 of the Real Property Act 1900 of New South Wales. In adopting the decision in Barry v Heider,²⁵ His Lordship stated the position in Singapore as follows:

The caveat entered by the defendants was, however, ordered to be removed because, although the defendants had an interest in the property for the purpose of lodging a caveat, they had not succeeded in establishing a valid ground for maintaining it as against the plaintiffs.

The position under the Code

In Malaysia, the position under the Code is reflected in two High Court decisions, namely, Eu Finance Bhd v Siland Sdn Bhd (M & J Frozen Food Sdn Bhd, Intervener)²⁷ and Hiap Yiak Trading Sdn Bhd & Ors v Hong Soon Seng Sdn Bhd,²⁸ which conflict with one another. The case of Eu Finance Bhd follows the position in New Zealand as laid down in the case of Re An Application by Haupiri Courts Ltd (No 2),²⁹ while the subsequent case of Hiap Yiak Trading Sdn Bhd adopts the position in Singapore as laid down in the case of Societe Generale v Good Property Land Development Pte Ltd.³⁰

In Eu Finance Bhd, the plaintiff, as registered chargee, had applied for and was granted an order for sale of the land in question. The defendant, the registered proprietor of the land, had defaulted in its payments in respect of a loan granted to it by the plaintiff. The loan was secured by a charge over the land. The land was subsequently sold to the intervener at a public auction and a memorandum of contract was entered into between the auctioneer and the intervener for the purchase of the land. The intervener was required to complete the purchase within a specified period, However, before the expiry of the period for completion of the purchase, the intervener wrote to the Registrar of the High Court asking for an extension of time to complete the purchase as the processing of the bank loan applied for by the intervener had not been finalized. The registrar received this letter but gave no reply. As the intervener did not pay the balance of the purchase price within the specified period, the defendant entered a private caveat in respect of the land. Owing to the existence of the caveat on the land, the bank loan which was subsequently approved to the intervener could not be released. In the meantime, the defendant together with the auctioneer appointed by the court, brought a civil action against the intervener for rescission of the memorandum of contract, for forfeiture of the deposit paid by the intervener and for a declaration that the intervener was not entitled to enlargement of time to complete the purchase. The intervener's application for extension of time to complete the purchase was granted by the court but was subsequently set aside on the application of the defendant. The intervener had since paid the balance of the purchase price into court and was willing and able to complete the purchase but for the caveat entered by the defendant. In the instant application, the plaintiff sought to have the caveat of the defendant removed. Counsel for the defendant contended that since the intervener had not observed the condition of sale with regard to the payment of the balance of the purchase price, the defendant remained the owner of the land and that by virtue of that status alone, it acquired the right to enter and maintain the caveat within the meaning of the first limb of s 323(1) (a) of the Code which provides for the entry of a private caveat by '... any person or body claiming title to ... any alienated land …’, notwithstanding that the court had made an order for sale of the land. There was no allegation by the defendant of any fraud or impropriety against the plaintiff or the intervener with regard to the judicial sale.

LC Vohrah J, who heard the matter, rejected the above contention of counsel for the defendant holding that the defendant, merely as registered proprietor, was not entitled to enter the caveat against its own land. As his Lordship said:

His Lordship found it difficult to accept the view that the defendant could be said to be 'claiming' title to the land when the title was already registered in its name. His Lordship found support for his view in the decision of Richmond J in Re An Application by Haupiri Courts Ltd (No 2).³² In the result, having regard to the first limb of s 323(1)(a) of the Code and the reasoning of Richmond J in Re An Application by Haupiri Courts Ltd (No 2),³³ the learned judge allowed the plaintiff’s application for removal of the caveat.

In Hiap Wak Trading Sdn Bhd, however, the court held that a registered proprietor of land is competent to enter a private caveat against his own land. In the instant case, the defendants were the registered proprietors of the land in question. The first four plaintiffs claimed that they were the purchasers of the land which they subsequently sold to the fifth plaintiff. The defendants denied selling the land at all. It was the defendants' contention that the true transaction was one in which they had borrowed money from the first plaintiff so as to obtain a discharge of an existing charge on the land. As they were not in a position to dictate terms, a sale agreement was entered into instead of a loan agreement being drawn up. The agreement, in the instant case, provided the defendants with an option to buy back the land by a certain date failing which the land would be transferred to the plaintiffs. After the discharge of the charge, the issue document of title to the land was handed to the common solicitors. The defendants failed to exercise the option to repurchase the land by the specified date as they did not have the money to do so. No transfer had yet been executed in favour of the plaintiffs and the title to the land remained registered in the name of the defendants. In order to protect their interest in the land, the defendants caused a caveat to be registered against it and commenced proceedings claiming the return of the land. The plaintiffs applied, in the instant proceedings, for the removal of the caveat. At the hearing of the plaintiffs’ application, the defendants claimed that, under normal circumstances, they would not have sold the land for $400,000 as stated in the agreement. The defendants produced a valuation by a licenced valuer and appraiser whereunder the land was valued at $700,000. In dismissing the plaintiffs' application, Richard Talalla JC held that the caveat ought to remain as the defendants had succeeded in showing that their claim to the land raise a serious question to be tried. In regard to the right of the defendants, as registered proprietors, to enter a caveat against their own land, the learned Judicial Commissioner said:

In the light of the above two High Court decisions which conflict, with one another, the basic question to be resolved is whether a registered proprietor can enter a private caveat against his or its own land, being a person or body claiming title to or registrable interest in the land within the meaning of s 323(1)(a). As a caveat is the creature of statute, it may be entered only by a person or body upon whom a right to enter it has been conferred by the statute.³⁵ Having regard to the wordings used in s 323(1)(a), it would appear that the title or interest in question, to be protected by the entry of a private caveat, must not have been registered as yet. In other words, s 323(1)(a) would appear to be concerned only with the protection of claims to unregistered registrable title to and interests in land and for the good reason that such title and interests are particularly vulnerable to adverse claims arising subsequently in respect of the same land or interest therein. It has been suggested elsewhere that one difficulty involved is that of deciding the registered proprietor's standing to enter a caveat pursuant to s 323(I)(a) for he cannot be said to be claiming title to the land as the title is already his.³⁶ This suggestion was in fact relied upon by LC Vohrah J in Eu Finance Bhd to support his view that a registered proprietor, who enters a caveat against his own land solely in his capacity as such, does not come within the ambit of s 323(1)(a).³⁷ It is, indeed, unfortunate that in Hiap Yiak Trading Sdn Bhd, Richard Talalla JC did not give his reasons for, coming to the decision that a registered proprietor can enter a caveat against his own land. Similarly, the learned Judicial Commissioner did not explain why the case of Societe Generale should apply and whether the effect of s 323(1)(a) is substantially the same as that of s 104(1) of the Singapore Land Titles Act (Cap 157, 1985 Ed). However, what is clear is that the learned Judicial Commissioner's decision in this respect is too brief to be of any assistance in determining this particular issue. It may be noted that s 323(1)(a) was not referred to at all by the learned Judicial Commissioner in his judgment. And it appears even more strange, indeed, that the learned Judicial Commissioner referred only to the Singapore case of Societe Generale when the earlier reported decision of LC Vohrah J in Eu Finance Bhd, a Malaysian case involving this very issue, was available to him for his consideration. A consideration of Eu Finance Bhd by the learned Judicial Commissioner would no doubt have enlightened the matter further.

While the wordings of s 323(1) (a) may not entitle a registered proprietor to enter a private caveat against his own land in his capacity as such, a question which comes to mind is whether the registered proprietor can, nevertheless, enter a private caveat to protect an interest in land which is distinct and separate from his registered proprietorship. the following passage of Richmond J in Re An Application by Haupiri Courts Ltd (No 2)³⁸ seems to suggest that this is possible:

However, it is submitted that the 'distinct interest' referred to by Richmond J must still be one capable of protection under s 323(1)(a). It would appear that in Hiap Yiak Trading Sdn Bhd, Richard Talalla JC was wrong in holding that the defendants, as registered proprietors, were entitled to enter the caveat in question. An analysis of the facts in the case suggests otherwise. In that case, the defendants had alleged that the sale was a sham and that they would not have sold the land to the plaintiffs for $400,000 as stated in the agreement when the land was worth $700,000 at the material time. If the agreement was, indeed, a sale agreement, as contended by the plaintiffs, then, in view of what the defendants had claimed, there would be a shortfall of $300,000 in the amount paid by the plaintiffs for the land. The defendants could be said to be a vendor who has yet to be paid the full purchase price. However, the defendants' status as such is, it is submitted, not one capable of protection within the meaning of s 323(1)(a). As the title is still registered in their names, the defendants cannot be said to be claiming title to the land⁴⁰ or a right to such title. Further, the interest of a vendor, who has yet to be paid in full for the land, is not a registrable interest in land.⁴¹ Neither does it give rise to a right to such an interest in land. The term 'registrable interest' in s 323(1)(a) must, it is submitted, be taken to mean only those interests recognized by the Code as capable of registration.⁴² The reliance by the learned Judicial Commissioner on Societe Generale, and indirectly, Barry v Heider, is misconceived as the wordings of the statutory provisions in s 104(1) of the Singapore Land Titles Act (Cap 157, 1985 Ed) and the then s 72(1)) of the New South Wales Real Property Act 1900 are materially different. In any event, if the transaction in Hiap Yiak Trading Sdn Bhd is fraudulent or improper, the appropriate measure for the defendants to take, in the circumstances obtained therein, would be to request for the entry of a registrar's caveat.⁴³

As for Eu Finance Bhd, it was clear in that case that the defendant founded its right to caveat solely on its status as the registered owner of the land. In any event, it is submitted that the defendant could not have claimed any interest in the land in the circumstances of the case so as to support the caveat entered. In Malayan United Finance Bhd, Johore Bahru v Liew Yet Lan,⁴⁴ VC George J stated the position of a defaulting chargor in the following words:

His Lordship had earlier held that, in a forced sale pursuant to s 256 of the Code, the chargee, at whose instance the sale is effected, is to be regarded as the vendor and that the order for sale and the conditions of sale are to be regarded as the sale and purchase agreement as between the chargee and the purchaser.⁴⁶ It is submitted that once a judicial sale is validly concluded, the defaulting chargor will cease to have any claim to the land. Although a defaulting chargor is given the right, under the Code, to tender the amount owing to the registrar of the court or the land administrator, as the case may be, in which case the order for sale ceases to have effect, this right must be availed of before the conclusion of the sale. Following from the observations of VC George J and the above submission, it is clear that the defendant in Eu Finance Bhd, as a defaulting chargor, would have no further claim to the land, much less a right to deal with the land upon default by the purchaser to complete the purchase of the land within the stipulated period, which right would have been vested in the plaintiff (the chargee) with the consequence that it is the plaintiff, rather than the defendant, which has the right to take steps to deal with the matter as it deems proper. In fact, in Eu Finance Bhd, the application for removal of the caveat was made by the plaintiff, as its entry was presumably detrimental to the interest of the plaintiff as it prohibited the purchaser, who did subsequently pay the balance of the purchase price into court, from completing the purchase. It may also be noted that in Eu Finance Bhd, there could arise no question in regard to the validity of the auction sale, as there was no allegation whatsoever of any fraud or impropriety against the plaintiff or the purchaser with regard to the sale. Accordingly, in the circumstances obtained in Eu Finance Bhd, the defendant's interest in the land, if any, could, at best, merely be that of a registered proprietor in name only on the register document of title subject to the right of the plaintiff to deal with the land and for the land to be formally transferred to the name of the purchaser upon completion of the purchase. It is hardly surprising, then, that the defendant could not, it is submitted, have entered any caveat at all, much less by virtue of any interest which is distinct and separate from its bare registered proprietorship. In this connection, it may be said that the reliance by LC Vohrah J on Re An Application by Haupiri Courts Ltd (No 2)⁴⁷ was unnecessary as his Lordship would have come to the same conclusion by considering the provision of s 323(1)(a) itself. In any event, s 137(l) of the Land Transfer Act 1952, considered in the New Zealand case, is not in parimateria with s 323(1)(a) of the Code. For the above reasons and seen in the manner discussed above, Hiap Yiak Trading Sdn Bhd would not have been inconsistent or in conflict with the decision in Eu Finance Bhd.

There is, however, the case of Siland Sdn Bhd & Anor v M & J Frozen Food Sdn Bhd & Anor,⁴⁸ involving the same parties as in Eu Finance Bhd, in which Richard Talalla JC seems to suggest that a defaulting chargor still has rights in respect of the land notwithstanding that the land had been sold at a public auction to a purchaser. In the instant case, the first plaintiff had charged its land to the second defendant as security for a loan granted to it by the latter. Upon default in repayment of the loan by the first plaintiff, the second defendant, as registered chargee, applied for an order for sale of the land by public auction. The order was granted and the land was sold to the first defendant, the successful bidder, at the auction. The first defendant paid a deposit of 25% of the purchase price and a memorandum of contract was executed between the second plaintiff (the auctioneer) and the first defendant. However, the first defendant failed to pay the balance of the purchase price within 30 days from the date of sale as stipulated in the contract. Time was the essence of the contract and there was no provision for extension of time to pay the balance of the purchase price. Nevertheless, the first defendant applied for extension of time and obtained an order of court extending the time to pay the balance of the purchase price. In this application by the first defendant, the second defendant was made the respondent. The first plaintiff applied to intervene in the proceedings claiming to be an interested and aggrieved party. The first plaintiffs application was successful and the order extending time was set aside. Notwithstanding the setting aside of the order, the first defendant paid the balance of the purchase price into court. A certificate of sale was issued by the senior assistant registrar to the first defendant whereupon the land was transferred and registered in its name. The first plaintiff applied, inter alia, for the certificate of sale issued to the first defendant to be annulled and for the registration of the name of the first defendant on the title to the land to be cancelled. The first plaintiff also applied for orders that the deposit paid be forfeited in its favour and that the property be resold. Counsel for the first defendant, relying on the decision of VC George J in Malayan United Finance Bhd v Liew Yet Lan,⁴⁹ submitted that the moment the sale was completed at the auction, the first plaintiff's right to the land ceased and that all that the first plaintiff was entitled to thereafter was the residue, if any, of the money realized on the sale of the land.⁵⁰

In rejecting the contention of counsel for the first defendant, Richard Talalla JC said:

For the above reasons, the learned Judicial Commissioner allowed the application of the first plaintiff.⁵²

A number of comments may be made against the decision of Richard Talalla JC in Siland Sdn Bhd. The decision of the learned Judicial Commissioner appears to hinge on when a sale of the land can be said to have been concluded for the purpose of s 266(1) as this will determine whether the defaulting chargor still has rights in respect of the land. In the opinion of the learned Judicial Commissioner, a sale would appear to be concluded for the purpose of s 266(1)⁵³ when the purchaser at the public auction for the sale of the land pays up the balance of the purchase price and not when the sale at the public auction is completed or carried out. It is submitted that his Lordship had erred in interpreting the meaning of the words '... before the conclusion of the sale …’ in s 266(1). A reading of this provision would make it clear that a sale is concluded the moment the hammer is struck at the auction.⁵⁴ Such an interpretation is more in line with the words '... and the order shall thereupon cease to have effect' appearing in the same provision. The question of an order for sale ceasing to have effect upon the purchaser paying the balance of the purchase price does not arise at all as the said order had already been perfected or executed at the auction sale. Section 259(2)(d), which applies to the auction sale in Siland's case and which provides for an officer of the court to '... declare the sale concluded in favour of the highest bidder', would lend further support to the view that the sale is concluded when the auction is completed and not when the purchaser at the auction pays the balance of the purchase price as was suggested by Richard Talalla JC. An illustration will show the absurdity of the view taken by the learned Judicial Commissioner. If the view as suggested by the learned Judicial Commissioner is adopted, it would mean that pending the period during which the purchaser at the auction is entitled to pay the balance of the purchase price, the defaulting chargor, whose land has already been sold, is also entitled to tender payment under s 266(1) with the result that there would be two claimants to the same land. This would lead to chaos and would necessitate litigation in court to resolve the matter. In Lim Yoke Foo v Eu Finance Bhd,⁵⁵ Lord Brightman had occasion to express the view that a sale by public auction has to take place once an order had been obtained unless the defaulting chargor tenders payment as required under s 266 before the sale. This is again authority for the view that a sale is concluded at the time the auction is completed and not when the successful bidder at the auction pays up the balance of the purchase price within the stipulated period.

As submitted earlier, the better view to take would be to hold that a defaulting chargor ceases to have any claim to the land once the auction sale is validly concluded and that as he has abdicated his right as registered proprietor of the land in favour of the chargee, matters pertaining to the post sale period should be strictly within the province of the chargee to deal with. Otherwise, one would end up with a situation whereby the chargee's right as a vendor to deal with the land would be open to unwarranted interference by the defaulting chargor. It may be noted that the right of a defaulting chargor under s 268(3) to the residue, if any, of the money realized on the sale of the land is not regarded by the Code as an interest in land.⁵⁶ In any event, in the instant case of Siland Sdn Bhd & Anor v M & J Frozen Food Sdn Bhd & Anor,⁵⁷ there was no evidence to suggest that the second defendant had colluded with the first defendant to the detriment of the first plaintiff in the application seeking an extension of time to pay the balance price. The second defendant was in fact made the respondent in the application by the first defendant. In granting the first defendant an extension of time, the second defendant would suffer as much loss as the first plaintiff as there would undoubtedly be, among others, a delay in recouping the losses secured by the registered charge. It is submitted that the remedy available to a defaulting chargor where an auction sale is validly concluded and where the chargee has negligently caused loss to the defaulting chargor in regard to the residue of the proceeds of sale which the defaulting chargor would otherwise be entitled to under s 268(3), is to sue the chargee for the loss suffered.⁵⁸ This would be consistent with the position of the defaulting chargor who is now merely a registered proprietor in name only on the register document of title subject to the right of the chargee as vendor to deal with the land.

On the liability of the defaulting chargor to pay additional interest on the loan in respect of the extended period granted to the purchaser to pay the balance of the purchase money, it is unfortunate that the learned Judicial Commissioner did not cite any authority, statutory or otherwise, to support his view. On the contrary, there is the decided case of Chase Manhattan Bank, NA v Malayan United Finance Bhd⁵⁹ in which Siti Norma Yaakob J expressed the view that the words '... at the time of the sale ...' in a 268(1)(c) can only mean the date of the auction and that a chargee is only entitled to be paid the total amount due under the charge as at that date. The position as laid down by Siti Norma Yaakob J is to be preferred in the light of the provision in s 268(1)(c).

Effectiveness of alternative remedies

One would have thought that for a registered proprietor, the need to enter a private caveat to protect his title to the land would not arise at all. In fact, he may not do so as can be seen from the discussion above. In any event, his title is indefeasible under s 340(l). However, there may yet arise situations where, by reason of fraud, a transfer of the registered proprietor's land to a bona fide purchaser for value is imminent and it is necessary to restrain the registration of the transfer by the entry of a caveat. Failure to do so would result in the bona fide purchaser for value obtaining an indefeasible title under s 340(l) upon registration. In such a case, the registered proprietor, if he is to enter a private caveat, can only do so based on his status as the registered proprietor of the land which, as already seen above, is outside the scope of s 323(1)(a). Where the instrument of transfer has yet to be presented for registration, the entry of a private caveat to restrain registration of the instrument would be the most effective remedy open to the registered proprietor. The alternative remedies available to him may not be the most effective, under the circumstances, in terms of speed and the efficacy of a private caveat.⁶⁰ The alternative remedies which come to mind are the entry of a registrar's caveat for the prevention of fraud or improper dealings under s 320(l) (a) and the application for an interim injunction to restrain the purchaser from obtaining registration of the transfer.⁶¹ In relation to the entry of a registrar's caveat, Lord Diplock in Registrar of Titles, Johore v Temenggong Securities Ltd⁶² described the nature of the registrar's functions as follows:

In determining whether or not to exercise the power conferred upon him by s 320(l)(a), the registrar can only act upon such information as is available to him. More often than not, this will consist not only of what is entered in the register itself or filed in the registry, but also together with such additional information as is supplied to him by whoever has requested him to exercise his power to enter a registrar, a caveat. As the entry of a registrar's caveat is dependent on the registrar being satisfied as to the impropriety of the transaction in question (and, in the process, to be supplied with such additional information as is necessary to enable him to be so satisfied), its entry may not be effected in time to prohibit the registration of the transfer. In contrast, in the case of a private caveat, the registrar exercises a purely administrative function in entering it without being concerned to inquire into the validity of the claim on which an application for a private caveat is based. In Ong Chat Pang & Anor v Valliappa Chettiar,⁶⁴ Gill FJ (as he then was) elaborated as follows:

However, where the instrument of transfer has already been presented to the land office for registration, the subsequent entry of a private caveat would not be an effective remedy⁶⁶ and in such a case, the entry of a registrar's caveat would be more appropriate and effective, if entered in time.⁶⁷ As for the remedy Of applying for an injunction from the court, it is clearly not as speedy and simple as the remedy of applying for the entry of a private caveat. in this connection, Lord Diplock in Eng Mee Yong & Ors v Letchumanan⁶⁸ had this to say:

In Foo Poh Sang & Ors v Yuen Lum Sdn Bhd (Asian Commercial Finance (M) Bhd, Intervener),⁷⁰ Peh Swee Chin J expressed the following similar observation in the course of pointing out the differences between a private caveat and an injunction:

In the result, it would appear that the registered proprietor may be left without any effective remedy in the above situation. It is left to be considered whether appropriate amendments to s 323(1)(a), for example along the lines of the New South Wales Real Property Act 1900, would be necessary and desirable so as to make available to the registered proprietor in such a situation, a speedy and effective remedy.

*[if !supportFootnotes]LLM. (Mal), LLM. (Harv); Advocate & Solicitor, High Court of Malaya; Associate Professor and Deputy Dean, Faculty of Law, University of Malaya. This article was cited with approval by Justice edgar Joseph Jr in Asia Commercial Finance (M) Bhd v Development & Realtor Sdn Bhd [1992] 2 MLJ 504 at p 515 and by Justice Abdul Kadir Sulaiman in Sharifah Mastura bte Tuanku Ibrahim v Wan Aziz Ibrahim [1993] 3 MLJ 231 at p 237.[endif]

1.    Act 56/65, hereinafter referred to as 'the Code'. Unless otherwise stated, all references to sections hereinafter shall be to the National Land Code 1965.
2.    [1989] 1 MLJ 1965.
3.    [1990] 2 MLJ 155.
4.    As to the scope of a 323(1)(a), see, generally, David Wong, Tenure And Land Dealings In the Malay States (1975) at  pp 432 435; Sihombing, National Land Code – A Commentary (1981) at pp 599 603; Kok, 'The Nature of Right Title and Interest Under The Malaysian Torrens System: The Non Application of English Equities and Equitable Interests To Malaysian Land Law’ [1983] 1 MLJ cxlix clxiv, and Wong, ‘Restraints on Dealings In Land' in Ch 10 of The Centenary of The Torrens System In Malaysia (Ahmad Ibrahim and Sihombing (eds)) (1989), at pp 150 151.

5.    See Whalen, The Torrens System In Australia (1982) at p 232 and Butt, Land Law (1988), at p 500.

6.    (1914) 19 CLR 197.
7.    [1982] 2 NSWLR 870.
8.    Ibid at p 875
9.    Ibid.
10.  It is pertinent to note that s 74F deals with caveats other than registrar's caveats.
11.  [1969] NZLR 353.
12.  Ibid at p 355.
13.  Ibid at p 357.
14.  (1914) 19 CLR 197.
15.  Percy v Youngman [1941] VLR275, Davies v Ryan [1951] VLR 283 and In re A Caveat [1934] GLR 592.
16.  [1969] NZLR 353 at 358.
17.  Ibid at p 357. In Sinclair v Hope Investments pty Ltd [1982] 2 NSWLR 870 at 873, Needham J formed the view that the last sentence of this passage by Richmond J did not reflect the law in New South Wales and, accordingly, declined to adopt it.
18.  See the comments by Brookfield on the decision in ‘Caveats: The Haupiri Courts Cases' (1969) 3 NZULR 454
19.  (1914) 19 CLR 197.
20.  [1989]2 MLJ 24.
21.  Section 104(1), which provides for the lodging of a caveat, reads as follows. ‘Any person claiming an interest in land, or any person otherwise authorised by any Act to do so, may lodge with the Registrar a caveat in the prescribed form.’
22.  [1969] NZLR 353.
23.  [1989] 2 MLJ 24 it 28.
24.  (1914) 19 CLR 197.
25.  Ibid.
26.  [1989] 2 MLJ 24 at 28.
27.  [1989] 1 MLJ 195.
28.  [1990] 2 MLJ 155.
29.  [1969] NZLR 353.
30.  [1989] 2 MLJ 24.
31.  [1989] 1 MlLJ 195 at 196.
32.  [1969] NZLR 353.
33.  Ibid at p 357.
34.  [1990] 2 MLJ 155 at 156.
35.  Guardian Trust & Executors Co of New Zealand Ltd v Hall [1938] NZLR 1020 at 1025.
36.  See Sihombing, op cit, at p 594.
37.  [1989] 1 MLJ 195 at 196.
38.  [1969] NZLR 353.
39.  Ibid at p 357.
40.  See Sihombing, op cit at p 594 and Teo and Khaw, Land Law In Malaysia: Cases and Commentary (1987) at p 288. For a different view, see Wong, op cit at p 151.
41.  Quaere whether such an interest of the vendor can come within the protection of s 323(1)(b). See also Great West Permenent Loan Co v Friesen [1925] AC 208 at 216.
42.   See David Wong, op cit at pp 433 - 434; Sihombing, op cit at pp 600 - 601; and Kok, op cit at pp clix. See also the comments by Lord Keith of Kinkel in United Malayan Banking Corp Bhd & Anor v PHT, Kota Tinggi [1984] 2 MLJ 87 at 91, as to the completeness and comprehensiveness of the Code in governing the tenure of land in Malaysia and the incidents of it.
43.  See s 320(l)(a).
44.  [1990] 1 MLJ 317.
45.  Ibid at p 319.
46.  His Lordship referred to s 253(l) and cited the case of Lim Beng v AVA Palaniappa Chetty [1922] 1 FMSLR 264 at 266 to support the above proposition of law laid down by him.
47.   [1969] NZLR 353.
48.   [1990] 2 MLJ 502.
49.   [1990] 1 MLJ 317
50.   [1990] 2 MLJ 502 at 504.
51.   Ibid.
52.   The first defendant's appeal to the Supreme Court vide Civil Appeal No 02 149 of 1990 has yet to be determined.

53.   Section 266(1) reads: 'Any chargor against whom an order for sale has been made under this Chapter may, at any time before the conclusion of the sale, tender the amounts specified in subsection (2) to the Registrar of the Court or, as the case may be, Land Administrator (or, if the tender is made on the day fixed for the sale, to the officer having the direction thereof), and the order shall thereupon cease to have effect.’
54.   See also Sihombing, op cit at p 522.
55.   [1985] 1 MLJ 17 at 20.
56.   Unlike the Code, s 104(3) of the Singapore Land Titles Act (Cap 157, 1985 Ed) expressly provides that an interest in the proceeds of sale of land shall be deemed to be an interest in that land.
57.    [1990] 2 MLJ 502.
58.   See generally, Cuckmere Brick Co Ltd v Matual Finance Ltd [1971] 1 Ch 949 at 965 966; Henry Roach (Petroleum) PtyLtd Credit House (Vic) Pty Ltd [1976] VR 309 at 313 and ANZ Banking Group Ltd v Bangaddly Pastoral Co Pty Ltd (1978) 19 ALR 519 at 522.
59.    [1987] 2 CLJ 138 at 141.
60.    See Whalen, op cit at p 232 and Hinde, McMorland and Sim, Land Law (2nd Ed, 1986) at 2.125.
61.    These remedies were referred to by Richmond J in the New Zealand context in Re An Application by Haupiri Courts Ltd (No 2) [969] 62.    NZLR 353 at 357.
62.    [1976] 2 MLJ 44.
63.    Ibid at p 47. See also AR PL Palaniappa Chettiar v PL AR Letchumanan Chertiar & Anor [1982] 1 MLJ 232 at 234.
64.    [1971] 1 MLJ 224.
65.    Ibid at p 230. See also Nanyang Development (1966) Sdn Bhd v How Swee Poh [1970] 1 MLI 145 at 146 where Suffian FJ (as he then was) said to the same effect.
66.    See as 322(4) and 324(2)(c).
67.    See s 319 (2).
68.    [1979] 2 MLJ 212.
69.    Ibid at p 214.
70.    [1989] 1 MLJ 373.
71.    bid at p 376.