Court of Appeal (Putrajaya)

Caveat Interest Pursuant to Land Purchase

Facts 1.     The Appellant was the registered proprietor and the vendor for a piece of land intended to be sold to the Respondent.  Both parties agreed for a sale & purchase agreement (“Agreement”) to be executed pursuant to the sale.

2.     Among the terms included in the Agreement is the non-refundable earnest deposit of 2% of the sale price and payment 8% of the sale price after the execution of the Agreement.

3.     Accordingly, 2% of the sale price was paid by the Respondent.  The Respondent however failed to pay the 8% of the sale price after the Appellant’s solicitor forwarded the Agreement for execution.

4.     The Respondent sought an extension to pay the 8% of the sale price and entered a caveat on the land pursuant to the payment of 2% of the sale price.

5.     The Appellant however did not agree to the extension requested by the Respondent and later filed an application to the Court for an order to have a caveat entered into by the Respondent to be removed.

6.     The first High Court judge granted order pursuant to the Appellant’s application to remove the caveat, which later appealed by the Respondent.

7.     Meanwhile, the second High Court judge granted a stay of the removal order pursuant to the Respondent’s application for the removal of the order by the first High Court judge in which later appealed by the Appellant.

Issue 1.    Whether the Respondent has caveatable interest pursuant to the sale and purchase transaction of the land.
Ratios 1.     Caveatable interest –

(a)  Section 323(1) of the National Land Code (“Act 828”) provides the meaning of private caveat as follows:

“(1) The person or bodies at whose instance a private caveat may be entered are —

(a)  any person or body claiming title to, or any registrable interest in, any alienated land or any right to such title or interest” …”

(b)  This means that a private caveat is designed to protect a registrable interest of the parties that may affect dealings of the land or any interests under Act 828.

(c)  The Court is of the view that “registrable interest can be interpreted as giving its holder an immediate right to have a substantive entry made on the register, particularly where the scenario depicts a purchase, who has paid all purchase money, received a transfer in registrable form and the issue of document of title is registrable”.

(d)  In regard to the circumstances of the Respondent, the Court is of the opinion that there was only negotiation between the parties where no concluded transaction came into existence as there had been no payment of the 8% of the sale price by the Respondent.

(e)  The Court took note that by the time the Respondent lodged the caveat, the Appellant had long forfeited the earnest deposit after giving additional extension of time for the Respondent to pay the 8% of the sale price.

(f)    Therefore, the Court took the same stand with the first High Court judge that at the time of lodging of the caveat by the Respondent, the Respondent had no caveatable interest in the said land.

(g)  The Court held that mere pecuniary interest in land does not entitle a person to lodge a caveat under Section 323 of Act 828.

Decision 1.    The Court of Appeal allowed the appeal with no order as to costs.
Key Take Away 1.    A private caveat is a legal entitlement under Act 828 which provides protection for an individual on their claim on a piece of land.  In effect, the land in question cannot be dealt with until the said caveat is removed.

2.    The Malaysian Law provides 3 instances whereby a person can lodge a private caveat as per Section 323 of Act 828 as follows:

(a)          A person who is claiming title or interest to the land;

(b)          A person who is claiming beneficial title to the land;

(c)          A person claiming on behalf of a minor for the beneficial

             title of the land.


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