RESTRAINT ON DEALINGSSharifah Zubaidah

LAW 3111 (Sem. 1 (09/10)

Section 3

WHAT ARE RESTRAINT ON DEALINGS?

Restrain = ‘to stop’, ‘to prevent’

To prevent any dealing from being registered in the land office in respect of a particular land in dispute.

TYPES OF RESTRAINT ON DEALINGS

1) Lis Pendens 2) Injunctions

1) Caveats 2) Prohibitory Order

Under Power of Court Under NLC

LIS PENDENS

n. Latin for “a suit pending” A written notice that a lawsuit is pending

with regard to the land in question. Granted pursuant to s.25(2) and para. 6 of

Schedule 1, Courts of Judicature Act 1964. (UK)

BELLAMY V SABINE (1857)

Lis pendens is based on the theory that so long as title to land is being litigated in court,

parties to the litigation were incapable of dealing with the land because otherwise the judgment of the court would be frustrated.

POSITION OF LIS PENDENS IN MALAYSIA

Not applicable in Malaysia by virtue of s.6 of the Civil Law Act 1956 as it is an incidence of English land tenure system.

No provision for recognition and registration of lis pendens under NLC.

S.417 NLC does not allow the court to direct the Registrar to make entries on the Register of a kind of transaction not provided for in the NLC.

T. DAMODARAN V CHOE KUAN HIM [1979]

The entry of a lis pendens on the RDT does not operate as a restraint on dealings and

will not prevent a transferee from obtaining an indefeasible title to the land.

INJUNCTION

Granted by the court upon application of a party in a legal proceeding (usually ex parte) to preserve the status quo of the parties pending settlement of the dispute.

Governed by s.50 of the Specific Relief Act 1950.

Available for caveator to preserve status quo in proceedings but CANNOT BE REGISTERED on RDT under NLC.

HENG BAK TEONG & ANOR. V NG AH SEONG & ANOR. [1988]

An injunction is a preventive relief granted at the discretion of the court. A Registrar of the

land cannot register an injunction as a Prohibitory Order on the RDT.

TAN LAY SOON V KAM MAH THEATRE S/B [1992]

An injunction is available to a party whose private caveat has been removed by the

court.

CAVEAT

MEANING: (BARRY V HEIDER (1914))

“a means devised for the protection of a right of the claimant pending proceedings in a

competent court to enforce the claim to an interest in the land.

s.5: ‘a registered caveat’ Misleading, as a caveat is NOT REGISTERED.

It is lodged by the caveator and then endorsed on the title.

MACON ENGINEERS S/B V GOH HOOI YIN [1976]

“ A caveat is a creature of statute and is in the nature of a statutory injunction which has

the effect of prohibiting the registration of any instrument of dealing.”

-per Gill, CJ.

BUTLER V FAIRCLOUGH (1917)

“It must now be taken to be well settled that under the Australian system of registration of

titles to land the courts will recognise equitable estates and rights except so far as

they are precluded from doing so by the statutes.

This recognition is indeed the foundation of the scheme of caveats which enable such

rights to be temporarily protected in anticipation of legal proceedings.”

(Purpose of Caveat)

FUNCTION OF A CAVEAT?

“…to suspend the process of registration until conflicting claims have been settled.

It is a unilateral act and no person can create rights in his favour nor enlarge or add to his

existing proprietary rights by means of a caveat. The effect of a caveat is to prohibit the registration…pertaining to any dealing

with the land in dispute so long as the caveat continues in force.”

-Syed Agil Barakbah, J. in Damodaran v Vasudeva [1974] 1 MLJ 128.

The caveat freezes the register.

Nothing can be done on the land until the caveat is lifted.

FUNCTIONS OF A CAVEAT:

1) The caveat freezes the Register and prevents the registration of any dealing on the land.

2) The caveat is a scheme under the NLC to protect unregistered titles and interests

pending registration of such title or interest.

3) The caveat preserves the status quo of the claimants to the land pending resolution of the dispute.

4) The caveat gives notice to the world that the caveator has a claim in the land.

WHAT IS THE DIFFERENCE BETWEEN A CAVEAT AND AN INJUNCTION?

In Eng Mee Yong & Ors. v Letchumanan [1979], the Privy Council pointed out that the application for a caveat differs from an application for an interlocutory injunction because in an application for a caveat, a caveat can be entered on a piece of land without any supporting evidence as the Registrar acts in an administrative capacity.

In an application for an interlocutory injunction, the applicant must show a strong arguable case from the affidavit deposed by the applicant and the judge exercises full judicial powers in this respect.

FOO POH SANG V YUEN LAM S/B [1989]

The Pf. sold their land to the Df. but the purchase price had not yet been paid in full.

Meanwhile, the Df. had been registered as the owner and had created charges on the land.

Pf. lodged a caveat on the land to protect their interests as the Df. had defaulted in paying the purchase price.

The chargee applied to the court to set aside the caveat and succeeded.

Pf. obtained an interlocutory injunction to restrain the Df. from disposing the land.

FOO POH SANG:

Chargee intervened to set aside the injunction on the ground that since the caveat had been earlier removed, the injunction should also be removed as it was merely a caveat under the guise of an injunction.

HELD: The injunction should not be removed but

was varied to protect the interest of the chargee.

JUSTICE PEH SWEE CHIN ON DIFFERENCE BETWEEN A CAVEAT AND

AN INJUNCTION IN FOO POH SANG:

“…there are real, though subtle, differences between the two. A caveator when called upon to justify his caveat, would have to satisfy the court that he has a caveatable interest in the land in question (set out u-s.323(1) NLC). An injunction can restrain a

person from doing anything, not just concerning land…a caveatable interest is, ofcourse, a relevant but by no means sine

qua non for an injunction to issue.”

TYPES OF CAVEATS:

1) Registrar’s Caveat (s.319) 2) Private Caveat (s.322) 3) Lienholder’s Caveat (s.330) 4) Trust Caveat (s.322)