Chapter 5 Liens 5.

1 Definition Non-registrable dealing: Sec 206(2)(b): Though subsection (1) required every dealing under the act to be registered, subsection (2) provides that the creation of liens are an exception to that requirement. Sec 281(1)(a): A person is entitled to a lien over the land or lease upon the deposit of the IDT as security for a loan, and the entry of a lien-holder¶s caveat. Sec 281(1)(b): If a judgment of amount due to a lien-holder has been obtained, he can apply to the court for order for the sale of the land. Sec 330: Creation and effect on lien-holder¶s caveat. Upon the depositing as per Sec 281 and application to Registrar for a LH caveat in respect of the land in question, then only the application will be in Form 19D and att ested as required in Sec 211 with a prescribed fee. The registrar will enter the caveat along with the time of receipt and serve a notification on Form 19A on the proprietor, as long as it is not encumbered by other interests (earlier caveats or charges etc). Sec 343(3): Normally in cases of co-proprietor, if there¶s no agreement as to who keeps the IDT, the Registrar will keep. The Registrar can make a copy upon payment of a fee and endorse the date with a signature certifying it to be a copy meant for the named co-proprietor. Sec 343(6): Such a copy, if used to create a lien, is by subsection (6) is recognized to be the required IDT in respect of a lien created on the undivided share of the co-proprietor. 5.2 Creation of Liens ± s 281 3 pre-requisites. Perwira Habib Bank Malaysia Bhd v Loo & Sons Realty Sdn Bhd [1996] 4 CLJ 171.
a. Intention to create a lien b. Deposit of the original issue document of title c. Lodgment of a lien-holder¶s caveat.

5.2.1 Intention to Create Lien Sec 281(1): Act of deposit of IDT or duplicate must be coupled or made with the intention to create the lien by only the proprietor of the alienated land (no representative) with the intention. A mere deposit of an IDT by a proprietor with any person but without the intention to borrow money from the person will not be sufficient to establish the element of deposit. Why? : What if just after discharging a charge? If the solicitors are still in possession of IDT, so can this be considered as a deposition for the lien? Or

what if the IDT was given to a person for the purpose of safekeeping whilst being overseas? Hence onus of proof on purported lendor. Hence: Note: Elements needed: i) intention, not just to borrow money, but the element of the intention to deposit the IDT; ii) only the registered proprietor depositing it (unless with Power of Attorney) Paramoo v Zeno Ltd [1968] 2 MLJ 230 FC Intention to deposit the IDT or duplicate lease with the lender as a security for the loan and for no other purpose must be proved. They argued that since the charge was not enforceable, the lien shouldn¶t be enforced either. But the court held that the lien in this case was a statutory lien and has its existence independent from the charge. If the charge is avoided for non compliance with the law, doesn¶t mean the lien is. Standard Chartered Bank v Yap Sing Yoke & Ors [1989] 2 MLJ 49 Court said that as a result of the unregistered charge, the plaintiff has received a title in equity over the land. The plaintiff then has the right to lodge caveat at any time. The second defendant lodged a caveat against the land for goods sold and delivered but that had nothing to do with the land. The plaintiff upon the deposit of the IDT immediately acquired an equitable interest. Nallammal & Anor v Karuppannan & Anor [1993] 3 MLJ 476 I: The first defendant was of the belief that in order for some contract works to be secured, security needed to be shown. The husband took the deed with the promise of returning it in a month or two. Then P reakized that she could not obtaine the return of the title and that the title had been deposited with Bank Buruh as a security for a loan. Thumbprint for the loan document was obtained by the husband through undue influence. P sued. H: confession subsequently made out of the D1 (husband) and he confessed that his wife had no knowledge (hence no intention) of the loan or the caveat on the land. Hence, the court held that the creditor cannot enforce the security against the first plaintiff as it had been established that the title was obtained through misrepresentation. Hong Leong Bank Berhad v Staghorn [2008] 2 MLJ 622 Subsection (1) of s 281 speaks of the registered proprietor depositing his issue document of title 'as security for a loan' but does not specify the borrower and neither does it restrict the loan to a loan to the registered proprietor. There is no reason for construing the loan to mean only a loan to the registered proprietor. The loan may be a loan to a third party. Where the loan is to a third party, it must follow that under subsection (2) the judgment obtained is a judgment against the third-party borrower. Perwira Habib Bank Bhd v Loo & Sons Realty Sdn Bhd & Anor [1995] 4 CLJ 619 By virtue of the definition of ³proprietor´ under s. 5 of the National Land Code, only a registered proprietor of land has the power or right to deposit the title to land to create a lien. Thus, it is not possible for a third party with whom the relevant document has been deposited to then use that document to create a lien in his name. 5.2.2 Deposit of Issue Document of Title ORMORM Manickavasagam Chetty v TJ McGregor [1933] MLJ Rep 295

Parting with the possession of the IDT other than debt surrounding the lien as when the title is delivered to the registered proprietor for a purpose which it is required under the NLC will not cause the lien to be lost. Means if A says he wants the IDT to perhaps be shown to a government office for administrative purposes (purpose other than the debt), but when taking the IDT away refuses to return it, the lien won¶t be lost just because its not in the lendor¶s possession. Minang Bina Sdn Bhd lwn Yahya bin Mohd Said & Lain -Lain [1991] 1 CLJ 70 The IDT was deposited to the defendant for the commencement of a construction project in order to subdivide the land, and the courts could not see that there was intention to deposit of it in manner to secure a debt. Besides, there was no action taken to enter into a caveat for the 1 ½ years that the IDT was in their possession. 5.2.3 Entry of Lien-holder¶s Caveat Sec 281: Creation and effects, of liens: Entitles any lendor who has been deposited onto a IDT to enter a lien-holder¶s caveat and gives entitlement of a lien over the land/lease. It also states condition for there to be sale of the land. Sec 330: Creation and effect on lien-holder¶s caveat. Application to be made by Form 19D duly attested. The time to be stated on the caveat entered and a notification to be served on proprietor. It states who the caveat binds and that the lien subsists till cancellation. Mercantile Bank Ltd v The Official Assignee of the Property of How Han Teh [1969] 2 MLJ 196 I: D deposited titles of lands for securing a loan. Upon default, a bankruptcy notice was issued but he failed to pay. Applicants registered caveats against title deposited under Sec 330 NLC. OA opposed the Applicant¶s application to sell lands by public auction. OA held that the applicants weren¶t lien-holders as there was no caveat entered by NLC at time of bankruptcy. H: at the time when the act of bankruptcy was committed the applicants had an equitable right to a lien and, the trustee in bankruptcy, who steps into the bankrupt's shoes, takes a title no better than him. He takes subject to the same equities as affected the property in the bankrupt's hands. The applicants have a prior interest and were entitled to an order for sale. 5.3 Effect of Liens Form 19D ± Endorsement of time on 19D and the notification to proprietor Sec 330 ± Regulates Form 19D ORMORM Manickavasagam Chetty v TJ McGregor [1933] MLJ Rep 295 cf Vallipuram Sivaguru v Palaniappa Chetty [1937] MLJ 59 For the effect if lien-holder caveat is not entered, see: Mercantile Bank Ltd v The Official Assignee of the Property of How Han Teh [1969] 2 MLJ 196

Peter P¶Chient v Ramasamy Chetty (1923) 3 FMSLR 220 It would appear that after the registration of the charge, the lien or the right to it seizes. Standard Chartered Bank v Yap Sing Yoke & Ors [1989] 2 MLJ 49 The lien has no duration to its existence and will exist till it is cancelled. Perwira Habib Bank Malaysia Bhd v Loo & Sons Realty Sdn Bhd [1996] 4 CLJ 171 Paramoo v Zeno Ltd [1968] 2 MLJ 230 FC. 5.4 Rights and Duties of the parties See s 281(2) ± Creation and effects of liens.
5. Determination of Liens

Sec 331 ± Lien-holder¶s caveat ends with notice of withdrawal (loan repaid), registration of certificate of sale, and application to court. Involuntary act by the lien-holder to return, then go to registrar and proof that the money has been fully paid