Applicability of Equitable Principles of Land dealing in Malaysia.

As we know National Land Code is a comprehensive in governing the tenure land in

Malaysia. The application of English land law and general equitable principles are still a
concerned. However, under section 6 of the Civil Law Act 1956 and some observations to
the contrary in case law, it is argued that relevant aspects of English land law may continue
to apply. English land law are based on common law principal and equity, this principal
cannot be applied in Malaysia land law system. As for general equitable principles, their
application is supported by statutory provisions and case law. The limitation have been state
in section 6 of the Civil Law Act 1956 (CLA) prohibits the reception of the law of England in
relation to tenure, conveyance, assurance or succession to any immovable property or any
estate, rights or interest therein while in the Section 3 of the Civil Law Act 1956 (Act 67)
(Revised 1972) gives the meaning of the English law which means ‘the common law of
England and the rules of equity’ and, in prescribed circumstances, English statutes and may
be used under two circumstances which are if there is a lacunae found in any part of local
law system and only can be used to the extent it is in accordance with Malaysian legal
principles. In the case of United Malayan Banking Corpo Berhad & Anor V Pemungut Hasil
tanah Kota Tinggi1, Lord Keith prohibited application of English land law and equitable
principles and state that The National Land Code is a complete and comprehensive code of
law governing the tenure of land in Malaysia while in Lian Keow Sdn Bhd v Overseas Credit
Finance (M) Sdn Bhd2, Held that the circumstances and the extent to which equitable
principles are applicable to National Land Code 1965, observed that the Malaysian Torrens
system does not prevent or restrict the creation of beneficial interests in land by way of
express, implied, constructive or resulting trusts arising by operation of law by virtue of s 3 of
the Civil Law Act 1956. In case of Vellasamy A/L Pennusamy & Ors V Gurbachan Singh A/L
Bagawan Singh & Ors,3, the plaintiff is a sub purchaser of land.  The plaintiff’s want to
declare that they had either an equitable or beneficial interest, since the land was sold to the
first defendant by way of a public auction undertaken by the fifth defendant who enjoyed an
unequivocal, indefeasible charge over the land. Therefore, the court not allow the lifting of
the corporate veil in determining the plaintiff’s interest. There was no evidence of fiduciary
relationship as there was no evidence of any contract between the first plaintiff and sub-
purchasers. The issues arise when the plaintiffs sought to be declared as either the lawful or
beneficial owners according to the plots that they held under their agreements. It was held
that the High Court dismissed the plaintiffs’ claims.

1
[1984] 2 MLJ 87
2
[1988] 2 MLJ 449
3
[2010] 5 MLJ 437
The Bare Trust concept is incompatible with the Malaysian Torrens system. This can be
observe in Chin Choy v Collector of Stamp Duties 4, where though the vendor became in
equity, a trustee for the purchaser of an estate sold was a peculiarity of English land law
nevertheless held that section 6 of the Civil Law Act prohibits the reception of any English
law pertaining to land matters in Malaysia, to allow the application of English land law and
equitable principles related would only serve to erode the policy objectives of the Malaysian
Torrens system. During the contractual or pre-registration, the beneficial ownership who is
purchaser has entitles the land to be transferred to him. The beneficial ownership does not
carry interest in land which vendor has as long as the registration has not affected to
purchaser. The land is capable of being caveated by vendor to protect the purchaser’s right.
Notwithstanding this material difference which exists in English land law and the Malaysian
Torrens system, subsequent Malaysian cases such as M and J Frozen Food Sdn Bhd v
Siland Sdn Bhd5, where public auction held by EU finance with M&J Frozen Food Sdn Bhd
as the highest bidder. However, M&J failed to make payment within 30days of sales and it
was held that NLC 1965 showed that the sale at this juncture had only be concluded in the
sense that goods would no longer be offered for a sale to successful bidder have continued
to apply the bare trust concept with exemption of loss. In recent case [ CITATION Kum17 \l
1033 ]6, the plaintiff enter into sale and purchase agreement with Ever Noble Sdn Bhd to
purchase an apartment. The issue arise when developer failed to hand over possession of
property on stipulated time and sold it to third party as the agreement with previous
purchaser annulled as believed they are the bare trustee to the property. It was held that
Ever Noble Sdn Bhd was merely a bare trustee did not have a legal interest to transfer the
said property. This application of the bare trust concept leads to confusion and uncertainty in
the Malaysian Torrens system.

In Malaysia Torrens system, equity acting in personam which do not go against the principle
of indefeasibility of title. By applying Wilkins V Kannammal 7 cases, torrens system is
conveyance system which does not abolish the principle of equity. The court has an inherent
jurisdiction to do justice between the parties by applying equity In this way, the court is
entitled to exercise jurisdiction in personam to insist upon proper conduct in accordance with
equitable principles and norms not incompatible with the Malaysian Torrens system.
However, as a general rule, there is no room for the application of equity where third party

4
[1981] 2 MLJ 47
5
[1994] 1 MLJ 294
6
[2017] 10 CLJ 129
7
[1951] MLJ 99
rights have intervened. When the court, acting in personam by granting equitable relief to the
plaintiff there is the usage of equitable principles to land disputes.

Thus, the Malaysian Torrens statutes are a complete and comprehensive code of law
governing the tenure of land in Malaysia and in certain situation equitable principles may
continue to apply as long as it do not offend the policy objectives of the Malaysian Torrens
system.

Bibliography
Wilkins v Kannammal , MLJ 99 (1951).

United Malayan Banking Corporation Bhd V Pemungut Hasil Tanah, Kota Tinggi, 2 MLJ 87 (High Court
of Malaya 1984).

Lian Keow Sdn Bhd (in liquidation) v Overseas Credit Finance (M) Sdn Bhd , 2 MLJ 449 (High Court of
Malaya 1988).

M and J Frozen Food Sdn Bhd v Siland Sdn Bhd , 1 MLJ 294 (Supreme Court 1994).

Vellasamy A/L Pennusamy & Ors V Gurbachan Singh A/L Bagawan Singh & Ors, 5 MLJ 437 (Court Of
Appeal 2010).

KumaguruThandavathevar V Ooi Soo Teik & Anor, 10 CLJ 129 (High Court Malaya Pulau Pinang
2017).

Kok, S. (1994). Equity in Malaysian Land Law (1). Malayan Law Journal Articles.

Sathiaseelan, J. K. (2006). Prinsip-Prinsip Penting Perundangan Tanah Di Malaysia. Malaysia: Gains

Print Sdn Bhd.

Sood, T. K. (2016). Role Of Equity And The Application Of English Land Law In The Malaysian Torrens
System. Retrieved November 27, 2019, from Role Of Equity And The Application Of English
Land Law In The MalaysianCanterbury Law Review: Role Of Equity And The Application Of
English Land Law In The Malaysian Torrens System.
http://www.nzlii.org/nz/journals/CanterLawRw/2016/4.pdf