CHAPTER 1 PART 1

Recap of Land 2 (Very briefly because he said it’s not the main focus, please refer back to your
Land Law notes. These are the things he mentioned in class.)
Definition of Land
 S. 5 of NLC: Surface of earth, earth below surface, all vegetation and other natural
products, all things attached to earth or permanently fastened to anything attached to
earth (two limbs-first would be building, second would be machinery fastened to the
building), land covered by water.
 Includes not only soil on earth but also all the subjacent and superjacent things of
permanent in nature affixed to the earth, whether by nature, or by hand of man on things
of a physical nature

Application of English law in land law

First View
 S. 3 NLC: By the cut off date and if there is lacuna.
 S. 6 NLC: Excludes the application in Malaysia of English land tenure.
 Teh Bee v Marumuthu
o The register is everything.

Second View
 S. 205 NLC: The phrase “effected under this Act” indicates that the provisions do not
affect what may take place outside the Code.
 S. 206 (3) NLC: Expressly preserves the recognition of the contractual operation of a
transaction irrespective of whether the dealing is carried out in accordance with the Code.
 S. 340 (4) NLC: Nothing in this section shall prejudice or prevent: the exercise in respect
of any land or interest of any power of forfeiture or sale conferred by this Act or any
other written law for the time being in force, or any power of avoidance conferred by any
such law; or the determination of any title or interest by operation of law.
 Devi v Francis
o Mother of Francis rented house to Devi, she subsequently told Devi that if she
wants to buy this house, she will be given first option. Mother of Drancis
transferred property to Francis, Devi x happy. Mother of Francis also gave 1
month notice of termination notice to Devi, Devi applied equitable principle of
irrevocable license. Court said that S.3 allows for application for equity.
 Kimlin Housing Development S/B (in Liquidation) v BBMB & Ors
o Can apply English law when there is a valid enforceable contract.
 Yong Tong Hong v Siew Soon Wah
o Can apply where third party rights have not been intervened.
  Wan Salimah Wan Jaffar b Mahmood Omar
o The lease agreement was as good as an agreement enforceable in equity Ordered
D to sign Form 15 A as contracted.

Indefeasibility of Title (he put all these cases together)

 Refer back Land 2 for Boonsom, Au Meng Nam and Tan Ying Hong.
 Refer solicitor’s duty part for Ngan Siong Hing, Yap Ham Seow, Rajamani.

Liputan Simfoni Sdn Bhd v Pembangunan Orkid Desa Sdn Bhd

 Facts: The plaintiff was the registered owner of a piece of land. An imposter company,
claiming that it had lost the title, applied to the PTG for a replacement title. At the same
time, the original title was in the plaintiff’s possession. The imposter sold the land to CST
and CST was registered as the owner of the land. CST sold the land to the 1st defendant.
The High Court allowed the plaintiff’s claim and restored the land to the plaintiff on the
grounds that the 1st defendant was not a purchaser in good faith and for valuable
consideration and was thus disentitled to an indefeasible title to the land pursuant to s
340(2) of the NLC; and the transfer of title to the 1st defendant was defeasible under s
340(2) as it was predicated on a contract having the effect of depriving government of its
revenue and was thus void under s 24(b) of the Contracts Act.
 Issues
o Whether the relevant time for the determination of good faith of a subsequent
purchaser for the purpose of s. 340(3) of the NLC is based on the circumstances at
the time of entering into the transaction or at the time of registration by the land
officer;
o Whether the principle of good faith for the purpose of s. 340(3) of the NLC is that
of the general common law principle of good faith or some other specific
principle of good faith;
o Whether the test for determining good faith of a subsequent purchaser is the
absence of fraud, deceit or dishonesty; or is there an added imposition of taking
ordinary precautions and investigations of a reasonable prudent purchaser;
o Whether mere knowledge of an adverse claim vitiates good faith of the
subsequent purchaser who is not fraudulent, deceitful or dishonest; If yes, at
which point in the transaction does such knowledge vitiate good faith;
o Whether a finding that a sale and purchase agreement is void ab initio pursuant to
s. 24(b) Contracts Act 1950 renders the Form 14A under the NLC void, despite
the Form 14A being a valid instrument duly registered in favour of the subsequent
bona fide purchaser with the Land Office; and
o Whether ‘instrument’ for the purposes of s. 340(2)(b) of the NLC refers to
documents presented to the Land Office for registration of title or does it also
extend to a sale and purchase agreement.
  Held:
o The relevant time for determination of good faith of a subsequent purchaser is the
circumstances prior and at the time of the registration of the transfer by the land
officer. All the conducts over a period prior to the entry into the SPA of the land,
up to the time of the registration is material for the purpose of ascertaining his
bona fides.
o The concept of good faith for the purpose of s 340(3) of NLC is wider than the
general common law principle. In order to discharge the burden of showing that it
is a purchaser in good faith and for valuable consideration, the purchaser must not
only show the absence of fraud, deceit or dishonestly but also that it had taken the
ordinary precautions that a reasonably prudent purchaser would have taken in the
circumstances (Au Meng Nam was followed).
o Whether mere knowledge of an adverse claim vitiates good faith of a subsequent
purchaser who is not fraudulent, deceitful or dishonest will depends on the facts
of each case.
o The SPA was not void. The compliance with the Stamp Act 1949 and the Real
Property Gains Tax 1976 were not the pre-requisite for the second SPA to be
enforceable. There is no prohibition under the two Acts to preclude the 1st
defendant from acquiring rights to the subject land. The 1st defendant’s
infringement of the two Acts did not prevent it from suing on the contract which
was legal. It will be an overkill for the 1st defendant to lose the land for the
infringement of the two Acts which is punishable by a fine upon conviction.
Question 5 and 6 was unanswered since the contract is not void.

AGS Harta Sdn Bhd v Liew Yok Lin

 Facts: The plaintiff was the original registered owner of a piece of land (‘the land’).
Subsequently the land was registered in the name of the defendant. The plaintiff claimed
for a declaration that the plaintiff was still the owner of the land and that the defendant’s
registration was void on the ground that the registration of the title into the defendant’s
name was obtained by forgery and[sol ]or means of an insufficient and[sol ]or void
instrument as the plaintiff had never at any time executed any instrument of transfer in
the defendant’s favour, that the original issue document of title had all along been in her
possession and that she never parted with it. The defendant in their amended defence
denied the existence of forgery on the instrument of transfer and pleaded that even if
forgery existed they were bona fide purchaser for value having paid the full purchase
price of RM500,000 and the relevant stamp duties and registration fees and by reason
thereof had acquired an indefeasible title under s 340 of the National Land Code 1965.
 Held: Plaintiff’s claim allowed. The sale documentation comprising of the sale and
purchase agreement, the transfer forms and the valuation forms did not bear the signature
of the plaintiff and hence the signature appearing thereon not being the signature of the
 plaintiff could not be a sufficient instrument to convey title to the defendant. Hence since
the sale documentation did not bear her signature, it could not bind. The defendant had on
a balance of probabilities failed to discharge the burden that they were purchasers in good
faith. The evidence adduced established that the circumstances in concluding the sale
without any proper investigation into the title or the person claiming to be owners of the
property and the unexplained completion effected five months after the completion date
in contravention of the express terms of time being the essence clearly negatived the bona
fides of the defendant. There was also no evidence from defendant and/or defendants’
lawyer that he ensured that an amount to cover the real property gains tax payable was
retained by the vendor’s solicitors bearing in mind that the vendor’s solicitor was
contractually obligated to retain such part of the balance of the purchase price for such
purpose. In the absence of any supporting evidence the court could not conclude that the
defendant was a bona fide purchaser even though valuable consideration had been given.

Shayo (M) Sdn Bhd v Nurlieda bt Sideh & Ors

 Facts: Plaintiff who was the registered proprietor of a land always received quit rent bills
and had enjoyed physical possession of the land at all times. When the quit rent bills
started coming in another person’s name, the P carried out a check at the Land Office and
discovered it was no longer the registered proprietor when the eighth to twelfth
defendants had converted the land titles into a computerized IDT in the name of the first
defendant although the manual IDT was into the continuous possession and custody of
the plaintiff.
 Held: Plaintiff’s claim allowed. There were now two titles i.e. the manual title and
computerized IDT. The issuance of the computerized IDT was due to the negligence of
the eighth to twelfth defendants as they did not adhere to the procedure required in the
NLC and as public officers in the LO, they owed a duty of care to the plaintiff. The
subsequent purchasers were all not BFPV as the title of the first defendant was void.

Kamarulzaman bin Omar & Ors v Yakub bin Hisin & Ors
 Facts: Plaintiff were the descendants of the deceased who was the registered proprietor.
The defendants were Indonesians who obtained a letter conferring them ownership of the
land of the deceased. The plaintiffs alleged that the letter was obtained by fraud and
misrepresentation and negligence of the Land Administrator of Sepang. The Indonesians
later transferred the land to D5 and D6.
 Held: No evidence of fraud was proved, hence D5 and D6 are BFPV and still gets
indefeasibility of title.

Seah Moon Hing and 6 others v Liman Ak Sujang

 Negligence in professional conduct of a conveyancing transaction owing to a fraud by a
third party.
  Resulted in professional indemnity insurance repudiated for non-disclosure of material
facts.

S. 206 (4) (he did not cover this in lecture but it’s in the slides)
 Nothing in this section shall prejudice or prevent (a), the exercise in respect of any land
or interest of any power of forfeiture or sale conferred by this Act or any other written
law for the time being in force, or any power of avoidance conferred by any such law or
(b), the determination of any title or interest by operation of law.
 Ong Chat Pang & Anor v Valliappa Chettiar
o The term ‘operation of law’ is a generic term deliberately used by the legislature
to grant relief in cases where contractual or conscientious obligations (importing a
breach of duty to which equity has attached its sanction) are undertaken by or
imposed on the registered proprietor either at law or in equity.
 Krishanadas a/l Achuthan Nair Ors v Maniam a/l Samykano
o FC adopted a very wide interpretation of the term ‘operation of law’. Parliament
enacted s. 340 (4) for the purpose of dealing with fact patterns that do not fall
squarely within the other exceptions to indefeasibility in s. 340.

Introduction (the moment he began to explain in detail, everything else above was like touch
and go)
Meaning of Conveyancing
 According to Andrew Law: ‘Conveyancing’ includes sales and transfers of immoveable
property, leases & tenancies, charges, debentures & other security documents, discharge
of charge and other non-contentious business.

Prescribed Forms
 S. 207 (1) NLC: Every instrument effecting any dealing under this Act shal be the forms
in the First Schedule as specified in relation to the dealing in question.

What can be transferred?

 S. 214 (1) NLC: The whole, but not a part only of any alienated land; the whole, but not a
part only of any undivided share in alienated land; any lease of alienated land; any charge
and any tenancy exempt from registration.
 S. 292 NLC: Instruments capable of being registered i.e. any transfer under Part 14,
undivided share land (more than one owner sharing shares on one piece of land, co-
proprietorship; only can divide by subdivision) or any lease or sublease under Part 15,
any charge or discharge under Part 16, cert of sale (when you charge the land to bank and
you fail to pay back the loan, the bank will sell your land by auction, the bank will give
cert of sale to the successful bidder while waiting for the land to be transferred to him.
 The one holding cert of sale is the successful bidder, he can deal with the land using this
cert) under Part 16; any instrument granting or releasing easement under Part 17.

Meaning of Dealings
 S. 5 NLC: Dealing means any transaction with respect to alienated land effected under
the powers conferred by Division IV, and any like transaction effected under the
provisions of any previous land law, but does not include any caveat or prohibitory order.
 Dealings effected and recognised under NLC = those specified in Part 14 to 17.
 Dealings not recognised by NLC: mortgage etc.
 Part 14: transfer, Part 15: leases, Part 16: charges, Part 17: easement. All 4 of these are
registerable dealings. Tenancy and lien are non-registerable dealings.
 Transfer: Form 14, Charges: Form 16 and so on, relate back to the Parts in NLC.
 Caveat is Form 19, but caveat is not part of dealings.

Solicitor’ Duty and Limitations of Solicitor’s Authority to Act

Solicitor’s Duty
Duty to investigate
 Agra v Barry
o Solicitor has a duty to investigate the true state of the title.

Duty as reporting institution

 Anti-Money Laundering, Anti-Terrorism Financing & Proceeds of Unlawful Activities
Act (AMLATAFA): Law firms are reporting institutions under the act.
  S. 14(1): A reporting institution shall report to the competent authority any transaction
exceeding the amount as specified / transaction involves proceeds of unlawful activity /
terrorism act.

Duty to be honest
 S. 5 Stamp Act: Requires all facts and circumstances which may affect the amount of
stamp duty chargeable to be fully and truly set forth in the instrument to be honest.
 S. 61 (a) Stamp Act: Evasion of stamp duty by executing an instrument in which the facts
and circumstances are untrue will result in a fine of maximum RM 2500.
 S. 94 (3)(c) LPA: Dishonest or fraudulent conduct while discharging duties amounts to
misconduct.
 S. 94 (2) LPA: An advocate or solicitor who engages in such fraudulent misconduct may
be suspended from practice or struck off the Roll.
 WHS comments on stamp duty evasion: LHDN still have the right to take the higher
price because of ad valorem stamp duty. Paying the penalty is just a civil action i.e. case
can be closed if pay penalty. By attempting to evade stamp duty, this is dishonesty. Under
LPA, this is fraud under S. 94 (3)(c), consequences are solicitor could be struck off from
the roll, suspended etc.

Duty to carry out undertakings

 Rule 14.09 (1) (a) of the Bar Council Rules and Rulings: Provides that the failure to
honour an undertaking amounts to professional misconduct.
 Rule 14.09 (1) (b) BCRR: Requires the solicitor to return any relevant payment or
documents to the client if the solicitor is unable to carry out the undertaking.
 S. 94 (3)(n) LPA: Gross disregard of the interest of the client amounts to professional
misconduct.
 S. 94 (2) LPA: Same as above.
 Seah Moon Hing: refer above.
 Yong & Co v Wee Hood Teck Development Corporation
o If there is a solicitor-client relatiobship, the duty of the solicitor is to protect the
interest of the client.
 WHS comments on amendment of title no: Designed for after execution of S and P. If
amend after signing even if its small particulars like name, have to inform the parties
because our intention is good faith. Breach if amend without informing the parties.
Practice is to at least drop an email. PS has to conduct searches to check the title number,
but sometimes got typo errors, VS has duty to provide correct information as well.
Cannot just put 100 percent responsibility on PS. Both have duty to make sure title
number is correct, but of course more liability is on PS, cannot simply amend without
informing, may amount to misconduct because we are amending something which has
been agreed on.
  WHS comments on undertaking: If the instructions are absurd, you can reject.

Duty not to be negligent

Midland Bank Trust Co Ltd and Anor v Helt, Stubbs and Kemp
 The solicitor-client relationship gives rise to a duty to exercise the care or skill he knows
his client would rely on.

Neogh Soo Oh and Ors v G Rethinasamy

 A solicitor’s failure to use reasonable care and skill in giving his advice and taking an
action owes a duty of care to the clients.

Swamy v Matthews & Ors

 A man or woman who practices a profession is bound to exercise the care and skill of an
ordinary competent practitioner in that profession.

Albert Chew v Hong Leong Bank

 A solicitor had attested signature of bank’s attorney on a discharge of charge, and he
admitted that bank’s attorney did not sign in his presence or before him. Problem was that
the signature of the bank’s attorney was forged. Held that the advocate and solicitor had
falsified the attestation. He had breached a code so fundamental to the legal profession
that the excuse he gave that it was the practice of the law firm to do as he did, makes the
commission more heinous.

John Lee Tsun Vui

 The standard expected of a solicitor would be what is expected of a reasonably competent
solicitor having regard to the standards normally adopted in the profession.

Ngan Siong Hin v RHB Bank Bhd

 The test is to evaluate the conduct of the solicitor based on the practice in “vogue” at that
material time.

Ngan Siong Hing v RHB Bank Bhd

 Facts: R (bank) released loan sum, later found out borrower is bogus, vendor is not owner
of properties, solicitor who witnessed SPA and acting for the borrower is also bogus firm.
 Issue: Whether solicitor liable for losses caused to the bank.
 COA Held: Instructions letter given to the firm to make searches by the bank was too
vague. General and not specific instructions. Dependent on conveyancing practice in
vogue at the material time. Solicitors expected to act within the parameters of
conveyancing practice. But for test, D only liable if damage accrued but for his
 negligence. A not proximate or direct cause of the loss, loss x foreseeable, A not liable in
contract or negligence. Set aside decision of HC.
 WHS comments: A firm only handled loan transactions. Issue is how do we determine
this is the real purchaser. Need to conduct searches, IC search, property search, meet the
person personally as well, check from Bar Council whether the firm is registered. In this
case, no caveat was filed. Property in this case under master title, means that particular
piece of land has not been subdivided into individual lots, so no individual IDT. All land
held under 1 master title, so if you lodge caveat on this land, it would restrain the whole
land. The bank actually instructed that the bank is agreeable to waive the lodgment of
private caveat, so NSH did not lodge based on the instructions. This could have been
avoided if a caveat was filed. In order to prevent fraud and to protect ourselves, current
practice is to write to the bank and confirm whether they really don’t want, failing which
may jeopardise the bank. If still agreeable to waive, it is ok. If anything happens to affect
the bank, we can show that we have advised accordingly but bank did not follow. Go
through all the instructions, find out what is unusual practice. If all other conveyancing
lawyers would do the same thing but this particular lawyer did not do the same thing,
liable. Must do as what other conveyancing lawyers would do.

Kok Weng Tuck v Ambank

 Facts: A developer entered into a SPA for a property with the true beneficial owner, who
did not sell the property to any other party. By a letter of offer to a purchaser, the plaintiff
had offered loan facility to part finance the purchase. The plaintiff instructed a firm to act
on the plaintiff’s behalf in the security documentation. The plaintiff confirmed that the
4th defendant was the beneficial owner of the property who had sold the property to the
purchaser. Based on the legal advice, the plaintiff released the money but the plaintiff
later received a letter from the law form stating that the (real) developer did not recognise
the 4th defendant as the assignor of the property. The plaintiff argued that the law firm,
by not liaising with the developer directly, breached the terms of the engagement,
fiduciary duty to the plaintiff and acted negligently pertaining to the legal documentation
for the loan facility.
 The High Court held that the plaintiff was contributorily negligent for 30% of the liability
for its failure in ensuring all necessary checks and safeguards had been put in place.
 Issue: Whether the law firm is liable for negligence and/or breach of contract and
subsequently be fully liable for such?
 Held: The law firm had given an undertaking or guarantee that it was safe to release the
loan monies by stating in the letter of advice that the law firm would indemnify the
plaintiff in full should the plaintiff suffer any loss as a result of acting on the advice. The
law firm failed to discharge the duty of care owed to the plaintiff by not liaising with the
developer properly and truly. The firm also failed to put in place any safeguards (e.g. not
making record pertaining to the freelance dispatch clerk; not checking with the real
 developer to ensure they received correspondence handled by freelance dispatch clerk)
because the information that was obtained from the developer and which was used as a
basis of the advice was emanated from a bogus developer. The negligence attributable to
the law firm must be 100% pursuant to the indemnity in the letter of advice, as well as the
failure of the law firm in not carrying out the mandate prior to giving such assurance.
 WHS comments: Property also held under master title, no subdivision so no IDT as well.
Solicitor should write to developer to get confirmation of who is the owner etc. Solicitor
relied on the freelance dispatch in this case who was using fake documents, simply said
that this is the letter issued by the developer. Solicitor never contacted the developer. HC
said who asked the bank to grant the loan, but COA relied on the letter of undertaking,
where there is a clause to indemnify the bank. Undertaking is something like trustee, you
promise you would do something on behalf, if you did not do you breach. Biggest issue is
that the solicitor never realized that the freelance dispatch (not staff from the firm) were
not giving genuine documents. If they called the developers, they would have found out
everything, but in this case it is obvious they never contacted the parties and thus, there
was professional misconduct.

CIMB v Ambank
 Facts: SBB granted loan facilities to the Chins. As a security for the loan, the Chins
charged a land to SBB, which was registered in favour of SBB. The business of SBB was
vested unto CIMB, the appellant. Wong intended to purchase the said land, with the land
as the security to a loan from AmBank, the 1st respondent. The solicitor of 1st respondent
presented the forged discharge of charge, memorandum of transfer by the Chins to Wong
and the memorandum of charge by Wong in favour of the 1st respondent together with
the forged original title for registration. The appellant commenced proceedings to declare
the charge in favour of the 1st respondent as null and void and to reinstate its charge in
the said land. The High Court ruled that the 1st respondent was an immediate purchaser
and hence not protected by indefeasibility under proviso to s 340(3) of the National Land
Code. The court found that the discharge and original title has been forged. The court
also found that Wong had created a charge of the said land by forging the signature of the
attorney of the appellant and registering it as a discharge of charge to enable the current
charge over the land in favour of the 1st respondent.
 Issue: Whether solicitor owes a duty of care to fraudster purchaser?
 Same as what was discussed in Rajamani
 WHS comments: Someone had forged the discharge of charge, the issue is whether
subsequent purchaser obtain indefeasibility or not (not discussing this issue in exam, but
how do we prevent such a thing from happening?) Normal practice is for such security
document to be signed by CEO, but the bank will delegate his power to certain general
managers by way of PA. The particular GM are allowed to sign discharge of charge on
behalf on the bank. If we receive such a doc, we have to verify whether this document is
 signed by a real attorney (will indicate the attorney number). Have to conduct a PA
search. Normally will only appoint 2 or 3 GMs to do such things, so if normally deal with
CIMB you will know its only signed by the same 3 persons. Call directly to the bank to
talk with these people. In Kok Weng Tuck, never called to developer to verify. Don’t
trust the part time dispatch too much.

Remedies for the purchaser

 Can sue for specific performance, damages for negligence and losses etc.

Previous Position on duty to Third Party

Lau Teck Seng v SK Song
 Although solicitor acting for the vendor, owed a duty of care to the Purchaser against
fraudulent vendors to compensate purchaser.

Current Position on duty to Third Party

G Balan Govindasamy v Lee Moi Moi
 Solicitor who acted for a bogus vendor was sued for breach of warranty to act and breach
of solicitor’s duties as a stakeholder. No evidence that solicitor identified the bogus
vendor as the true owner.
 On the facts no justification to extend the duty of care/scope of implied warranty of
authority made by the solicitor.
Yap Ham Seow v Fatmawati bt Ismail & Ors
 Facts: The plaintiff was the owner of the land. A fraudster purported to sell the land on
behalf of the plaintiff under a forged power of attorney. The 1st defendant was a solicitor
who attested the forged power of attorney. The 2nd defendant was the solicitor firm who
acted for the fraudster and DW5 was the solicitor in charge. The 3rd defendant was the
first purchaser of the land. The 4th defendant was the subsequent purchaser of the land.
The 5th defendant was the Land Registrar. The High Court allowed the plaintiff’s action
against the defendant for loss of ownership and recovery of the land, but dismissed the
claim against the 1st defendant and the claim for damages against the 2nd to the 5th
defendants.
 Issue: Whether the solicitor acted for fraudster is liable to the plaintiff, the real owner?
 Held: Based on the surrounding facts and circumstances, there were nothing to suggest
the purported power of attorney was irregular and it called for further investigation on the
part of the solicitor. DW5 cannot be faulted for the irregularities which were not apparent
of the fact of the power of attorney as it would be too onerous a duty to require a solicitor
to do such. DW5 had followed the formalities, including the verification of power of
attorney, making of amendments in the SPA etc., and thereafter withdrawn herself when
 she could not get the cooperation from the forger to execute the supplementary agreement
to the existing SPA in order to reflect the new development of the situation and to avoid
breach of SPA. Even if DW5 has any suspicion, she only owed a duty of care to the
forger which she derived from the retainer and not to the real owner.
 WHS comments: Issue of POA. Purpose of POA is that the donor gives power to the
donee i.e. donee can do XXX. If someone brings POA to your office. As a solicitor, we
have to conduct a POA search to confirm whether it is genuine or not. We have to
register POA at 2 places, all such matters have to be registered at High Court, and land
office. Without registration, land office won’t recognise. Have to ask why the person
received the POA, ask where is the donor now. Not reasonable that someone in Malaysia
would give POA to someone else. If claim that owner is overseas, ask for the contact
number for the owner to ask whether he really gave POA to this particular person.

Rajamani A/P Meyappa Chettiar v Eng Beng Development Sdn Bhd. & Ors.
 Facts: The plaintiff was the registered proprietor of a land. His name was replaced with
the name of the second respondent and subsequently with the first respondent in the
register document of title, although the original issue document of title was in the
possession of the plaintiff at all material times. According to the 2nd defendant, the land
was purchased from a fake plaintiff (‘fake Rajamani’) with consideration. The 3rd
defendant, a partner in the fourth respondent, was an advocate and solicitor acted for the
fake Rajamani. The 5th and 6th defendants were the land authorities responsible for all
the transactions in respect of the land. The 7th defendant was a legal assistant who acted
for the 2nd defendant. The High Court dismissed the plaintiff’s claims against all the
defendants except for the 2nd defendant.
 Issue 1: Whether 3rd and 4th defendant was liable in negligence to the plaintiff who is
not their client?
 Held: The general rule is that a solicitor owes a duty of care primarily to his client, albeit
it comes with exceptions. Ross v Caunters (a firm) is an authority for the proposition that
the duty of care of a solicitor is not limited to his client. Penn v Bristol &West Building
Society and others, Halsbury Laws of England, Al Sabah v Ali and others demonstrates
that a solicitor must not act for a person without authorization. Otherwise, if his
negligence leads to damage to that person, he is liable to that person. The court
considered the above authorities to be good law and were applicable to the facts of this
case.
 The court corrected the decision of the JC to rely on Yap Ham Seow by stating that
conclusion in Yap Han Seow (that a solicitor does not owe third party duty of care) was
not reached simply on the basis in law that a solicitor does not owe such a duty and
instead, the court looked at the totality of evidence before coming to the conclusion that
the solicitor was not negligent.
  The 3rd defendant was put to notice of the need to make further enquiries when the fake
Rajamani produced a passport which did not match with the real vendor’s passport. Had
the 3rd defendant carried out further investigation as a prudent and reasonable competent
solicitor would under the circumstance, she would have discovered that the person that
she was dealing with was not the real landowner. She must then bear the natural and
probable consequences of her acts and omissions.

Rajamani’s case went on to FC and became Pushpaleela R Selvarajah & Anor v. Rajamani
Meyappa Chettiar & Other Appeals
 The court applied a 3-fold test. Foreseeability, proximity, policy consideration. Not
reasonable for court to impose duty because solicitor did not know of existence of the
plaintiff. Plaintiff is not client of the solicitors, so no proximity, and no policy
consideration also. Solicitor did not breach any duty.
 Solicitor x owe duty to non-client unless voluntary assume and reasonable reliance.
Extent of the duty is test of reasonable solicitor. Degree of attention, prudence or caution
expected from the reasonable solicitor.
 Whether replacement title generated during original IDT can be passed to BFPV. Yes
because the title given to the first defendant is still indefeasible also first transaction is
defeasible because D entitled to protection under proviso.
 WHS comments: If someone hands over documents that differ, must make further
investigation. After 5 years when renew passport, will be given new number. So
documents registered 5 years ago may be different. Solicitors in this case did not make
proper queries, that’s why bogus Rajamani could make fraudulent transactions. Passport
search in this case had to go through Indian embassy, Malaysians could go through JPN.
Besides from land search, should ask for quit rent assessment receipt, ask for utility
receipts, cukai pintu cukai tanah because all these receipts would show whether the
person is the owner of the property. Don’t rely on one document only. Have to do further
queries. If there is a replacement title in which the owner claims this is replacement title
because the new one is misplaced, and you suspect something, can ask this owner to
explain why the title was misplaced, do you have police report, enquiry report from land
office registrar. If information is different from what you have, this is a warning sign. At
FC, only the lawyers and law firm made the appeal. FC held that lawyers not liable
because of the threefold. Requires foreseeability (foresee the third party), proximity (any
rship with this person?), public policy. COA did not apply this threefold test, FC
interpreted law differently, so they feel that solicitors only owes duty of care to his own
clients, not third party. Pushpaleela only owed duty to bogus Rajamani who is their
client. Some people comment that this should not be the case, some are agreeable. Both
judges are actually in the right direction, but they have a different perspective. COA
thinks that solicitors owe duty to everyone even if you are not my client, I must take
measures to protect your interests. FC tried to limit the duty with the threefold test.
Limitations on Solicitor
 S. 84 LPA: Prohibits a solicitor acting for a housing developer from acting for the
purchase as well.
 O. 7 (1) Solicitors Remuneration Order (SRO): Prohibits one solicitor from acting for
more than one party.
 O. 7 (2) SRO: However, purchaser solicitor can attest the execution of documents such as
SPA etc if the vendor does not engage his own solicitor as long as there is no conflict of
interest.
 If vendor insist that you must act for him, give him an acknowledgement letter that we
have advised you to appoint your own solicitor but you refused.
 Gibb & Co v Malaysia Building Society
o This case demonstrates the perils solicitors face in acting for more than one party
in property transactions and in consequence constraining them not infrequently
into adopting invidious and untenable partisan positions in the event of ensuing
conflicts of interest.
 Bar Council’s Conveyancing Practice Rulings:
o Rule 16: Vendor’s solicitor shall not charge any fees for the supply of SPA
o Rule 17: Solicitor shall not charge his client additional fees for the agreement as
the scale fee under Solicitors Remuneration Order includes the charge for it.
o Rule 14.18: Provides that a solicitor shall not act for more than one party.

Solicitor as a Stakeholder
 Bar Council Rulings 14.10 (1): Solicitor to pay interest on monies held as Stakeholder.
o Where an Advocate and Solicitor holds money as a stakeholder (whether or not
such money is paid by a client of the Advocate and Solicitor) the Advocate and
Solicitor shall pay interest in accordance with the Solicitors’ Accounts (Deposit
Interest) Rules 1990 to the person to whom the stake money is paid unless
otherwise agreed.
 Subsection 2: A Solicitor is entitled to charge a fair and reasonable fee for acting as a
stakeholder.
 Subsection 3: A Solicitor acting as stakeholder for 2 or more parties must strictly adhere
to the terms of the stakeholding at all times No money or document held by a Solicitor as
stakeholder shall be released, utilised, applied or otherwise dealt with by such Solicitor
except in accordance with the terms of the stakeholding or with the express written
consent of all relevant parties.
 Housing Development Regulations 11 (12): No person, including parties acting as
stakeholders, shall collect any payment except as prescribed in contract of sale.
 Lai Kee Ping v Tay Hup Lian
o Stakeholder is trustee, breach of stakeholding terms = breach of trust.
 R Sivabalan A Ramiah v Neoh Lay Cheng
o Appellant had assured the respondent that the transfer of ownership of the land
would be concluded within 2 years. However, after 2 years, there was no transfer
of ownership effected. The respondent wanted the return of the purchase price,
but the appellant admitted to him that the purchase price has been paid to him as a
stakeholder, but the sum had been paid to purchaser in the principal agreement.
o Held that there was no misconduct as the purchased price had been transferred to
the other party already.
 Au Kong Weng v Bar Committee Pahang
o One of the most fundamental duties of an advocate and solicitor is that he must
honour to the utmost the promise or undertaking given by him in a professional
capacity and failure to honour it is a breach of professional conduct.
 OCBC Bank v Lee Lee Fah
o The solicitors as stakeholders were legally bound to pay out the balance of the
purchase price deposited with them to the respondents once the transfers and
charges over the lands had been registered. The loss of the balance purchaser
price had to be borne by the stakeholders and no other person. The respondents
had to look to the stakeholders to account and not the purchaser.