CHAPTER 4: SECURED TRANSACTION

Previously under Chap 3.2, we studied on how banks dealt with properties without title,
security was given by way of contract, Loan Agreement Cum Assignment (LACA), where
the borrower assigned all its rights, title and interest in the property to the bank not by way of
charge and we saw the consequences of that.
-LACA is not registrable interest, it’s a contractual right in personam
Chap 4 is about securities given for properties with individual titles. Create a registrable
charge on the property.

4.1 Introduction
1. There are 3 types of secured transactions recognized under the NLC. These are Charges
and Statutory, Liens. A 3rd category developed by the courts is the ‘Jual Janji’ transaction.
-Jual janji means a contract in personam
2. A charge is a transaction entered into between a registered proprietor (RP)-( s. 43 be it an
individual or corporation) of land and a financier whereby in consideration for a loan from
the financier the RP provides his interest in the land as security for the loan. The RP’s interest
in the land could be that of a freehold title holder or a lessee.
3. The owner of the land or lease is known as the Chargor whilst the financier is known as the
Chargee.
4. There is a fundamental difference between a ‘charge’ under the Torrens system and the
English or Common law mortgage.
Lai Soon Cheong v Kien Loong Housing Development Sdn Bhd [1993] 2 CLJ 199.

CHARGE
1. Created under the NLC.
2. The Chargee does not own the land. The
Ownership remains with the RP. The
Chargee only has the right to enforce the
sale of the land with a court (s.83 for
LACA) order or to take possession thereof
in the event of a default in the repayment of
the loan.
3. Charge is created using prescribed
statutory form.
MORTGAGE
1. Created by contract. The land is used as a
security to pledge against borrowings. The
borrower is the Mortgager and the Lender is
the Mortgagee.
2. The legal title to the land goes to the
thereof in the event of a default in the
Mortgagee (as security for the debt and not
all repayment of the loan, not all powers of
dealing with the land), while the equitable
title (equity of redemption) remains with the
mortgagor.
Malayan United Finance Bhd v Tan Lay
Soon [1991] 1 MLJ 504
3. There is no prescribed form, there
is deeds of conveyance.

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4.2. Effect of a Charge
1. s. 241(1) NLC specifies the type of land that can be charged and the method. Subject to s.
241(3)
(a) the whole but not part of alienated land’- J Raju v Kwong Yik Bank[1994]
(b) the whole but not part only of an undivided share in any land,
(c) any lease of alienated land may be charged.
2. s. 5 a charge means a registered charge. S. 243 – a charge can only be enforceable if it is
registered. Thus a chargee without a registered charge would have to resort to contractual
remedies to obtain repayment of the debt.- Mahadevan s/o Mahalingam v Manilal & Sons
(M) S/B [1984]
3. A charge can only be created to secure a debt. There can be no charge of land where there
is no loan as it would defeat the purpose of the charge.- Yee Sin Cheong v UMBC [1992]
4. Upon default by the chargor the remedy of the chargee is not against the person of the
chargor but against the property charged i.e. remedy of possession and sale as under the
NLC – Co-operative Central Bank Ltd. v Y&W Development S/B[1997]
5. A registered charge constitutes an indefeasible interest in land as a security which the
chargee could enforce by way of sale – Ho Giak Chay v Nik Aishah[1961]; T Bariam
Singh v Pegawai Pentadbir Tanah Pesaka Malaysia [1983]
6. A Charge shall be subject to the restrictions of s.241(3) and (4)-
• Any prohibition or limitation by the NLC or any other written law in force.
• Any restriction in interest to which the land is subject
• In relation to leases – the provisions therein.
• (4) no charge may be granted to 2 or more persons or bodies otherwise than as
trustees or representatives
Any charge created contrary to the above shall be void ab initio – Phuman Singh v Khoo
Kwang Chang[1965]
-However, let’s say RM300k loan is taken and the property charged is worth RM1.5million,
so in this situation can create another charge on the same property for same or another person
with the written consent of the first bank for the second charge. Also can have joint venture
agreements with consent of RP.
7. Creation of 2nd. or subsequent charge – s. 241(2) - the 1st. chargee will have priority over
the land as compared to any subsequent chargee and the 1st. chargee would have the right to
retain possession of the issued document of title (IDT). – Samat Din & Partners v Bank
Pembangunan M’sia Bhd. & Anor. [1997]

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8. Privileges enjoyed by a chargor –
• Right to create subsequent charges on the property (subject to consent of prior
chargees and provided the value of the land permits)

• Right to consolidate –Consolidation in relation to charges mean that if a chargee has

made separate loans to the same chargor secured by charges over separate pieces of
land, the chargee can prevent the redemption of one charge unless all other charges
are also redeemed. S.245 NLC provides that unless there is an agreement to the
contrary, the chargee has no right of consolidation. Thus, it is common that charge
documentation normally excludes the application of the NLC in this aspect, therefore
giving the chargee the right of consolidation. S.245 allows consolidation only if both
parties consent. The right to consolidation should be exercised before any application
for foreclosure. – Public Finance Bhd. v Hock Seng Housing Development &
ors.[1999]. The effect of consolidation is to alter the priority of a subsequent chargee
by restricting its priority in respect of the land or lease by giving the consolidating
chargee an advantage.

• Tacking – s.246(2) gives the chargee the right to tack. i.e. the chargee may make
further advances to rank in priority to any subsequent charges. Thus the
borrower/chargor’s liability increases. This right to tack is restricted to two situations:
- where the making of the advance or advances is expressly authorised by the prior
charge, or the charge is to secure a floating balance such as an overdraft
- where the advance or advances are made with the consent of the subsequent
chargee(s). Thus all subsequent chargees should inspect the prior charge document to
ascertain whether there was a right to tack.

Difference between Consolidation & Tacking several pieces of land are

Several pieces of land are charged by the One piece of land is charged by the same
same person to the same chargee. person to different chargees.

• Postponement of Charges – s.247 – Form 16C – postponement of a registered

charge alters the original priority by placing it on a lower level of priority.

4.3. Breach by Chargor and Chargee’s Remedies

s.249 implied terms binding on the chargor that he shall comply with all the terms of the
charge.
s.250 implied in the absence of any term to the contrary that the chargor shall keep all
buildings on the land in good repair, insured and on failure of which the Chargee may take
such action as necessary to remedy the breach.

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4.4. FORECLOSURE - Remedy
1. Upon a continuous default of at least 1 month or as specified in the loan agreement,
• s. 254 provides for taking possession of the charged property, and/or
• s. 253 provides for an application for an order of sale.
3. Procedure
4. s.254 Notices – Forms 16D issued where there is a breach by the chargor and
Form 16E – if the principle sum secured is payable on demand
Specifying the breach and requiring it to be remedied within 1 month failing which
foreclosure proceedings shall be commenced.
Standard Chartered Bank Malaysia Bhd. v Tunku Mudzafar b Tunku Mustapha
[2005]– notices are mandatory;
RHB Bank v Sykt. Sungei Nal Timber Industries S/B [2007] - D argued irregularities in
Form 16D. Court held that Form 16D sufficiently clear and specific as to the breach and
amount in default.
5. Consequence of a wrong notice eg.
Jacob v OCBC [1974] - Form 16 D instead of 16 E –- does not negate its validity.
Reiterated in OCBC Bank (M) Bhd. v Hotel Rasa Sayang S/B [2005]
Affin Bank v Chua Lok Bah [2009] 7 CLJ 197
6. Period of Notice – s.253 – 1 month or as may be specified –
Citibank Bhd. v Md. Khalid b Farzular Rahaman &Ors.[2000] notice could be less than
1 month if provided in the loan agreement. However, S.253 prevails.
Adopted in MBB v United Cartel S/B [2006]

4.5 Procedure for Order for Sale

1. Application for order for sale could be made either to the Land Office or the High Court
depending on the nature of title.
2.
Registry Title (PTD) Land Office Title (PTG)
1. Town and city land – HS(D) 1.Rural land – HS(M)
Registrar of Land – application to HC. Application to Land Administrator
2. O.83 ROC - Applications pursuant to 2. Agricultural land.
s.256(2) NLC 3. Form 16C pursuant to s. 260(2) –
application to Land office.

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3. Applications for Sale under ROC O.83-
(i) r.1 – whether by writ or originating summons (OS); commenced by chargor or chargee; or
any other person with the right to redeem / foreclose. May claim for:-
a) payment of moneys secured by charge;
b) sale of the charged property;
c) foreclosure;
d) delivery of possession to the chargee by any person having possession
e) redemption;
f) reconveyance and / discharge of charge
g) delivery of possession by the charge

(ii) r. 3 supporting documents in an action for possession or payment –

• OS with affidavit where chargee is the plaintiff and claims delivery of possession and
/ or payment
• Affidavit should exhibit – true copy / original charge, charge certificate
• Where claim is for possession affidavit must show circumstances under which right to
possession arises; status of account between chargor & chargee showing
- amount of loan
- amount of repayments
- interest due and installments in arrears at date of issue of OS and affidavit
- balance outstanding under the charge
- Affidavit must also show all persons who are in possession of the property,
- If there is a tenancy – how it was determined, proof of service of notice –Nira S/B v
MBB [1990]
• Where the claim is for money the affidavit must prove all particulars of money due
and payable as above- Maimunah b Megat Montak v Mayban Finance Bhd. [1996]
• Where the Plaintiff’s claim includes a claim for interest up to judgment calculation of
the daily interest must be shown.
(iii) Non-compliance of the requirements will result in the application being struck off.-
Citibank NA v Ibrahim Othman[1994],
reconfirmed by the FC in Perwira Habib Bank(M) Bhd. v Lum Choon Realty S/B [2006]
Kandiah Peter v Public Bank Bhd. [1994] an order for sale granted to a chargee does not
constitute a judgment debt. -This is why lawyers usually get the judgment debt first, then go
for foreclosure
Chargee may at the same time commence an action for the recovery of the debt against the
principle debtor / guarantor.
American International Assurance Co. Ltd. v Union Builders (M) S/B [1973]. The court
only has power to impose interest at the agreed rate from date of order to date of sale by
public auction.

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(iv) Remedy of the Chargor -Objecting to the Sale – Cause to the Contrary
s.256(3) an application for an order for sale to court / Land Administrator shall be granted
unless there is cause to the contrary. The NLC does not define ‘cause to the contrary’
*Low Le Lian v Ban Hin Lee Bank [1997]– cause to the contrary may be established in 3
circumstances – fraud, impropriety, breach of statutory or contractual terms
Chargor is able to claim under exceptions to indefeasibility of title under s.340 as in:-
• Keng Soon Finance v MK Retnam Holdings S/B[1998]1MLJ457
• UMBC v Sykt. Perumahan Luas (No.2) [1988] 3MLJ 352
• Harta Empat S/B v Koperasi Rakyat Bhd. [1997] 1MLJ 381
• CCBLtd (in receivership) v Feyen Dev. S/B [1997] 2MLJ 829
• Co-operative Central Bank Ltd. v Meng Kuang Properties Bhd.[1991]2MLJ 283
or
Chargor is able to demonstrate that chargee failed to meet the conditions precedent for the
making of an application for an order of sale eg. notice of demand, service as per Form 16D,
incorrect amount:-
• Keng Soon Finance v MK Retnam Holdings S/B[1998]1MLJ457
• Low Lee Lian v Ban Hin Lee Bank Bhd. [1997]1MLJ 77
• MBB v Md. Salleh b Hj. Md. Nor & Anor.[2006] 2MLJ 333 Or
is able to show that to grant the application would be contrary to some rule of law or equity
Murugappa Chettiar v Letchumanan Chettiar(1938) MLJ 237. 24
• Buxton v Supreme Finace(M) Bhd.[1992] 2MLJ 481
• OCBC v Lee Tan Hwa [1989] 1 MLJ 261
• Kuching Plaza S/B v BBB&Anor.[1991] 3MLJ 163
Burden on the Chargor/ defendant to show cause to the contrary to resist the order for sale. -
• B Bank Bhd. v Muthusamy Sinnakaundan [2008] 9 CLJ 621 - bank had confirmed
payment completed.
• Standard Chartered Bank Malaysia v Hew Hai Woon[2007] 7 CLJ 454
D obtained a loan from P and executed a LACA. Later converted to a charge. However P did
not give D a copy of the charge. D defaulted in loan payments and P issued a Form 16D
notice. D alleged charge ineffective as not served on him.
Held: P’s OS dismissed. Charge fatally defective:
(i) Copy of Charge not given to D
(ii) Not signed by the chargee as required instead signed by a ‘Manager’ at the time. Did
not stipulate PA or PA registration no. No affidavit evidence.
(iii)Lack of capacity of P’s signatory. PA not given to any manager – only HQ Manager.

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Lim Ban Hooi and Another v Malayan Banking Berhad (201S] MYCA 155; CA
This was an appeal against the decision of the Land Administrator who, on 24.5.2015,
pursuant to section 418 of the National Land Code 1965 had granted in favour of the charge
respondent, an order for sale of land located at Lot 12190 Mukim Bat, Negeri Wilayah
Persekutuan (subject land].
By Originating Summons, the appellants sought to set aside that order for sale on the primary
basis that there is cause to the contrary, that the order sought is barred by the Limitation Act
1953. CA referred to its recent decision on limitation in Sivadevi ap Sivalinzam v CIMB
Bank Berhad [Civil Appeal No: J-02(A)-59-01/2017], this Court has expressed its views on
the interpretation and construction of section 21, in particular sections 21(1) and (2) of the
Limitation Act 1953, Part 16 of the National Land Code 1965 and Order 83 of the Rules
of Court 2012.
Section 21 of the Limitation Act 1953 reads as follows:
Time bar pursuant to section 21(2) Limitation Act
(1) No action shall be brought to recover any principal sum of money secured by a mortgage
or other charge of land or personal property or to enforce such mortgage or charge, or to
recover proceeds of the sale of land or personal property after the expiration of twelve years
from the date when the right to receive the money accrued.
(2) No foreclosure action in respect of mortgaged personal property shall be brought after the
expiration of twelve years from the date on which the right to foreclose accrued:
In order to enforce a charge, two steps are mandatory: compliance with the requirements of
section 256 of the National Land Code 1965, and compliance with the requirements of Order
83 of the Rules of Court 2012. Part 16 requires the breach of the express or implied
agreement must have "continued for a period of at least one month or such alternative period
as may be specified in the charge" before the efforts towards enforcing that charge can take
place. The object of this notice was expressed by the Federal Court in Jacob v Overseas
Banking Corporation, Ipoh (1974) 2 MLJ 161:
“…was to see that sufficient notice was given to the chargor before the charge applied for an
order of sale and in this case the charge had given the chargor sufficient notice before coming
to the Court.”

Q.Can charge issue a fresh Form 16D notice to defeat the limitation?
In Order 83 of the Rules of Court 2012. The 12-year period commences a month after the
breach or after the chargor has been deprived of the right to receive the money accruing under
the charge. This period does not alter the underlying contractual relationship between the
parties. The right to pursue this statutory remedy is triggered by an event of breach or default
in the underlying contractual agreement and in the terms of the charge- see Federal Court
decision in S&M Jeweller Trading Sdn Bhd v Eui Lian-Kyong Hing Son Bid (2015] 5
MLJ 717.

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From the affidavits filed and the submissions made, the appellant has successfully shown
cause to the contrary as the proceedings under Order 83 of the Rules of Court 2012 are barred
under section 21 of the Limitation Act 1953, Since the default which gave rise to the right to
"foreclose" was the default in the repayment of the loan agreement, the computation of the
12-year limitation allowed under section 21 of the Limitation Act 1953 must necessarily
commence from the date of the last payment. That date is 12.5,2003 in which case, limitation
set in 12 years from that date, which is on 12 5.2015. The “foreclosure proceedings” initiated
on 8.8.2016 is consequently, barred.
Mary Lim Thiam Sun JCA: The appeal has merit and is accordingly allowed with costs. The
decision of the learned Judge is therefore set aside.

* In addition - Islamic Banking transactions –

Arab Malaysian Merchant Bank Bhd. v Silver Concept S/B [2005]5MLJ 210 in any
Islamic Banking transaction, it must be presumed to be in order at the outset unless rebutted
eg. slip shod preparatory work. Cause to the contrary may be established by a Statement of
Disapproval from the in-house Syariah Advisory Body as set up by the bank.
s.16B Central Bank of Malaysia (Amendment)Act 2003 where in any proceedings relating
to Islamic banking business any question relating to a Syariah matter, the court may refer
such matters to the Syariah Advisory Council.

Objective of Order 83 Rule 3

Kwan Chew Holdings Sdn Bhd v Kwong Yik Bank Berhad [CA] [2011] 2 CLJ 269 [CA].
CA made the following points:
• A chargor may show cause to the contrary within section 256(3) of the Land Code by
demonstrating that the chargee has failed to meet the conditions precedent for the making of
an application for an order for sale.eg.
(i) failure on the part of the chargee to prove the making of a demand or service upon the
charger of a notice in Form 16D.
(ii) where the notice demands sums not lawfully due from the chargor. However in such a
case, it would be open to the chargee to subsequently serve a notice or a proper notice (as the
case may be) before commencing proceedings afresh as the cause shown to the contrary does
not in substance affect the chargee’s right to apply for an order for sale (quoting and citing
Low Lee Lian).
• The failure to comply with RHC O. 83 r 3(6) and r 3(3), in particular, the failure to state: (a)
the amount of the repayments; and (b) the amount of installments in arrear, are serious
omissions which warrant a dismissal of the action; for the absence of such pertinent
information is highly prejudicial to the defendants. The purpose of the rule is also to protect
the interest of the debtor/chargor (Bank Pertanian Malaysia v Zainal Abidin bin Kassim).

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The objective of ROC O. 83 r. 3 is to enable the chargor to know at least by the date the
originating summons is filed, the exact sum he is legally liable to pay. If there is a dispute as
to the amount payable, the court must be able to say precisely when making its order as per s.
257(1)(c) NLC ‘the total amount due to the chargee at the date on which the order is made’.
These words are mandatory. O 83 r (3)(3) allows more than one affidavit to be filed to state
the total amount due on the date of the order. Provided evidence of the correct amount due
has been put before the final hearing, the court has the power to dispense some omission to
fulfil the rules to the letter, but only if no real prejudice will thereby result to the defendant
(Citibank NA v Ibrahim bin Othman).
• Since the statutory demand in Form 16D was for a sum greater than that owed by the
defendant, it was accordingly a wrongful demand for payment and that would certainly
constitute cause to the contrary. The learned judge failed to deal with these issues in making
the decision that he did and for these reasons we had allowed the appeal with costs and
ordered that the order for sale be set aside.

House Auction ruled Unlawful, Damages awarded [Matilda Louis Angel Perix]
A magistrate’s court at Johor Bahru has awarded a woman, whose apartment was auctioned
off by a
RHB bank after she failed to settle her final outstanding balance of RM1,385.17 on her loan
of RM23,000/-. She had made a part payment of RM500/- but the bank proceeded with the
auction. The Court ruled that the auction was unlawful and awarded her RM25,000 in
damages.
MLA Reference No: MLA-170510-N-28; Source(s): The Star; Date(s) of Publication:
14/05/10; Original Title(s): House auction ruled unlawful (The Star, 14/05/10);
Rules of Court 2012 (previously under RHC 1980) O.31r.1

RHB Bank Bhd v. Zalifah Juan & Anor [2005] 4 CLJ 430 -
Whether holder of equitable Mortgage must apply to court to exercise its contractual rights to
sell
Property - Whether O.31 r.1RHC1980 provides court with jurisdiction to order judicial sale
HELD: court has an inherent power to order sale – “where it appears necessary or expedient".
In the case of an absolute assignment the assignee does not require an order of court to sell.

4. Sale Procedure in Land Office

s.261 the Land Administrator must hold an inquiry in order to make an order for sale – Form
16H after satisfying himself that there is no cause to the contrary.-s.263(1)
s.263 sale must be conducted by public auction under the direction of the Land Administrator
and the assistance of a licensed public auctioneer.
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The Chargee has to deposit with the Land Administrator:
- The duplicate charge document
- IDT
At the inquiry the Land Administrator / Collector has to satisfy himself that there was a
default. He has no power to investigate “what was due under the charge” or issues of title.

Powers of the Land Administrator are limited, functus officio, No power to cancel sale, order
payment of arrears, or rectify errors. Cannot go behind the Register.
Ragavanaidoo v Supramaniam Chetty[1914]
Suppiah v Ponnampalam[1963]
Lim Yoke Foo v Eu Finance Bhd.[1985]

s.265(2) the chargee is also entitled to bid.

s.265(3a) If no bid is received at or above the reserve price, the auction of the land must be
withdrawn and the Land Administrator must refer the matter to court.
Lee Ghee Peng v RHB Bank Bhd.[2003]4CLJ639 – functus officio
Rohaya Binti Ali Haidar v Ambank (M) Bhd. Civil Appeal No. N-02(MUA)(A)-1568-
09/2014; Court of Appeal; Date of Decision: 07 March 2016
Purchasers had obtained Letters of Release and disclaimer excluding their lots from any
foreclosure. Bank overlooked their interest and auctioned the land including the plaintiff’s lot.
CA held citing Scotch Leasing Sdn Bhd v Chee Pok Choy & Ors [1997] 2 MLJ 105 where
SC held:
"An order of sale of charged land was a final order unless appealed against and once it was
made, drawn up and perfected, the judge was functus officio and therefore had no power to
set aside the order of sale. Thus, the judge in the court below had no power to hear the
application to set aside and make the second order (see p 108H-I); MUI Bank Bhd v Cheam
Kim Yu (Beh Sai Ming, Intervener) [1992] 2 MLJ 642 followed and Muniandy a/l
Thamba Kaundan & Anor v D & C Bank Bhd & Anor [1996] 1 MLJ 374 , Asia
Commercial Finance (M) Bhd v Kawal Teliti Sdn Bhd [1995] 3 MLJ 189 distinguished.
To allow the judge in the court below to reopen the matter nine months after it was decided
by himself would bring absolute chaos to the judicial system. Plaintiff’s remedy was against
the Defendant for damages not revocation of the order for sale.

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5. Sale by Private Treaty
ss. 256 -259 contemplate by public auction.
Chartered Bank v Pakiri Maidin [1963] Initially open to parties to negotiate a private sale
before any proceedings are commenced in court.

Kimlin Housing Dev. S/B v BBMB [1997] SC - sale by private treaty could be held at any
time even after commencement of proceedings in court provided:
• Agreed by parties
• Chargee cannot on its own sell privately after order for sale by public auction
• Proceeds sufficient to pay off amount due to chargee in full and cover all incidental
expenses.
6. Discharge of Charge
1. s. 278 - Form 16N discharge other than by payment chargee may grant discharge of charge
and all further liability thereunder. Shall take effect on the date of registration of the
Discharge.
Eng Ah Mooi v OCBC[1983] – where chargee did not act to discharge property upon
settlement of loan - for a discharge to be possible an order of court would be necessary. The
discharge of charge could be in respect of the total or partial amount of the loan. No time
frame was specified for the charge to discharge.
2. s.279(1) Discharge by payment to Registrar in cases of Death, Absence or Disability
Where chargee is unable or unwilling to accept payment due to the fact that the chargee is
dead, cannot be found or evades or refuses to accept payment. Registrar shall upon receipt of
such payment -
a) place it in the custody of such public officer as he may think fit.
b) Allow a claim by person or body entitled there to within 6 years of the date of deposit
c) Where unclaimed after 6 years be paid into the State Consolidated Fund.

3.6 Chargee’s Remedy of Possession ss270 – 277

1. Only available to 1st. chargee.
2. 2 options available – take up occupation – Form 16K or receive rent – Form 16J
3. A chargee in occupation will be liable to the charger.

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3.7 Statutory Lien
1. No definition in NLC. Palaniappa Chetty v Dupire Bros. [1919] Lien is a right to retain
something belonging to another in his possession until certain demands by the person in
possession are satisfied.
2. Regulated by s 281 – a proprietor or lessee may deposit his IDT with any person or body as
security for a loan. He may thereupon apply for a lienholder’s caveat, must have title deed
(IDT) to apply –Chap.1 Part 19 Form 19D and thereupon become entitled to a lien over the
land or lease.
3. Where such lienholder has obtained judgment on the debt he may apply for and obtain an
order for sale of the land or lease as per ss 256 -259 and 266-269
4. Conditions to register a statutory lien:-
a) deposit of IDT
b) Intention to create a lien – consent of the proprietor
c) lien holders caveat Form 19D – must prove that the deposit was made as a security for
a loan advanced by the holder to the depositer and not for any other reason. –
Hong Leong vFinance Bhd. v Staghorn S/B & or Appeals [2005]
Perwira Affin Bank v Selangor Properties S/B & Ors. [2003]
Megat Najmuddin b Megat Khas & Ors. v Persira Habibi Bank (M) Bhd.
Ormomrm Manikavasagam Chetty v Thomas James McGregor [1933]
Heap Huat Rubber Co. S/B v UOB [1992]
Perwira Habib Bank (M) Bhd. v Loo & Sons Realty S/B [1996] – reiterated essentials of a
lien holders caveat:-
• Express intention by the registered proprietor to create the lien
• Registered owner must consent to the entry of the caveat
• IDT must be delivered to the lender by the registered owner not a third party.
• Lien can only be created for 1 purpose ie. Security for a loan
• Upon default the lien holder must 1st. obtain judgment against the registered
proprietor against the debt owing and then may apply for an order for sale of the land.
5. Remedies of a Lien Holder
ss.256 – 269 the lien holder may obtain an order of sale of land or lease ROC O.83 However
unlike a chargee, a lien holder must first obtain a judgment on the amount due. – But it is
better for lawyer to obtain judgement first for charge.
6. Determination of a Lien Holder’s Caveat s. 331 by -
a) notice of withdrawal given to the Registrar by the lien holder,
b) by registration of a certificate of sale issued s 281(2) upon an order of sale obtained
by the lien holder,
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 c) registrar receiving proof that all sums due under the lien had been duly paid
d) where the court is satisfied that the caveat ought not to have been entered or ought to
be withdrawn and makes an order for cancellation

3.8 Differences Between Liens and Charges

Suffian FJ in Paramoo v Zeno Ltd.[1968]1

LIENS
1. Intention to create a lien.
2. IDT is deposited with the lender as
security.
3. Failure to enter a lien holder’s caveat will
not necessarily deprive the lender in equity
provided other prerequisites met.
4. Mandatory to obtain judgment on the
debt before applying to Court for an order of
sale.
5. Cannot create subsequent liens.
6. Liens are non- transferable.
CHARGES
3. Failure to register a charge defeats the
security. Remedy in contract only.
4. Not mandatory to obtain judgment on the
debt first. (In practice, lawyers will obtain)
5. May create more than one charge on the
same.
6. Charges can be subject to composition /
tacking

Lim Cho Hock v Speaker, Perak State Legislative Assembly [1979]

APP applied by OS for the determination of the question whether the seat of a member of the
Legislative Assembly, who was also the Speaker, had been vacated as he had not taken the
oath required of a member. RP applied to set aside OS on the grounds inter alia, that
1. the application was not maintainable in law and procedure and
2. the court had no jurisdiction to entertain the application as the reliefs sought were
exclusively within the jurisdiction of the Legislative Assembly of the State of Perak.
Held: The proceedings by OS were incompetent as they do not come within the requirements
of 054ArlA Rules of the Supreme Court. The Legislative Assembly is the final arbiter in any
question arising as to whether a member of the Legislative Assembly has become disqualified
for membership. The matters raised were for the Legislative Assembly to decide and within
its exclusive jurisdiction and not for the courts to determine

Ng Wan Siew v Teoh Sin [1963] 1 MLJ 103

1
[1968] 2MLJ 230
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There was a dispute as to whether AP he was the natural or the adopted son of an intestate.
Proceedings were commenced by OS.
Held: These proceedings should have been started by writ and not by OS. Theoretically they
could have been started either by writ or by OS but it has been said again and again that when
it is known there is going to be conflict of testimony and a necessity for taking parol evidence.
the proceedings should be commenced by writ.

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