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Case: Malayan united finance bhd v tay lay soon 'efaulted [1991] 1 mlj 504

)*uity of Redemptio n
Malayan United Finance Bhd

Registered proprietor
Kam Mah Theatre Sdn Bhd

Charged to secure repayment of loan of $ !" million

Ca&eats %ere (ased on a purported agreement to sell the land


Tay Lay Soon

Too# preliminary steps to commence foreclosure proceedings to enforce the charge

$t %as found that t%o pri&ate ca&eats %ere lodged against the land

There %as a dispute (et%een the appellant and the respondent! The respondent had (rought an action for specific performance of the agreement! The appellants applied to ha&e the ca&eats remo&ed under s +,- of the .ational Land Code /0"1 and argued that it %as the registered chargee1 presently e2ercising its right of sale of the charged property under s ,"0! $t also argued that the charge on registration %as indefeasi(le and ran#ed in priority o&er the ca&eats! The learned trial 3udge (asing himself on the principles enunciated in4 Eng Ah Mooi & Ors v Oversea Chinese Banking Corp Ltd4held that the ca&eator had succeeded in sho%ing a tria(le issue as (et%een himself and the chargee and he dismissed the application! The appellants appealed!

6hether the e*uity of redemption under the )nglish la% is applica(le in land tenure in Malaysia!

The appeal %as allo%ed5

$n this case the chargee 8the appellant9 had an indefeasi(le right (y &irtue of the registration of the charge and this right had priority o&er the ca&eats %hich %ere lodged fi&e years after the registration of the charge! The respondent:s proposition that he has a statutory or e*uita(le right of discharge or redemption of a charge under the pro&isions of the .ational Land Code must (e re3ected! $t is the chargor or the (orro%er 8the registered proprietor9 %ho has the right to discharge the charge and the right to tender payment (efore the 3udicial sale is specifically and e2clusi&ely granted to the chargor! Since the right or interests in the charged land remains %ith the registered o%ner he has nothing to redeem! The e*uity of redemption or the li#e of it in the situation under the .ational Land Code is clearly technically and legally incorrect! The system of registration does not permit the application of the doctrines of e*uity relating to )nglish tenure to land matters in Malaysia!

The4e*uity of redemption4refers to the right of a mortgagor in4la%4to redeem his or her property once the lia(ility secured (y the4mortgage4has (een discharged! The distinction (et%een a mortgage and a charge is that in a mortgage1 the o%nership of the land is transferred to the mortgagee %hile %hat is left %ith the mortgagor is an e*uita(le right to redeem< in a charge1 the charger retains the o%nership %hile the chargee ac*uires a statutory right to enforce his security! Since the right or interests in the charged land remains %ith the registered o%ner1 the respondent has nothing to redeem! =)*uity of redemption> is a misnomer (ut persistence in its use is not a matter of la% (ut of ha(it of Australia and in Malaysia it does not e2ist at all! Therefore1 the doctrine of e*uity of redemption is inapplica(le in Malaysia!