BSR656

LECTURE 3 & 4

Disposal & Dealings

zulkifly sapeciay
dept. of building survey
faculty of architecture, planning and surveying
uitm shah alam malaysia
 Keywords
State Authority,
State land,
Disposal,
Alienation,
Reservation,
Lease of Reserved Land,
Temporary Occupation License,
Permit

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The purpose of this lecture is to
discuss and make aware on the
following area :-
 Disposal of land
 Alienation of land.
 Otherwise than alienation
 Classification & Use of land
 Condition of land.
 Dealings.
 Restraint of Dealing.
 Torrens system – NLC 1965 section 40 – land within state territory belongs
to the ruler.
 As the owner of the land, SA has power to manage the land in whatever
manner it pleases.
 In a capitalist economy, individuals and bodies expect to be allowed to own
land for economic activities and for personal wealth.
 Thus the NLC 1965 gives power to SA to dispose of State Land in various
forms.
 The NLC 1965 does not recognised adverse possession of State Land.

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 1) Alienation

2) Reservation

3) Lease of Reserved Land

4) Temporary Occupation License

5) Permits

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Division I – Part 3 Chapter 1
Property in Land & power of disposal

Division II – Part 5 Chapter 1

Disposal by alienation

Division II – Part 4 Chapter 1

Disposal otherwise than by alienation

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Chapter 1 Property in Land & power of disposal
Section 40 Property in State land, minerals & rock materials
Section 41 Powers of disposal of State Authority and rights in
reversion, etc.
Section 42 Powers of disposal
Section 43 Persons or bodies land may be disposed off
Section 44 Extent of disposal (general)
Section 45 Extent of disposal: minerals, rock material and forest
produce

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Chapter 1 Disposal by alienation
Section 76 Meaning of alienation
Section 77 Titles under which land may be alienated

Section 78 How alienation is effected

Section 85 Register and issue documents of title

Section 88 Registration of register documents of title

Section 90 Issue of issue documents of title

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Disposal of Underground land.

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Chapter 1 Disposal otherwise than by alienation

Section 62 Power of reservation of State land

Section 63 Power to lease reserved land

Section 64 Revocation of reservation

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Chapter 2 Temporary Occupation License

Section 65 Power to issue license

Section 66 Issue of TOL
Section 67 Duration, conditions, etc.
Section 68 TOL not capable of transfer or transmission on death

Section 68A Deposit

Section 69 TOL & Permit combined

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Chapter 3 Removal of Rock Materials License

Chapter 4 Permit to Use Air Space

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State’s general power of disposal
State Authority is the absolute owner of all state
land within its territory. They’re empowered to
dispose lands to such grantees it deemed fit
subject to payment of fees, premiums and rents
and other terms they choose to impose.
The extent of state powers (S42 NLC)
a) To alienate state land for a term of years not
exceeding 99 years or in perpetuity pursuant to
provisions of S76 of NLC
b) To reserve state land & grant leases of reserved
land
c) To grant Temporary Occupation Licenses

d) To permit extraction & removal of rock material

from any land other than reserved forest
e) To permit use of air space on or above state or
reserved land.
Type of disposal
a) Dispose by alienation

b) Dispose other than alienation

Definition
A transferring of property, or the voluntary
resignation of an estate by one person, and its
acceptance by another.

“Alienate” means to dispose of State land in

perpetuity or for a term of years, in
consideration of the payment of rent, and
otherwise in accordance with the provision of
section 76 [section 5, NLC1965].
Alienation of land, either for a term of years or in
perpetuity are invariably subject to the
following terms (S76):
a) The grantee must pay premium (unless
exempted), survey fees and other fees in
connection with preparation and registration of
documents of title
b) The land will be subjected to a specific category
of land use determined by the state pursuant to
S52 of NLC
FREEHOLD LAND
 When state Land is disposed of by the state
authority to an individual in perpetuity.
 The land vests in such individual and his
successors in title for an indefinite period.
 Better market value.
 Best security.
FREEHOLD LAND (cont’d)
State authority will alienate in perpetuity only
where [section 76 of the NLC] :-
 The Federal Government requires the State
Authority to them or public authority.
 To be used for public purposes.
 Special circumstances and appropriate to
do so.
LEASEHOLD LAND
 State land is dispose by the state
authority to an individual and successors
for a term of years as originally granted.
 Minimum 3 years cannot exceed 99 years
[section 76 of the NLC].
 After 99 years to be reverted back to the
state government [section 76 of the NLC].
 Good security.
Right of Owners
1) Paramount rights:
S44 NLC :
a) Exclusive use and enjoyment of so much of the
column of air space above the surface of land & below
– lawful use
b) To support of the land in its natural state by any
adjacent land
c) Right of access to foreshore, river or public places
2) Subsidiary right (S45 NLC)
a) To extract, move or use rock material and to fell, clear,
destroy or use forest produce-strictly within confines
of the land.
TENANCIES
 Subject to payment/quit rent.
 Periodical - cannot exceed 3 years and
renewable.
 Not to be registered [not a title] and may
be created by word of mouth or in
writing i.e. tenancies agreement.
 Not to be taken as security for loans by
the financial institution.
 No security.
The powers of State to dispose State land
otherwise than by alienation are set out in
detail in Division II Part Four of the NLC:
a) To reserve State land and to lease State land

b) To issue temporary occupation license

c) To permit extraction and removal of rock

material and
d) To permit the use of air space above State land
or reserved land.
State land may be reserved for a number of
purposes, the common examples are
reserves for roads, drainage and rivers.

S63: State Authority may, upon application

by the officer having the control of
reserved land, grant leases of such
reserved land or any part thereof for any
period not exceeding 21 years.
S70 of NLC: the State Authority may issue
permit for the extraction , removal and
transportation of rock material from any
state land, alienated land, mining land
and reserved land.
Permits are valid for the year of issue and
expire not later than the end of calendar
year in which it commences, unless
otherwise prescribed. The permits are not
assignable and they terminate on the
death of the permit holder.
Temporary Occupation License (TOL)
Temporary Occupation License (TOL)
A license, a permission, of a temporary nature, granted by
the State Authority for some restricted and permitted
purpose, for which otherwise the occupant would have
become a trespasser, an illegal squatter, if not for the
permission. It expires at the end of each calendar year
and may be renewed up to a maximum of three times
(S67) unless it is terminated earlier by the State
Authority.
S65 : state Authority is empowered to issue TOL in respect
of State land, mining land not for the time being used
for the purposes of mining, and reserved land for the
time which it is reserved.
Temporary Occupation License (TOL)
Rights of TOL Holders
a) Have the same paramount & subsidiary right as the
rightful owner.
b) Have no right to get renewal
Teh Bee v. K. Maruthamuthu : TOL holder have to vacant the
land when the Negeri Sembilan State Authority decided to
alienate it to someone else.
c) TOL holder can sue in trespass
Julaikha Bivi v. Mydin (1961)
d) TOL not capable to being inherited
Fatimah v. Moideen Kutty (1969) : TOL holder-
respondent’s deceased husband’s name. Decided that
the widow did not had any title.
Temporary Occupation License (TOL)
Rights of TOL Holders
e) Right to grant tenancy
Govindaraju v. Krishnan (1962) : TOL holder can rent out his
premise as long as it does not amount to transfer or
assignemnt which is prohibited by law.
f) No right of sale
Hee Cheng v. Krishnan(1955) : No right of sale can be
granted to a TOL holder.
g) Ex-licensee is a trespasser
Public Prosecutor v. Yap Tai (1947) : Respondent being
occupying State land for a number of year. She was asked to
vacant the land and demolish her house after the expiry of
the license. She failed to do so and was prosecuted for
unlawful occupation of state land.
When SA disposes off land to a person, he enjoys two main rights
(section 44):

1) Natural Rights  Exclusive use & enjoyment of air space and

anything below the surface
 Right of support in its natural state
 Right of access

2) Acquired Rights  Right of dealings: transfer, charge, lease,

tenancy, lien.

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Cases

 Lacroix v. The Queen [1954] 4 DLR 470

 Swetland v. Curtis Airport s Corporation (1932)
 Mdm. Chah Siam v. Chop Choy Kong Kongsi [1939] MLJ Rep. 187
 Guan Soon Tin Mining Co. v. Ampang Estate Ltd. [1973] 1 MLJ 25

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 Division II – Part 5 (Chapter 1 – Disposal by Alienation)

Section 76 Meaning of alienation

Section 77 Titles under which land may be alienated

Section 78 How alienation is effected

Section 85 Register and issue documents of title

Section 88 Registration of register documents of title

Section 90 Issue of issue documents of title

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Division II – Part 5 (Chapter 1 – Disposal by Alienation)

Cases
 Teh Bee v. Maruthamuthu
 Procedure
 Dr. Ti Teow Seow & anor v. Pendaftar Geran-Geran Tanah
Negeri Selangor
 Restriction in interest

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Final title
Final form of title under which lands are
alienated after they have been surveyed.

Qualified title [hak milik sementara]

For the purpose to enable land to be
alienated and to enable titles to be issued
in the of sub-division, partition or
amalgamation lands in advance of the
completion of a survey.
S 5 : Any transaction with respect to alienated
land effected under the powers conferred
under division IV of the Code and includes any
similar transaction effected under any previous
land law.
Four types of dealings recognized under the code:
a) Transfers
b) Leases and tenancies
c) Charges and liens
d) easements
A. TRANSFERS
Section 214 of the NLC provides that the whole, but
not part only, of any alienated land; undivided
share in alienated land; any charge; and tenancies
shall be capable of transfer.
However, such powers are subject to any prohibition
or limitation imposed by the code itself or any
written law such as Malay Reservation
Enactments.
A. TRANSFERS (Cont’d)
The title of the transferor shall pass to and vest in the
transferee upon the registration of such transfer,
together with the benefit of any such registered
interests then enjoyed with the land (S216 (2)
B. LEASES
Lease : a conveyance by which the proprietor of
land grants to other person an interest in the
land less than a freehold and less than that to
which the lessor is himself entitled.
Sec 221 (2) : Every lease or sub-lease must exceed
three years. The maximum period for which a
lease may be granted is 99 years if it relates to
the whole of the alienated land and 30 years if
it relates to a part only thereof.
B. LEASES (Cont’d)
The characteristics of leases:-
 The lessee is given the right to exclusive possession
of the demised premises.
 The parties must have intended to create a lease
and not a license, evidenced by a written agreement
or conduct.
 Lease must be granted for a definite period or for a
period which is capable of being ascertained.
Karuppan Chetty v. Suah Thiam (1916)
Agreement to rent a house for as long as the tenant
liked was held to be vague and uncertain thus void.
C. CHARGES
A charge is a transaction (or a dealing for the
purposes of code) whereby the proprietor of
an alienated land or a lease conveys it as a
security for the repayment of a loan, an
annuity or any other periodical payment, to
another.
Legal charge comes into existence only upon
registration.
C. CHARGES(cont’d)
Land is the most tangible form of security and its
supply is inelastic.
Land is most sought after security by lenders
whether they are :-
 Chettiers [Goh Chong Hin & Anor v The

Consolidated Malay Rubber Estates Ltd ]

 Finance companies.

 Bankers.
C. CHARGES (cont’d)
 Charges does not involve the transfer of the
land to the chargee.
 The chargee has the power of take
possession/foreclosure upon default of
repayment of the debt.
 The registration of charge confers upon the
chargee a legal interest in the land.
It was held that charge is an interest in land
especially in view of the fact that it renders the
land liable as a security which the chargee could
enforce by way of the sale of the land in the
event of default by the chargor.
C. CHARGES (cont’d)
 S226: Charged land or a charged lease may be
transferred, leased or otherwise dealt with by
the chargor according to the statutory
provisions. He cannot grant any lease (or
sublease) or tenancy without the consent of
the chargee. S241(2): chargor may create
subsequent charges, theoretically unlimited in
number.
D. LIENS
Sec 281 (1): this kind of dealing is concerned with the
deposit of title document ‘as security of a loan’.
[Palaniappa Chetty v. Ng Chin Pan (1919)]
A statutory lien can be created merely by deposit of
grant or document of title as security of loan
without further ado. Thus for the creation of such
lien nothing needed to be recorded or entered in
the register. It was a dealing off the register and
the lien was therefore not a registered interest.
Peter P’Chient v. Ramasamy (1923) : creation of a
lien was to be effected upon the ‘registration of a
caveat’
D. LIENS (cont’d)
Method of taking security when the borrowing is
short term.

In Paramoo v Zeno Ltd (1968) is was held that the

intention to create lien may be gathered from the
fact that the issue document of title to the land is
deposited with the lender as a security for the
loan and for no other purposes.
D. EASEMENTS
S282 (1) defines easement simply as “any
right granted by one proprietor to
another, in his capacity as such and for
the beneficial enjoyment of his land”.

The land for the benefit of which the

easement is granted is called “dominant”
land and the land of the proprietor by
whom the easement is granted us called
the “servient” land.
D. EASEMENTS (contd)
Right granted by a proprietor of the servient
land to the proprietor of the dominant
land for the beneficial enjoyment of the
dominant’s land (Section 282 of the NLC).

An easement under the NLC can only arise by

way of express grant under Section 284 of
the NLC.
D. EASEMENTS (cont’d)
Section 283(1) of the NLC states that he rights
capable of being granted as easements are:-
(a) any right to do something in, over or upon the
servient land; and
(b) any right that something should not be so done.

The rights do not include to take anything from the

servient land or right to the exclusive
possession.
Two kinds of restraints of
dealings:-

1. Caveats

2. Prohibitory order
The Latin cavere, means "warning" (or more
literally, "let him beware").

The land cannot be registered if caveat is

applied.

The NLC permits a person who claims he is

entitled to a caveatable interest to
lodge a caveat against the land to
protect his interest.
It in an exception in indefeasibility (registration is
everything). Any person who intending to deal
with the land need to go behind the register
to investigate all transactions entered into by
the owner.
Eng Mee Young & Ors v. Letchumanan(1979)
Caveat is issued ‘ex parte’ by the Registrar acting in
an administrative capacity without the
intervention of the court and is wholly
unsupported by any evidence at all.
Caveat can be imposed at the instance of anyone
who claims to have an interest in the land
however baseless that claim may be in the
end.

S324: Registrar acted on administrative capacity

only-he is not concerned with the validity of
the claim.
Function of caveat:
1. Restrains the registered proprietor from
dealing with his land
2. Protects the interest of the caveator for the
time being until final disposal of his claim against
the proprietor
3. Serves as a notice to the world at large that the
caveator has an interest in the land which he is
protecting by means of caveat
4. It freezes situation by maintaining the status
quo of all parties until the final disposition of the
case.
TYPES OF CAVEAT
1. Private Caveats

2. Trust Caveats

3. Lien-holder Caveats

4. Registrar’s Caveats

Each type of caveat has its own distinctive procedures

and purposes.
Applicable to any person claiming title to the land or
registerable interest to claim such registered
interest such as purchasers of land, assignee of
purchasers, co-owners, administrators, chargees,
lessees and tenants and option holders.
Macon Works & Trading Sdn Bhd v. Phang Hon Chin
(1976)
“whole system of caveat is founded on the principle that
they exist for the protection of alleged as well as
proved interest…”

A registered proprietor of land is not entitled to enter

a private caveat in respect of his own land.
Means of protecting the interests of beneficiaries under a
trust.

S333(1): An application to enter a trust caveat may only be

made by the trustees for the time being of any land
or interest, the person or body by whom any land or
interest is first is tranferred to trustees and the person
or body by whom any interest is created in favour of
trustees.

A trust caveat shall continue in force until it is cancelled by

the Registrar.
May only lodge by a person with whom the document of
title has been deposited as security for a loan.

A lien-holder’s caveat may be withdrawn by the caveator.

May be cancelled by the Registrar or court upon proof of

the satisfaction of all sums due under the lien.

Chew Sze Sun v. Muthiah Chettiar (1983) : a lien holder’s

caveat, entered earlier in point of time, will prohibit
the subsequent entry of a private caveat in respect
of the same land.
Entered by Registrar for the reasons of the
following:-
1. For the prevention of fraud or improper
dealing.
2. For protecting the interests of the
federation or the state authority or any
person under disability of minority, mental
disorder or unsoundness mind.
3. By reason of error in register or issue
document of title.
S319(2): A registrar’s caveat prohibits entry
of any claim to the benefit of an exempt
tenancy and a lien-holder’s caveat.
S321 (3): A registrar's caveat continues in
force until it is cancelled by the Registrar
either on his own motion, or upon an
application by the proprietor of the
land, or pursuant of court order.
S334: An order made pursuant to rules of court by a
court of competent jurisdiction prohibiting the
judgment-debtor from affecting any dealing in
respect of his land or interest in the land as may
be specified in the order.

The effects are that they prohibit the registration,

endorsement or entry of any instrument of
dealing, any claim to the benefit of any exempt
tenancy and any lien-holder’s caveat.
For persons who do not have any caveatable
interest under the NLC.

For judgment creditors, they may obtain a

prohibitory order for the purpose of
imposing restraint on dealings over land
owned by the judgment debtors.

Life span for 6 months.