LAND LAW

1. MUHAMMAD AIZAT AFIFI BIN ZAINUDDIN
2010746161
TEST 1
LAND LAW 2
QUESTION 1 (a)
The issue is whether Ben can redeem the land from Bob on the ground of jual janji
transaction.
Generally, Jual janji is a security transaction that was being practiced by the early society
since 19th
century. Jual janji evolved from a local community loan transaction where land is
used as a security for the loan to secure full repayment of loan. In order to complete this
transaction, the borrower will transfer his land to the lender with an undertaking given by the
lender that the borrower can redeem the loan upon full settlement of the loan.
There are two principles adopted by the Malaysian Courts which are strict interpretation and
liberal interpretation. Strict interpretation is whereby transfer of land and the collateral
agreement are only regarded as a contract of sale. It is purely contract of sale where time is
essence. The collateral agreement to re transfer the land to the borrower in a jual janji
transaction confers no real right in the land on the borrower as it was valid as a contract
only. If the term of contract stated time as an essence, then the parties are bound to comply
with the said terms. If the borrower failed to comply with the terms of the contract, the court
will not assist him to obtain re transfer of the land upon full settlement of the loan if it is made
out of time. It can be seen in the case of Haji Abdul Rahman v Mohamed Hassan whereby
the borrower entered into loan agreement with the lender and transferred his land to the
lender with a collateral agreement to re transfer upon full settlement. He fails to repay on
time but managed to settle the full outstanding amount. He insisted that the land be
transferred back to him. The court held that it was not a security transaction or mortgage as
the only form of mortgage in Malaysia is charge or lien. Since it was a contract, the claim
was statute barred.
However there are two exceptions in strict interpretation principle. This exception uphold that
time is not as an essence. First exception is extension of time whereby the lender is
agreeable to the extension of time for the repayment of loan. It will resulting to time is no
longer be regarded as essence of contract. So, the borrower contractual right to repurchase

2. the land can still be exercised even after the due date. As regard to the case of Ismail HJ
Embong v Lau Kong Han whereby plaintiff and defendant entered into a jual janji and when
the period for repayment expired, the defendant (lender) extended the period provided he
paid the $40 monthly. The court held that the plaintiff is entitled to repurchase the land on
payment of the sum of the money lawfully due to the defendant. Second exception is the
lender refused to accept repayment. It is either by evading repayment or asking for
additional term not provided for in the original agreement. In the event the lender refused to
accept repayment to avoid the borrower from performing the contract, the borrower will be
allowed to redeem the land. Based on the case of Hatijah Bte Rejab v Abdullah Saad, the
borrower borrowed rm 20000 from the creditor with a condition that she has to pay in full the
loan amount within five years from the date of agreement and creditor will be registered as
new proprietor of land. In 1996 which is two years after the date of agreement, borrower
made an attempt to pay the loan. However, the creditor refused to accept the payment. The
court decided on the borrower favour because by refusing to accept the repayment of the
loan within stipulated time shows he has breached the contract.
As regard to the liberal interpretation, it is where Jual janji is regarded as an equitable
security transaction akin to the English mortgage transaction. The collateral agreement for a
re transfer in a jual janji is in nature of an equitable secutity transaction whereby the roght to
redeem remain irrespective whether the period for repayment has lapsed. By virtue the case
of Yaacob Bin Lebai Jusoh v Hamisah Bte Saad, court of appeal stated that the
circumstances of the case there was evidence to show that the real intention of the whole
transaction was to mortgage the land to secure the repayment of the sum of $2000 and to
give the appellant the right to redeem. That as the agreement was in nature of a mortgage
the right to redeem remained although the period which it was specified the loan should be
repaid had expired. Thus, the appellant was entitled to an order for the transfer of the land to
him.
In application, Ben is a borrower while Bob is a lender. There is stated in their collateral
agreement whereby Bob agreed to sell the said land back to Ben for the same amount
should Ben be able to pay the loan granted to him before 31/3/2012. The expiry date was
31/3/2012. However, Ben failed to repay the loan. As Malaysian court adopted the strict
interpretation principle, it is stated that the transfer of land and collateral agreement are
regarded as contract of sale where time is of an essence. So, Ben must pay the loan within
the stipulated time as agree in the agreement. The collateral agreement is not a security
transaction and as Ben failed to comply with the terms stipulated in the contract, the court
will not assist him to obtain re transfer of the land as Ben failed to pay the loan before

3. 31/3/2012 as stated in the contract. Thus, since it was a contract of sale, Ben cannot claim
to redeem the land from back.
Conclusion, Ben cannot redeem the land from back on the ground that he failed to made a
payment of loan within stipulated time.

4. QUESTION 1 (b)
The issue is whether Dol has lost his right as a lien holder after parting with IDT.
Halsbury Laws of England define lien as right of one man to retain the property the property
belonging to another man until certain demand of the man in possession of the goods are
satisfied. By virtue of section 281(1) of National Land Code 1965(NLC) defines lien as the
act of any proprietor depositing his title or duplicate lease to another person as security for a
loan. Lien can be created by registered proprietor of the whole piece of land by depositing
the IDT, co proprietor of the whole undivided shares by depositing his copy of IDT and
registered lessee of a lease by depositing his duplicate lease. Lien is not dealing therefore it
can be created simply by the act of the lender holding the IDT or duplicate lease as security
for loan released to the borrower. In addition, Lien can be divided into two which are
statutory lien and equitable lien. Statutory lien is based on NLC whereby equitable lien
based on equity principle.
National Land Code requires four elements to be fulfilled for the creation of statutory lien.
Firstly, registered proprietor or lessee. Based on section 281(1) of NLC, only registered
proprietor or registered lessee can create a lien. In brief, IDT or lease must be deposited by
the registered proprietor or lessee in order to create lien. Other than that, section 281(1) did
not prohibit the registered proprietor or lessee from depositing the title deed or duplicate
lease to secure a loan granted to a third party. It can be referred to the case of UJA SDN
BHD v United Overseas Bank whereby the plaintiff is the registered proprietor of a land
deposited its title deed to the lender as security for a loan granted to a borrower, Union
Plastics Sdn Bhd. The borrower defaulted in repayment of the loan. The lender obtained a
judgment against the borrower and applied for an order for sale under section 281(2) against
the plaintiff land. It was decided by the court that since the judgment had been obtained and
not been satisfied and all sums due under lien had not been duly paid, the lender was
entitled to the benefit of the lien. The court also held that section 281(1) did not specifically
prohibit the creation of lien by registered proprietor to secure loan granted to a third party.
Based on the case of Hong Leong Bank v Staghorn, it was decided by court that registered
proprietor may deposit his IDT as security for a third party loan. As quoted by Federal Court
Judge Abdul Aziz Mohamad, the registered proprietor may deposit his IDT for a third party
loan or the actual act of depositing may be done by someone else as long as he authorizes it
and consent to it.

5. Second element is depositing of IDT or duplicate lease. Furthermore, it means the act of the
borrower handling over the subject matter of lien to the lender. The act of keeping the
subject matter of lien by the lender will give rise to a lien. This can be seen in the case of
Merchantile Bank Ltd v The Official Assignee of The Property How Han The where he stated
that the act of charge keeping the title as security created an equitable lien. On the other
hand, section 281(4) allowed the lien holder to part with IDT upon written request made by
proprietor or lessee but it only restricted to produce the IDT or lease at any registry or land
office. Lender may part with the IDT provided he enters the lien holder caveat on the land
and parting with the possession of IDT for purpose which it is required under NLC will not
cause the lien to be lost. It can be seen in the case of Manickawasagam Chetty v Mc Gregor
whereby lien holder handed over the IDT to the land office upon request made by the
collector of land revenue for the purpose of portioning the land on application made by the
co proprietor. The caveat remained on the RDT. When the new title issued, there was no
endorsement of lien holder caveat and was returned to the proprietor. The proprietor
contended that lien has been terminated. It was decided by the court that the lien holder has
not lost his lien over the land by the fact that he was no longer in physical possession of the
title since his caveat remained on the RDT. In contrast with the case of Sithambaram Chetty
v Ramanathan Chetty, whereby the lien holder handed over the title to second lender. When
the charge created in favour of the second lender was rejected by the land office, the second
lender applied for removal of caveat which was allowed. The first lender attached the land
under section 275 of Civil Procedure Code. It was decided by the court, the first lender lost
hid right as a lien holder the moment he parted with IDT and his caveat was removed from
RDT as it rise to equitable lien.
Third element of lien was intention to create lien. The intention need not be expressly
documented as it can be in an oral or any written form. It can be inferred from the relevant
circumstances of the situation or transaction. The deposit must be with the intention of
creating lien and intention of security for a loan. It contrasts with the case of Master Strike
Sdn Bhd v Sterling Height Sdn Bhd where in this case the plaintiff and defendant entered
into a sale and purchase agreement not a loan transaction. It was decided that they could
not convert the sale agreement into loan agreement and alleged the title is handed over to
the purchaser as a lien.
Last element of statutory lien is entry of lien holder caveat. In order to create valid and
enforceable statutory lien, the lien holder must apply for the lodgement of a lien holder
caveat based on section 330(1) of NLC. Lien holder caveat have same effect as private
caveat under section 322 that is it will restraint all dealings with the land. In the event of
default by the borrower, the lender is entitled to invoke remedy available under section

6. 281(2) which are judgement on the outstanding amount and upon receipt of the judgment, to
obtain an order for sale against the property at the relevant court or tribunal. In brief, any lien
holder who did not lodge a caveat will not receive any benefit granted to a statutory lien but
will only create an equitable lien. In the case of Merchantile Bank v The Official Assignee,
Raja Azlan Shah stated that the lien holder will not be considered as a statutory lien holder
but he still possesses a right in equity. He can exercise that right by registering the caveat at
any time.
In applying, Ben was a registered proprietor and borrower while Dol was a lender. In order to
be statutory lien, there must fulfilled 4 elements. First element is fulfilled as Ben is a
registered proprietor for the land in Bangi. Second element also fulfilled on the ground that
Ben passed the title to Dol in consideration of the loan granted to him and the Dol act that
kept the title with him rise to a lien. Third element is also fulfilled as there is intention by Ben
to obtain a loan from Dol for the sum of RM 50000 and as a consideration Ben deposit his
title of land in Bangi to Dol as a security for his loan. However, fourth element is not fulfilled
as Dol never lodged a lien holder caveat. So, it could only considered as equitable lien.
As regard to the act of Dol parting with IDT of the land in Bangi, it makes Dol lost his right as
lien holder. It is because Dol as a lien holder only allowed to part with IDT upon written
request made by proprietor but it only restricted to produce the IDT at any registry or land
office. In the situation Dol part with IDT without written request made by Ben as Ben only call
requesting him to return the title and he passed the title to Ben. In addition, Dol did not lodge
a lien holder caveat to restraint all dealing with the land as he just return the title to Ben
without lodge lien holder caveat. Lodgement of lien holder caveat can restraint Ben from
created the charge over that land. Thus, Dol has lost his right as lien holder.
Conclusion, Dol has lost his right as lien holder the moment he part with IDT and there is no
lodgement of lien holder caveat by Dol.

7. QUESTION 2 (a)
The issue is whether the order for sale should be granted to the Bank Indah Berhad on the
ground of Oren failure to remedy the breach.
Charge is one of the recognized dealing under NLC. It is a transaction whereby the
registered proprietor of land or lease uses that particular property as a security for the
repayment of loan advanced to him or another third party. The registered proprietor or
lessee of a land assure the lender that the borrower will pay the loan advanced by creating
an interest known as charge over the property. Based on section 5 of NLC, charge is defined
as registered charge. In brief, charge is only considered as valid and enforceable once it has
been registered accordance with NLC as stated in section 243. By virtue the case of Yee Sin
Cheang v UMBC, the person who offers his land or lease as security is known as chargor
and the lender who accepts the land as a security is known as chargee. By virtue section
241(1) of NLC, the subject matter of charge are whole piece of land, undivided shares and
lease including sublease. Based on section 241(3) provides that power to charge shall
subject to any limitation imposed by NLC or any other written law such as trustees act,
malay reserve land enactment or companies act. In order to create a charge over a lease,
the charge shall be subject to any express or impied term of the lease agreement between
lessor and lessee. It can be in the case of UMBC v Syarikat Perumahan Luas whereby
charge was registered without letter of consent to charge and it was held the charge was
defeasible.
Moreover, there are two types of charge which are first party charge and third party charge.
First party charge is when the charger and the borrower is the same person while third party
charge is when the borrower and the chargor are different person.
Generally, charger has to comply with the express provision of the loan agreement or charge
such as instalment and the implied provisions as stated in section 249(1) where it is
stipulated that the charger shall pay the sum secured together with the payment of interest.
In the event of default by charger, the registered chargee may applied for remedies which
are order for sale, taking possession and assignment to danaharta.
Futhermore, order for sale (OFS) is to recover whatever amount due to the lender and any
residue shall be refunded to the borrower since the borrower is the owner of the property.
OFS is carried out by obtaining court or land office order to auction the property to the public.
Once the property is sold to the bidder, the proceeds of the sale will be utilized towards
repayment of the full outstanding amount plus incidental costs and the residue if any will be

8. refunded to the chargor. There are 4 procedures of order for sale for chargee to complied
which are statutory notice, foreclosure proceeding, application for order for sale and auction.
As regard to the statutory notice, the chargee must first serve a notice in a form specified by
NLC to the chargor. There are three factors that will affect the validity of a statutory notice
which are the form of notice used by the charge, the content of the notice and the service of
the notice. There are two form of notice which are form 16D under section 254 and form 16E
under section 255. Based on section 254, the chargee may serve form 16D to a chargor if
there is breach of any express or implied obligations of chargor under the charge agreement
and the breach has been continued at least one month or more. It is only relevant when
chargee prove the breach by chargor. Meanwhile, the chargee may use form 16E under
section 255 to give notice the chargor of his intention to demand for the principal sum
advanced to him within one month from the date of the notice is served. It is not need to
specify breach. Form 16E only relevant when the charge agreement states that the chargee
is entitled to demand the principal sum at any time. By virtue the case of VAM Hussain v BP
Malaysia Sdn Bhd whereby the charge agreement provides that the principal sum secured
was payable on demand and the court held that the respondent had used the correct form
that is form 16E. On the other hand, based on Jacob v Overseas Chinese Banking
Corporation whereby the appellant charged his land to the respondent to secure the
repayment of an overdraft. On default of payment, the respondent served form 16D and
applied for OFS. The court held that where there was a demand for payment of principal
sum and interest, form 16E could be used as well as form 16D and the demand be made by
either form.
On the other hand, the contents of notice must be in accordance with NLC or loan
agreement. It is not in accordance with the provision of the loan agreement. For example,
form 16D shall indicate the amount due, requiring the chargor to remedy the breach within
the time stipulated in the NLC and give warning that failure to comply with statutory notice,
chargee will proceed with OFS. Under section 254(1), it required chargor to remedied within
one month of the date on which the notice is served. It can be seen in the case of Citibank
Bhd v Khalid Farzalur Rahman whereby in this case period to remedy the breach given by
chargee was 7 days. The court applied the golden rule of the interpretation of section 254(1)
as the court look into the parliament intention when passed the law. The court decided that
the period stated in section 254(1) should be at least one month and alternative period must
be more than one month. Thus, the bank in this case has breach the section 254(1) as they
only give 7 days to the chargor to remedy breach.

9. On the part of service of notice, it must follow the provision in section 430-433 of NLC.
Based on section 431, notice can be delivered by way of personal delivery, by leaving the
notice at the person last known address, by pre paid registered post or substituted service.
Effect of non compliance of the service of notice may result it can be challenged. It can be
seen in the case of Kekatong Sdn Bhd v BBMB, it was decided by the court that the notice
was not effectively served when the chargee served to the address that they knew it was no
lpnger being occupied by the chargor.
Next, application for foreclosures proceeding to the relevant tribunals are depends on the
title of the land. Based on section 256, the relevant tribunal for registry title is the High court.
Based on section 260, the relevant tribunal for land office title is land office. It can be seen in
the case of Tan Teng Pan v Wong Fook Shang whereby the title was a land office title and
the chargee applied to the high court. The court decided that it had no jurisdiction to hear the
case if the title is not registry title.
After that, application for an order for sale will take place. Normally, high court(section
256(3)) and land administrator(section263(1)) will grant OFS unless there is existence of
cause to the contrary. It refers to a situation where if the judge or land administrator is
satisfied that there is a valid reason or valid objection to the application, then the OFS will be
dismissed. Based on the case of Low Lee Lian v Ban Hin Lee Banking, Justice Gopal Sri
Ram stated that OFS will not be granted if it fall on one of the four categories of existence of
cause to the contrary. First category is when a chargor was able to bring his case within any
of the exceptions to section 340, indefeasibility. It is can be said that the charge is void or not
enforceable such as the charge is amounted to fraud. Based on the case of Public Finance v
Narayanaswamy whereby the chargee denied the rights of the purchasers of the subdivided
land. The court decided there was intention to cheat due to the denial and it amounted to
fraud.
Second category is the chargee fails to comply with the condition precedent before applying
OFS. It could be either a problem under issuance of statutory notice, applying to the relevant
tribunal or failure to comply with the provision of rules of high court. Based on the case of
Eliathamby v Sheikh Mohd Said whereby there is no provision in the charge agreement that
allows the chargee to demand for principal sum. The chargee used 16E to demand for the
outstanding amount. The court held that form 16E was wrongly used. It can also be seen in
the case of Citibank Bhd v Khalid Farzalur Rahman whereby in this case period to remedy
the breach given by chargee was 7 days. The court applied the golden rule of the
interpretation of section 254(1) as the court look into the parliament intention when passed
the law. The court decided that the period stated in section 254(1) should be at least one

10. month and alternative period must be more than one month. Thus, the bank in this case has
breach the section 254(1) as they only give 7 days to the chargor to remedy breach.
Third category is whereby it against the rule of law if the chargee when creating the charge
violated any provision of NLC or other written laws. It can be referred to the case of Phuman
Singh v Khoo Kwang Choon where a moneylender (chargee) created a charge without
obtaining license under Moneylender Ordinance. Thus, it is existence of cause to the
contrary.
Last category is whereby it is against the rule of equity which is based on the concept of
fairness, natural justice and fair representation. By virtue the case of Kuching Plaza v BBMB
whereby the developer constructed a high rise building and applied for a bridging loan with
the chargee. The developer failed to pay and the chargee applied OFS. The sub purchasers
of the high rise building challenged the application for OFS because it is against the rule of
equity because the chargee already made an undertaking to exclude the sub purchasers
units from the charge. The court decided on behalf of the sub purchasers because if OFS is
granted it will be unfair to them as they have paid for their units. The court stated that not
only the chargor can claim that there is existence of cause to the contrary, any party who
have interest on the land may also do so.
In application, there is third party charge whereby the borrower and the chargor are different
person. In this situation, Oren is a borrower and Apel is the chargor as Oren used Apel
property in Subang Jaya as a security for a loan granted by Bank Indah Berhad.
In order for Bank Indah Berhad to be granted OFS, they as a chargee must comply with the
obligations. There are two aspects that need to look out on the ground that Bank Indah will
not be granted order for sale which are the chargee (bank) failed to comply with the
condition precedent before applying OFS and it is against the rule of equity which is based
on fairness, natural justice and fair representation.
As regard to the Bank Indah Berhad failed to comply with the condition precedent before
applying OFS, Bank Indah had failed to give a proper statutory notice as the form 16D was
wrongly used and the content of notice is not accordance with NLC. Bank had wrongly used
form 16D to requested Oren to pay all outstanding amount on his loan as the charge
agreement between bank and Oren only stated that the principle sum is payable on demand.
So, it is against section 254 of NLC and form 16E is more appropriate to use if the charge
agreement stated the principal sum is payable on demand as stated under section 255 of
NLC. Moreover, the content of notice given by Bank also is not in accordance with the NLC
as section 254 and section 255 stated that the period to remedy the breach shall within one

11. month from the date of the notice is served to the chargor. It can be seen that the charge
agreement between Bank and Oren only give the borrower 14 days to remedy the breach
upon receiving a notice of demand from the bank in the event of breach of the terms of the
loan agreement. On 30 September 2012, bank requested Oren to pay all outstanding
amount on his loan within 14 days and that amounted to breach the section 254 and 255 of
NLC.
On the other hand, Bank Indah Berhad cannot be granted OFS as it is against the rule of
equity which is based on fairness, natural justice and fair representation on the ground that
Apel is the innocent party. It is unfair towards Apel that Oren used his property as a security
for a loan but Oren failed to pay the loan that will resulted Apel property will be auction. Apel
is a registered proprietor and he has interest over the land to challenged the application of
OFS by Bank.
Conclusion, order for sale should not be granted to the Bank Indah Berhad as there is
existence of cause to the contrary.
QUESTION 3 (a)
The issue is whether Bank Indah Berhad can claim for remedies for not registered the
charge.
Charge is one of the recognized dealing under NLC. It is a transaction whereby the
registered proprietor of land or lease uses that particular property as a security for the
repayment of loan advanced to him or another third party. The registered proprietor or
lessee of a land assure the lender that the borrower will pay the loan advanced by creating
an interest known as charge over the property. Based on section 5 of NLC, charge is defined
as registered charge. In brief, charge is only considered as valid and enforceable once it has
been registered accordance with NLC as stated in section 243. By virtue the case of Yee Sin
Cheang v UMBC, the person who offers his land or lease as security is known as chargor
and the lender who accepts the land as a security is known as chargee. By virtue section
241(1) of NLC, the subject matter of charge are whole piece of land, undivided shares and
lease including sublease. Based on section 241(3) provides that power to charge shall
subject to any limitation imposed by NLC or any other written law such as trustees act,
malay reserve land enactment or companies act. In order to create a charge over a lease,
the charge shall be subject to any express or impied term of the lease agreement between

12. lessor and lessee. It can be in the case of UMBC v Syarikat Perumahan Luas whereby
charge was registered without letter of consent to charge and it was held the charge was
defeasible.
On the other hand, every charge shall take effect upon registration as stated under section
243 of NLC. Charge will be valid after registration and called as statutory charge. In order to
create a statutory charge, preparation of charge document (form 16A) must comply with
provision in section 207-208. Then, execution of documents as stated in section 210 plus
attestation in section 211. Next, stamping documents as stated in stamps acts. After that,
registration of documents by virtue section 294-306. In the event of default, the borrower
fails to comply with the loan agreement, NLC provided the chargee with a statutory remedy.
The statutory remedies include Order For Sale (section 253), Order of possession (section
271) and assignment of property to Danaharta.
As regard to the unregistered charge, it is where the lender takes possession of IDT as a
security or assurance for the repayment of loan by borrower but fails to present the
instrument, the law considered the chargee as unregistered chargee or equitable charge.
Unregistered charge is not valid as the registration is a mandatory procedure as stated in
section 206(1)(a) and section 206(1)(b). However, since the parties have entered into loan
agreement, the transaction is valid as a contract on the basis of section 206(3). The effect of
unregistered charge is invalid but agreement to create charge is valid and can be enforced
by specific performance. By virtue the case of Mahadevan s/o Mahalingam v Manilal & Sons
whereby it was held that the agreement to secure debt in favour of the creditor in respect of
the debtor land could create an equitable charge giving rise to an equitable right in favour of
the creditor although no charge within the provision of NLC had been created.
In application, charge is only considered as valid and enforceable once it has been
registered accordance with NLC as stated in section 243 of NLC. As the registration was
rejected by the land office on the ground the documents were not in order is considered as
not valid as the registration is a mandatory procedure. But it can be considered as equitable
charge. However, since there is loan agreement between Oren and Bank to obtained
overdraft facility of rm 800,000, the transaction is considered as valid as a contract as stated
in section 206(3). So, Bank can enforced the agreement on the ground of specific
performance and can use specific performance as remedy for the breach.
Conclusion, Bank Indah Berhad can claim remedy of specific performance.