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Prohibitory Order

This document provides a summary of key concepts relating to prohibitory orders (PO) under Malaysian land law: 1) A PO is a court order obtained by a judgment creditor to restrain a judgment debtor from dealing with land that is subject to execution proceedings to recover a judgment debt. 2) A PO only takes effect once registered on the land title register and prohibits the registration of transfers or charges on the land except a certificate of sale under execution. 3) Case law has established that a PO will not override the interests of a purchaser who entered a private caveat on the land title prior to the PO, as the judgment debtor no longer owns more than a bare trustee interest in the land.

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Suhail Samsudin
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237 views

Prohibitory Order

This document provides a summary of key concepts relating to prohibitory orders (PO) under Malaysian land law: 1) A PO is a court order obtained by a judgment creditor to restrain a judgment debtor from dealing with land that is subject to execution proceedings to recover a judgment debt. 2) A PO only takes effect once registered on the land title register and prohibits the registration of transfers or charges on the land except a certificate of sale under execution. 3) Case law has established that a PO will not override the interests of a purchaser who entered a private caveat on the land title prior to the PO, as the judgment debtor no longer owns more than a bare trustee interest in the land.

Uploaded by

Suhail Samsudin
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPT, PDF, TXT or read online on Scribd
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PROHIBITORY ORDER

Sharifah Zubaidah Syed Abdul Kader


LAW 3111
(2009)

Terminology:
Judgment debt: a court judgment obtained by the
judgment creditor to claim a debt from the
judgment debtor.
Judgment creditor: the party who claims the
judgment debt.
Judgment debtor: the party who owes money to
the judgment creditor.
Execution proceedings: proceedings to
enforcement judgment.

Meaning of Prohibitory Order?


See s.334 NLC
is to be sold in execution proceedings refers to
the judgment creditor obtaining a writ of seizure
and sale that will enable the court to sell the land
to pay off the judgment debt.
Thus, the PO will restrain the judgment debtor
from disposing off the land to frustrate the
execution proceedings.

Equivalent Concept
Writ of fieri facias :
a writ for the levy of property as a mode of
enforcing a court judgment, authorising a
court officer to seize and sell the property of
the judgment debtor, proceeds of which
would be used to satisfy the judgment debt.

When is a PO obtained?
When a judgment creditor applies to court
to enforce the judgment debt by way of writ
of seizure and sale against the land/interest
under Order 47 Rule 6, Rules of the High
Court 1980.
The court will issue a PO to restrain any
dealings on the land/interest.

P.O. = Court Order


A prohibitory order is
issued by the court.
It is an order of the
court against the land
owner who is the
judgment debtor to
stop him from dealing
with his land.

PO effective only upon entry on


the RDT
A PO is issued by the
High Court but can
only be effective to
restrain dealings on
land when it is entered
by the Registrar on the
RDT under section
335 NLC.
See s. 335.

O.47 r.6(3) RHC 1980:


No PO issued under this rule shall affect
any immoveable property/ registered
interest therein and no immoveable
propertyshall be deemed to have been
seized until such PO shall have been
registered as provided by any written law
relating to such land.

Effect of PO:
See s. 336.A PO prohibits the registration or
entry of:
1) any instrument of dealing EXCEPT a
certificate of sale;
2) any TER
3) any Lien Holders Caveat
If PO is to restrain a particular interest on
land, see effect in s.336(2).

Differences between a PO and a


Private Caveat:
1) A P.O. must be entered by a judgment
creditor, whilst a private caveat is
entered by a person with a caveatable
interest in s.323(1) NLC.
2) A private caveat restrains the
registration of a certificate of sale, a PO
does not. (See s.322(2) and 336)

Which has priority,


a PO or Lien Holders Caveat?
S.336(1): If LH Caveat is to be entered after
PO, PO takes priority and will restrain the
entry of a LH Caveat and Registrar must
reject the entry of a LH caveat. (see
s.336(4))
S.336(3): If LH caveat presented/entered
prior to PO, LH Caveat shall have priority.

When Can Land Subject to a PO


Be Sold in Execution Proceedings?
14 days after entry of the PO on the RDT.
(Order 47 rule 7(a) RHC 1980)
See discussion in p.420 of your textbook.

Standard Chartered Bank v Yap


Sing Yoke & Ors. [1989]
The sale of land made 3 days after entry of
a PO was set aside as being contrary to
Order 47 r.7(a) RHC as 14 days had not
yet expired.

Duration of PO?
6 months (see s. 338)
Can a PO be extended?
Yes, through application by the Judgment
Creditor for a court order to extend the PO.
(see s.338(1))
When is the extension order effective? (See
s.338(2))

Karuppiah Chettiar v Subramaniam


[1971] 2 MLJ 45
The vendor sold land to the purchaser and the
transfer was executed but not registered.
On 13 Nov. 1968, the purchaser entered a private
caveat on the land.
On 14 April 1969, the judgment creditors obtained
judgment agst the vendor and entered a PO on the
property already sold to the purchaser.
Purchase applied to set aside the PO.

Held:
High Court allowed the purchaser to set aside the
PO.
Judgment creditors appealed to the Federal Court.
Federal Court dismissed the appeal on the ground
that the vendor had already sold his entire interest
in the land and had received the full purchase
price. Hence the vendor (judgment debtor) was
only a bare trustee.

Ong, CJ:
If the land cannot be sold,
what is the point in allowing a PO to stand
on the register?

Principle from Karuppiah


Chettiars case:
A purchaser who has entered a caveat in order to
protect his interest in the vendors land has
priority over the claim of a Judgment Creditor
who subsequently entered a Prohibitory Order in
respect of that land.
(Note however, such purchaser must have
concluded a contract of sale and has paid the full
balance purchase price!)

Meriam bt Yaacob & Ors v Shell


Msia Trading S/B [1984] 2 MLJ 31
Federal Court held:
A judgment creditor can only take whatever
interest the judgment debtor has in the land
and not against any interest in the land in
respect of which the right of the judgment
debtor has since ceased to exist.

Chua Hee Hung & Ors. v QBE


Supreme Insurance Bhd. [1990]
This was an application to set aside the PO
as the judgment debtor had sold the land.
Supreme Court held:
1) When the court orders the sale of a
judgment debtors property, it cannot
sell more than what the judgment debtor
himself is entitled to sell.

2) Neither a PO nor a caveat creates a legal


interest in land.

Ban Hin Lee Credit S/B v Utama


Computer Centre S/B & Anor. [1991]
Held: (High Court)
1) The courts jurisdiction to renew a PO
ought to be exercised with caution
because a PO is in the nature of a caveat
and it interferes with the rights of a
registered owner of the land in dealing
with it. The court can only renew a PO
upon proof of special circumstances.

Cont.:
2) A sale of land in execution proceedings
can only be carried out if a PO is in
force. A void PO would vitiate the order
for sale.

Airmartech Corp. Msia S/B v Equaltra


Msia S/B [2002] 6 MLJ 657
There is no rigid formulation as to what
constitutes special circumstances in an
application to extend a PO.
Depends on circumstances of each particular case.
In this case, court refused to extend the PO as it
found no special circumstances.
See discussion on further PO in this case
discussed at p. 309 of your textbook.

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