Lien

Ainul Jaria Maidin - LAW 3111- LAND LAW II 1
TOPIC 2
STATUTORY LIENS

Ainul Jaria Maidin - LAW 3111- LAND LAW2
Definition of Lien
 Halsbury Laws of England in Vol.19,
at p.2 defines lien as
 “Lien in its primary sense is a right
in one man to retain that, which is
in his possession belonging to
another man until certain demands
of the person in possession are
satisfied.”

 This definition was cited and accepted
by the court in Palaniappa Chetty v
Dupire Brothers FMSLR 370.
 In this case, the judge said that the
meaning of lien is said to have been
derived through French from Latin that
is ligo, ligamen is that of binding or
tying or securing something.

S.281 NLC
 “Any proprietor or lessee for the
time being may deposit with any
other person or body as security for
a loan, his issue document of title or
duplicate lease.”

Who can create a Lien
 Registered proprietor; Lessee; Co-
proprietor

Cases
 Perwira Habib Bank (M) Bhd. v Loo
& Sons Realty S.B. (No.1)[1996]3
MLJ 409
 Peter P‘Chient v Ramasamy Chettiar
(1923) 3 FMSLR 220
 Perwira Habib Bank (M) Bhd. v Loo
& Sons Realty S.B.(No.2)[1996]3
MLJ 421

Who can be a Lien Holder
 Persons listed in S.43 NLC
 These are persons to whom the state
authority can alienate land, usually a bank or
a financial institution. Previously a non-
citizen and foreign companies are prevented
from transacting in land in Malaysia, however
the restriction imposed by S.433B ceased to
apply by virtue of S.3 NLC Amendment
(No.2) Act 1965 which came into force on 12th
September 1985

What can be the subject matter
of lien
 A lien may be effected over land or a
lease of land. Likewise an undivided share
may be a subject matter of lien. This
means that a co-proprietor in an
undivided share may effect lien over his
share in land refer S.343(6) NLC
 However, unlike a charge, a lien is a
dealing which gives rise to non-
registerable interest. Refer S.206(2)(b)
NLC

Essential characteristics of a
lien
 1) Deposit of issue document of title
or duplicate lease with the lender as
security for loan
 2) Intention to create a lien
 3)Lodgement or entry of a Lien-
Holder’s Caveat

 There must be a deposit of the
issue document of title or
duplicate lease with the lender
as security for loan
 The element of deposit of the issue
document of title is very important.
The lien will only be considered not
in existence if the depositee or lien
holder returns the issue document
of title upon full and final settlement
of the loan

Case
 Manikavasagam Chetty v TJ
McGregor (1933) MLJ 295
 Merchantile Bank Ltd v The Official
Assignee of Property of How Han
Teh [1969]2 MLJ 196

Intention to create Lien Paramoo v Zeno Ltd (1968) 2 MLJ 230.
This requirement may be seen from the
fact that there must be an intention to
deposit the issue document of title or
duplicate lease with the lender as a
security for the loan and for not other
purpose. Unlike a chargee a person
entitled to a lien under the code must have
first obtained judgment for the amount
due to him. It is only then that he can be
able to apply to the court for sale

Lodgment or Entry of
Lien-Holders Caveat
 According to S.281 NLC a lien may be
created over the land or an undivided
share or lease. The lien holder may then
proceed to enter the lien holder’s caveat
over the said land. It is only after such
entry of the lien holders caveat that the
lien will then take effect in law as
provided in S.281 (a)(b) & S.330 NLC in
order to render the land, lease or the
undivided share liable as a security for
the loan advanced by the lender

 The entry of such a caveat protects
the interest of the Lender in respect
of the land, undivided share or the
lease in that it will prohibit any
further dealings with the said land

Cases
 Luggage Distributors (M) S.B. v Tan
Hor Teng & Anor.[1995] 3 CLJ 520
 Hong Leong Finance Berhad v
Staghorn S.B. [1995] 3 CLJ 368
Gan Leong Chai & Ors v Sin Heng
Chan (Malaya) Bhd & Anor [1997] 3
CLJ Supp 31
 Manilal & Sons (M) S.B. v
Pentadbir Tanah Daerah Kulim & Ano
r [1998] 1 CLJ 7

 Perwira Habib Bank Malaysia v Loo &
Sons Realty S.B. & Anor.. [1995] 4 CLJ
619
 Heap Huat Rubber Co. S.B. v United
Overseas Bank Ltd. [1992] 2 CLJ (Rep)
496
 Minang Bina S.B. v Yahaya Mohd. Said
& Anor..
[1992] 1 CLJ (Rep) 503
 Perwira Habib Bank (M) Bhd. v Tin
Siang S.B. & Ors.[1992] 3 CLJ
(Rep)1993) 4 CLJ 454
h [1935] FMSLR 81

Lien

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