restraint on dealings

RESTRAINT ON DEALINGS
Sharifah Zubaidah
LAW 3111 (Sem. 1 (09/10)
Section 3

WHAT ARE RESTRAINT ON
DEALINGS?
 Restrain = ‘to stop’,
 ‘to prevent’
 To prevent any
dealing from being
registered in the land
office in respect of a
particular land in
dispute.

TYPES OF RESTRAINT ON DEALINGS
 1) Lis Pendens
 2) Injunctions
 1) Caveats
 2) Prohibitory Order
Under Power of Court Under NLC

LIS PENDENS
 n. Latin for “a suit pending”
 A written notice that a lawsuit is pending with
regard to the land in question.
 Granted pursuant to s.25(2) and para. 6 of
Schedule 1, Courts of Judicature Act 1964. (UK)

BELLAMY V SABINE (1857)
 Lis pendens is based on the theory that so long as
title to land is being litigated in court, parties to
the litigation were incapable of dealing with the
land because otherwise the judgment of the court
would be frustrated.

POSITION OF LIS PENDENS IN
MALAYSIA
 Not applicable in Malaysia by virtue of s.6 of the
Civil Law Act 1956 as it is an incidence of
English land tenure system.
 No provision for recognition and registration of
lis pendens under NLC.
 S.417 NLC does not allow the court to direct the
Registrar to make entries on the Register of a
kind of transaction not provided for in the NLC.

T. DAMODARAN V CHOE KUAN HIM
[1979]
 The entry of a lis pendens on the RDT does not
operate as a restraint on dealings and will not
prevent a transferee from obtaining an
indefeasible title to the land.

INJUNCTION
 Granted by the court upon application of a party
in a legal proceeding (usually ex parte) to
preserve the status quo of the parties pending
settlement of the dispute.
 Governed by s.50 of the Specific Relief Act 1950.
 Available for caveator to preserve status quo in
proceedings but CANNOT BE REGISTERED on
RDT under NLC.

HENG BAK TEONG & ANOR. V NG AH
SEONG & ANOR. [1988]
 An injunction is a preventive relief granted at the
discretion of the court. A Registrar of the land
cannot register an injunction as a Prohibitory
Order on the RDT.

TAN LAY SOON V KAM MAH
THEATRE S/B [1992]
 An injunction is available to a party whose
private caveat has been removed by the court.

MEANING: (BARRY V HEIDER (1914))
 “a means devised for the protection of a right of
the claimant pending proceedings in a competent
court to enforce the claim to an interest in the
land.
 s.5: ‘a registered caveat’
 Misleading, as a caveat is NOT REGISTERED. It
is lodged by the caveator and then endorsed on
the title.

MACON ENGINEERS S/B V GOH
HOOI YIN [1976]
 “ A caveat is a creature of statute and is in the
nature of a statutory injunction which has the
effect of prohibiting the registration of any
instrument of dealing.”
 -per Gill, CJ.

BUTLER V FAIRCLOUGH (1917)
 “It must now be taken to be well settled that
under the Australian system of registration of
titles to land the courts will recognise equitable
estates and rights except so far as they are
precluded from doing so by the statutes.
 This recognition is indeed the foundation of the
scheme of caveats which enable such rights to be
temporarily protected in anticipation of legal
proceedings.”
 (Purpose of Caveat)

FUNCTION OF A CAVEAT?
 “…to suspend the process of registration until
conflicting claims have been settled.
 It is a unilateral act and no person can create
rights in his favour nor enlarge or add to his
existing proprietary rights by means of a caveat.
The effect of a caveat is to prohibit the
registration…pertaining to any dealing with the
land in dispute so long as the caveat continues in
force.”
 -Syed Agil Barakbah, J. in Damodaran v
Vasudeva [1974] 1 MLJ 128.

 The caveat freezes the
register.
 Nothing can be done
on the land until the
caveat is lifted.

FUNCTIONS OF A CAVEAT:
 1) The caveat freezes the Register and prevents
the registration of any dealing on the land.
 2) The caveat is a scheme under the NLC to
protect unregistered titles and interests
pending registration of such title or interest.
 3) The caveat preserves the status quo of the
claimants to the land pending resolution of
the dispute.
 4) The caveat gives notice to the world that the
caveator has a claim in the land.

WHAT IS THE DIFFERENCE
BETWEEN A CAVEAT AND AN
INJUNCTION?
 In Eng Mee Yong & Ors. v Letchumanan [1979],
the Privy Council pointed out that the
application for a caveat differs from an
application for an interlocutory injunction
because in an application for a caveat, a caveat
can be entered on a piece of land without any
supporting evidence as the Registrar acts in an
administrative capacity.
 In an application for an interlocutory injunction,
the applicant must show a strong arguable case
from the affidavit deposed by the applicant and
the judge exercises full judicial powers in this
respect.

FOO POH SANG V YUEN LAM S/B
[1989]
 The Pf. sold their land to the Df. but the
purchase price had not yet been paid in full.
 Meanwhile, the Df. had been registered as the
owner and had created charges on the land.
 Pf. lodged a caveat on the land to protect their
interests as the Df. had defaulted in paying the
purchase price.
 The chargee applied to the court to set aside the
caveat and succeeded.
 Pf. obtained an interlocutory injunction to
restrain the Df. from disposing the land.

FOO POH SANG:
 Chargee intervened to set aside the injunction on
the ground that since the caveat had been earlier
removed, the injunction should also be removed
as it was merely a caveat under the guise of an
injunction.
 HELD:
 The injunction should not be removed but was
varied to protect the interest of the chargee.

JUSTICE PEH SWEE CHIN ON
DIFFERENCE BETWEEN A CAVEAT
AND AN INJUNCTION IN FOO POH
SANG:
 “…there are real, though subtle, differences
between the two. A caveator when called upon to
justify his caveat, would have to satisfy the court
that he has a caveatable interest in the land in
question (set out u-s.323(1) NLC). An injunction
can restrain a person from doing anything, not
just concerning land…a caveatable interest is,
ofcourse, a relevant but by no means sine qua
non for an injunction to issue.”

TYPES OF CAVEATS:
 1) Registrar’s Caveat (s.319)
 2) Private Caveat (s.322)
 3) Lienholder’s Caveat (s.330)
 4) Trust Caveat (s.322)

restraint on dealings

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restraint on dealings