Discuss the circumstances in which Registrar’s Caveat may be entered.

Does the Registrar

have an extensive discretion to exercise that power?

Section 320(1): Circumstances Where (RC) Registrar’s Caveat May Be Entered

(a) For prevention of fraud or improper dealing:

Seet Soh Ngoh v Venkateswara [1976] 1 MLJ 242

Facts: The plaintiff purchased a piece of land from the first defendant, the developer, who

(defendant) contracted to build a house on it. It was agreed between the plaintiff and the first

defendant that progress payments were to be made by the plaintiff at various stages of the

building. At the material time, the plaintiff had paid to the first defendant more money than it

was entitled to. The first defendant sought to repudiate the agreement on the ground that the

plaintiff had no money to complete the purchase.

Held: Section 320(1)(a) of the National Land Code empowers the Registrar of Titles to enter
his caveat to prevent fraud and improper dealing, and if such a possible dealing is brought to
the notice of the court and the Registrar is before the court, the court can order him to do so.
The first defendant had no right to repudiate the agreement and rely on a cause (that the
purchaser had no money to complete the purchase) which had not arisen.

(b) For protecting interests of:

(i) The Federation/ State Authority

Registrar of Titles, Johore v Temenggong Securities Ltd [1976] 2 MLJ 44

Facts: The Revenue department had learned that Li-Ta Company was proposing to sell its
land

at Johore. It had started an action for recovery of the tax on September 24, 1972. On October

2,1972, the Department of Inland Revenue wrote a letter to the Registrar of Land Titles

requesting him to enter a Registrar caveat in respect of the land and this was done on October
11, 1972. Li-Ta was indebted to the Federation Government for income tax which was
overdue.

Held: The court held that, although the income tax was due and payable by the taxpayer, it
remained an unsecured civil debt until it was converted into a judgment through a recovery of
judgment action. As an unsecured civil debt, it did not grant the government any legal rights
over the taxpayer's property or entitle them to any remedies against the taxpayer's property.

(ii) Any minor, person with mental disorder/ unsoundness of mind or owner absent from
Federation.

(ba) For protection of the unsecured government debts.

Temenggong Securities Ltd v Registrar of Titles

Facts: The registrar entered his caveat to protect the interest of the inland revenue department
in respect of a claim for unpaid income tax.

Held: Privy Council held that interests, which can be protected were those in the land that are
recognised by the Code as being either registrable or otherwise entitled to protection. This
means the interest must be proprietary as such an unsecured creditor of the proprietor of the
land has no such interest in the land. Therefore, the caveat must be removed because the
interest did not represent an interest in the land.

➢ The government dissatisfied with the decision in Temenggong Securities, & inserted
subsection (ba) to section 320 of the National Land Code 1965 so that even in circumstances
where the debt is unsecured or judgment has yet to be obtained against the registered
proprietor, the Government reserves the right to apply to enter a Registrars Caveat to prevent
dealing with caveated land prior to the settlement of the Government's claim.
➢ Section 320(1) (ba) has been used increasingly by Inland Revenue Department (IRD) to
place a registrar’s caveat over landed properties belongs to registered proprietor who are in
arrears of income tax payment. A RC entered under S 320(1)(ba) cannot take priority over the
earlier registered charge (s 340)

Development & Commercial Bank Bhd v Land Administrator, Wilayah Persekutuan

[1991] 2 MLJ 180 SC

Facts: RC was entered four years after the registration of the charge to secure the chargor's
income tax due to Inland Revenue. The debt due to the chargee was RM11.2m while the land
value was estimated at RM1.8m.

Held: There is nothing unlawful in the entry of the RC merely because there is an existing
charge. S 320(1)(ba)has enlarged the interests of the govt to be protected to include
unsecured creditors. But there is nothing in the NLC or elsewhere that creates a charge in
favor of the Inland Revenue over the land/rights giving priority over the chargee. The only
form of priority given under s 320(1)(ba) is the priority over other unsecured creditors
conferred by s 10(1) Government Proceedings Act 1956. Thus the right of the Registrar to
maintain a caveat under s 320(1)(ba) is subject to the indefeasible interest of the chargee. The
indefeasible interest of the A chargee takes priority over the subsequent RC.

(c) Protection of register pending correction of errors on register document of title.

Pendaftar Hakmilik Negeri Kedah v OCBC [1991] 2 MLJ 177 SC

1) If there is a registered charge, it's important to consider relevant information before

securing government debt. This includes comparing the debt under the charge to the
land's market value.
2) The land's market value.
3) The amount of debt due on any registered charge(s).
4) The value of the debt owed to the government.
5) If the value of the charges equals or exceeds the land's value, there won't be any surplus
for the landowner. It's hard to see why the Registrar would find it necessary or desirable
to ensure the land can satisfy the debt owed to the government.

Facts: The Registrar had decided to enter the RC without all the information on several
material matters which need to be considered by him before he decided to do so. He had thus
not exercised his discretionary powers according to and within the limits set out in s 320(1)
(ba).

Held: As the Registrar had not acted judiciously or reasonably within the ambit and scope of
s 320(1)(ba), he has thus exceeded his powers under that section and has acted ultra vires and
his act was invalid.

DISCRETION OF REGISTRAR
Section 319(1)(a) of the NLC

(a) (a caveat) may be entered by the Registrar on the register document of title to any land in
any of the circumstances specified in section 320;

Palaniappa Chettiar v PL. AR. Letchumanan Chettiar & Anor

Whether Registrar has discretion to enter caveat or refuse entry of Caveat

Discretion is with the Registrar as to whether to enter a caveat. The discretion of Registrar
must be exercised judiciously and reasonably without any element of mala fide (bad faith).
Registrar must genuinely believe a caveat must be entered. Must be very good reasons.

Palaniappa Chettiar v PL. AR. Letchumanan Chettiar & Anor

Per Wong Kim Fatt JC: ;

“It is clear that under the Code the Registrar may act on his own motion or upon information
or request made to him. The word "may" indicates a discretion on the part of the Registrar.
He is not bound to act on such information or request in every case. Thus in the case of an
entry of a Registrar's caveat, the Registrar is said to perform a quasi-judicial function in the
exercise of that discretion, but the discretion must always be exercised judiciously or
reasonably and in good faith, not arbitrarily nor in bad faith. By contrast, in the case of an
application for the entry of a private or lien-holder's caveat, his function is purely ministerial
or administrative. In other words, in the last two categories of cases, he must enter the
caveats, provided the applications are in the proper forms and accompanied by the
prescribed fees”