Can a prospective purchaser lodge a private caveat over land when no binding Sale and Purchase Agreement (SPA) has been concluded? And can a property agent be held liable for the resulting losses?
In the recent Court of Appeal decision of Siva Kumar Jeyapalan & Anor v Firwas Sdn Bhd & Ors & Another Appeal [2026] CLJU 3197, the Court reaffirmed that a private caveat must be supported by a legally recognisable interest in land, and that its wrongful lodgement may expose the caveator to substantial damages under section 329 of the National Land Code 1965 (“NLC”).
The decision also highlights the continuing fiduciary obligations of property agents and the legal protection available to registered landowners against unjustified interference with their property transactions.
Background of the case
The dispute concerned approximately 22.06 hectares of agricultural land in Plentong, Johor Bahru, owned by Firwas Sdn Bhd (“the Landowner”).
In 2017, the Landowner appointed Thevandran a/l K. Ragavan (“the Agent”) to market the land for sale.
Negotiations subsequently commenced with Siva Kumar a/l Jeyapalan (“the Prospective Purchaser”) for a proposed sale involving a total consideration of RM60 million.
A Temporary Receipt was signed, recording an earnest deposit of RM1.2 million and expressly stating that the transaction was “Subject to Contract”.
However, negotiations continued over several fundamental terms, including the payment structure and squatter removal obligations. Although several draft SPAs were exchanged, no final SPA was executed by the Landowner.
On 18 June 2018, the Landowner terminated the negotiations and subsequently entered into a separate SPA with Eastern Titan Sdn Bhd for RM58 million.
Despite this, the Prospective Purchaser proceeded with an alleged SPA that had not been executed by the Landowner and lodged a private caveat over the land on 5 July 2018.
The caveat interfered with the Landowner’s ability to complete the subsequent sale and receive the outstanding purchase consideration.
The Prospective Purchaser and Ammsa Property Sdn Bhd commenced proceedings seeking specific performance of the alleged SPA. The Landowner counterclaimed for the removal of the caveat and damages arising from its wrongful lodgement.
The Legal Issues
The Court of Appeal considered several issues, including:
- Whether a binding SPA had been concluded despite the absence of the Landowner’s execution and unresolved contractual terms.
- Whether the private caveat was wrongfully lodged, thereby exposing the Prospective Purchaser to damages under section 329 of the NLC.
- Whether the Agent breached his fiduciary duties to the Landowner and could be held liable for losses arising from the wrongful caveat.
- Whether the High Court could make findings of fraud and conspiracy when those causes of action had not been properly pleaded.
Court of Appeal’s Decision
1. No Concluded SPA, No Caveatable Interest
The Court upheld the High Court’s finding that no binding agreement existed between the Landowner and the Prospective Purchaser.
The Temporary Receipt was expressly made “Subject to Contract”, and the parties had not reached agreement on fundamental terms.
The Court further held that the alleged SPA was unenforceable because it had neither been executed by the Landowner nor authorised by anyone empowered to bind it.
Consequently, the Prospective Purchaser had no caveatable interest in the land, and the private caveat was wrongfully lodged.
2. Wrongful Caveat Attracts Substantial Damages
The Court affirmed the Landowner’s entitlement to general damages under section 329 of the NLC.
The High Court had assessed damages at RM14,244,169.50, calculated at 8% per annum on the outstanding purchase consideration of RM52.2 million for the original assessment period.
Significantly, the Court of Appeal allowed the Landowner’s cross-appeal and extended the damages computation period to the date of its judgment, reflecting the continuing financial deprivation suffered while the subsequent transaction remained unable to proceed.
The Court also clarified that an unsuccessful interlocutory application to remove a caveat does not necessarily prevent a landowner from subsequently establishing wrongful lodgement and claiming damages after a full trial.
However, liability under section 329 is not automatic merely because a caveator ultimately fails in litigation. There must be a finding that the caveat was procured wrongfully or without reasonable cause.
3. Property Agents Owe Fiduciary Duties to Landowners
The Court affirmed that the Agent had breached his fiduciary duties by continuing to advance the disputed transaction despite knowing that the Landowner had terminated negotiations.
The Agent’s conduct contributed directly to the wrongful caveat and the resulting financial loss.
The Court held that an agent may remain liable for conduct connected to the original transaction even after the formal termination of the agency, depending on the circumstances.
Accordingly, the Agent was held jointly and severally liable with the Prospective Purchaser and Ammsa for the relevant period of damages, on the independent basis of breach of fiduciary duty.
4. Fraud and Conspiracy Must Be Properly Pleaded
Although the Court upheld the findings concerning the absence of a concluded SPA, wrongful caveat and breach of fiduciary duty, it set aside the High Court’s findings of fraud and conspiracy.
The Court emphasised that parties are bound by their pleadings and that allegations of fraud and conspiracy must be supported by properly pleaded material facts.
This distinction is important: the setting aside of those findings did not invalidate the Landowner’s independent claims for wrongful caveat and breach of fiduciary duty.
Key Takeaways
✔️ A private caveat requires a legally recognisable interest in land. Preliminary negotiations, a conditional receipt or an unexecuted SPA do not, on the facts of this case, establish such an interest.
✔️ Wrongful caveats can result in substantial financial liability. Landowners may seek compensation under section 329 of the NLC where wrongful lodgement causes financial loss.
✔️ An unsuccessful caveat removal application is not necessarily the end of the matter. A landowner may still establish wrongful lodgement and seek damages following a full trial.
✔️ Property agents must act in their principal’s interests. An agent who acts beyond authority or advances an unauthorised transaction may face liability for breach of fiduciary duty.
✔️ Proper documentation is essential. Landowners, purchasers and their solicitors should ensure that contractual terms, authority to proceed and the basis of any caveatable interest are properly established.
Conclusion
The decision serves as an important reminder that a private caveat is a legal mechanism for protecting a legitimate interest in land, not a tool for compelling a landowner to proceed with an unconcluded transaction.
For developers and landowners, the case reinforces the availability of legal remedies where an unjustified caveat obstructs a legitimate property transaction.
For purchasers, property agents and conveyancing practitioners, it highlights the importance of establishing a valid contractual foundation before asserting rights over land.
A failed property negotiation does not necessarily create a right over the land, but an unjustified caveat may create a substantial liability.
For further information, please contact Dato’ George Miranda at george@mirandasamuel.com.
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– By George Miranda, Joy Sam Jia Qian, Shahidatul Anisha –
This article is for general information purposes only and does not constitute legal or professional advice. It should not be used as a substitute for legal advice relating to your particular circumstances. Please note that the law may have changed since the date of this article.
