Property Friday: 8 Times Courts Removed Wrongful Caveats (Part 1)

⚖️Court Decisions

Caveats have been consistently removed by the Malaysian courts when it is found that the caveator lacks a valid caveatable interest/ has non-caveatable interest.

🛡️What is Non-Caveatable Interest?

• Incomplete/Unascertainable Interests
• Delays & Inaction
• State Authority Permission Not Obtained
• Personal Claims (In Personam—Not Land Claims (In Rem)
• Company Shareholdings (Not Property Interests)
• Profit-Sharing Only (No Land Share)
• Negotiations & Preliminary Agreements
• Options Not Yet Exercised
• Contractual Provisions to Create Caveats
• Specific Contractual Arrangements
• Lienholder’s Caveat Specific Grounds

Read more on Non-Caveatable Interests from our last week’s article:

🔗How to Save a Property from Wrongful Caveats 

 

1) Shareholder Lodged Caveat on Company’s Land

Hew Sook Ying v Hiw Tin Hee [1992] 2 MLJ 198 (Supreme Court)

📋FACTS: The plaintiff was a shareholder and director of a company. The company owned certain properties. The plaintiff lodged a caveat against the company’s land, claiming an interest as a shareholder/director.

⚖️ COURT’S DECISION: Caveat REMOVED. The Supreme Court held that a shareholder, director, or managing director does not possess any caveatable interest in properties owned by the company. Their interest is confined to their stake in the company itself, not the land.

🔑 KEY PRINCIPLE: Company has separate legal entity—shareholders don’t own company property. Shareholder interest in company ≠ interest in company’s land.

 

2) Judgment Creditor Seeking Debt Recovery

Standard Chartered Bank v Yap Sing Yoke & Ors [1989] 2 MLJ 49

📋FACTS: A judgment creditor obtained a court judgment against the proprietor for recovery of a debt. The creditor then lodged a caveat on the proprietor’s land to prevent the proprietor from dealing with the property until the debt was paid.

⚖️ COURT’S DECISION: Caveat REMOVED. The court held that a judgment creditor whose claim is for recovery of debt does not have a caveatable interest in land. The claim is purely personal (in personam) against the proprietor, not a claim to title or registrable interest in the land itself (in rem).

🔑 KEY PRINCIPLE: Money claims (in personam) cannot be caveated—only land interests (in rem) can. Caveat is not a debt collection tool.

 

3) Joint Venture Partner (Profit-Share Only, No Land Share)

Score Options Sdn Bhd v Mexaland Development Sdn Bhd [2012] 7 CLJ 802 (Federal Court)

📋FACTS: The parties entered into a Joint Venture cum Project Management Agreement (JVPM) dated 22.02.2006. Under this agreement, the respondent (developer) was given rights to manage and develop the land, had spent vast sums transforming raw land into a developed metropolis, and was given Powers of Attorney. The developer argued it had “practically surrendered” all rights and the developer assumed “quasi-ownership.” The agreement also expressly provided for the developer’s right to lodge a caveat. However, the agreement only gave the developer profit-sharing rights, NOT actual share in the subdivided lots or units.

⚖️ COURT’S DECISION: Caveat REMOVED. The Federal Court held that the JVPM agreement was merely an agreement for profit-sharing from development. It gave only a contractual right to manage and develop, NOT ownership or any interest in the land. The contractual provision allowing caveat entry doesn’t create a caveatable interest. The developer’s option to purchase units had not yet been exercised—the right hadn’t ripened into an interest.

🔑 KEY PRINCIPLE: Joint venture for profits alone ≠ caveatable interest. Must have entitlement to actual land/units, not just profit-sharing. Parties cannot create caveatable interest by contractual declaration alone.

 

4) Prospective Purchaser Without State Authority Permission

Goo Hee Sing v Will Raja & Anor [1993] 3 MLJ 610 (High Court)

📋FACTS: The plaintiff was a prospective purchaser of land. However, there was a restriction/prohibition endorsed on the title by the state authority. The state authority’s permission (“pihak kuasa negeri”) was required before the land could be sold. The plaintiff lodged a caveat BEFORE obtaining the irrevocable consent of the state authority.

⚖️ COURT’S DECISION: Caveat REMOVED. The High Court held that to file a caveat, one must have a title to land or right thereto “in praesenti” (in the present), not some contingent title or right “in futuro” (in the future). Until state authority permission is irrevocably obtained, a prospective purchaser has NO caveatable interest. The prohibition by state authority is absolute.

🔑 KEY PRINCIPLE: Must have PRESENT interest (in praesenti), not FUTURE/contingent interest (in futuro). State permission is a prerequisite—cannot caveat before obtaining it.

 

Another 4 cases will be featured in next week’s article— stay tuned for Part 2! 🔔

 

For further information, please contact us at Miranda & Samuel:

• Dato’ George Miranda (george@mirandasamuel.com)
• Joy Sam Jia Qian (joy@mirandasamuel.com)
• Alisyah Maisarah (alisyah@mirandasamuel.com)

 

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