Compugates Development and Mining Sdn Bhd Main Uptown Sdn. Bhd

IN THE HIGH COURT OF MALAYA IN SHAH ALAM IN THE STATE OF SELANGOR DARUL EHSAN, MALAYSIA ORIGINATING SUMMONS NO.: BA-24NCvC-1150-07/2022 _________________________________________________________ Dalam Perkara Seksyen 327(1) Kanun Tanah Negara 1965 Dan Dalam perkara kaveat persendirian melalui Nombor Perserahan : 18351/2022 didaftarkan pada 20.4.2022 oleh Main Uptown Sdn Bhd di atas No. Hakmilik HSD 13828, Lot No. PT 26800, (No. Lot Baru: 30729), Mukim Dengkil, Daerah Sepang, Selangor Dan Dalam perkara mengenai perjanjian usahasama bertarikh 18.8.2015 antara Compugates Development dan Mining Sdn Bhd dan Main Uptown Sdn Bhd dan Perintah Mahkamah Tinggi Shah Alam bertarikh 13.1.2022 di Guaman Sivil No. BA-22NCvC-425-09/2019 Dan Dalam perkara Arahan 8 Kaedah- Kaedah Mahkamah 2012 BETWEEN COMPUGATES DEVELOPMENT AND MINING SDN BHD (COMPANY NO. : 833239-U) ..... PLAINTIFF AND 1 MAIN UPTOWN SDN BHD (COMPANY NO. : 1146841-V) ..... DEFENDANT GROUNDS OF JUDGMENT (O.S. for Removal of Caveat) Introduction [1] The Plaintiff filed this Originating Summons (Enclosure 1) for cancellation and removal of the private caveat which the Defendant has lodged on the title to the land in respect of which the Plaintiff is the registered proprietor. [2] Before the decision of the High Court in Shah Alam High Court Suit No. BA-22NCVC-425-09/2019 there was a Joint Venture Agreement dated 18.8.2015 whereby the Plaintiff-proprietor appointed the Defendant-developer to develop 38.3 acres of land held under HS(D) 13828, PT 26800, Mukim Dengkil, Daerah Sepang, Negri Selangor (‘the said Land”) into a commercial development scheme. A copy of the Joint Venture Agreement is enclosed as Exhibit “GKP-2” to the Plaintiff’s Affidavit-in-Support (Enclosure 2) of the Originating Summons. A Power of Attorney dated 19.8.2015 was also given and signed by the Plaintiff- proprietor in favour of the Defendant-developer: Exhibit “GKP-2” to the Plaintiff’s Affidavit-in-Support (Enclosure 2, pdf pages 71 to 78) of the Originating Summons. [3] On or about 22.10.2015 the Defendant-developer lodged a private caveat on the title to the said Land. Background Events leading to this Originating Summons [4] In 2018 part of the said Land to the extent of 0.98 hectare was compulsorily acquired by the Government for the purpose of constructing the Kuala Lumpur-Putrajaya-KLIA (MEX 2) Expressway: see Exhibit “GKP-3” to the Plaintiff’s Affidavit-in- Support (Enclosure 2, pdf pages 80 to 84) of the Originating Summons. The acquisition compensation of RM9,397,400.00 was paid into Court due to a pending dispute between the Plaintiff- proprietor and the Defendant-developer as to the entitlement to receive the compensation money: see Exhibit “GKP-3” to the 2 Plaintiff’s Affidavit-in-Support (Enclosure 2, pdf pages 88 to 89) of the Originating Summons. [5] By Shah Alam High Court Suit No. BA-22NCVC-425-09/2019, the Plaintiff-proprietor sued the Developer for declaration that the Plaintiff-proprietor was entitled to the land acquisition compensation, for termination of the Joint Venture Agreement, cancellation of the private caveat, forfeiture of the Deposit paid under the Joint Venture Agreement, and ancillary orders. [see Exhibit “GKP-4” to the Plaintiff’s Affidavit-in-Support (Enclosure 2, pdf pages 91 to 111 of the Originating Summons]. [6] After a full trial the High Court in the said Suit No. 425 allowed on 13.01.2022 the Plaintiff-proprietor’s claims and dismissed the Defendant-developer’s counterclaim and made the following orders: “(a) Satu deklarasi bahawa Plaintif berhak kepada keseluruhan wang pampasan yang diawardkan sebanyak RM9,397,400.00 bagi pengambilan 0.9892 hektar tanah yang dipegang di bawah No. Hakmilik HSD 13828, Lot No. PT 26800, (No. Lot Baru : 30729), Mukim Dengkil, Daerah Sepang, Selangor; (b) Plaintif dibenarkan untuk menuntut keseluruhan wang pampasan sebanyak RM9,397,400.00 yang diperintahkan didepositkan ke Mahkamah bersama kesemua faedah yang terakru melalui Saman Pemula No. BA-24NCvC-1363 TAHUN 11/2018 untuk dilepaskan kepadanya; (c) Satu deklarasi bahawa Perjanjian Usahasama bertarikh 18.8.2015 di antara Plaintif dan Defendan adalah telah tamat, tidak sah dan terbatal dan tidak berkuasa antara Plaintif dan Defendan; (d) Satu deklarasi bahawa Plaintif berhak untuk melucutkan wang sebanyak Ringgit Malaysia Tiga Juta (RM3,000,000.00) daripada wang pendahuluan yang dibayar oleh Defendan sebagai gantirugi tertentu yang dipersetujui berdasarkan terma-terma Perjanjian Usahasama tersebut; (e) Bahawa Kaveat Persendirian No. 54272/2015 yang dimasukkan oleh Defendan bertarikh 22.10.2015 ke atas hartanah yang dipegang di bawah hakmilik HSD 13828, Lot 3 No. PT 26800, (No. Lot Baru : 30729), Mukim Dengkil, Daerah Sepang, Selangor dikeluarkan / dibatalkan dengan segera; (f) Bahawa Pendaftar Hakmilik dan kesemua pihak berkuasa yang berkenaan adalah diarahkan di bawah Seksyen 417 Kanun Tanah Negara 1965 untuk memberi kesan dan efek kepada perintah ini; (g) Bahawa Plaintif diarahkan untuk memulangkan wang berjumlah Ringgit Malaysia Dua Juta (RM2,000,000.00) kepada Defendan pada atau sebelum 21.2.2022; (h) Sekiranya Plaintif gagal membayar jumlah Ringgit Malaysia Dua Juta (RM2,000,000.00) pada atau sebelum 21.2.2022, maka faedah pada kadar 5% setahun di atas Ringgit Malaysia Dua Juta (RM2,000,000.00) dikenakan dan perlu dibayar oleh Plaintif kepada Defendan dari 21.2.2022 sehingga penyelesaian penuh; (i) Tuntutan Balas Defendan adalah ditolak; dan (j) Kos sebanyak RM30,000.00.” [7] On 28.01.2022 the Defendant-developer filed a Notice of Appeal against the High Court’s decision dated 13.01.2022 in the said Suit No. 425: see Exhibit “GKP-5” to the Plaintiff’s Affidavit-in-Support (Enclosure 2, pdf pages 142 to 145) of the Originating Summons. [8] On 31.01.2022 the Defendant-developer applied to the High Court for stay of execution pending the appeal: see Exhibit “GKP-5” to the Plaintiff’s Affidavit-in-Support (Enclosure 2, pdf pages 146 to 149 of the Originating Summons. [9] On or about 20.4.2022 the Defendant-developer lodged a fresh private caveat on the title to the Plaintiff-proprietor’s said Land: Exhibit “GKP-8” to the Plaintiff’s Affidavit-in-Support (Enclosure 2, pdf pages 190 to 192) of the Originating Summons. [10] On 10.6.2022 the High Court in Suit No. 425 ordered that the land acquisition compensation of RM9,397,400.00 be deposited in an interest-earning escrow account pending the final outcome of the appeal: see Exhibit “GKP-6” to the Plaintiff’s Affidavit-in-Support (Enclosure 2, pdf pages 181 to 182) of the Originating Summons. 4 [11] Subsequently the Defendant-developer by Notice of Motion dated 01.07.2022 applied to the Court of Appeal for stay of execution of the High Order dated 13.01.2022 pending the outcome of the appeal: see Exhibit “GKP-7” to the Plaintiff’s Affidavit-in-Support (Enclosure 2, pdf pages 184 to 188) of the Originating Summons. [12] When this Originating Summons first came up for hearing on 28.9.2022, it was brought to the attention of this Court that the Notice of Motion on stay application would be heard by the Court of Appeal on 4.10.2022. As the hearing of the stay application before the Court of Appeal was just a few days away, this Court re- scheduled the hearing and decision on this Originating Summons to 19.10.2022 and gave liberty to the parties to report on the outcome of the stay application and to submit further on the consequent of such outcome. [13] On 7.10.2022 the Defendant-developer filed a Supplementary Affidavit to report that the stay application has been dismissed by the Court of Appeal: see Enclosure 18. Law on Private Caveat [14] The law on removal of private caveat is well-settled and the locus classicus is the Court of Appeal's decision in Luggage Distributors (M) Sdn Bhd v. Tan Hor Teng & Anor [1995] 3 CLJ 520; [1995] 1 MLJ 719. [15] In the case of Luggage Distributors (M) Sdn Bhd v. Tan Hor Teng & Anor [1995] 3 CLJ 520; [1995] 1 MLJ 719, the Court of Appeal laid down the principle and procedure of application to remove a private caveat as follows:- 'In considering an application for the removal of a caveat, the procedure to be adopted should be a simple and summary one. At the first stage, the court will examine the grounds expressed in the application for the caveat to see whether they show a caveatable interest. Once the court is satisfied that the caveator's claim amounts in law to a caveatable interest, it must then go on to consider whether the claim discloses a serious question meriting a trial. After these two stages have been crossed, the court must decide where the balance of convenience lies.' 5 [16] From the Court of Appeal's decision in Luggage Distributors (M) Sdn Bhd v. Tan Hor Teng & Anor, a private caveat will only be allowed to be continued if all the three (3) following requirements are fulfilled: (i) the caveator's claim expressed in the grounds for caveat application amounts in law to a caveatable interest; (ii) the caveator's said claim discloses a serious question meriting a trial; and (iii) the balance of convenience is in favour of allowing the private caveat to continue. Whether the Defendant has caveatable interest [17] Section 323 of the National Land Code provides as follows: (1) The persons and bodies at whose instance a private caveat may be entered are— (a) any person or body claiming title to, or any registrable interest in, any alienated land or undivided share in any alienated land or any right to such title or interest; (b) any person or body claiming to be beneficially entitled under any trust affecting any such land or interest; and (c) the guardian or next friend of any minor. [18] In Perbadanan Setiausaha Selangor & Ors v. Metroway Sdn Bhd & Anor [2003] 1 MLRA 312 the Court of Appeal held that “A joint venture agreement to develop land and to share proceeds of the development does not confer a caveatable interest even if the agreement expressly provides for entry of a caveat”. [19] In Wong Kuan Tan v. Gambut Development Sdn Bhd [1984] 1 CLJ (Rep) 441, [1984] 2 MLJ 113 the Federal Court held the: (a) the mere contractual right alone does not create a caveatable interest; (b) interests which are protectable by caveat are only interests recognised by the National Land Code (“NLC”); (c) the words “any right to such title or interest” in subsection 323(1)(b) of NLC may be wide enough to allow rights arising under 6 a contract for registrable dealing to be protected by a caveat but they are not wide enough to cover mere personal rights as distinguished from rights relating to land. [20] The Federal Court in Score Option Sdn Bhd v. Mexaland Development Sdn Bhd [2012] 6 MLJ 475, [2012] 7 CLJ 802 held as follows: “CAVEATABLE INTEREST [25] A caveat is a creature of statute namely, the NLC and hence it can only be lodged by a claimant who has a caveatable interest under the NLC. The purpose of a caveat is to protect an interest in a land, or a right to an interest in that land (see Yeong Ah Chee v Lee Chong Hani & Anor and other appeals [1994] 2 MLJ 614 at p 624) and to preserve the status quo of the land pending the enforcement of such interest or right (see Registrar of Titles, Johore v Temenggong Securities Ltd [1976] 2 MLJ 44 at p 46) . [26] It serves as a substitute for the equitable doctrine of notice under the English land law (see Eng Mee Yong & Ors v Letchumanan [1979] 2 MLJ 212 at p 214; Nanyang Development (1966) Sdn Bhd v How Swee Poh [1970] 1 MLJ 145; [1969] 1 LNS 116; Haroon v Nik Mah [1951] MLJ 209; Jit Kaur v Pari Singh [1974] 2 MLJ 199; [1974] 1 LNS 57 and Butler v Fairclough & Anor (1917) 23 CLR 78 at p 91). [27] In a New Zealand case of Miller v Minister of Mines and Attorney General of New Zealand [1963] AC 484 at p 497, the Privy Council observed that: The caveat procedure is an interim procedure designed to freeze the position until an opportunity has been given to a person claiming right under an unregistered instrument to regularise the position by registering the instrument. [33] In our considered view, Zemine Development Sdn Bhd v Hong Kong Realty Sdn Bhd could not support the respondent's case: it is clearly distinguishable on the facts. In that case, the appellant as the land owner entered into a joint venture agreement with the respondent to develop residential and commercial buildings. Under that agreement, a sharing arrangement was agreed to where the appellant will be entitled to 20% of the buildings built while the respondent will retain the remaining 80%. The Court of Appeal affirmed the High Court's decision and held that the 7 respondent has a caveatable interest in the land by virtue of its entitlement to 80% of the subdivided lots of the land. However in our case here, what the respondent had under the JVPM agreement was not any share in the subdivided lots or units of buildings on the land, but merely a share in the profits under the GDV. It is purely a share in the profits and not in the land. [35] It is our considered view, therefore, that based on the provisions of the NLC and the authorities cited above, the only parties who are authorised to lodge a private caveat are those who may effect dealings in the particular interests in the land. Those parties may either have a claim to the title to the land or a claim to a registrable interest in the land or a claim to any right to such title or registrable interest. [36] Emphasis should be given to the words 'registrable interest' in s 323(1)(a) of the NLC. To be caveatable, the interest must be an interest in the land and that interest must be capable of registration. In short, it must represent a transaction that can ultimately lead to its registration on the register. [37] Reverting to this appeal before us, although the appellant has conferred numerous rights on the respondent under the JVPM agreement and the powers of attorney, all these rights are merely rights to develop the land that would give rise only to a monetary interest, ie a right in personam against the appellant and does not create any interest in the land. [38] Under the NLC, these rights are not capable of registration. They do not fall under any scheme of dealings in alienated lands as provided under Division IV of the NLC. PRESENT INTEREST AS OPPOSED TO POTENTIAL INTEREST [39] It is also our considered view that the caveator under s 323(1)(a) of the NLC must have a present interest as opposed to a potential interest in the land. The registrable interest that the caveator is claiming for, must be an existing interest. The caveator under s 323(1)(a) of the NLC must be limited to those who are claiming to an existing interest in the land or right to such existing interest and cannot include potential interest or interest in futuro. 8 [40] This principle is firmly embedded in our Torrens system. This can be seen in the decision of the Supreme Court in Tan Heng Poh v Tan Boon Thong & Ors [1992] 2 MLJ 1. In that case, a caveat lodged by a residuary beneficiary was ordered to be removed because the administration of the estate was still incomplete at the time the caveat was lodged, as such his interest in the land was still unascertainable. [44] In the present case, even though the respondent was given the option to purchase the units it developed and transfer the units to itself if it chooses to do so, that right has yet to be exercised at the time when the caveat was lodged. Therefore, the right has not ripened into an interest in the land. [45] As we have alluded to earlier, a caveat is purely a creature of statute and can only be lodged and maintained according to the statute by a person who is authorised to do so by the statute. Parties cannot by agreement between themselves create a caveatable interest. As was rightly held in Wong Kuan Tan v Gambut Development Sdn Bhd [1984] 2 MLJ 113, 'the contractual provision does not amount to an equitable or other interest sufficient to support a caveat.' A contract cannot override a statute by inventing a right which is not recognised by statute. The court could not give recognition to such a right (see Luggage Distributors (M) Sdn Bhd v Tan Hor Teng @ Tan Tien Chi & Anor). [46] Any private caveat lodged outside the scope of s 323 of the NLC is bound to be removed. The burden is on the caveator to show that his caveat is within the scope of s 323 of the NLC. The respondent, as the caveator, failed to discharge that burden.” [emphasis added] Application of laws to the facts of the present case [21] Although the specific terms of a joint venture agreement may under certain circumstances confer proprietary right or interest in the land upon the developer (as was decided in the Federal Court case of Score Options, in our present case, the High Court has held that the Joint Venture Agreement has been validly terminated, and the Defendant’s stay application to the Court of Appeal has been dismissed. The position as between the parties now, in light of the High Court’s decision which upheld the termination of the Joint Venture Agreement and the Court of Appeal’s refusal of stay, is that 9 the High Court’s Order dated 13.01.2022 in Suit No. 425 (as reproduced in paragraphs [6] above] still operates and in force. As such, there is no valid subsisting Joint Venture Agreement upon which the Defendant can argue as its basis for creating or conferring a caveatable interest upon it in respect of the development land. See the cases of Thien Lip Kuen v. Tiow Wee Kong [2016] 1 LNS 720, Ganding Maju Sdn Bhd v. KS Property Development Sdn Bhd and Affin-ACF Finance Berhad (Third Party) [2007] MLJU 690, and Matair Suhaili v. Rose Foo Chin Lan [2007] 5 CLJ 406. [22] The legal position may probably be different if the High Court or the Court of Appeal has granted a stay of the High Court order which upheld the termination of the Joint Venture Development. This is because in the definition clause of the Joint Venture Agreement here, “Company’s Lots” means all the Lots comprised in the Project excluding the Owner’s Lots (if any), “Lots” means the subdivided individual lots together with the buildings, if any, to be erected thereon … including the individual parcels comprised in any stratified building in the Project; Section 3.03(a) read with paragraph 3 Company’s Entitlements stipulated that “Subject to the Owner’s entitlements hereinbefore stated, the Company shall be entitled to all the Lots in the Project, legally and beneficially, and all whatsoever monies, profits, incomes and/or proceeds of sale directly and indirectly derived therefrom”. If not terminated, the Joint Venture Agreement would confer upon the Defendant-developer proprietary rights and/or interest in the Lots as well as monetary entitlement. These clauses of the Joint Venture Agreement, if not terminated, may probably confer a caveatable interest upon the Defendant-developer here - similar to that of the developer in Zemine Development Sdn Bhd v Hong Kong Realty Sdn Bhd [2011] 4 MLJ 466, [2009] 5 CLJ 218 (Court of Appeal). [23] At this point of time, with the Joint Venture Agreement held as validly terminated by the High Court and with no stay of the Court Order granted, it is not open to this Court to hold that the Defendant still has any caveatable interest in the land. [24] In the premises, being bound by the principles laid down in appellate court’s decisions, this Court holds that as at present, the Defendant in the eyes of the law has no caveatable interest in the land by reason of the aforesaid. 10 [25] As the Defendant has no caveatable interest now, the private caveat should be removed and it is not necessary to consider the other factors on removal of private caveat. [26] This Court finds that as the express terms of the Joint Venture Agreement in the pending appeal stipulated for the Defendant to lodge private caveat on the land and the Defendant acted bona fide upon the express terms of the Agreement which was signed by the Plaintiff and the Defendant’s primary motive is to preserve the status quo pending the outcome of the appeal, there should be no order as to assessment of damages. Conclusion [27] In conclusion this Court held on 19.10.2022 that the private caveat lodged on or about 20.4.2022 should be cancelled and removed with costs. [28] Accordingly, this Court on 19.10.2022 made the following orders: (1) Bahawa Kaveat Persendirian No 18351 / 2022 yang didaftarkan pada 20.4.2022 oleh Defendan di atas hartanah yang dipegang di bawah No. Hakmilik HSD 13828, Lot No. PT 26800, Lot No. PT 26800, (No. Lot Baru: 30729), Mukim Dengkil, Daerah Sepang, Selangor dibatalkan; (2) Bahawa Pendaftar Hakmilik dan kesemua pihak berkuasa yang berkenaan adalah diarahkan di bawah Seksyen 417 Kanun Tanah Negara 1965 untuk memberi kesan dan efek kepada perintah ini; dan (3) Kos guaman sejumlah RM5,000 hendaklah dibayar oleh Defendan kepada Plaintif, tertakluk kepada alokatur Dated : 3rd November 2022 Signed ………....................................................... TEE GEOK HOCK JUDICIAL COMMISSIONER HIGH COURT OF MALAYA AT SHAH ALAM (NCvC 10) 11 To the parties’ solicitors : 1. For the Plaintiff : Syamala a/p Jeyaraman Messrs Dhyan & Co. (Kuala Lumpur) 2. For the Defendant : Loo Hui En Messrs Raja, Darryl & Loh (Kuala Lumpur) 12