MOHD HAKIMI BIN MOHD JANI v MOHD NOOR HAFIZ BIN ABD JALIL

Case Significance

Instructive on the legal priority of a registered charge over a later private caveat under the National Land Code 1965, and on the protected position of a purchaser at a chargee's public auction against a caveat resting on a conditional beneficial interest.

This High Court decision at Johor Bahru concerns an application to remove a private caveat lodged over a property that had been sold at a chargee's public auction, under sections 323 and 327 of the National Land Code 1965. The plaintiff was the successful purchaser at a public auction of a double-storey terrace house in Pasir Gudang, buying it for RM342,000, paying the deposit and arranging financing for the balance, with approval obtained from a public-sector housing financing body. As the transfer and charge documentation neared registration in the plaintiff's name, the process was halted when a title search revealed that the defendant, who was occupying the property, had lodged a private caveat over it. The defendant relied on a Syariah Court order of 2021 directing him to bear the full repayment of the housing loan. The property had, however, been taken over and sold by public auction by the chargee bank after the registered proprietor, the defendant's former wife, defaulted on the sums owing, and the plaintiff was the lawful purchaser at that auction. The court, per Manira binti Mohd Nor JC, allowed the application and ordered the caveat removed. It held that a registered charge enjoys legal priority, so that a purchaser at the chargee's auction acquires title free of later encumbrances, and that the Syariah Court order conferred, at most, a conditional beneficial interest, the defendant not being the registered owner. On the balance of convenience the plaintiff's right, as lawful auction purchaser, prevailed over the defendant's, and the caveat, which merely protected an equitable interest subject to the bank's charge, could not obstruct the plaintiff's right to be registered as proprietor. Maintaining the caveat after the auction was concluded was baseless and contrary to law and constituted an unlawful obstruction to the plaintiff's lawful right. The court directed the Land Administrator or the Registrar of Titles to cancel the caveat, with costs of RM5,000 against the defendant. The judgment is instructive on the priority of a registered charge over a later caveat and on the position of a purchaser at a chargee's auction.