2. To have a valid lien, there must be an intention to create such a lien.

Discuss this
element with reference to the relevant statutory provisions and case law.
The intention to create a lien is one of the elements that is needed to be fulfilled in order for the
creation of a lien to be valid. The act of depositing the issue document of title, or duplicate lease
must be coupled with the intention to create a lien. A mere deposit of an issue document of title
by a proprietor with any person but without the intention to borrow money from the person will
not be sufficient to establish the element of deposit. Without the existence of intention, the act of
deposit could be construed as a deposit done merely as a matter of convenience in view of a
possible sale or simply for safekeeping due to the proprietors departure from the country would
not justify the entry of a lien-holders caveat.
The lender must prove that the deposit was made on the advance of money. The lender must
prove the true intention of the proprietor when the title was deposited by the proprietor. In other
words, the lender must shows that the deposit was made as security for a loan advanced by the
lender. If a deposit is for any reason other than as security for a loan no valid lien could be
created.
This can be referred to in the case of Paramoo v Zeno Ltd where the court held that the
requirement that there must be an intention to deposit the issue document of title or duplicate
lease with the lender as a security for the loan and for no other purpose must be proved. The
intention to create a lien may be inferred from the fact that the issue document of title to the land
has been deposited with the lender as a security for the loan or for other purposes.
The element of intention is not satisfied if the possession of issue document of title is obtained
through fraud or misrepresentation and the deposit of issue document of title is never authorised
by the registered proprietor.
In the case of Nallammal v Karuppanan, the 1st defendant took the title deed from the plaintiff
who was the registered proprietor of the land by giving the false pretext that he required it in
order to secure a contract job. The plaintiff then found out that the 1 st defendant had deposited
the title with Bank Buruh as a security for a loan which was utilised by the 1 st defendant without
the authorisation of the plaintiff. The plaintiffs thumbprint was affixed to the loan document
under undue influence by the 1st defendant. The court held that, the 1st defendant had no tight in
law to make use of the issue document of title as security for the loan. The 1 st defendant did in
fact defraud the plaintiff to obtain the issue document of title.
Pewira Habib
Standard Chartered Bank v Yap Sing Yoke