[2008] 7 MLJ 14 (RC)

Affin Bank Bhd v Mahanbir Singh a/l Manmohon Singh & Anor

Case reviewed by Muhamad Ali bin Hussain 1425989

Brief facts:- The first defendant was a director and shareholder of MDV Technical Services

Sdn Bhd, which was the registered proprietor over a land. The second defendant was the

Pengarah Tanah dan Galian Johor. 5 September 1992, the plaintiff approved RM13m banking

facilities to United Cannery Sdn Bhd, the borrower. The banking facilities partly secured by a

third party charge over the land of MDV Sdn Bhd as the chargor. Both borrower and chargor

defaulted, subsequently the plaintiff commenced foreclosure proceedings. The chargor was

wound up on 23 March 1994 and in pursuant to s 226(3) of the Companies Act 1965, the

plaintiff had obtained leave on 18 July 1996 from the court to proceed with the said charge

and obtained an order for sale against land from the court. However, negotiation took place

with the official receiver for a sale of the said land, resulted redemption of the plaintiffs

charge. In a meantime, the first defendant had lodged a private caveat over the land on 2

December 2002. On 20 August 2003, a registrar’s caveat has been entered over the said land.

The plaintiff had relied on the expectation of negotiation to effect the sale of the said land and

thereafter to redeem the charge. But, such sale never materialize. The plaintiff now filed an

application for the removal of the private caveat and the registrar’s caveat.

Judgement& Analysis:-

By disallowing the claim:

1. It has to be noted that the registered owner of the land in this case was the chargor company

and not the first defendant. (( The concept of separate legal entity should be applied since

there is separation between the company and its member. In which the first defendant’s caveat

was entered in his own name as a shareholder of the chargor company for to protect his

1
personal interest (see para 6), To support in the Court of Appeal case, Luggage Distributors

(M) Sdn Bhd v Tan Hor Teng & Anor [1995] 1 MLJ 719 pointed out that the principle of a

shareholder of a proprietor company had no caveatable interests in the company’s land (see

para 8)).

2. The first defendant’s application in Form 19B did not show any caveatable interest at all as

the registered owner of the land was the chargor company. Since the first defendant failed

to satisfy the first tier test, the private caveat including the registrar caveat must be

removed without the necessity of going any further (see para 11). This is because as the

second defendant had not filed any affidavit in reply to any of the plaintiffs affidavits in

matter of registrar caveat, the second defendant was deemed to have admitted all of the

plaintiffs averments in the plaintiffs first and second affidavits (see para 12).