PROHIBITORY PROHIBITORY ORDERORDER

A type of restraint on dealings available to a judgment creditor who does not come within category of persons having caveatable interest pursuant to s.323(1) NLC

Definition-s.334 NLCDefinition-s.334 NLCwhere land or an interest in land

held by a judgment-debtor is to be sold in execution proceedings, an order made pursuant to rules of court by a court of competent jurisdiction prohibiting judgment debtor from effecting any dealing as specified in order.

PO cannot be granted in respect of land or interest held by a registered proprietor who is not a judgment debtor or where judgment debtor is no longer holding title or any interest in land.

Hon Ho Wah & Anor v United Malayan Banking Corp. [1994] 2 MLJ 393

Judgment creditor can take whatever interest judgment debtor has in land and not those that he has already parted with to other persons.

Karuppiah Chettiar v Subramaniam [1971] 2 MLJ 116 (FC)

PO - is EFFECTIVE on entry in RDT by Registrar – s.335 NLC.

After entering PO on RDT seizure & sale of land can be carried out - Ord.47 rule 6(3) RHC

SA Andavan v Siow Meow Choi [1976] 1 MLJ 147 at 148.

PO cannot empower sale of land/interest until ENTERED on RDT

But its entry will not necessarily ensure priority to judgment creditor,

PO does not give judgment creditor interest in land

No sale until after expiry of 14 days from date of ENTRY of PO on RDT - Ord. 47 r 7(a) RHC.

Failure to comply with condition – sale is irregular & can be set aside.

order declaring sale made pursuant to PO can be made absolute after expiration of one month from date of sale - Ord. 47 rule 7(g) RHC

Rationale - to enable any objection to be made during this period.

Where PO is in contest with a prior uncaveated interest in land, the absence of the caveat will not defeat the prior interest for general legal principles will determine priority.

However, priority of first in time can be lost by negligence

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

UMBC Bhd v Goh Tuan Lye [1976] 1 MLJ 169.

Similar to private caveat, PO does not create an interest in land nor does it defeat an existing interest but merely temporarily inhibits dealings with land or interest in land.

Entry of PO has effect of attaching land or interest that can be sold in execution

Raman Chetty v Muthiah Chetty (1922) 3 FMSLR 177.

Effect of Prohibitory Effect of Prohibitory OrderOrders.336 NLC 1965 s.336 NLC 1965

EFFECT of PO entered on RDT & expressed to relate to land prohibit:

(a) REGISTRATION of all instrument of dealing executed by or on behalf of proprietor EXCEPT certificate of sale

(b) ENDORSEMENT of claim to benefit of tenancy exempt from registration granted by proprietor

© ENTRY of lien-holder's caveat

Exceptions to prohibition – ss. (2)

(a) any instrument of dealing, other than a certificate of sale, directly affecting that interest;

(b) where that interest is a lease or sub-lease-◦(i) any claim to benefit of any tenancy exempt

from registration granted directly◦(ii) lien-holder's caveat

Time PO Effective Time PO Effective

PO CANNOT prohibit registration, endorsement or entry of any instrument, claim or lien-holder's caveat where instrument was presented, or application for endorsement or entry received, prior to time from which order takes effect.

Registration of any instrument, or endorsement or entry of any claim or lien-holder's caveat, is prohibited by PO, Registrar MUST REJECT instrument

Procedure on rejection of Instrument

On rejecting any instrument or application for endorsement, Registrar must take similar steps as if he had rejected it pursuant to s.298 / s.317

Sale of land or interest subject to PO –s.337 NLC

Rules & regulations for carrying out sale of land is subject to - Order 47 RHC

Ker Chee Chaun v Katlyn Enterprise (M) Sdn Bhd [1991] 1 MLJ 98 (SC) at 100.

Land had been sold to a purchaser who failed to pay purchase price but Purchaser was registered as proprietor. Vendor obtained a judgment against purchaser and land was sold to satisfy amount owed.

Appellant bought land, received a certificate of sale issued by registrar of court

Former purchaser/proprietor applied to set aside judgment and sale & caveated.

Appellant applied to have caveat removed.

SC dismissed appeal for on balance of convenience it was preferable to maintain status quo pending settlement of action by former purchaser/ proprietor as RHC 1980 had not been followed in conduct of sale.

CT - RHC Ord 47 r 7, required conditions of sale to be approved by court, and that sale be confirmed by court.

On confirmation sale would become absolute, subject to proviso in r 7(g).

In this case, this rule was not observed nor was certificate of sale in appropriate form.

Thus there is serious questions to be tried -whether auction of land is absolute having regard to RHC 1980 and whether registration was effected by sufficient instrument to vest indefeasible title on appellant under NLC.

6 months - RHC 1980 Ord 47 r 6(4)

Extension of PO must be entered on RDT prior to expiry - RHC 1980 Ord 47 r 6 (5).

IF PO expired or extended - extensions have lapsed, creditor has no right to seize & sell land.

Strict compliance with RHC & terms of NLC are necessary to authorize & legalize seizure & sale.

DURATION of PO - s.338 NLC

Ban Hin Lee Credit Sdn Bhd v Utama Computer Centre Sdn Bhd [1991]2 MLJ 327

on four occasions, applications for extension of PO was granted by a senior assistant registrar, but no sale took place.

Finally when creditor applied to set date, time and venue for auction of land, proprietor (as judgment-debtor) applied to set aside PO.

Court granted proprietor's application and observed that because PO is in nature of a caveat, and interferes with rights of owner of land against which it is registered from dealing with it, Court 'can only make an order for renewal of PO upon proof of existence of

"special circumstances".

Existence of special circumstances, is a condition precedent to exercise by court of its jurisdiction to renew PO.

Court must be satisfied that there exist good reasons before exercising its discretion to extend PO.

Extension is ordinarily not to be granted.

General ground which creditor had relied in its applications was that it had been unable to take necessary steps for sale of the lands within 6 months but no explanation on delay.

methods of determination – methods of determination – s.339s.339

PO can be withdrawn at any time by CT order

Registrar on receiving a copy of order of withdrawal, MUST cancel entry on RDT, note reason & date for cancellation

Normal rule – first in time will be given PRIORITY.

Lien holder first in time compared to a judgment creditor will have priority.

See Paramoo v Zeno Ltd. [1968] 2 MLJ 230