Restraint on DealingsRestraint on DealingsDr. Nuarrual Hilal Haji Md. DahlanDr. Nuarrual Hilal Haji Md. DahlanCollege of Law, Government and College of Law, Government and

International StudiesInternational StudiesUniversiti Utara MalaysiaUniversiti Utara Malaysia

DealingsDealings

TransferTransfer ChargeCharge LienLien EasementEasement LeaseLease

ExampleExample

Bakar owns a land in Sintok.Bakar owns a land in Sintok. The land is worth RM 10,000.00The land is worth RM 10,000.00 Bakar sells his land to Umar at the Bakar sells his land to Umar at the

price of RM 15,000.00.price of RM 15,000.00. Here, Bakar Here, Bakar transferstransfers his land to Umar. his land to Umar. Now, the new proprietor/owner to the Now, the new proprietor/owner to the

land is Umar.land is Umar. This is a type of dealing under the NLC.This is a type of dealing under the NLC.

ExampleExample

Bakar owns a land in Sintok.Bakar owns a land in Sintok. The land is worth RM 10,000.00The land is worth RM 10,000.00 Bakar leases his land to Umar for a duration Bakar leases his land to Umar for a duration

of 5 years.of 5 years. The lease is effected via a lease agreement.The lease is effected via a lease agreement. Bakar – Lessor, Umar – Lessee.Bakar – Lessor, Umar – Lessee. Umar has to pay monthly lease payment to Umar has to pay monthly lease payment to

Bakar at RM 500.00 per month for 5 years. Bakar at RM 500.00 per month for 5 years. The lease is a type of dealing under NLC.The lease is a type of dealing under NLC.

Restraint on DealingsRestraint on Dealings

By the word, we can understand that By the word, we can understand that the dealings (transfer, charge, lease, the dealings (transfer, charge, lease, easement) effected by the parties easement) effected by the parties are restrained.are restrained.

Types of Restraint on Types of Restraint on DealingsDealings

CaveatCaveat Court orders – lis penden, injunction, Court orders – lis penden, injunction,

prohibitory ordersprohibitory orders Purpose: to serve as a notice to the Purpose: to serve as a notice to the

world at large about the existing world at large about the existing claim that is being disputed and to claim that is being disputed and to discourage and restrain others from discourage and restrain others from dealing with the land while preserving dealing with the land while preserving the status quo of the parties and their the status quo of the parties and their interests.interests.

Example – Private CaveatExample – Private Caveat Bakar owns a land in Sintok.Bakar owns a land in Sintok. The land is worth RM 10,000.00The land is worth RM 10,000.00 Bakar sells his land to Umar at the price of RM Bakar sells his land to Umar at the price of RM

15,000.00.15,000.00. Bakar enters into an agreement of sale with Bakar enters into an agreement of sale with

Umar.Umar. Umar has to pay 10% deposit once the Umar has to pay 10% deposit once the

agreement is signed. 10% = RM 1,500.00.agreement is signed. 10% = RM 1,500.00. The balance of RM 13,500.00 has to be paid by The balance of RM 13,500.00 has to be paid by

Umar to Bakar in 3 months.Umar to Bakar in 3 months. To protect Umar’s interest during this 3 months, To protect Umar’s interest during this 3 months,

Umar created a private caveat against the land in Umar created a private caveat against the land in question.question.

The purpose of this caveat is to protect The purpose of this caveat is to protect Umar’s interest in the land (he has already Umar’s interest in the land (he has already paid RM 1,500 as deposit and intends to get paid RM 1,500 as deposit and intends to get the land).the land).

So, a caveat is registered in the land office.So, a caveat is registered in the land office. The Land administrator/land registrar will The Land administrator/land registrar will

endorse the issue document of title that a endorse the issue document of title that a private caveat, lodged by Umar has been private caveat, lodged by Umar has been created.created.

Thus, Bakar cannot sell to other person Thus, Bakar cannot sell to other person during this 3 months period.during this 3 months period.

Umar has a caveatable interests in the land.Umar has a caveatable interests in the land. The application form of caveat is provided The application form of caveat is provided

in the last part of the NLC. Find and see.in the last part of the NLC. Find and see.

CaveatCaveat

A ‘statutory injunction’. Note the A ‘statutory injunction’. Note the word ‘statutory’.word ‘statutory’.

Provisions in the NLC.Provisions in the NLC. Types of Caveat – private caveat, Types of Caveat – private caveat,

registrar caveat, lien-holder caveat, registrar caveat, lien-holder caveat, trust caveat.trust caveat.

Registrar’s CaveatRegistrar’s Caveat

Applied by interested parties to Applied by interested parties to prevent fraud and any improper prevent fraud and any improper dealings in the land.dealings in the land.

To protect the interest of the Federal To protect the interest of the Federal or State Authority, minors, persons of or State Authority, minors, persons of unsound mind and owner who is not unsound mind and owner who is not in the country.in the country.

Example – Registrar’s Example – Registrar’s CaveatCaveat

Bakar (a minor) owns a land in Sintok.Bakar (a minor) owns a land in Sintok. The land is worth RM 100,000.00The land is worth RM 100,000.00 Osman is the trustee to Bakar land, created via a Osman is the trustee to Bakar land, created via a

will by Bakar’s father – Ali.will by Bakar’s father – Ali. Ali died 10 years ago.Ali died 10 years ago. Osman is a greedy person. He wishes to sell Osman is a greedy person. He wishes to sell

Bakar’s land to Talha for RM 500,000. This money Bakar’s land to Talha for RM 500,000. This money will go directly to Osman’s hand, not Bakar.will go directly to Osman’s hand, not Bakar.

Osman tries to persuade Bakar to sell the land.Osman tries to persuade Bakar to sell the land. However, Umar being Bakar’s uncle, knew However, Umar being Bakar’s uncle, knew

Osman’s bad intention. Osman’s bad intention. Umar applies a Registrar’s Caveat at the land Umar applies a Registrar’s Caveat at the land

office to protect Bakar’s interest in the land from office to protect Bakar’s interest in the land from being sold to Talha, by Osman.being sold to Talha, by Osman.

Example – Trust CaveatExample – Trust Caveat Majlis Agama Islam Kedah (MAIK) owns a Majlis Agama Islam Kedah (MAIK) owns a

land in Sintok.land in Sintok. The land is worth RM 10 million. The land is worth RM 10 million. This land is a wakaf land – for the benefit This land is a wakaf land – for the benefit

of Muslims in Kedah.of Muslims in Kedah. MAIK, is a trustee to the wakaf land MAIK, is a trustee to the wakaf land

(pursuant to the Kedah Administration of (pursuant to the Kedah Administration of Islamic Law Enactment).Islamic Law Enactment).

MAIK can apply a trust caveat against the MAIK can apply a trust caveat against the wakaf land in Jitra Land Office, if MAIK can wakaf land in Jitra Land Office, if MAIK can prove that somebody may sell or deal with prove that somebody may sell or deal with the land dishonestly.the land dishonestly.

Example – Lien Holder Example – Lien Holder CaveatCaveat

Bakar gives a loan RM 100,000 to Umar. Bakar gives a loan RM 100,000 to Umar. In return Umar gives the issue document In return Umar gives the issue document

of title to Bakar as a lien.of title to Bakar as a lien. Umar has to repay the loan to Bakar in Umar has to repay the loan to Bakar in

installment for 10 years.installment for 10 years. To protect Bakar’s interest, Bakar can To protect Bakar’s interest, Bakar can

create a lien-holder caveat against Umar’s create a lien-holder caveat against Umar’s land.land.

So during the subsistence of the loan So during the subsistence of the loan repayment, Umar cannot deal with the repayment, Umar cannot deal with the land (for eg sell the land to others).land (for eg sell the land to others).

Example – Prohibitory OrderExample – Prohibitory Order Bakar gives a loan RM 100,000 to Umar. Bakar gives a loan RM 100,000 to Umar. Umar has to repay the loan to Bakar in installment for Umar has to repay the loan to Bakar in installment for

10 years.10 years. However, Umar defaulted on the loan repayment.However, Umar defaulted on the loan repayment. Bakar took a legal action against Umar and obtained Bakar took a legal action against Umar and obtained

a judgment.a judgment. Bakar – judgment creditor, Umar – judgment debtor.Bakar – judgment creditor, Umar – judgment debtor. To protect Bakar’s interest, Bakar can apply to the To protect Bakar’s interest, Bakar can apply to the

Court for a Prohibitory Order against some of Umar’s Court for a Prohibitory Order against some of Umar’s land.land.

Bakar also can sell off Umar’s land which are subject Bakar also can sell off Umar’s land which are subject to that Prohibitory Order to settle Umar’s oustanding to that Prohibitory Order to settle Umar’s oustanding loan still not repaid to Bakar.loan still not repaid to Bakar.