A202 BWBB3043 BANKING SECURITIES

Case study

THE ISSUE IN CAVEAT

The issue in caveat is about fraud. The fraud can be made in any type of land or property. Fraud is an issue that always occured in Malaysia and it also is one of the main issues in the caveat. The caveat can make a person fraudulent the land or property of the owner even though never sold the land to other people. The fraudster can fraud through pretending the identity of the owner and doing the transaction as an owner without the consent of the actual owner. It could make other people believe that the fraudster is the owner without any doubt. For example, the fraud can be found in the case that happened in Malaysia in which is Liputan Simfoni Sdn Bhd v Pembangunan Orkid Desa Sdn Bhd. This case is about the imposter company fraudulently transferring a piece of land to another party by claiming it is the owner and needs to replace the original document of the land that has been lost. From the cases, it can be known that the fraud is easily occurring although the actual owner never did any transaction regarding the transfer or sold the interest and ownership of an asset. The fraudster can easily copy a document and can enter a caveat easily without any permission of the actual owner. Hence, it will bring a lot of problems and issues to the society especially for the owner of the land and it could make the owner become flustered and uneasy.

Caveat has the issue that can enter without sufficient proof to support the claim of caveat. According to Section 323(2) of the National Land Code 1965, caveat needs the caveator to fulfill the requirement which needs to specifically mention what nature of the caveat on the land or property. The caveat can be entered or registered without meeting the requirement of the law because the caveat has inappropriate or insufficient proof to support the caveat that it creates. It could make the caveat become invalid or can be removed due to inability to fulfill the term and condition by the law in Malaysia. Besides that, although the people who registered the caveat do not fulfill the requirement, it also can apply or enter the caveat and it will make some issues or problems appealing. It means that the caveat can be registered without any sufficient information on the nature of the property or land. For instance, the case of Yeap Joo Kim v. Ong Choo Ean is about the plaintiff suing the defendant due to the defendant not being the beneficiary of the land but she already registered the caveat for four years without meeting the requirement of law. The defendant, who is one of the beneficiary's wife stated that she had lent some money to her husband and the husband was verbally admitting trust in his inheritance. In this case, the defendant does not fulfill the requirement when entering the caveat in which she does not mention the nature of claim for the land and not clearly stating the caveat is binding for the land or in particular interest. Therefore, the court removes the caveat that the defendant does not fulfill the requirement.

In addition, another issue that appeals in caveat is forgery. Forgery can be done through forge signature of the owner, forge identity and forge the document. Forgery is a common issue that occured in Malaysia and it may also happen in caveat. The people who want to forgery can forge through by pretending as the owner of the property or land. Through the forgery, the buyer or someone who wants to buy the land or property will believe that the fraudster is the actual owner. It could bring a negative impact to the real owner due to the owner might not know the identity, signature or document has been forged by someone. Moreover, it could make the owner have the probability of losing the land or property. For example, the same case which is the Liputan Simfoni Sdn Bhd v Pembangunan Orkid Desa Sdn Bhd is also about forge the identity of the owner and went to Pendaftar Tanah dan Galian, Wilayah Persekutuan Kuala Lumpur to claim the original document of the land due to the fraudster said that he has been lost the original document. The imposter company entered the private caveat of the land and caused other people unable to register as the proprietor. In this case can know that the identity will be forge by fraudster even though did not doing any transactions.

Question 1: Based on the issue above, IDENTIFY THE SOLUTION OF THE CAVEAT. (50 marks)