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Role of Equity and the Application of English Land Law in the Malaysian Torrens System

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Role of Equity and the Application of English Land Law in the Malaysian Torrens System ROLE OF EQUITY AND THE APPLICATION OF ENGLISH LAND LAW IN THE MALAYSIAN TORRENS SYSTEM Teo Keang Sood* Abstract Tis paper looks at the applicability of English land law and general equitable principles in the context of the Malaysian Torrens system. Notwithstanding section 6 of the Civil Law Act 1956 and some observations to the contrary in case law, it is argued that relevant aspects of English land law may continue to apply. As for general equitable principles, their application is supported by statutory provisions and case law. Tis is subject to their application not being in confict with the principle of indefeasibility and the caveat system provided for in the Malaysian Torrens statutes. I. Introduction Te extent to which English land law and general equitable principles are applicable in the Malaysian Torrens system is a vexed question. As a starting point, s 3, which is found in “Part II (General)” of the Civil Law Act 1956,1 provides, inter alia, for the general reception of English common law, rules of equity and statutes of general application in Malaysia in the circumstances specifed therein.2 However, s 6 of the same Act qualifes s 3 and categorically prohibits the application of English land law and equitable principles relating thereto. Section 6 reads as follows: Nothing [in Part II (General)] shall be taken to introduce into Malaysia or any of the States comprised therein any part of the law of England relating to the tenure or conveyance or * Professor, National University of Singapore. 1 Act 67 (Revised 1972). 2 Reception of the said common law, rules of equity and statutes of general application is allowed so far only as the circumstances of the States of Malaysia and their respective inhabitants permit and subject to such qualifcations as local circumstances render necessary. As provided in s (3)(1) of the Civil Law Act 1956, the cut-of date for reception in Peninsular Malaysia is 7 April 1956. For Sabah and Sarawak, the cut-of dates are 1 December 1951 and 12 December 1949 respectively. English cases decided after the respective cut-of dates will only be of persuasive authority and not binding as such on Malaysian courts. See also, generally, Andrew Phang, Cheshire, Fifoot and Furmston’s Law of Contract – Singapore and Malaysia Edition (2nd ed, Butterworths Asia, Singapore, 1998) at 37. 40 Role of Equity and the Application of English Land Law 41 in the Malaysian Torrens System assurance of or succession to any immovable property or any estate, right or interest therein. As will be seen, case law does not take a uniform position on the application of English land law and general equitable principles in the Malaysian Torrens system. In addition, the lack of clarity in the pronouncements by the courts exacerbates the problem. In Tan Wee Choon v Ong Peck Seng,3 the High Court opined as follows: 4 [Te] common law and equitable rights previously procurable in this country are no longer available since the passing of ss 3(1) and 6 of the Civil Law Act, 1956 and the National Land Code, 1965. … Tis intention to preclude the continued importation of common law and equitable rights into this country is further substantiated in s 6 of the Civil Law Act … Tis view that rights arising out of common law or the rules of equity which relate to land are no longer applicable in Malaysia was shared by the High Court in the subsequent case of Oriental Bank v Chup Seng Restaurant (Butterworth) Sdn Bhd.5 Te question which arises, however, is whether the prohibition is absolute and so applies even where there is a lacuna in a land matter and the application of English land law and general equitable principles is not inconsistent with the aims and objectives of the Malaysian Torrens system. It is suggested below that the solution may be to evaluate whether the application of English land law and general equitable principles in a particular situation goes against the policy objectives of the Malaysian Torrens system. If not, they should continue to apply. II. Judicial Pronouncements on Prohibited Application Te policy objectives of the Malaysian Torrens system of land registration embodied in the Peninsular Malaysia National Land Code 19656 and the Sarawak Land Code (Cap 81)7 seek to provide for certainty and security of title and interests in land. In Eng Mee Yong v Letchumanan,8 a case on 3 Tan Wee Choon v Ong Peck Seng [1986] 1 MLJ 322. 4 At 323-324. 5 Oriental Bank v Chup Seng Restaurant (Butterworth) Sdn Bhd [1990] 3 MLJ 493 at 495. 6 Peninsular Malaysia National Land Code 1965, Act 56. 7 Te Sabah Land Ordinance (Cap 68) embodies a modifed Torrens system of land registration which does not confer indefeasibility of title or interests in land which is a feature of central importance in the Torrens system of land registration. See the Sabah cases of Sia Hiong Tee v Chong Su Kong [2015] 4 MLJ 188 at [29]-[31] and Sabindo Nusantara Sdn Bhd v Majlis Perbandaran Tawau [2011] 8 MLJ 653 at [15]. 8 Eng Mee Yong v Letchumanan [1979] 2 MLJ 212. 42 Canterbury Law Review [Vol 22, 2016] appeal from Malaysia, Lord Diplock, in delivering the judgment of the Privy Council, afrmed that:9 Te Torrens system of land registration and conveyancing as applied in Malaya by the National Land Code, has as one of its principal objects to give certainty to title to land and registrable interests in land. On the prohibited application of English land law and equitable principles related thereto, the Privy Council in United Malayan Banking Corporation Bhd v Pemungut Hasil Tanah, Kota Tinggi10 exhorted as follows:11 Te National Land Code is a complete and comprehensive code of law governing the tenure of land in Malaysia and the incidents of it, as well as other important matters afecting land there, and there is no room for the importation of any rules of English law in that feld except in so far as the Code itself may expressly provide for this. Indeed, as early as 1917, in Haji Abdul Rahman v Mohamed Hassan,12 Lord Dunedin, in delivering the judgment of the Privy Council, had this to say of the then Selangor Registration of Titles Regulation 1891 which was modelled on the Torrens system of land registration:13 It seems to their Lordships that the learned judges … have been too much swayed by the doctrines of English equity, and not paid sufcient attention to the fact that they were here dealing with a totally diferent land law, namely a system of registration of title contained in a codifying enactment … Te essence of Lord Dunedin’s speech would appear to be that the system of registration of title and land dealings contained in a codifying enactment does not permit the application of the doctrines of equity relating to English land tenure to land matters in Malaysia. In a similar vein, on the applicability of the bare trust concept to a vendor/ purchaser situation in the Malaysian Torrens system, the Privy Council in Chin Choy v Collector of Stamp Duties,14 in view of s 6 of the Civil Law Act 1956, had, by way of obiter, expressed reservation that:15 9 At 214. And for that matter, the Sarawak Land Code (Cap 81) as well. 10 United Malayan Banking Corporation Bhd v Pemungut Hasil Tanah, Kota Tinggi [1984] 2 MLJ 87. 11 At 91. 12 Haji Abdul Rahman v Mohamed Hassan [1917] AC 209. 13 At 216. 14 Chin Choy v Collector of Stamp Duties [1981] 2 MLJ 47. 15 At 48 (emphasis added). Role of Equity and the Application of English Land Law 43 in the Malaysian Torrens System … the principle that once a valid contract for sale is concluded the vendor becomes in equity a trustee for the purchaser of the estate sold is a peculiarity of English land law. Tese Privy Council cases would suggest that, given the prohibition contained in s 6 of the Civil Law Act 1956 and that the National Land Code 1965 is a complete and comprehensive code of law governing the tenure of land in the Malaysian Torrens system, to allow the application of English land law and equitable principles related thereto would only serve to erode the policy objectives of the Malaysian Torrens system as noted above. In Eng Mee Yong, the Privy Council was troubled by the continued application of the equitable doctrine of notice in place of the system of caveats. Lord Diplock stated the rationale for having the system of caveats in the National Land Code 1965 as follows: “Te system of private caveats is substituted for the equitable doctrine of notice in English land law …”16 Tis is an authoritative statement that the equitable doctrine of notice is part of English land law. Constructive notice is an example of the equitable doctrine of notice. Its application leads to insecurity and uncertainty of title and interests acquired by an innocent third party purchaser in the mistaken belief that the registered proprietor has an unencumbered title. Failure to caveat would, thus, jeopardise one of the aims of the Malaysian Torrens system, namely, to maintain the conclusiveness of the register and this would in turn give rise to uncertainty and insecurity of title and interests in land dealings. In addition, the application of the doctrine of constructive notice would undermine the role which the system of caveats is designed to play in this regard. In Holee Holdings (M) Sdn Bhd v Chai Him,17 the High Court also expressed its concerns that acceptance of such an equitable doctrine would rock the very foundation of the National Land Code 1965, given its indefeasibility provisions and the caveat system provided therein.18 Hence, the application of the equitable doctrine of notice should not be permitted as it is inconsistent with the policy objectives of the Malaysian Torrens system.19 In United Malayan Banking Corporation Bhd, the registered proprietor had failed to pay the rent due in respect of the land to the State Authority.
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