Land Assignment Final

Question A Generally security transactions  are dealings efected by the registered proprietor o an alienated land to coner an interest on such land to the lender in order to obtain a loan. Such interest unctions as a guarantee o repayment o the loan and in the event o  deault by the borrower, the lender will be entitled to commence oreclosure proceedings or an order or sale o the said land to recover the loaned sum. 1 In other words, security is created when the creditor obtains rights eercisable against some property in which the debtor has an interest in order to enorce the discharge o the debtor!s obligation to the creditor." #ender is usually disinclined to ofer loan by merely basing it on the borrower!s personal credit and hence, security is a orm o $certainty! or repayment in enorcing a claim in debt.% &here are three 'inds o security namely lien, mortgage and also pledge (an interm intermedi ediate ate betwee between n lien and mortga mortgage) ge)*. +owev +owever er in est est -alay -alaysi sia, a, char charges ges and and statutory liens are the security transactions recognied under our /ational #and 0ode 123 and remedies are also provided.

Lien is unde4ned under /#0 but -alaysian courts 3 approved the de4nition as laid down in +alsbury!s +alsbury!s #aws o 5ngland 5ngland 2 which means 6a right at common law in one man to retain rightully and continuously in his possession belonging to another until the present and accrued accrued claims o the person person in possessio possession n is satis4ed.7 satis4ed.7 S"81(1) S"81(1) o the /#0 lays down the principles governing a valid creation o &orrens statutory lien. &he method o creating creating a lien in the /#0 is by depositing depositing the issue issue document document o title by the proprietor or lessee as a security security or a loan and that lien9holder may thereupon apply or the entry o a lien9holder! lien9holder!s s caveat.: &he proprietor proprietor may also deposit his title with a lender or the bene4t bene4t o a third third party party.. ;nce ;nce a lien9h lien9hold older< er1?@ Powdrill  >1?@ 0h. :** % 0ousins, &he #aw o -ortgages, pg 1. * Halliday v Holgate (1828) Holgate (1828) #.. % 5ch. " 3 Palaniappa Chetty v Dupire Brothers & Anor  (1"") 1 B-S# %:? (0A) at pg %::C ORMORM Manickavasagam Chetty v homas !ames Mc"regor >1%%@ " -#D "3 (+0) at pg "2C Perwira A#n Bank Bhd v $elangor Properties $dn Bhd & Ors >"?1?@ Ors  >"?1?@ % -#D *% (0A) at pg *.

2 Eol 28 (3

th

: &he #ien.

 5d) at pg "3:.

becomes a secured creditor.8 +ence the holder o any lien will be entitled an order or the sale o the land or lease ater he has obtained Fudgement or the amount due to him under the lien in the event o deault payment by the debtor.

Mortgage is both a contract and a transaction which creates an interest in land by way o security. It is a conveyance o land or an assignment o chattels as a security or the payment o a debt, or the discharge o some other obligation or which it is given. -ortgage securities coner contractual right (including the right to sue or debt) which is supported by proprietary rights over the property that is the subFect9matter o the security to the lender, but which are not dependent on the lender obtaining possession o that property.1?A mortgage deed generally stipulates that the mortgagor shall repay on a 4ed date rom the eecution o the deed, ailure in which the property will be vested in the mortgagee. &he common law mortgage is redeemable on the payment or discharge o such debt or obligation and it is complementary to the lender!s power to return the property (or money euivalent represented by the surplus on the sale o the property) on repayment. 0onversely, i the lender is unable to return the property or money euivalent, as happens on oreclosure, the personal covenant, even i unsatis4ed, is etinguished. 11 /#0 does not recognie common law mortgage.1" A mortgage is a conveyance o property subFect to a right o redemption, whereas a charge conveys nothing and merely gives the chargee certain rights over the property as security or the loan.1% Charge is provided in /#0 by virtue o s3 and s"*1 and it is ineuivalent to 5nglish mortgage at common law although both are meant to secure repayment o loan. 1* A statutory charge is created over any alienated land or lease or undivided share to secure the repayment o a loan and it ta'es efect only upon registration. 0harge passes no title or 8 Perwira A#n Bank Bhd v $elangor Properties $dn Bhd & Ors >"?1?@ % -#D *%.  +alsbury #aw o 5ngland. 1? $antley v %ilde >18@ " 0h *:* 11 oakes & Co 'td v Rice >1?"@ A0 "*, +#C $utton v $utton (188") "" 0hH 311. 1" oakes & Co 'td v Rice >1?"@ A0 "*, +# Jut our land law certainly recognises a mortgage in the sense o &orrens system, reerred as &orrens -ortgage in which the mortgagor retains the legal ownership whilst the mortgagee acuires a statutory right to enorce his security. Bor the purpose o avoiding conusion, our /ational #and 0ode drops the word KmortgageK and uses the word KchargeK in place o &orrens mortgage.

1% &he #aw o eal =roperty (3

th

 5d), Sir obert -egarry L + ade at pg 1*.

1* Bank Bumiputra Malaysia Bhd v Doric Development $dn Bhd & ( Ors >188@ 1 -#D *2".

ownership rom the registered proprietor o the land to the chargee or lender. It is clearly stated under s"*% o /#0 that the charge merely renders the land in uestion liable as a security. egistered charge only amounts to an interest in land but is not to be considered as a contract. 13 As such, no power o sale or oreclosure is conerred on the chargee himsel  upon deault o the chargor but legal proceedings must be ta'en by the chargee to obtain a  Fudicial order o sale o the charged property.12 Agreement to secure repayment o a loan created by contracts outside any enactments o  the &orrens system1:@ % -#D %:% (0A) at pg %:2. 12 5norcement o 0harges +andboo', pg 1?9%? 1: Chuah +ng ,hong v Malayan Banking B hd >18@ % -#D : (B0) at page 11". 18 ARRM Arunasalam Chetty s-o $itham.aram Chetty v eah Ang Poh & Anor  >1%:@ 1 -#D 1: (S0) at pg "?. 1 Phileoallied Bank /M0 Bhd v Bupinder $ingh a-l Avatar $ingh & Anor  >"??"@ " -#D 31% (B0) "? Cheshire and Burn1s Modern 'aw o2 R eal Property  (13th 5d) by 5+ Jurn "1 Russel v Russel (1:8%) 1 Jro 00 "2 in 1:8%.

An euitable lien arises under our /#0 when there is a ailure to enter lien9holder!s caveat or, pending such entry, the lender will acuire a right to a lien in euity. "" A lien in euity over a land can be claimed by a registered chargee who has custody o the title pending registration o the charge and subseuently the right to enter into a caveat. "% In the event o conNicting euities, a lender with whom the title is deposited earlier in time will not lose his priority Fust because o his ailure to caveat the property. "* Question J Security &ransactions under the /ational #and 0ode in =eninsular Onder the /ational #and 0ode, there are two types o security transactions in land which are statutorily provided, namely, charge "3 and lien"2. 5ssentially, these transactions are to ensure that in the event o a deault by a borrower to repay loan, there are some orms o compensation available to the lender through security o loans. 0harge A charge can be granted over the whole o an alienated land or any undivided share in an alienated land and also any lease o alienated land but not parts o an alienated land ":. Bor a charge to be efective, it has to be registered accordingly with the #and ;Pce or the #and egistry "8. It is also possible or a registered proprietor to charge his property ew times in succession".Generally, a charge to two or more persons or bodies is not permitted but it can be created in avour o them as trustees or representatives Fointly %?.

"" Mercantile Bank 'td v O#cial Assignee o2 the Property o2 How Han eh  >12@ " -#D 12 (+0) "% $tandard Chartered Bank v *ap $ing *oke & Ors >18@ " -#D * (+0) "* Paramoo v 3eno 'td >128@ " -#D "%? (B0) "3 /ational #and 0ode 123, section "*% "2 Ibid, section "81(1) ": Ibid, section "*1(1) "8 Ibid, section "*%. " Ibid, section "*1(") %? /ational #and 0ode 123, section "*1(*)

In order to create a legal charge, the prescribed statutory orm %1 should be used to avoid reFection upon presentation or registration. +owever, a mista'e between the usage o  Borm 12A and 12J was held not detrimental or the usage o the statutory orms is deemed to be Neible%". hen a charge is registered, the efect would be that the land would be encumbered and thus urther dealings by way o sale or transer is prevented and consent rom the 4rst chargee would be reuired or urther charges to be efected %%. Burthermore, upon registration o the charge, the chargee will have an indeeasible interest in the land %* which also coners the charge priority over other dealings that would be created ater the registration o the charge.%3  hen there is a charge created, there would be provisions which are implied on the part o the chargor in all charges %2 and when there is an absence o a contrary intention epressed in the charge %:. Jy virtue o section "**(1), the 4rst chargee is entitled to the custody o the issue document o title to the land charged or in certain circumstances, the duplicate lease subFect to any agreement to the contrary. It is also provided that, the chargee may when reuired by and on the written reuest o the proprietor or lessee produce the issue document o title or duplicate lease at the land registry or oPce or a purpose speci4ed under the /ational #and 0ode(/#0)%8.Hue to charges being able to be subseuently

%1 Ibid, section "*"(1) and "*"("). &he type o orm used should depend on whether it is or the repayment o a debt or or a periodic sum.

%" See 4 'etchumanan v Central Malaysian 5inance Bhd >18?@ " -#D 2 and an *en *ee & Anor v +6uity 5inance Corp Bhd >11@ 1 -#D "%:

%% ow, #ainah ;i #in ("??%) Conveyancing Practice and Procedure in %est Malaysia, Ruala #umpur, -alayan #aw Dournal at pp. "%

%* ai 'ee 5inance Co $dn Bhd v O#cial Assignee & Ors  >18%@ 1 -#D 81 %3 Ainul Daria -aidin, et. al. "??8. =rinciples o -alaysian #and #aw. =etaling Daya #eis /eis at pp. "*3 %2 /ational #and 0ode 123, section "* %: Ibid, sections "3?9"3" %8 /ational #and 0ode, section "**(")

granted, there is the possibility that the issues o priority o charges may arise. Such priorities could be altered by tac'ing,%consolidation*? and postponement*1.  &he rights and remedies o the charger and charge are ehaustively and eclusively dealt with under the /#0 *". Onder the /#0, two remedies are available to a charge in the event o a deault o the loan by the charger. &hey are to obtain a sale o the land charged *% or to ta'e possession o the property charged **. +owever, the right to ta'e possession o  charged land is restricted to certain types o land *3 and only eercisable by 4rst chargees only*2. An eercise o the right o possession is no bar to subseuently obtaining an order o  sale o the land*:. #astly, a rare practice *8 among ban'ers which is epressly allowed in the /#0 is the transer o charges* . &he efect o the transer would be that subFect to agreement to the contrary, the transeree is subFect to the obligation and has a duty to perorm and observe the provisions o the charge 3?.

% Ibid, section "*2 *? Ibid, section "*3 *1 Ibid, section "*: *" ,imlin Housing Development $dn Bhd v Bank Bumiputra /M0 Bhd & Ors >1:@ " -#D 8?3 *% /ational #and 0ode, section "3% ** Ibid, section ":1 *3 Ibid, section ":?(1) *2 Ibid, section ":?(") *: Ibid, section "3%(") *8

ong, Rim Batt,(1 ) 5norcement o 0harges +andboo', Ruala #umpur, -alayan #aw Dournal at pp. %3

* /ational #and 0ode, section "1*(1)(d) 3? Ibid, section "12(") and section "1(")

An unregistered chargee is not entitled to a statutory remedy under the /#0, 31 but he can see' euitable recognition o the charge and obtain a contractual relie. 3" I he has custody o the issue document o title, he can claim or a lien over the land. 3%  In act, according to S"?2(%) o the /#0, an agreement to secure a debt in avour o the creditor in respect o the debtor!s land may create an euitable charge 3* giving rise to an euitable right in avour o the creditor, although no charge has been created under the /#0.33 #ien Onder the /#0, a lien is created when the registered proprietor deposits his issue document o title or a loan.32 &he person or body can later apply to enter into lien9holder caveat 3: and shall upon the entry o the caveat, become entitled to a lien over the lease or land. Bor the creation o lien, nothing needs to be recorded or entered in the register. It is a dealing of  the register and thus, is not a registered interest.  &he statutory lien is not capable o being created by deposit o title documents alone. Its creation also reuires the ormality o an entry o caveat in the register. 38 A lien is a non9registered interest but it becomes protected as against registered interests as soon as it is created. &he entry o caveat itsel does not warrant the validity o a lien. &he validity o a lien is dependent on the ul4llment o the prereuisite with regards to the deposit o  title documents as security or loan. &he entry o a lien9holder!s caveat is a statutory orm o dealing or efecting a valid lien and it is distinguishable rom the lodgment o an ordinary caveat in other cases or the purpose o protecting claims to land.

31 Oriental Bank v Chup $eng Restaurant /Butterworth0 $dn Bhd >1?@ % -#D *%. 3" Daito ,ogyo /$arawak0 $dn Bhd v Port Dickson 'and Development $dn Bhd >"??1@ " -#D 3%1. An unregistered charge unctions as a debt but it is not a proprietary interest in the land or lease or undivided share.

3% $tandard Chartered Bank v *ap $ing *oke & Ors >18@ " -#D *. 3* Malayan Banking Berhad v 3ahari .in Ahmad >188@ " -#D 1%3. An euitable charge can be created where there is no instrument capable o registration.

33 Mahadevan s-o Mahalingam v Manilal & $ons /M0 $dn Bhd >18*@ 1 -#D "22 at ":?9":1C gan ,hong v Bamah .te Pakeh  !amin Rashid >1%3@ -#D 12:C Arunasalam Chetty v eah Ah Poh rading >1%:@ -#D 1:C 4allipuram $ivaguru v Palaniappa Chetty  >1%:@ -#D 3C and Mercantile Bank v O#cial Assignee o2 the Property o2 How Han eh >12@ " -#D 12. 32 Ibid, section "81(1) 3:Ibid,section %%? 38 eh eck Huay v hor Hor Chooi  (13*) "? -#D "":C 3eno 'td v Pre2a.ricated Construction Co7 /Malaya0 'td7 >12:@ " -#D 1?*.

S"81(") o the /ational #and 0ode provides that a lien9holder is entitled to apply to the 0ourt or an order or the sale o the land or lease, upon the obtaining o Fudgement or the amount due to him thereunder. &he only remedy or a lien9holder upon deault o  payment is to have the debt discharged out o the land by way o sale o land under the direction o the 0ourt. A lien holder might only apply or and obtain an order o sale when he had obtained a Fudgement o the 0ourt o the actual sum due, and his right to enorce the lien by Fudicial sale was conditional upon proo o the personal obligation o his borrower to repay the debt. 3 A lien9holder may proceed as a mere Fudgement creditor against the land by way o an attachment. 2? A statutory lien is not transerable as there is no statutory provision or its transer. Its duration depends on the continuing presence o the caveat on the register. A lien9 holder!s caveat does not lapse by passage o time as does a private caveat which will lapse over the period o si years. here the caveat is withdrawn or cancelled, the lien will be determined. Histinguishes between 0harge and #ien  &he case o =aramoo v eno21 made it clear that a charge is uite diferent rom that o a lien and that they can eist independently o each other. A star' diference apparent rom the /#0 is the type o interest that is conerred upon the lender rom a charge and a lien. Onder a charge, by virtue o section %*?(1), the interest conerred upon the lender is indeeasible, whereas or a lien the interest is a statutory but non9registrable interest. &hus, rom the lender!s point o view, an indeeasible interest weighs more than an interest which is not registered. +owever, because o the various reuirements and procedure that is reuired to register a charge, some borrowers would opt or a lien or greater epediency to get a loan. In the past when the usual period to get a -emorandum o &ranser adFudicated was " months, some developers would opt or a lien rom the lender as interim security or aster loans2". A lien9holder!s caveat can be entered at any time and the ailure to caveat timeously will not cause the prior uncaveated lien to lose priority against later caveated 3 Cheong ,am v 'oke Chow ye (1"*) * B.-.S.#.. "*C Alagappa Chetti v 2? Dyal $ingh v Pandak Dahalim (1%) 8 -#D "*2. 21 >128@ " -#D "%? 2" Supra n at pp."*

Perianayagam (1?8) Innes 11:.

interests. &he reason why lien9holders are able to overrule the usual priority principles is because the lien9holder retains the issue document title. 5ntering a lien9holder caveat is usually done pending the registration o a charge. /onetheless, i there is a restriction in interest on the title, such an option or lien may not be as epedient because o the need to obtain prior consent and advent o the e9adFudication system in our current times. 2% Another

distinguishable

diference

is

the

possibility

o

subseuent

similar

transactions that can be made. Bor a charge, section "*1(") permits the creation o second and subseuent charges but or a lien, while it is not epressly stated that there cannot be subseuent liens, the basis or such a prohibition is that there can only be one copy o  issue document o title to the land and as such there cannot be subseuent liens 2*. &he result o this is that it is harder to get urther advances or loans when we have a lien as compared to. As such, there is also no issue o alteration o priority or statutory lien. Burthermore, section "*1 (1) allows a charge to be used to secure the repayment o  debt or the payment o any sum other than a debt, but a lien can only be used to secure a loan under section "81. +ence, the scope o usage o charge is wider than lien. Also, unli'e charge, a Fudgment or debt owed must 4rst be obtained beore he is entitled to apply or an order or sale o land23. Such an arrangement is less bene4cial to lenders or in the event o deault, obtaining compensation is less epedient and discouraging. 0ases &he 0ourt o Appeal!s decision in +ong #eong Binance Jhd v Staghorn Sdn Jhd 22 highlights the advantage o lien. #ien under s "81 o the /#0 allows 6a registered proprietor to raise money on loan speedily by depositing the document o title registered in the lender!s name, as compared to the comple process o registering a legal charge over the land7.2: In act, according to +alsbury!s 28, there is no reuirement o a ormal contract or 2% Ibid. 2* See &he /ature and Application o the &orrens #iens and #ien9+olders! 0aveats in est -alaysia >18%@ 1 -#D l 23 /ational #and 0ode, section "81(") 22 Hong 'eong 5inance Bhd v $taghorn $dn Bhd >"??3@ 3 -#D 1?1. 2:  Ibid

11 >%*@. &he Dudge stated $S "81 o /#0 is intended or a registered proprietor to raise money on loan speedily by depositing the document o title registered in the lender!s name, as compared to the comple process o registering a legal charge over the land.!

28 J &an Sri Abdul Gani =atail, $Securities ;ver #and! ("??) 1?(1) Hals.ury8s 'aws o2 Malaysia %:" >"3?.%32@.

evidence in writing or a lien to be created. &hus, a statutory lien can be created more conveniently and easily as compared to a legal charge.  &he Bederal 0ourt in +ong #eong Binance 2, overturning the 0ourt o Appeal!s decision, held that a third9party lien holder caveat, Fust li'e a third9party charge:?, is allowed.:1  +owever, the Bederal 0ourt held that the actual depositor needs not be the registered proprietor himsel so long as the registered proprietor consents to the depositing.:"

:%

. hen a depositor is not a registered proprietor, a lien will only be valid

under s "81(1) o the /#0 i the registered proprietor consents to the depositing o  document o title and i the depositing does Fustice to the registered proprietor. In lien cases:*, a depositor o issue document o title oten happens not to be a registered proprietor. &hese have given rise to issues on whether the registered proprietor in uestion consents to the depositing and whether the depositing does Fustice to the registered proprietor. Jut or a charge, issues li'e these do not arise. 0harge is a registrable interest and thus, must be presented or registration under the /#0. A charge instrument is registered on the register document o title. :3 Similar to lien, a chargor must be a registered proprietor.:2 I the chargor is not a registered proprietor, the charge in uestion cannot be registered. +ence, once a charge has been registered, the ban' is sae. Since the creation o a lien does not reuire registration, it is dangerous or the ban' as it has to 4nd out whether the depositor o the document o title is a registered proprietor. I the answer is negative, the ban' also has to ensure that the registered proprietor in uestion consents to

2 Hong 'eong 5inance Bhd v $taghorn $dn Bhd >"??8@ " -#D 2"". :? J &an Sri Abdul Gani =atail, $Securities ;ver #and! ("??) 1?(1) Hals.ury8s 'aws o2 Malaysia %:" >"3?.%3:@. :1 9nited Overseas Bank /Malaysia0 $dn Bhd v 9!A $dn Bhd >"??@ 2 -#D 3:. &he 0ourt o Appeal upheld the Bederal 0ourt!s decision in +ong #eong Binance. A lien can be created as a security in avor o third party borrowers.

:" Hong 'eong 5inance Bhd v $taghorn $dn Bhd >"??8@ " -#D 2"". :% Perwira A#n Bank Bhd v $elangor Properties $dn Bhd & Ors >"?1?@ % -#D *%.

&he 0ourt o Appeal upheld the Bederal 0ourt!s decision in +ong #eong Binance. A depositor needs not be a registered proprietor.

:* Hong 'eong 5inance Bhd v $taghorn $dn Bhd >"??8@ " -#D 2"": Perwira A#n Bank Bhd v $elangor Properties $dn Bhd & Ors >"?1?@ % -#D *%.

:3 Section %?* (")(a) o the /#0. hen registering a charge instrument, the egistrar will ma'e a memorial and seal in the terms and description o the charge on the register document o title.

:2 Borm 12A o /#0, Section "*" o the /#0.

the depositing and the depositing does Fustice to the proprietor, in order or a lien to be valid. #awyers! ;pinions According to -r. 0hew::, a practicing lawyer, ban's nowadays preer charge, because holding a lien is unsae as evidenced in cases above. A chargee has the right to sell the land using an IH& but a lien9holder does not have an automatic right to sell even with an IH&. A Fudgement needs to be obtained rom the court or the amount due under a lien prior to applying to court or an order or sale, :8 and this may ta'e up to one year. Burther, i a Fudgement debt order is statute9barred, a lien9holder cannot apply or an order or sale.: &he lengthy and tedious process involved in getting an order or sale 8? coupled with court cases81 above, have caused the ban's to be reluctant in ta'ing up a lien nowadays. According to -r. Goh 8", another property lawyer, 4nancial institutions now avor a legal charge under the /#0 because they eel more secured having their interest registered on the register document o title, and the /#0 provides comprehensive provisions to deal with the property on deault. #ien is outdated and appears as an option to non94nancial institutions. Generally, legal charge provides a better notice to third parties as ar as 4nancial institution!s interest is concerned. 8% Jy having a registered charge on the title, the whole world will be aware o it when a search is conducted on the title. In a lien, i there is only a deposit o issued document o title, and a lien9holder caveat is not yet endorsed on :: -r. 0hew =hye Reat, a practising lawyer at aFa, Harryl L #oh #aw Birm, at ?12""8"*:. :8 S "81(") o the /#0. : Alagappa Chettu v Periyanayagam (1?8) Innes 11:. A lien9holder is not entitled to a remedy under lien i the Fudgement debt order is statute9barred. A lien9holder might only apply or and obtain an order o sale when he had obtained a court  Fudgement o the actual sum due. +is right to enorce the lien by Fudicial sale was conditional upon the recoverability o the debt rom the borrower.

8? S "32 (%) o the /#0 states that or a charge, a Fudgement debt order is not reuired prior to an application to court or an order or sale. &his has made the process o getting an order or sale under a charge much more easier and uic', as compared to a lien.

81 Hong 'eong 5inance Bhd v $taghorn $dn Bhd >"??8@ " -#D 2""C Perwira A#n Bank Bhd v $elangor Properties $dn Bhd & Ors >"?1?@ % -#D *%.

8" Goh Sea &ai, a practising lawyer at St. Goh and Dohari law 4rm. 8% Borm 12A o the /#0 shows the identity o a chargee, something that a 4nancial institution is concerned about. Jy registering a charge, the identity o a chargee is 'nown to the public, when a search is conducted on the land title. Borm 1H o the /#0 does not disclose the identity o a lien9holder. It only shows the entry o a lien9holder!s caveat. hen a search is conducted on the land title in uestion, the public will only 'now about the eistence o a caveat but they will not 'now the identity o the lien9holder.

the register document o title 8*, the interest o the ban' as a lien9holder is not reNected on the title. Security transactions in Sabah and Sarawa' #ien can only be ound in the /#0 but it is not provided by the Sarawa' #and 0ode and the Sabah #and ;rdinance. In Sabah, the Sabah #and ;rdinance (S#;) li'e the /#0, reuires a charge over a land or an interest 83 to be registered or it to be valid. 82 +owever, unli'e the /#0 8:, the S#; does not provide or indeeasibility o a registered charge. A registered charge merely becomes valid and creates a proprietary interest over a land or a registered sub9lease in avour o the chargee.88  &he procedure o sale o land by the 0ollector in Sabah is similar to that in the /#0 or the sale o land with land oPce title 8, where a hearing is to be held in the presence o interested parties, and ater the hearing, i  there is a satisaction o a deault, the sale by public auction must be ordered. ? &he only diference is S#; allows or the sale o part o the land which is not allowed in the /#0. A charge in the /#0 can be efected over the whole o an alienated landC the whole o an undivided shareC and any lease o an alienated land. +owever, a charge under the Sabah #; can only be efected over a land (not limited to alienated land)C an undivided share in the land1C or a sub9lease. "  Section "12(1)(b) o the /#0 is also diferent rom section 1?: o the S#;.%Burther, in the /#0, a discharge is efected upon the registration o 

8* S %%? (%) o the /#0. 83 Section 1?* o the Sabah #and ;rdinance. 82 Section 88 o the Sabah #and ;rdinance. 8: Section %*? o the /#0 provides or the indeeasibility o a registered charge. 88 Section 88 o the S#;. 8 Section "21 and section "2" o the /#0. Section "2"(") and "2"(%) o the /#0 is similar to ule 1*(*) and ule 1*(2) o the Sabah #and ules 1%?.

? Sabah #and ules 1%? r 1*(%). 1 Section 1?2 o the Sabah #and ;rdinance. It is not possible to charge part o the land until the land has been subdivided and a new document o title has been issued.

" Sabah #and ;rdinance, n %". Section * reers to the charge over landC Section 1?* reers to a charge over land or interest thereinC Section 1?A reers to a charge over $land or sub9lease!. &he combined efect is that a charge can be efected over a land or a sub9lease. A land here is a land contained in the Government lease, and the sub9lease reers to a lease created by the Government lessee.

Borm 12A.* Jut in the S#;, discharge o a charge may be efected by registering a memorandum and endorsing the word $release! on individual titles. 3 Also, in the /#0, only ull payment o debt can warrant a discharge. 2 Jut in the S#;, a charge can be discharged even i the debt has not been paid in ull. : In addition, in the /#0, the court (or a registry title) or the land administrator (or a land oPce title) is empowered to order the sale o a land or lease by public auction. 8 Jut in Sabah, the 0ollector is the one who can order the sale by public auction o the whole or any part o the charged land upon a deault. 

1??

In Sarawa', sections 1*% to 13: and section 1?* o the Sarawa' #and 0ode (S#0) (0ap 81)1?1  provide or the creation o charge. &he S#0 does not epressly prohibit the creation o an euitable charge.1?" #i'e the /#0 1?%, an unregistered charge coners on the lender caveatable interest in Sarawa'.1?*  Similar to the /#0 1?3, a charge in the S#0 is

% Section "12(1)(b) o the /#0 states that any charge with a land transerred shall be implied on the part o the transeree to be bound by it unless the instrument o transer otherwise provides. Jut section 1?: o the S#; provides that the chargor who is the transeror is reuired to obtain the agreement o the transeree to ta'e over the payment o debt due to the chargee. Bailure to do so will give the chargee a right to pursue the original chargor on the transeree!s deault.

* Section ":8 o the /#0. 3 Section 1?:A and section 1? o the Sabah #and ;rdinance. 2 Section ":8(") o the /#0. : Section 1?A o the S#;. 8 Section "32 and section "2? o the /#0.  Section 111 o the S#;, and Sabah #and ules 1%? r 1*(1?). 1?? $tandard Chartered Bank v Mukah $ingh >12@ % -#D "*?. &he court held that the sale o land under the Sabah #and ;rdinance is used to satisy the statutory charge over the land.

1?1 Sarawa' #and 0ode (0ap 81). 1?" ing $ieh Chung v Hock Peng Realty $dn Bhd, Jintulu ;S /o "*9*:9"???. It was held that this case should not be ta'en as an authority or reFecting euitable charges. &he ratio decidendi is that a mere monetary underta'ing does not provide a basis or a caveat.

1?% ,umpulan $ua Betong v Dataran $egar $dn Bhd >1"@ 1 -#D "2%. It was held that according to the /#0, an unregistered charge can be caveated pending registration.

1?* $tandard Chartered Bank v *ap $ing *oke & Ors >18@ " -#D *C $tockalingam Mudaliar v Ramasamy Chettiar & Anor  >1%8@ -#D "%:C Pica 5irst Credit $dn Bhd v 'ai ,im eng & Anor >"??:@ " A- 2:%C Mahadevan & Anor v Patel >1:3@ " -#D "?:C 'eie $iew yuk /20 v ong ,wong 5eedmills Co $dn Bhd  ;- /o RG 1 o 18*.

1?3 Section "*" and section "*% o the /#0 provide that a charge is efected by registration o Borm 12A.

efected by the eecution o a memorandum o charge in Borm +(1) or +(") 1?2, and it must be registered.1?: +owever, certain provisions o S#0 are uniue and cannot be ound in the /#0. Bor eample, the S#0 allows a negative pledge covenant or the eclusion o dealings to be included in a charge, and upon registration o a charge, the covenant operates as a caveat during the period o charge.1?8 Also, the S#0 allows an amendment to be made to a charge to increase or reduce the principal sum or rate o interest, or the terms o the charge. 1? Burther, s. 1*: o the S#0 provides or the creation o a subcharge by the registered chargee, something that is not ound in the /#0.  &he scope o security provided by a charge in S#0 is also wider and more clearly de4ned than the /#0. 11? Burther, the remedies available to a chargee in Sarawa' are more comprehensive than those provided in the /#0. 111 &he remedies provided in s. 1*8 (") o  the S#0, including the right to be registered as a proprietor o the land, the right to ta'e possession by any chargee (not necessarily the 4rst chargee) and the right to receive rents and pro4ts o the charged land are not provided in the /#0. In the /#0, the remedy o an order or sale is more restrictive as the sale must only be made by public auction. 11" In Sarawa', an amendment11% to s. 1*8(%) o the S#0 allows a sale to be made by 6tender or such other mode o sale as may be directed by the court7 to realie a registered charge. 11*

1?2 Section 1*% o the S#0. 1?: Section 11(1) o the S#0 provides that no instrument shall be efectual to pass an interest until it has been registered. Section 11(*) provides that the deposit o any document relating to land as a security or the payment o money may operate as an agreement to create a charge, but shall not be enorced as a charge unless the charge has been registered on the egister.

1?8 Section 1*%(") and 1*%(%) o the S#0. 1? Section 1*3 o the S#0. 11? Section " o the S#0 provides that a charge can be used to secure repayment o loanC repayment o uture advances or unascertained debtC payment to holders o any bonds, debentures, promissory notes or other securities made beore or ater the creation o a chargeC or payment o periodic sum or o any annuity, rent, charge or sum o money other than a debt.

111 &he /#0 provides " remedies in the event o a chargor!s deault (1) ;rder or sale by way o public auction in s. "3% o the /#0C (") &a'ing possession o the charged property by the 4rst chargee in s.":? o the /#0. In Sarawa', s. 1*8(") o the S#0 states that the chargee is entitled to (1) the right to ta'e possession o the land and to be registered as a proprietor o the landC (") the right to receive the rents and pro4ts o the charged landC or (%) the right to sell the land, ater the 0ourt has heard evidence o the chargor!s deault and issued the appropriate order.

11" Section "3: and section "2% o the /#0. 11% #and 0ode (Amendment) ;rdinance 1* (0ap A 1:) which is operative rom Dune "%, 1*.

 &he remedies available or a charge in the /#0 are eclusive and ehaustive113, but in Sarawa', the remedies provided under s. 1*8(") o the S#0 are not mutually eclusive. 112  &he Sarawa' +igh 0ourt can grant an order o possession even when the chargee applies or an order or sale. Also, unli'e the /#0 where the issue document o title is placed in the custody o the 4rst chargee 11:, in Sarawa', the document o title may or may not be deposited with the lender.118 Although s. 1*8 (%) o the S#0 is o similar efect to s. "3*(1) o the /#0, s. 1*8(1) and (") o the ormer are diferently constructed rom s. "32 o the latter. 11 &he word 6shall7 in s. "32 (%) o the /#0 indicates that the court is under a duty to ma'e an order or sale when no cause to the contrary is shown. 1"?  &here is only one order that the court is permitted to ma'e, namely, an order or sale. Jut under s. 1*8(") o the S#0 1"1, the court is given a choice to ma'e one o the % orders 1""  and the only consideration is Fustice and euity in the circumstances o the case. +ence, when a chargee applies or an order or sale, the court may, i the circumstances do not seem Fust 1"%, reuse that order 1"*, and instead ma'e an order directing the chargee to receive rents and pro4ts rom the charged 11* ,imlin Housing Development $dn Bhd v Bank Bumiputera /M0 Bhd ;? @ AMR (@"??*@ * 0#D :%C Re Rindaya %ood Processing $dn Bhd: e parte ,enneth eh Ah ,iam & Anor  >"??"@ 2 -#D %1".

1"? 'ow 'ee 'ian v Ban Hin 'ee Bank  >1:@ " 0#D %2. 1"1 Section 1*8(") o the S#0. &he court may grant an order entitling the chargee to enter into possession and to be registered as a proprietor o the charged landC an order to receive rents and pro4ts o the charged landC or an order or sale o the charged land.

1"" ,uching Plaa $dn Bhd v Bank Bumiputra Malaysia Bhd and another appeal >11@ % -#D 12%. &he power o a court to grant a remedy under s. 1*8 (") o the S#0 is discretionary.

1"% Malayan Banking Bhd v *a8kup .in Oe & Anor  >"??:@ 2 -#D %8. &he court may not grant an order under s. 1*8(")(c) o the S#0 i the order is going to be perverse to the deendants.

1"* Section 1*8 (")(c) o the S#0.

land.1"3 In s. "32 o the /#0, a statutory demand in Borm 12H is necessary or the eercise o the court!s power, but in s. 1*8 o the S#0, it is the chargor!s deault and not the notice o demand that is a condition precedent to the ma'ing o an order or sale. 1"2 ("3?? words ecluding ootnotes)

1"3 Such an order can be made where the value o the charged property ar eceeds the sum due and the charged property is producing suPcient income to repay the loan within a reasonable time.

1"2 Citi.ank A v !ong e ,hiok  >1%@ * 0#D %"3.