Land Law - 2006 Q1

In Devi v Francis [1969] 2 MLJ 169, Chang Min Tat J, in response to an objection raised by the respondent to the application of English equitable rules relating to licenses by estoppel in the case, said inter alia :

The other [ground] is based on section 6 of the Civil Law Ordinance, 1956 which excludes the application of the law of England relating to tenure or conveyance or assurance of or succession to any immovable property or any estate right or interest therein. The answer  to this objection is that the land law of England is one thing and equity another matter and it is expressly provided in section 3(1) of the same Ordinance that the court shall apply the common law of England and the rules of equity and in section 3(2) that in the event of conflict the rules of equity shall prevail. (At p 172 of the report.)

With reference to the above decision and other relevant decisions of the courts as well as relevant statutory provisions, explain and discuss what in your opinion is the effect of section 6 of the Civil Law Act 1956.    (25 marks)

The Malaysian Torrens system as embodied and codified in the National Land Code 1965 is a system of registration of tiles which was designed to provide simplicity and certitude (Oh Hiam v Tham Kong) and is totally different land law system from that in England. Under the Torrens system, the register is everything (Teh Bee v Maruthamuthu). In safeguarding the Torrens systems, section 6 of the Civil Law Act 1956 (CLA) prohibits the reception of the law of England in relation to tenure, conveyancing, assurance or succession to any immovable property or any estate, rights or interest therein. Though the section was devised to met its purpose, the court in Wilkins v Kannamal held that the Torrens system is a system of conveyancing; it does not abrogate the rules of equity.

Section 3 of CLA allows the general reception of English equity in cases where there is lacuna in the local law and where the application of English equity is suitable to local circumstances.

In the case Devi v Francis, the appellant occupied that part of the respondent’s land on which stood a house owned by the appellant. The appellant had commenced occupation of the said house after the purchase of the same from the respondent’s mother and subsequently the purchase was incorporated in an agreement. The respondent gave notice and claimed possession of the ground on which the house was erected. The court applied the principles of equitable estoppel and rejected the contention by the counsel for the respondent that English equity was not applicable to land matters in Malaysia in view of the section 6 of CLO. Further, the Lordship held that the land law of England is one thing and equity another matter and it is expressly provided in section 3(1) of the same Ordinance that the court shall apply the common law of England and the rules of equity and in section 3(2).

In UMBC v PHT Kota Tinggi, the court dealing with the question whether English equitable rules relating to relief against forfeiture, had expressly stated that section 6 wide enough to cover the said principles of equity. The equitable rules were precluded by the section from being applied. However, the court went further to state that English equitable principles of general application are applicable to land matter in Malaysia so long as their application is not inconsistent with the stated aims and objectives of the Malaysian Torrens system as embodied in the express provisions of the National Land Code 1965. Therefore, section 6 even though clearly bar the application of equitable principles in relation to tenure and conveyancing but it does not have any effect to the applicability of English equitable principles of general application.

The effect section 6 also can be seen in the light of the claim in personam, where the Privy Council used its inherent power of jurisdiction held if a claim is made based on the equitable principles of general application on a right ad rem which is right in personam, section 6 does not abrogate the applicability. In Oh Hiam v Tham Kong, the parties entered in a contract of sale of certain pieces of land. The transfer was included with a land on which stood the house on the ground of common mistake. The High court set aside the sale and the transfer of the land. On appeal the Federal Court allow the appeal on the ground there was no mistake. When the matter reached the Privy Council, the issue was whether, the equitable remedy of rectification was available to the appellant notwithstanding the purchaser being the new registered owner of the fact his title was indefeasible under NLC. The Privy Council held equitable remedy of rectification was available to the appellant when the claim was based on right in personam.

Another situation where the Court had used a particular doctrine under English equitable principles of general application against the section 6 is the doctrine of bare trust. The application of the doctrine of bare trust had been clouded but Malaysian court had applied on numerous occasions without hesitation in land matters. Be that as it may, Lord Roskill in Chin Choy v Collector of Stamp Duties, had vehemently expressed that though the vendor became in equity, a trustee for the purchaser of an estate sold was a peculiarity of English land law nevertheless held that section 6 of the CLO prohibits the reception of any English law pertaining to land matters in Malaysia.  This obiter dicta, however had been rejected by the Federal Court in Borneo Housing Mortgage Finance v Time Engineering and affirmed that the doctrine of bare trustee applicable in a modified form in Malaysia.

It is pertinent to note that the High Court in Templeton v Law Yat Holding, while conforming that the Plaintiff was entitle for easement, held that the NLC [s 206(3)] shall not affect the contractual operation of any transaction relating to alienated land and further of the view that this subsection provides authority for the liberal application of equity whenever there is a basis for that. This is a clear indication that the Court never accepted the effect of section 6 as a whole but rather to halt any matters which has a direction relation to the land matters.

In Bhagwan Sigh Co. v Hock Hin Bros, the court dealt with a purchase of land whereby of one of the purchasers died after the execution of the transfer by the vendor which made the original transfer incapable of registration the sub-purchaser was entitled to an order directing the Registrar of Titles to register what he had bought. In holding that the antecedent contract was a binding contract, Thomson J. (as he then was) gave the order asked for and held that the English equitable principles in determining a question of priorities of caveats applicable and the Torrens system does not prevent the court from doing equity  where the rights of third parties have not been intervened.

Section 6 was enacted to prevent the importation of the English law land under section 3(1) to the land matters in Malaysia. However, in the interest of justice, the court had use the English equitable principles of general application in matters pertaining to land law and granted relieves to the affected parties where there was lacuna in the local law. Thus, it is my humble opinion that the effect of section 6 does not conclusively and/or wholly bar the application of the equitable principles in the Malaysian land law.