Malaysia Building Society Bhd v KCSB Konsortium Sdn

[2017] 2 MLJ Bhd (Arifin Zakaria Chief Justice) 557

A Malaysia Building Society Bhd v KCSB Konsortium Sdn Bhd

FEDERAL COURT (PUTRAJAYA) — CIVIL APPEAL NO 02(F)-13–02

OF 2015(J)
B ARIFIN ZAKARIA CHIEF JUSTICE, RAUS SHARIF PCA, HASAN LAH,
RAMLY ALI AND BALIA YUSOF FCJJ
14 FEBRUARY 2017

C Land Law — Charge — Indefeasibility of interest — Respondent intended to

enter third party charge on its land in favour of appellant — First party charge
mistakenly filed in Form 16A — Respondent applied to set aside charge
— Whether Form 16A insufficient instrument — Whether error could be
corrected pursuant to s 380(1) of the National Land Code (‘the NLC’) — Whether
D
court could order registrar to give effect to decision of court pursuant to s 417 of the
NLC — National Land Code ss 340(2)(b), 380(1) & 417

A loan agreement (‘the loan agreement’) was entered into by the appellant and
E a company known as Definite Pure Sdn Bhd for the purpose of financing a
building project. The respondent was to provide security for the said loan, as
such the respondent agreed to create a third party charge over its lands in favour
of the appellant. Problem arose when the charge instruments in Form 16A were
mistakenly registered as a first party charge instead of a third party charge.
F Consequently, the respondent filed an originating summons to set aside the
charge entered on the said land. The High Court found that the mistake in the
Form 16A was not an error or omission capable of correction by the registrar
pursuant to s 380(1)(a)–(c) of the National Land Code (‘the NLC’), as such,
the High Court allowed the respondent’s application. On appeal by the
G appellant, the Court of Appeal agreed with the finding of the High Court and
dismissed the appeal. Aggrieved by the decision, the appellant filed the present
appeal. The issues for court’s consideration were: (a) whether the conflict
between Form 16A filed and the loan agreement and the charge annexure
rendered the form to be an ‘insufficient instrument’ within the meaning of the
H words in s 340(2)(b) of the NLC; and (b) whether the error could be corrected
pursuant to s 380(1) of the NLC. Further, the appellant relied on s 417 of the
NLC for the court to give the necessary direction to the registrar to give effect
to the decision of the court.

I Held, allowing the appeal with costs and setting aside the order of the High
Court as affirmed by the Court of Appeal:
(1) In considering whether the form filed suffered from any insufficiency or
otherwise, the court need to look at the form alone and not elsewhere ie
the loan agreement and the charge annexure. In the circumstances,
558 Malayan Law Journal [2017] 2 MLJ

paras (b) and (c) of the charge instrument were deleted hence making it A
into a first party charge instead of a third party charge as intended by the
parties. Apart from that error the instrument did not suffer from any
deficiency. Form 16A was sealed with the seal of the respondent’s
company and attested to by directors of the company or a director
together with the secretary of the company. Thus, it was not an B
‘insufficient instrument’ as envisaged by s 340(2)(b) of the NLC which
rendered the charge created pursuant thereto defeasible (see paras
23–24).
(2) There was no doubt that there was substantial compliance with the
C
prescribed form notwithstanding the error. Further, it had never been
suggested that anyone, be it the respondent or any other party, was ever
prejudiced by the error. Thus, the error in Form 16A filed in the present
case may be rectified by the registrar pursuant to s 380(1)(b) of the NLC
to achieve what was intended by the parties (see para 29).
D
(3) It is clear that under s 417 of the NLC, the court is vested with the power
to direct the registrar to do anything it deems necessary to give effect to its
judgment or order. This broad power is conferred by the NLC on the
court to ensure that judgment or order of the court is duly carried out by
the registrar. As such, pursuant to s 417 of the NLC, the court directed E
the registrar to review the file relating to the said charge and cause the
rectification of the charge as a third party charge. In totality, the
impugned charge was a valid charge (see paras 33–34).

[Bahasa Malaysia summary F

Perjanjian pinjaman (‘perjanjian pinjaman tersebut’) dimasuki oleh perayu dan
syarikat yang dikenali sebagai Definite Pure Sdn Bhd bagi tujuan pembiayaan
projek bangunan. Responden adalah untuk memberikan sekuriti bagi
pinjaman tersebut, dengan itu responden bersetuju untuk membentuk caj
pihak ketiga ke atas tanahnya berpihak kepada perayu. Masalah berbangkit G
apabila instrumen caj dalam Borang 16A secara salah didaftarkan sebagai caj
pihak pertama sepatutnya caj pihak ketiga. Akibatnya, responden memfailkan
saman pemula untuk mengetepikan caj yang dimasuki ke atas tanah tersebut.
Mahkamah Tinggi mendapati bahawa kesilapan dalam Borang 16A bukan
kesilapan atau ketinggalan yang membolehkan pembetulan oleh pendaftar H
berikutan kepada s 380(1)(a)–(c) Kanun Tanah Negara (‘KTN’), dengan itu,
Mahkamah Tinggi membenarkan permohonan responden. Atas rayuan oleh
perayu, Mahkamah Rayuan bersetuju dengan dapatan Mahkamah Tinggi dan
menolak rayuan tersebut. Tidak puas hati dengan keputusan tersebut, perayu
memfailkan rayuan ini. Isu untuk penentuan mahkamah adalah: (a) sama ada I
konflik di antara Borang 16A yang difailkan dan perjanjian pinjaman dan
lampiran caj menjadikan borang tersebut sebagai ‘insufficient instrument’
dalam maksud perkataan-perkataan di dalam s 340(2)(b) KTN; dan (b) sama
ada kesilapan boleh diperbetulkan berikutan s 380(1) KTN. Selanjutnya,
 Malaysia Building Society Bhd v KCSB Konsortium Sdn
[2017] 2 MLJ Bhd (Arifin Zakaria Chief Justice) 559

A perayu bergantung ke atas s 417 KTN untuk mahkamah memberikan arahan

perlu kepada pendaftar untuk memberi kesan kepada keputusan mahkamah.

Diputuskan, membenarkan rayuan dengan kos dan mengenepikan perintah

Mahkamah Tinggi seperti yang disahkan oleh Mahkamah Rayuan:
B
(1) Dalam mempertimbangkan sama ada borang yang difailkan mengalami
apa-apa ketidakcukupan atau sebaliknya, mahkamah perlu melihat
kepada boring itu sendiri dan bukan di tempat lain iaitu perjanjian
pinjaman dan lampiran caj. Dalam keadaan, perenggan (b) dan (c)
C instrumen caj tersebut dipadamkan maka membuatkannya kepada caj
pihak pertama dan bukan caj pihak ketiga seperti yang diniatkan oleh
pihak-pihak. Selain daripada kesilapan tersebut instrumen tidak
mengalami apa-apa kekurangan. Borang 16A dimeterai dengan meterai
syarikat responden dan disahkan oleh pengarah-pengarah syarikat atau
D pengarah bersama dengan setiausaha syarikat. Oleh itu, ia bukan
‘insufficient instrument’ seperti yang dibayangkan oleh s 340(2)(b) KTN
yang menyebabkan caj yang terbentuk boleh dibatalkan (lihat perenggan
23–24).
(2) Tidak terdapat keraguan bahawa terdapat pematuhan yang substansial
E
dengan borang yang dinyatakan meskipun kesilapan tersebut.
Selanjutnya, ia tidak pernah dicadangkan oleh sesiapa pun, responden
atau pihak yang lain, diprejudiskan dengan kesilapan tersebut. Oleh itu,
kesilapan dalam Borang 6A difailkan dalam kes ini boleh diperbetulkan
oleh pendaftar berikutan kepada s 380(1)(b) KTN untuk mencapai apa
F
yang diniatkan oleh pihak-pihak (lihat perenggan 29).
(3) Adalah jelas bahawa di bawah s 417 KTN, mahkamah diletakhakkan
dengan kuasa untuk mengarah pendaftar untuk berbuat apa-apa yang ia
anggap perlu untuk memberi kesan kepada penghakiman atau
G perintahnya. Kuasa luas ini diberikan oleh KTN kepada mahkamah
untuk memastikan bahawa penghakiman atau perintah mahkamah
dilaksankan dengan wajar oleh pendaftar. Dengan itu, berikutan s 417
KTN, mahkamah mengarahkan pendaftar untuk menyemak semula fail
berkaitan caj tersebut dan menyebabkan pembetulan caj tersebut sebagai
H caj pihak ketiga. Secara keseluruhannya, caj yang dipersoalkan tersebut
adalah caj yang sah (lihat perengga 33–34).]

Notes
For cases on indefeasibility of interest, see 8(2) Mallal’s Digest (5th Ed, 2017
I Reissue) paras 2871–2875.

Cases referred to
Co-Operative Central Bank Ltd v Y & W Development Sdn Bhd [1997] 3 MLJ
373, CA (refd)
560 Malayan Law Journal [2017] 2 MLJ

Hassan bin Seman & Ors v Jusoh bin Awang Chik [1982] 1 MLJ 66, FC (refd) A
Mahadevan & Anor v Manilal & Sons (M) Sdn Bhd [1984] 1 MLJ 266, FC
(refd)
Mohammad bin Buyong v Pemungut Hasil Tanah Gombak & Ors [1982] 2 MLJ
53 (refd)
Mook Meng Sun v Lo Aa Kau & Ors [2002] 2 MLJ 193, HC (folld) B
Sungei Biak Tin Mines Ltd v Saw Choo Theng & Anor (No 2) [1970] 2 MLJ
226, FC (refd)
Takako Sakao (f ) v Ng Pek Yuen (f ) & Anor (No 2) [2010] 2 MLJ 181, FC (refd)
Tan Soo Bing & Ors v Tan Kooi Fook [1996] 3 MLJ 547, FC (refd)
Tan Tock Kwee & Anor v Tey Siew Cha & Anor [1995] MLJU 408; [1995] 4 C
CLJ 658, HC (refd)
United Malayan Banking Corporation Bhd v Syarikat Perumahan Luas Sdn Bhd
(No 2) [1988] 3 MLJ 352b, HC (refd)
Upmarket Development Sdn Bhd v Sriera Development Sdn Bhd [2011] 4 MLJ
681, FC (refd) D
Woon Kim Poh v Sa’ Amah bt Hj Kasim [1987] 1 MLJ 400, SC (refd)

Legislation referred to
National Land Code 243, 336, 340, 340(1), (2), (2)(b), (3)(a), 380,
380(1), (1)(a), (1)(b), (1)(c), 417, Form 16A E

Cyrus Das (K Gobinath and V Rakesh with him) (Kadir Andri & Partners) for the
appellant.
Malik Imtiaz Sarwar (Gobind Singh Deo with him) (Lopez & Chin) for the
respondent. F

Arifin Zakaria Chief Justice (delivering judgment of the court):

INTRODUCTION
G
[1] This is an appeal against the decision of the Court of Appeal dated
16 October 2014 which dismissed the appellant’s appeal with costs. Leave to
appeal was granted by this court on 29 January 2015.

THE FACTS H

[2] The facts pertinent to this appeal are as follows. The Government of
Malaysia (‘the government’) entered into a privatisation agreement with the
respondent dated 10 July 1997 under which the respondent undertook to
build an army camp for the Ministry of Defence (‘the army camp project’) at I
Pulai in Johor Bahru.

[3] In exchange, the government agreed to transfer to the respondent the

following two pieces of lands (‘the lands’) located in Johor Bahru:
 Malaysia Building Society Bhd v KCSB Konsortium Sdn
[2017] 2 MLJ Bhd (Arifin Zakaria Chief Justice) 561

A (a) lease No 648, Lot 1876, Mukim of Plentong measuring in area of

approximately 310.75 acres; and
(b) lease No 548, Lot 139, Mukim of Tebrau measuring in area of
approximately 71.406 acres.
B
[4] The lands were to be used as security to raise the fund to enable the
respondent to carry out the army camp project. Meanwhile, the respondent
assigned all its rights and obligations under the privatisation agreement to one
Kausar Corp Sdn Bhd (‘Kausar’).
C
[5] In 1997, Kausar entered into discussions with the appellant to finance
the development of the lands. Pursuant to these discussions, it was agreed that
the appellant will provide the funding for the development of the lands and
that a joint venture agreement will be entered into with the respondent.
D
[6] Under the joint venture, a loan agreement was entered into on
21 October 1997 between the appellant and a company known as Definite
Pure Sdn Bhd (‘the borrower company’). The borrower company was the
E intended joint venture vehicle through which the development of the lands will
take place.

[7] At the request of the borrower company and pursuant to the loan
agreement dated 21 October 1997, the appellant agreed to provide the
F borrower company with the following facilities (‘loan facilities’):
(a) a term loan of up to RM465m (‘term loan’) for principal only inclusive
of a land bond (‘land bond’); and
(b) an advance of up to RM65.1m (‘advance’).
G
[8] The borrower company was not in the position to provide security for
the loan. As such, by the terms of the loan agreement, the respondent was to
create a third party charge over the lands in favour of the appellant.
H
[9] It is common ground that the parties were aware that the charge was to
be a third party charge to be provided by the respondent. All relevant
documents, such as, the loan agreement, the charge annexure and the joint
venture agreement spoke of the creation of a third party charge.
I
[10] On 2 August 1999 a charge was created by the respondent in favour of
the appellant over the lands as a security for the term loan. The charge
instrument in Form 16A was filed at the relevant Land Registry.
562 Malayan Law Journal [2017] 2 MLJ

[11] Thereafter, on 29 August 2000 a second charge was created by the A

respondent in favour of the appellant over the lands as a security for the
advance. The respondent has not applied for this second charge to be set aside.

[12] Both the charge instruments in Form 16A were, however, by mistake
registered as a first party charge instead of a third party charge. This is contrary B
to all relevant documents ie the loan agreement and the charge annexure which
provide that the respondent was to create a third party charge in favour of the
appellant.

THE HIGH COURT C

[13] On 12 April 2013, the respondent filed an Originating Summons

(‘OS’) No 23M-154–04 of 2013 at the High Court of Johor Bahru to set aside
the charge dated 2 August 1999 entered on the lands. D

[14] In opposing the application, the appellant admitted that the charge was
wrongly registered as a first party charge instead of a third party charge as a
result of an error or mistake made in the instrument of charge (Form 16A).
However, the appellant contended that the mistake did not nullify the charge E
as the mistake can be rectified under the relevant provisions of the National
Land Code (‘the NLC’). The appellant further contended that the charge is
indefeasible under s 340 of the NLC except on the grounds as provided in
s 340(2) of the NLC.
F
[15] It is further contended that the error or mistake in wrongly registering
the charge as a first party charge instead of a third party charge as such does not
affect the validity of the charge as to warrant the setting aside of the same. On
the other hand, the removal of the charge will be highly prejudicial to the
appellant as it will deprive the appellant the security for the loan. In any event, G
the appellant contended that, the error is of no consequence as the Registrar of
Titles (‘the registrar’) has the necessary power under s 380 of the NLC to rectify
the error.

[16] The High Court allowed the respondent’s application to set aside the H
charge. The charge was held to be void and cannot be rectified by the registrar
under s 380 of the NLC. In his judgment the learned judicial commissioner
(‘JC’) held, inter alia, as follows:
[19] The mistake in the Form 16A adverted to is serious and fundamental as, inter I
alia, it altered the status of the plaintiff from that of a mere third-party charger to a
borrower of the substantial loan from MBSB. This altered capacity carried serious
implications as to the legal liabilities and obligations of the plaintiff under the
charge. The charge annexure could not rectify the situation as the Form 16A was the
only instrument recognised under s 242 of the NLC. The said mistake was not a
 Malaysia Building Society Bhd v KCSB Konsortium Sdn
[2017] 2 MLJ Bhd (Arifin Zakaria Chief Justice) 563

A mere error, omission or technical defect as envisaged under s 380 of the NLC that
could, on application to the registrar, be corrected. In any event, the registrar and
not the court was empowered to make the correction that was required. MBSB,
thus, cannot in law invoke s 380 of the NLC to seek on order for rectification of the
Form 16A.
B [20] The above mistake renders the Form 16A an insufficient and defective
instrument for registration of the charge, which would, thus, became defeasible
under the provisions of s 340(2) of the NLC. It was, accordingly, voidable and liable
to be declared void at the instance of the chargee.
[21] For the reasons alluded to, s 417 of the NLC did not have any application to the
C issues in dispute in the present case as MBSB had not obtained any judgment or
order for the Registrar to give effect to.

THE COURT OF APPEAL

D
[17] On appeal, the Court of Appeal agreed with the finding of the learned
JC that the mistake in the Form 16A was not an error or omission capable of
correction by the registrar pursuant to s 380(1)(a)–(c) of the NLC. The appeal
was accordingly dismissed.
E
THE QUESTIONS OF LAW

[18] For ease of reference, we set out below the questions of law posed to us:
Question 1
F Whether indefeasibility under section 340 of the National Land Code (NLC) has
relevance where the complaint is of an admitted mistake in the charge form
(Borang 16A) where the charge was erroneously described and registered as a first
party legal charge instead of a third party legal charge.
Question 2
G
Whether in the case of a mistake in an instrument of dealing under the NLC, the
applicable provisions are Sections 207 and 380 of the NLC and Section 62 of the
Interpretation Act 1967 to determine if the mistake is a correctable error.
Question 3
H Whether the appropriate test to determine the error is of a matter of substance
under the NLC and the Interpretation Act 1948 and 1967 is whether the deviation
has changed the character of the instrument or calculated to mislead the parties
concerned.
Question 4
I
Whether Section 417 of the NLC envisages a two stage procedure whereby a party
has to first obtain a judgment or order in separate proceedings before the court can
be moved under Section 417 to issue the appropriate directive to the Registrar or
Land Administrator to give effect to the order.
564 Malayan Law Journal [2017] 2 MLJ

OUR DECISION A

[19] The questions posed to us arose directly from the decision of the High
Court as affirmed by the Court of Appeal. The High Court founded its
judgment on the error occurring in the charge instrument in Form 16A where
paras (b) and (c) were deleted instead of para (a) as intended by the parties. As B
a result of the mistake in the deletion, the plaintiff chargor instead of becoming
a third party chargor became a first party chargor. This is contrary to the
expressed intention of the parties as provided in the loan agreement and the
charge annexure.
C

[20] Let us first consider what is a charge under the NLC? A charge is a
dealing in which the registered proprietor of land uses the property as security
for the repayment of the loan advanced to him or to a third party. In the case of
the former it is referred to as the first party charge while in the case of the latter D
it is referred to as the third party charge. In the present case, it is not in dispute
that what was commonly intended by the parties was to create a third party
charge in favour of the appellant for the loan facilities given to the third party
(the borrower company) with the land registered in the name of the respondent
as security. Under the NLC, a charge is an interest in land and it will take effect E
as a security transaction under the NLC upon registration (see s 243 of the
NLC, Co-Operative Central Bank Ltd v Y & W Development Sdn Bhd [1997] 3
MLJ 373). It has also been held that when a creation of a charge does not
comply with the requirements of the NLC, as when the dealing is not
registered, such charge is valid as an equitable charge (see Mahadevan & Anor v F
Manilal & Sons (M) Sdn Bhd [1984] 1 MLJ 266 (FC)).

[21] In the present case, the charge was registered, but it was set aside by the
court on the application of the respondent on the ground that there was an
error in Form 16A which created the charge. The High Court in its judgment G
held that the charge was rendered defeasible under s 340(2)(b) of the NLC on
the premise that ‘it fundamentally conflicted with the Loan Agreement that
was the basis of the charge over the subject land and the express intention of the
contracting parties, could be regarded as an insufficient and defective
instrument’. The Court of Appeal agreed with the learned JC holding that H
Form 16A as it stood is an insufficient instrument to create a first party charge
as the respondent did not at any time receive the loan sum from the appellant.
Both the High Court and Court of Appeal held that the instrument for
registration was ‘insufficient’ because it runs counter to the express term of the
loan agreement. Learned counsel for the appellant, however, submitted that the I
sufficiency of the instrument must be considered purely on the instrument
itself ie we have to consider and examine Form 16A as filed to see whether on
the face of it, it suffers from any insufficiency as to render it defeasible under
s 340(2)(b) of the NLC. The relevant provisions of s 340 of the NLC reads:
 Malaysia Building Society Bhd v KCSB Konsortium Sdn
[2017] 2 MLJ Bhd (Arifin Zakaria Chief Justice) 565

A (1) The title or interest of any person or body for the time being registered as
proprietor of any land, or in whose name any lease, charge or easement is
for the time being registered, shall, subject to the following provisions of
this section, be indefeasible.
(2) The title or interest of any such person or body shall not be indefeasible —
B
(a) in any case of fraud or misrepresentation to which the person or
body, or any agent of the person or body, was a party or privy; or
(b) where registration was obtained by forgery, or by means of an
insufficient or void instrument; or
C
(c) where the title or interest was unlawfully acquired by the person or
body in the purported exercise of any power or authority conferred
by any written law.

What s 340(2) provides is that the title or interest of any person referred to in
D sub-s (1) is rendered defeasible when the registration was obtained by forgery,
or by means of an ‘insufficient’ or ‘void’ instrument. In the present case forgery
is not an issue. We are, therefore, left with ‘insufficient’ or ‘void’ instrument.
Haidar J (as he then was) had in the case of Tan Tock Kwee & Anor v Tey Siew
Cha & Anor [1995] MLJU 408; [1995] 4 CLJ 658, rightly ruled that the
E
words ‘insufficient’ or ‘void’ appearing in s 340(2)(b) of the NLC ought to be
read disjunctively. We agree with Haidar J that because of the conjunctive ‘or’
appearing between the words ‘insufficient’ and ‘void’ in s 340(2)(b) of the
NLC, therefore, the two words must be read disjunctively and not
F conjunctively. So any title or interest is not indefeasible if it was obtained by
means of either an ‘insufficient’ or ‘void’ instrument.

[22] The respondent did not contend that the instrument in the present case
is void, their contention is that the charge is liable to be set aside under
G s 340(3)(a) of the NLC on the ground that the Form 16A filed herein is an
‘insufficient instrument’ falling within s 340(2)(b) of the NLC. For
convenience we set out below Form 16A that was filed in this case:

I
566 Malayan Law Journal [2017] 2 MLJ

It is not in dispute that the effect of the above Form 16A filed in the present case
is to create a first party charge and not a third party charge as intended by the
parties. Hence the Form 16A filed runs counter to the loan agreement and the
charge annexure. H

[23] The critical issue is, does this conflict between Form 16A filed and the
loan agreement and the charge annexure render the form to be an ‘insufficient
instrument’ within the meaning of the words in s 340(2)(b) of the NLC. The I
word ‘insufficient’ is not anywhere defined in the NLC, therefore, in our view,
it must be accorded an ordinary meaning. The dictionary meaning of the word
‘insufficient’, is ‘not sufficient’ or ‘inadequate’ (see Concise Oxford Dictionary
(9th Ed)). Given the meaning of the word ‘insufficient’ can we then conclude
 Malaysia Building Society Bhd v KCSB Konsortium Sdn
[2017] 2 MLJ Bhd (Arifin Zakaria Chief Justice) 567

A that the Form 16A filed herein, is insufficient or inadequate? In this regard we
agree with submission of learned counsel for the appellant that in considering
whether the form filed suffers from any insufficiency or otherwise we are to
look at the form alone and not elsewhere — meaning to say not to look at the
loan agreement or the charge annexure. This view finds support in the High
B Court case of Mook Meng Sun v Lo Aa Kau & Ors [2002] 2 MLJ 193. In that
case the plaintiff sought a declaration that the transfer of certain land by the
first and second defendants to the third defendant was void under s 336 of the
NLC. The plaintiff ’s application was grounded on the fact that he had prior to
the registration of transfer obtained a prohibitory order which was still
C
operative on the day of the transfer hence the registrar should have rejected the
instrument of transfer. In that case the plaintiff ’s counsel relied on s 340(2)(b)
of the NLC contending that the third defendant’s title is defeasible as the
registration ‘was obtained … by means of an insufficient or void instrument’. In
D dismissing the application, Abdul Aziz Mohamad J (as he then was), stated:
In my opinion, for an instrument to be regarded as an insufficient or void
instrument, there must be something about the instrument itself that renders it
insufficient or void. There is no evidence as to that as regards the instrument of
transfer in this case. As I said, had the instrument been presented and registered a
E day later, the plaintiff would have no ground to find fault with the registration. The
fact that the registration of the instrument was prohibited by reason of the existence
of the prohibitory order cannot, in my opinion, affect the character of the
instrument so as to render it an insufficient or void instrument. The prohibitory
order is extraneous to the instrument and has nothing to do with the character of the
instrument.
F

[24] We agree with the observation of the learned judge in the above case,
that in considering whether the instrument was sufficient or not we have to
consider the instrument alone without resorting to other documents which is
G ‘… extraneous to the instrument and has nothing to do with the instrument’. In
the present case paras (b) and (c) of the charge instrument were deleted hence
making it into a first party instead of a third party charge as intended by the
parties. Apart from that error the instrument does not suffer from any other
deficiency. Form 16A was sealed with the seal of the respondent’s company and
H attested to by directors of the company or a director together with the secretary
of the company. For those reasons we find that Form 16A filed in the present
case is not an ‘insufficient instrument’ as envisaged by s 340(2)(b) of the NLC
which renders the charge created pursuant thereto defeasible.

I [25] The second issue is whether the error can be corrected pursuant to s 380(1)
of the NLC.

[26] For convenience we set as below the relevant provisions of the said
section:
568 Malayan Law Journal [2017] 2 MLJ

Section 380 Correction of errors in documents of title, etc A

(1) Where the Registrar is satisfied —
(a) that any document of title has been registered or issued in the wrong
name, or contains any mis-description of land or boundaries, or other
error or omission, or B
(b) that any memorial or other entry has been made in error on any document
of title or other instrument relating to land, or
(c) that any memorial or other entry made on any such document of title or
instrument itself contains any error or omission,
C
he may, subject to sub-sections (2) and (3), make such correction on the document
or interest in question as may be appropriate in the circumstances of the case.
This section confers upon the registrar a wide discretion to make any correction
on the document of title or instrument relating to land as may be appropriate.
D
It is wide enough to include any entry howsoever wrongly made by the registry
(see Mohammad bin Buyong v Pemungut Hasil Tanah Gombak & Ors [1982] 2
MLJ 53). In Hassan bin Seman & Ors v Jusoh bin Awang Chik [1982] 1 MLJ
66, rectification of the register was ordered where the transferee was wrongly
registered as having full shares in the land. The correction there was made E
pursuant to s 380(1)(c) of the NLC. In that case Salleh Abas FJ (as he then was)
emphasised that the provision relating to indefeasibility and correction must be
read separately where His Lordship observed:
The provision for correction of error is not even treated by the Code as an exception
to indefeasibility provision. Thus correction of an error can never be a violation of F
the indefeasibility principle, and must remain outside the scope of the
indefeasibility principle.
Relying on Sungei Biak Tin Mines Ltd v Saw Choo Theng & Anor (No 2) [1970]
2 MLJ 226, the court then directed the registrar pursuant to s 417 of the NLC G
to correct the error.

[27] Reverting to the present case it is not in dispute that the deletion of the
wrong paragraphs in Form 16A was a mere error and the error does not have the
effect of transforming the charge into a transfer or to any other instrument of H
dealing.

[28] The next question then, is whether the error is remediable under the
NLC. The test to be applied in this regard was set down by this court in
Upmarket Development Sdn Bhd v Sriera Development Sdn Bhd [2011] 4 MLJ I
681. The two tests to be applied are — (a) whether there has been substantial
compliance of the prescribed form; and (b) whether any party has been
prejudiced or misled by the error.
 Malaysia Building Society Bhd v KCSB Konsortium Sdn
[2017] 2 MLJ Bhd (Arifin Zakaria Chief Justice) 569

A [29] Applying the two tests to the present case, there is no doubt that there
exist substantial compliance with the prescribed form notwithstanding the
error. Secondly, it has never been suggested that anyone, be it the respondent or
any other party, is ever prejudiced by the error. The respondent never denied
that the loan sum of RM59m had been disbursed to the borrower on the
B security of the charge, albeit it was registered as a first party charge. We do not
see what difference would it make to the respondent whether it was first party
or third party charge, the relevant property is still subject to a charge.
Therefore, we do not see how the respondent could be said to have been
prejudiced or misled by the error. On the above premise, we hold that the error
C
in Form 16A filed in this case may be rectified by the registrar pursuant to
s 380(1)(b) of the NLC to achieve what was intended by the parties.

Section 417 of the NLC

D
[30] The appellant is relying on s 417 of the NLC for the court to give the
necessary direction to registrar to give effect to the decision of the court.
Section 417 of the NLC reads:
(1) The Court or a Judge may by order direct the Registrar or any Land
E Administrator to do all such things as may be necessary to give effect to
any judgment or order given or made in any proceedings relating to land,
and it shall be the duty of the Registrar or Land Administrator to comply
with the order forthwith.
(2) Where, pursuant to any order made by virtue of this section, the Registrar
F or any Land Administrator —
(a) cancels any instrument relating to land, or any memorial or other
entry on any such instrument, or
(b) makes any other amendment of, or addition, to, any such
G instrument, he shall note thereon the reason for the cancellation,
amendment or addition, and the date thereof, and shall
authenticate the same by his signature and seal.
(3) Where the Registrar or Land Administrator takes action under this section
in respect of any land or any share or interest therein, he shall cause notice
H of his action to be served upon any person or body having a claim
protected by caveat affecting the land, share or interest.

As regards the application of s 417 the Court of Appeal held that before a party,
in this case the appellant, could invoke the said section it should first have
I obtained a judgment or order relating to land under the NLC. The Court of
Appeal cited Woon Kim Poh v Sa’ Amah bt Hj Kasim [1987] 1 MLJ 400 in
support of the proposition. Upon close scrutiny of the case we could not find
any statement to that effect. What the court said was that, ‘… Section 417(1) of
the National Land Code does not authorise the making of an order or direction
570 Malayan Law Journal [2017] 2 MLJ

contrary to the National Land Code itself ’. A

[31] The case of Tan Soo Bing & Ors v Tan Kooi Fook [1996] 3 MLJ 547 was
also cited in support of the same proposition. The respondent relied on what
was said by Wan Adnan FCJ (as he then was) at p 554 which reads:
B
In our view, the words ‘… be necessary to give effect to any judgment or order given
or made in any proceedings’ in s 417(1) are very important. These words limit the
power of the court to give directions to the registrar. The court can only give
directions to the registrar if such directions are necessary to give effect to any
judgment or order of the court. There must first be a final judgment or order of the C
court. Then only, in order to give effect to such judgment or order, the court can give
directions to the registrar. (Emphasis added.)

The words underlined were construed to mean that there must first exist a final
judgment or order of the court then only the court can give direction under D
s 417 to give effect to the judgment or order. However, at p 555, the learned
judge elaborated further in the following words:
Thus, where for example the court in a proceeding relating to a particular piece of
land makes an order that an instrument of transfer in respect of such land is void, the
E
court may direct the registrar to remove any memorial made pursuant to such void
instrument of transfer from the register and issue document of title in respect of the
said land. Such direction is necessary to give effect to the order that the court has
made.

F
In our view what the learned judge said was that any court making an order on
any matter which relates to land may, consequent upon the order, give such
direction to the registrar as may be necessary to give effect to such order. There
is nothing in the judgment to say that a party has to firstly obtain the order of
court in one proceeding and subsequently apply in another proceeding for a
G
direction under s 417 of the NLC. Therefore, we do not find anything in the
judgment which goes to support the two-stage approach/process, as submitted
by learned counsel for the respondent.

[32] On the contrary we find that there are ample authorities to support the H
single-stage approach as advocated by learned counsel for the appellant (see
Hassan bin Seman; United Malayan Banking Corporation Bhd v Syarikat
Perumahan Luas Sdn Bhd (No 2) [1988] 3 MLJ 352b and Takako Sakao (f ) v
Ng Pek Yuen (f ) & Anor (No 2) [2010] 2 MLJ 181).
I
[33] In Takako Sakao this court unequivocally stated:
To prevent any further fraud and for the purpose of preserving the subject property
in specie, on 27 October 2009 we directed the Registrar of Titles to enter his caveat
pursuant to s 320 read with s 321 of the National Land Code. We did so in the
 Malaysia Building Society Bhd v KCSB Konsortium Sdn
[2017] 2 MLJ Bhd (Arifin Zakaria Chief Justice) 571

A exercise of the powers conferred by s 417 of the National Land Code. It is settled that
this court has ample jurisdiction to make consequential orders to give effect to its
judgment. (Emphasis added.)

In our view, it is clear that under s 417 of the NLC, the court is vested with the
B power to direct the registrar to do anything it deems necessary to give effect to
its judgment or order. This broad power is conferred by the NLC on the court
to ensure that judgment or order of the court is duly carried out by the registrar.

CONCLUSION
C
[34] For the reasons alluded to above, we hold that the impugned charge is a
valid charge and accordingly the order of the High Court as affirmed by the
Court of Appeal is set aside. Further, in exercise of the power under s 417 of the
NLC, we direct the registrar to review the file relating to the said charge and
D cause the rectification of the charge as a third party charge.

[35] In the result we allow the appeal with costs.

Appeal allowed with costs; order of High Court as affirmed by Court of Appeal set
E aside.

Reported by Dzulqarnain Ab Fatar