Chapter 6 - Land Dealing: Security Transactions - Statutory Lien

Question 1

STATUTORY LIEN

Overview

Answer 1

1) Requirements

2) Rights of lenders

Question 2

STATUTORY LIEN

Requirements - overview

Answer 2

1) The law
2) Deposition
3) Purpose of deposition
4) Entry of LHC

Question 3

REQUIREMENTS TO CREATE LIEN

The law

Answer 3

S.261

Question 4

REQUIREMENTS TO CREATE LIEN

Deposition of IDT or duplicate lease

Answer 4

1) Temporary parting - ORMORM Manickavasagam Chetty v TJ McGregor:

• there must be deposit of IDT;
• subsequent temporary parting for the purpose of registering other instrument will NOT cause the lien to be lost.

2) Deposition by 3rd party - Hong Leong Bank v Staghorn Sdn Bhd:
- 3rd party may deposit the IDT upon instruction or written authorization by the registered proprietor.
3) Fraud or misrepresentation - Vallipuram Sivaguru v Palaniappa Chetty:
- element of deposition is not satisfied if IDT is obtained through fraud or misrepresentation.

Question 5

REQUIREMENTS TO CREATE LIEN

Purpose of deposition

Answer 5

• deposition of IDT must be for the purpose of security;
  1) Paramoo v Zeno Ltd:
• all that is required is deposition of title with the purpose of obtaining loan.
  2) Perwira Habib Bank Bhd v Tin Siang Sdn Bhd:
• once title has been deposited as a security for loan, lender was entitled for a lien even though there is no agreement for the entry of LHC.

Question 6

REQUIREMENTS TO CREATE LIEN

Entry of LHC

Answer 6

Heap Huat Rubber Co v UoB:

• the lien is created & effected only AFTER the entry of lien-holder’s caveat;
• there must be entry of LHC to give effect to the lien.

Question 7

RIGHTS OF LENDER

At law

Answer 7

S.281(c)

• OFS: has right to apply for OFS to realise his security.
• JUDGMENT: he must first obtain judgment before applying for OFS.
• BAR: if right to recover debt is barred by statute, right to apply for OFS will also be barred.

Question 8

RIGHTS OF LENDER

At equity

Answer 8

Before entry of LHC to effect the Lien, lender has right at equity to:

• enter LHC at any time;
• not lose right when there is conflicting equity;
• have his rights prevails over judgment debtor.