Lien

Question 1

Definition of lien is provided under…

Answer 1

Section 281(1) of the NLC.

Question 2

Section 343(6) of the NLC states…

Answer 2

co-proprietor of undivided shares can create a lien by depositing his copy of the IDT.

Question 3

Who can create lien?

Answer 3

1. Registered proprietor (IDT)
2. Co-proprietor (copy of IDT)
3. Registered lessee (copy of lease)

Question 4

The borrower must…

Answer 4

physically hand in the IDT/duplicate lease to the lender as a security to create a lien.

Question 5

What is the difference between statutory lien and equitable lien?

Answer 5

A statutory lien must have a registered lien holder’s caveat on the RDT while an equitable lien does not.

Question 6

Can a borrower deposit his IDT/duplicate lease to a lender for the benefit of a third party?

Answer 6

Section 281(1) of the NLC does not prohibit this.

Question 7

The traditional view of the court on who is entitled to lodge a lien holder’s caveat over the land is…

Answer 7

only the registered proprietor for his own benefit.

Question 8

What is the case of Perwira Habib Bank (M) Bhd v Megat Najmuddin Megat Khas about?

Answer 8

The borrower lodged a lien holder’s caveat over the land being used as security for overdraft facilities but the court held that it was insufficient because the borrower was not the registered proprietor.

Question 9

In Hong Leong Finance Bhd v Staghorn Sdn Bhd, the court stated that…

Answer 9

it must be the registered proprietor who gives his title because he is the one surrendering his rights in case of a default in payment by the borrower.

Question 10

The contemporary view of the court on who is entitled to lodge a lien holder’s caveat over the land is…

Answer 10

the registered proprietor may use his IDT as a security for a third party loan with the consent of the proprietor.

Question 11

In the appeal case of Hong Leong Bank Bhd v Staghorn Sdn Bhd, the court decided that…

Answer 11

registered proprietor may deposit his IDT as security for a third party loan.

Question 12

In the case of Perwira Affin Bank Bhd v Selangor Properties Sdn Bhd,

Answer 12

the title deed may not necessarily be deposited by the proprietor.

Question 13

In Standard Chartered Bank Bhd v Yap Sing Yoke,

Answer 13

the lender acquired an equitable lien by keeping the title as a security in a loan transaction.

Question 14

What is Section 281(4) of the NLC about?

Answer 14

A lien holder can only part with title upon written request of the proprietor only to produce the title at the Registry Office of Land Office.

Question 15

Sithambaram Chetty v Ramanathan Chetty is a case of an equitable lien where…

Answer 15

the lender lost his rights as a lien holder the moment he parted with the title and his caveat was removed from the RDT.

Question 16

A statutory lien is illustrated in the case of ORMORM Manickawasagam Chetty v TJ Mc Gregor in which…

Answer 16

the caveat remained on the RDT, so the lender did not lose his rights as a lien holder even though he parted with the title.

Question 17

The creation of lien depends on the…

Answer 17

intention of both parties.

Question 18

In Master Strike Sdn Bhd v Sterling Height Sdn Bhd,

Answer 18

the parties intended to enter into a Sale & Purchase agreement instead of a loan transaction. The court held that the could not convert the agreement into a loan agreement due to the absence of their intentions to create a lien.

Question 19

Intention of parties is inferred from…

Answer 19

1. the act of depositing the title as a security
2. the agreement executed