Section 329(1) of the National Land Code provides the following:
“Compensation for wrongful caveats, and limitation on repeated applications
(1) Any person or body who, wrongfully or without reasonable cause, secures the entry of, or fails to withdraw, any private caveat shall be liable to pay compensation to any person or body who thereby suffers any damage or loss.”[1] (Emphasis ours)
If A wrongly secures the entry of a caveat on B’s property and B suffers damage or loss as a result of this, A will be liable to pay compensation to B for the damage or loss which B suffered.
If A fails to withdraw his/her caveat on B’s property and B suffers damage or loss as a result of this, A will be liable to pay compensation to B for the damage or loss which B suffered.
In determining what is the scope of damage or loss which an aggrieved party would be able to claim compensation for, Abdul Malik Ishak J (later JCA) in Lo Foi v Lee Ah Hong @ Lee Lum Sow & Ors [1997] MLJU 310 held that the test to be applied is the reasonable foreseeability test.[2]
The Court of Appeal in MD Biomedical Engineering (M) Sdn Bhd v Goh Yong Khai [2021] 5 MLJ 408 [“Goh Yong Khai”] affirmed the application of the reasonable foreseeability test as decided in Lo Foi.
In Goh Yong Khai, the aggrieved party was allowed to claim the total amount of legal fees (amounting to RM70,000.00) [3] incurred for:
(a) the removal of the caveat; and
(b) the application for assessment of damages.
In Aeon Co (M) Bhd v Asia Plywood Co Sdn Bhd and another appeal [2021] 2 MLJ 102, the Court of Appeal allowed the aggrieved party’s claim for compensation for:
(a) fixed deposit interest at a rate of 3.1% per annum on the purchase price of the property, amounting to RM2,310,805.53;[4] and
(b) the cost in obtaining a report and valuation of the property, amounting to RM99,269.00.[5]
Disclaimer: The contents of this article are intended for information dissemination and academic discussion only and should not be construed as legal advice on a specific set of facts or circumstances. Should you require legal assistance, you may contact us via email (liti@pelim.my) or via WhatsApp/telephone call (+6011-5672 7813).
[1] https://www.miea.com.my/sites/default/files/webmaster/National%20Land%20Code%20Act%20828%20_Pewartaan__15Oct2020.pdf#page=490
[2] Lo Foi v Lee Ah Hong @ Lee Lum Sow & Ors [1997] MLJU 310 (HC), at page 41
[3] MD Biomedical Engineering (M) Sdn Bhd v Goh Yong Khai [2021] 5 MLJ 408 (CA), at paragraph 29
[4] Aeon Co (M) Bhd v Asia Plywood Co Sdn Bhd and another appeal [2021] 2 MLJ 102 (CA), at paragraphs 55-57
[5] Aeon Co (M) Bhd v Asia Plywood Co Sdn Bhd and another appeal [2021] 2 MLJ 102 (CA), at paragraph 62