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Legal Issues - Coggle Diagram

- - - - The creditor cannot enforce the security against the first defendant because IDT was obtained through fraud. (the thumb print affixed on the loan document was acquired by undue influence)
  - - - (2) The title or interest of any such person or body shall not be indefeasible-
        (a) in any case of fraud or misrepresentation to which the person or body, or any agent
        
        Elements of Fraud:
        
        Actual Fraud
        
        Party/Privy to fraud
        
        Intention to cheat
        
        Actual Fraud
        
        Waimiha Sawmilling Co. Ltd. v Waione Timber Co. Ltd. (1923) NZLR 1137
        
        Actual fraud is ‘dishonesty - a wilful and conscious disregard and violation of the rights of other persons.’
        
        Tai Lee Finance v Official Assignee & Ors. [1983] 1 MLJ 81
        
        Federal Court held that there must be actual fraud to defeat a person of his title or interest.
        
        Party/Privy to fraud
        
        Assets Co. v Mere Roihi [1905] AC 176
        
        The Privy Council observed as follows:
        'The fraud must be brought home to the person whose registered title is impeached or to his agents. Fraud by person through whom he claims does not effect him unless knowledge of it is brought home to him or his agents'
        
        Intention to cheat
        
        Goh Hooi Yin v Lim Teong Ghee & Ors [1990] 3 MLJ 23
        
        “It is not enough to show that the transfer had the effect of depriving the plaintiff of a known existing right. It must be demonstrated that the transfer was executed with the intention of cheating the plaintiff of such right…”
- - - - The provision did not specify for whom the security is for and does not restrict the loan to be a loan for the registered proprietor.
    - - Section 281 is not limited to the creation of a security by way of a lien on title for the benefit of a registered proprietor, it also extends to 3rd party borrowers as well.
    - - Any proprietor or lessee can deposit the IDT to a lender for security to create a lien
    - - NLC does not prohibit the creation of 3rd party lien holder's caveat subjected to the condition that the lien would not be prejudicial to the landowner
    - - A lien can be created to secure the loan mare to a 3rd party and not to the registered proprietor
  - - - Enables or empowers the registered proprietor to deposit his IDT as security for a loan. It does not lay down the procedure for or the manner of depositing. It does not require the registered proprietor himself must do the act of depositing.
        
        If he wills that the document of title be deposited, then it is valid. He already exercised his power under s281(1) of NLC
    - - Section 281(1) does not limit the procedure or the manner of depositing, as long as the depositing is done by the registered proprietor's will
    - - someone other than the registered proprietor can deposit the IDT as long as the registered proprietor consented to it
- - - - (1) Any proprietor or lessee for the time being may deposit with any other person or body, as security for a loan, his issue document of title or, as the case may be, duplicate lease; and that person or body-
        (a) may thereupon apply under Chapter 1 of Part Nineteen for the entry of a lien holder's caveat; and
        (b) shall, upon the entry of such a caveat, become entitled to a lien over the land or
        lease.
      - (2) Where the holder of any lien has obtained judgment for the amount due to him
        thereunder, he shall be entitled to apply to the Court for, and obtain forthwith, an order for
        the sale of the land or lease.
    - - Hong Leong Bank Bhd (formerly known as Hong Leong Finance Bhd) v Staghorn Sdn Bhd and other appeals [2008] 2 MLJ 622
        
        Where the loan is to a third party, it must follow that under sub-section 2 of section 281, the judgment obtained is a judgment against the 3rd party borrower."
      - CIMB Bank Bhd (previously known as Cempaka Finance Bhd) v Kamaruddin bin Said (as the administrator of the estate of Said bin Ali, deceased) & Ors and another appeal [2019) 5 MLJ 512
        
        It was said that the appellant did not have any cause of action against the respondents because they were not the appellant's borrowers. The loans were also between the borrower and the appellant only and the respondents were not parties to the loan agreements hence, the appellant needs to secure a judgment against the borrower, Ikaz and not the respondents ie the registered proprietors of the land to enable to enforce night under section 281(2) of the NLC.
    - - In section 281 (2), the judgment required must be obtained against a third parties borrower.
        In current case, Menang Bank need to secure judgement agaist the third-party only which is Suasa and not the registered proprietor to enforce the lien holder's caveats
    - - Therefore, Arshad may set aside the judgement obtained by Menang Bank against him.