Introduction
A private caveat plays an important role in protecting a person’s claimed interest in land. It acts as a warning to the world that there is a person who claims an interest in the land and prevents any dealings from being registered until the issue is resolved. However, while a caveat provides protection, it can also create difficulties for the registered proprietor or other interested parties if it is entered without proper justification.
For this reason, the National Land Code 1965 (“NLC”) provides a mechanism to deal with the removal of private caveats and the consequences of wrongful caveats. Sections 327 and 329 of the NLC seek to strike a balance between protecting genuine interests in land and preventing the misuse of caveats as a way to unnecessarily obstruct land transactions.
Who is the Aggrieved Person/Body under Section 327 of the NLC?
Section 327 of the NLC provides a remedy for any person or body who is aggrieved by the existence of a private caveat. Such person may apply directly to the Court for an order to remove the caveat. The Court has the discretion to make any order that it considers just and appropriate based on the circumstances of the case.
The concept of an aggrieved person is important because not every person can simply challenge a caveat. The applicant must show that the existence of the caveat has affected their rights or interests. This may include a registered proprietor whose ability to deal with the land is restricted, or a purchaser who is unable to complete a transaction because of the caveat.
Once the Court grants an order for removal, the Registrar will cancel the entry of the caveat on the register document of title under Section 327(2).
The Courts’ Approach in Determining the Removal of Private Caveats
The requirement of being an aggrieved person was considered in SKS Foam (M) Sdn Bhd v Gan Bee San [2025] MLRHU 436. The Court emphasised that, for the purpose of removing a private caveat, the applicant must first establish that he or she is genuinely aggrieved by the existence of the caveat. In other words, the applicant must show that the caveat has affected his or her rights or interests in relation to the land.
Besides, the Court of Appeal in Luggage Distributors (M) Sdn Bhd v Tan Hor Teng @ Tan Tien Chi & Anor [1995] 3 CLJ 520 held that the burden lies on the caveator to satisfy 3 important requirements. Firstly, the caveator must prove that he has a caveatable interest. This means that the caveator must have a legally recognised interest capable of protection under the law. A mere personal claim, expectation, or unsupported allegation is insufficient to justify the continuation of a private caveat.
Secondly, after establishing caveatable interest, the caveator must show that the claim raises a serious question to be tried. At this stage, the Court is not required to determine the final rights of the parties. Instead, the Court only considers whether there is a genuine dispute that requires further examination.
Thirdly, the caveator must demonstrate that the balance of convenience favours maintaining the caveat until the disposal of the main action. The Court will weigh the potential prejudice suffered by both parties. If maintaining the caveat is necessary to protect a legitimate interest, the Court may allow it to remain. However, if the caveat merely obstructs lawful dealings without sufficient justification, the Court may order its removal.
Consequences of Wrongful Caveats under Section 329 NLC
While the law provides protection for those with genuine claims, it also recognises that a private caveat can be misused. Section 329(1) provides that a person or body who wrongfully or without reasonable cause secures the entry of, or fails to withdraw, a private caveat may be liable to pay compensation to any party who suffers damage or loss as a result.
This provision acts as a safeguard against abuse. A private caveat should not be used simply as a pressure tactic or to delay another person’s lawful dealings with the land. If a caveat is maintained without reasonable grounds and causes financial loss to another party, the person responsible may be required to compensate for that loss.
Section 329(2) further prevents repeated applications for the same caveat based on the same claim. Where the Court has ordered the removal of a caveat under Section 327, or where a previous application relating to the same claim has failed, a further caveat based on the same grounds cannot simply be entered again. This prevents the same dispute from being repeatedly used to interfere with dealings involving the land.
Conclusion
The law relating to private caveats reflects a balance between two competing interests: protecting persons who genuinely claim an interest in land and protecting landowners or other parties from unnecessary restrictions. Section 327 allows an aggrieved person to seek removal of a private caveat through the Court, while Section 329 provides protection against wrongful or repeated caveat applications.
The decision in Luggage Distributors (M) Sdn Bhd v Tan Hor Teng @ Tan Tien Chi & Anor [1995] 3 CLJ 520 highlights that a private caveat is not an automatic right but a protective measure that must be supported by a genuine legal interest. A caveator who wishes to maintain a caveat must show a caveatable interest, a serious question to be tried and that the balance of convenience supports its continuation.
Protecting genuine rights while preventing unfair restrictions — that is the balance the law seeks to achieve.