ENG MEE YONG & ORS V. LETCHUMANAN
PRIVY COUNCIL [HONG KONG]
PC (LORD DIPLOCK, J, LORD MORRIS OF BORTH-Y-GEST, J, LORD
HAILSHAM OF SAINT MARYLEBONE, J, LORD EDMUND, J, DAVIES, J, LORD FRASER OF
TULLEYBELTON, J)
[APPEAL NO. 25 OF 1977]
4 APRIL 1979
Appeal allowed.
JUDGMENT
Ajaib Singh J:
This was an application for an order that a private caveat entered by the
respondent against land belonging to the applicants under Grant No. 2457 Lot
593 in the Mukim of Ampangan be forthwith removed on the ground that the
respondent had no interest in the land after he had failed to complete the
purchase of the said land under an agreement for sale dated 28 June 1974.
The applicants also claimed damages for loss suffered by them as a result of
the wrongful lodgment of the caveat and the failure on the part of the
respondent to withdraw it after 28 September 1974 which was the date for the
completion of the sale of the land.
The application was by originating motion supported by a joint affidavit
of the applicants dated 7 August 1975. In their affidavit the applicants
stated that they were co-owners of the land and they had entered into a
written agreement with the respondent on 28 June 1974 whereby the respondent
was to purchase the land at the price of $827,656.25. Time was stated to be
the essence of the contract and the agreement provided that the purchase
should be completed on or before 28 September 1974. The respondent however
failed to complete the purchase of the land by that date in accordance with
the written agreement whereupon the applicants forfeited the sum of
$97,765.62 which was paid by the respondent as a deposit and in part payment
of the purchase price. The applicants also forfeited a further sum of
$30,000 which was paid by the respondent to the applicants towards the
purchase price pursuant to a clause in the agreement. On 9 November 1974 the
applicants were served with a notice by the Registrar of Titles under s.
324(3) of the National Land Code stating that a private caveat expressed to
bind their land had been entered on the application of the respondent. On 6
January 1975 the applicants applied to the Registrar for the removal of the
caveat under s. 326(1) of the Code but the Registrar's notice of intended
removal of the caveat could not be served upon the respondent as the
respondent had moved to another place. The notice could not also be served
by registered post and the envelope containing the notice was returned
undelivered to the Registrar by the Postal Department with the remark that
it was unclaimed. Hence the present application by the applicants for the
removal of the caveat under s. 327(1) of the National Land Code. In their
joint affidavit the applicants referred to a letter dated 25 October 1974
addressed to the applicants' previous solicitors by the then solicitors of
the respondent wherein it was stated inter alia that the applicants and the
respondent had orally agreed to an extension of two months beyond 28
September 1974 for the completion of the purchase of the land and that the
respondent would complete the purchase on or before the agreed extended date
of 28 November 1974. The applicants in their affidavit denied that they had
ever agreed to the extension of two months beyond 28 September 1974 for the
completion of the purchase or to any extension at all. In any event they
said that the respondent made no attempt to complete the purchase at any
time.
When the notice of motion came up for hearing before me I noticed that it
was not served upon the respondent but was made ex parte. I did not think it
proper in the circumstances of this case to make any order on the
application in the absence of the respondent and I directed that the notice
of motion be served upon him which was eventually done by way of substituted
service. The respondent then filed a lengthy affidavit in reply but not
everything that was stated therein was relevant or worthy of consideration.
In his affidavit the respondent stated that the agreement for sale dated 28
June 1974 was not the final or the first written agreement concerning the
land and he referred to an earlier agreement dated 16 December 1973 a copy
of which was exhibited in the affidavit. The respondent stated that this
earlier agreement was not specifically cancelled or withdrawn by any
subsequent agreement in writing and further that the second agreement dated
28 June 1974 did not contain all the agreed terms because some of the terms
were made orally which included the term that time should not be the essence
of the contract. He further stated that the applicants had agreed to grant
an extension of time for a period of two months from 28 September 1974 and
he said that the agreement of 28 June 1974 had not been expressly
terminated. He stated further that the applicants were not entitle to
forfeit the two sums of $97,765.62 and $30,000. He had enhanced the value of
the land by building an access road with the knowledge and consent of the
applicants and they were therefore estopped from denying his interest in the
said land. He said he was obliged to lodge the caveat as the applicants were
about to disregard the actual terms of the agreement and forfeit to their
own use the sums of money paid by him notwithstanding the fact that the
building of the approach road on the land was then still in progress. The
respondent stated further that on 10 October 1975 he lodged a second caveat
against the same land setting out his grounds more fully for claiming an
interest in the land. He had also caused a writ to be issued against the
applicants for an order that they do complete the sale of the land and for a
declaration that they were not entitled to forfeit the sum of $127,765.62.
After giving due consideration to the application, the affidavits and the
submissions advanced on behalf of the parties I came to the conclusion that
the respondent had no caveatable interest in the land concerned within the
meaning of s. 323(1) of the National Land Code. The parties had entered into
a written agreement on 28 June 1974 wherein time was made the essence of the
contract and acting pursuant to the provisions in the agreement the
applicants were well within their rights when they forfeited the deposit of
$97,765.62 and the further sum of $30,000 upon the failure of the respondent
to complete the purchase of the land on or before 28 September 1974. The
respondent stated in his affidavit that the first agreement dated 16
December 1973 was not specifically cancelled or withdrawn by any subsequent
agreement in writing. This statement was patently false because in one of
the recitals in the second agreement of 28 June 1974 it was specifically
stated that the vendors and the purchaser had mutually agreed to determine
the former agreement of 16 December 1973. The respondent also said in his
affidavit that there was an oral term agreed to by the parties that time
should not be the essence of the contract and that it was also agreed that
the time for the completion of the purchase be extended by two months. Here
too there was no merit in the respondent's allegations. The vendors and the
purchaser signed the agreement of 28 June 1974 in the presence of solicitors
and the agreement itself appeared to have been drawn by a firm of
solicitors. It was a well prepared document and it stated in no uncertain
terms that time should be the essence of the contract. The respondent's
attempt to introduce extrinsic parol evidence to vary the terms of the
written agreement of 28 June 1974 was obviously meant to embarrass the
applicants and to cause delay in the proceedings. Moreover this evidence was
inadmissible under ss. 91 and 92 of the Evidence Act, 1950 for apart from
the bare allegations of the respondent no other evidence in support was
adduced so as to bring the matter under any of the provisos to s. 92 of the
Evidence Act. On the other hand I accepted the statement of the applicants
in their joint affidavit that they had not agreed to any extension of time
for the completion of the purchase of the land and that the respondent had
made no attempt whatsoever to complete the purchase at any time. In the
event I held that the applicants were entitled to an order in terms of the
first prayer, in the originating motion and I ordered that the caveat
entered by the respondent be removed. The applicants had also claimed
damages for loss suffered by them as a result of the wrongful lodgment of
the caveat. This claim however was not pursued by the applicants and no
evidence was adduced on their behalf to establish the extent of any damage
or loss suffered by them. With regard to the second caveat entered against
the same land by the respondent on 10 October 1975 Mr. Ramachandran for the
respondent gave an undertaking after briefly consulting his client in Court
that in the event that no appeal against my decision ordering the removal of
the caveat was filed within ten days of my order the respondent would
withdraw the second caveat.
Costs of the proceedings were ordered to be paid by the respondent to the
applicants.
From the above judgment the respondent appealed to the Federal Court,
which allowed the appeal - see [1977] 1 MLJ 7. The appellants appealed from
the judgment of the Federal Court.
JUDGMENT
Lord Diplock (delivering the judgment of the Board):
This is an appeal from a judgment of the Federal Court of Malaysia in
proceedings brought in the High Court in Malaya at Seremban under s. 327(1)
of the National Land Code, and claiming the removal of a private caveat
which had been entered on the register document of title to land under s.
322 of the Code.
The applicants in the High Court ("the caveatees") were the registered
proprietors of the land which is situated in the Ampangan District of
Seremban. The respondent in the High Court ("the caveator") was the person
at whose instance a caveat was entered on the register document of title to
the land, on 9 November 1974. The caveat was expressed to bind the land
itself to the extent of a whole share. The caveatees had applied to the
Registrar on 6 January 1975 for removal of the caveat under s. 326(1) of the
Code; but the Registrar was unable to serve notice of intended removal on
the caveator as he could not be found. The caveatees were thus driven to
proceed ex parte under s. 327(1) for an order for the removal of the caveat.
This they did on 26 August 1975: their application was supported by a joint
affidavit of the caveatees. The case came on for hearing before Ajaib Singh
J. in the High Court on 10 November 1975. Shortly before that, the caveator
had appeared and on November 4 had filed an affidavit in which he asserted a
right to the title in the land under a contract of sale made between him and
the caveatees. Shortly before the date of his affidavit he had issued a writ
claiming specific performance of this contract.
The learned Judge granted the caveatees' application and ordered the
removal of the caveat. He gave his reasons for judgment on 5 February 1976.
The caveator appealed to the Federal Court on a number of grounds to which
their Lordships will have to advert later. The appeal was heard on 7
September 1976. It was allowed, and the order for removal of the caveat set
aside. From this judgment and order of the Federal Court appeal is now
brought to His Majesty the Yang di-Pertuan Agong.
Although the facts of the instant case are peculiar to itself the appeal
raises a question of law of more general importance as to the principles
applicable to the exercise by the High Court of its jurisdiction under ss.
326 and 327 of the National Land Code. Their Lordships will deal with this
general question first before turning to the consequence of applying those
principles to the facts of the instant case.
The Torrens system of land registration and conveyancing as applied in
Malaya by the National Land Code, has as one of its principal objects to
give certainty to title to land and registrable interests in land. Since the
instant case is concerned with title to the land itself their Lordships will
confine their remarks to this, though similar principles apply to other
registrable interests. By s. 340 the title of any person to land of which he
is registered as proprietor is indefeasible except in cases of fraud,
forgery or illegality, and even in such cases a bona fide purchaser for
value can safely deal with the registered proprietor and will acquire from
him an indefeasible registered title.
The system of private caveats is substituted for the equitable doctrine
of notice in English land law. By s. 322(2) the effect of entry of a caveat
expressed to bind the land itself is to prevent any registered disposition
of the land except with the caveator's consent until the caveat is removed.
This is a very grave curtailment of the rights of the proprietor, yet it can
be imposed at the instance of anyone who makes a claim to title to the land,
however baseless that claim may turn out to be. By s. 324 the Registrar is
required to act in an administrative capacity only; he is not concerned with
the validity of the claim on which the caveat purports to be based. If the
document is in the correct form he must enter the caveat on the register and
leave the registered proprietor to secure its removal and to claim
compensation from the caveator for any damage he has suffered by reason of
the entry of the caveat having been obtained by the caveator without
reasonable cause.
The caveat under the Torrens system has often been likened to a statutory
injunction of an interlocutory nature restraining the caveatee from dealing
with the land pending the determination by the Court of the caveator's claim
to title to the land, in an ordinary action brought by the caveator against
the caveatee for that purpose. Their Lordships accept this as an apt analogy
with its corollary that caveats are available, in appropriate cases, for the
interim protection of rights to title to land or registrable interest in
land that are alleged by the caveator but not yet proved. Nevertheless their
Lordships would point out that the issue of a caveat differs from the grant
of an interlocutory injunction in that it is issued ex parte by the
Registrar acting in an administrative capacity without the intervention of
the Court and is wholly unsupported by any evidence at all. Unless there
were some speedy procedure open to the registered proprietor to get the
caveat set aside in cases where the caveator's claim is baseless or
frivolous or vexatious, the Torrens system of land registration and
conveyancing, so far from giving certainty to title to land in Malaya, would
leave the registered proprietor in a more precarious position as respects
his powers of disposition of his land than an unregistered proprietor under
English law.
Under the National Land Code there are alternative procedures for the
removal of a caveat at the instance of the caveatee. Under s. 326 the
caveatee may apply to the Registrar for its removal and the Registrar,
provided he is able to serve the caveator with notice of the application (as
he was not in the instant case), is required to remove the caveat from the
Register at the expiry of one month from the date of such notice, unless the
caveator applies successfully to the Court for an extension of the period
for which the caveat shall remain on the register.
As was pointed out by the Federal Court in Nanyang Development (1966) Sdn.
Bhd. v. How Swee Poh [1969] 1 LNS 116 , it is the caveator who is the
applicant in proceedings brought under s. 326(2), and it is for him to begin
and to satisfy the Court that there are sufficient grounds in fact and law
for continuing the caveat in force after the month has elapsed. This in
their Lordships' view is plainly right. What constitute sufficient grounds
they will discuss later after examining the alternative procedure open to
the caveatee under s. 327.
Whereas the procedure under s. 326 for obtaining the removal of a caveat
is available only to the caveatee, the procedure for applying directly to
the Court for an order of removal is available not only to the caveatee but
also to any other person aggrieved by the existence of the caveat -
typically a purchaser to whom the registered proprietor has contracted to
sell the land but the sale has not yet been completed by a proper instrument
of transfer duly registered. In their Lordships' view a distinction must be
drawn between cases where the applicant is the registered proprietor of the
land (ie the caveatee) and cases where the applicant is some other person
who claims a right to an interest in it. In the former case the caveatee can
rely upon his registered title as prima facie evidence of his unfettered
right to deal with the land as he pleases; it is for the caveator to satisfy
the Court that there are sufficient grounds in fact and law for continuing
in force a caveat which prevents him from doing so. So where, as in the
instant case, the only parties to an application under s. 327 are caveatee
and caveator there is no difference between what the caveator must establish
to obtain an extension of the caveat under s. 326 and what he must establish
to defeat the caveatee's application for removal of the caveat under s. 327.
It is otherwise when the applicant under s. 327 is someone other than the
caveatee. He has no registered title to rely upon as prima facie evidence of
his interest in the land. It is for him to begin by satisfying the Court
that there are sufficient grounds in fact and law for treating him as a
person claiming such an interest in the land as would, if it were
established, make him aggrieved by the existence of the caveat.
So far their Lordships have deliberately refrained from speaking of "onus
of proof. It is an expression which, if it is used in relation to
proceedings which are interlocutory in their legal character, is liable to
lead to confusion. Their Lordships have already noted the analogy between
the effect of a caveat and that of an interlocutory injunction obtained by
the plaintiff in an action for specific performance of a contract for the
sale of land restraining the vendor in whom the legal title is vested from
entering into any disposition of the land pending the trial of the action.
The Court's power to grant an interlocutory injunction in such an action is
discretionary. It may be granted in all cases in which it appears to the
Court to be just and convenient to do so. Similarly in s. 327 it is provided
that "the Court ... may make such order on the application as it may think
just". The guiding principle in granting an interlocutory injunction is the
balance of convenience; there is no requirement that before an interlocutory
injunction is granted the plaintiff should satisfy the Court that there is a
"probability", a "prima facie " case or a "strong prima facie case" that if
the action goes to trial he will succeed; but before any question of balance
of convenience can arise the party seeking the injunction must satisfy the
Court that his claim is neither frivolous nor vexatious; in other words that
the evidence before the Court discloses that there is a serious question to
be tried. American Cyanamid v. Ethicon Ltd. [1975] AC 396.
This is the nature of the onus that lies upon the caveator in an
application by the caveatee under s. 327 for removal of a caveat: he must
first satisfy the Court that on the evidence presented to it his claim to an
interest in the property does raise a serious question to be tried; and,
having done so, he must go on to show that on the balance of convenience it
would be better to maintain the status quo until the trial of the action, by
preventing the caveatee from disposing of his land to some third party.
In so far as the Nanyang Development case might be understood as
suggesting that in proceedings under s. 326 or s. 327 the caveator in order
to maintain his caveat must satisfy the Court that on the balance of
probabilities his claim will succeed, it puts the burden on the caveator of
satisfying the first requirement too high. On the other hand if
Kasivisvanathan Chettiar v. Pereira [1976] 1 LNS 48 might be understood as
suggesting that the first requirement would be satisfied by the facts that (i)
the caveator had commenced proceedings against the caveatee to enforce his
claim to an interest in the land, coupled with (ii) his bare assertion in an
affidavit that he was entitled to that interest unsupported by any
disclosure and verification upon oath of the facts upon which his claim was
based, this would put the burden on the caveator too low.
In the case of a refusal by the vendor to complete a contract for the
sale of land the normal remedy of the purchaser as plaintiff in an action is
an order for specific performance of the contract; and in the absence of
special circumstances, if it were shown that the vendor threatened to
dispose of the land while the action was still pending, the balance of
convenience would be in favour of granting an interlocutory injunction to
prevent his doing so, provided that the plaintiff would be in a position to
satisfy his undertaking as to damages if the action should fail at trial. So
too in an application by the caveator under s. 327 for removal of a caveat,
once the caveatee has met the first requirement of satisfying the Court that
the claim on which his caveat is based does raise a serious question to be
tried, the balance of convenience would in the normal way and in the absence
of any special circumstances be in favour of leaving the caveat in existence
until proceedings, brought and prosecuted timeously by the caveator, for
specific performance of the contract of sale which he alleges had been
tried.
This may be why in the Malaysian cases about applications under s. 327 to
which their Lordships have been referred there does not appear to have been
any reference to balance of convenience. They are concerned with what, if
anything, the caveator has to prove in order to resist the caveatee's
application for removal of the caveat. In the instant case too the learned
High Court Judge never reached the question of the balance of convenience.
He concluded that the statements in the caveator's affidavit about the
contract for the sale of the land which he claimed to be still subsisting
were so vague, equivocal and inconsistent with the contemporary documents as
to lack credibility and that they did not satisfy him that there was any
serious question to be tried.
Their Lordships must therefore turn to the evidence that was before the
High Court on the hearing of the application, bearing in mind that if there
appears to be conflict of evidence which is not on the face of it
implausible, such a conflict ought not to be disposed of on affidavit
evidence only. It leaves a serious question to be tried.
The land that is in question in the instant case had been the subject of
a formal written contract of sale between the caveatees as vendors and the
caveator as purchaser, drawn up by their respective solicitors and dated 28
June 1974 ("the Sale Agreement"). The price was $827,656 and this was
payable as $97,765 by way of deposit and part payment of the purchase price
on the execution of the agreement (cl. 1); as to a further $30,000 in part
payment of the purchase price on 29 July 1974 (cl. 2); and, as to the
balance of $699,890 on 28 September 1974 (cl. 3). It was expressly provided
that time was to be of the essence of each of the clauses providing for such
payments and that in default of punctual payment of the balance due under cl.
3 the previous payments under cll. 1 and 2 were to be forfeited. The
caveator duly paid, or was credited in account with, the deposit and paid
the instalment of the purchase price due on 29 July 1974: but he defaulted
on the payment of the balance of $699,890 due on 28 September 1974. On 30
September the caveatees gave notice to the caveator and his solicitors
terminating the contract for breach by the caveator of the condition in cl.
3 and claiming to forfeit the deposit and instalments of the purchase price
which had been already paid under cll. 1 and 2 and totalled $127,765.
These were the facts deposed to in the joint affidavit of the caveatees
filed in support of their application of 26 August 1975 for an order for
removal of the caveat. Copies of the Sale Agreement and the letters
terminating it were exhibited. So was a copy of a letter from the caveator's
to the caveatees' solicitors dated 25 October 1974 in which among other
things it was said:
Our client states that he and your clients have orally agreed for an
extension of two months beyond 28 of September 1974 for the completion of
the purchase.
..
Our said client states that he would complete the purchase on or before
the agreed extended date of 28 November, 1974.
The caveatees in their affidavit denied that any such agreement for an
extension of time for payment had been reached; they also averred that the
caveator had not made any attempt to complete the purchase at any time.
As appears from the recitals to the Sale Agreement, this was not the
first agreement between the parties for sale of that particular area of
land. There had been a former agreement dated 16 December 1973 of which a
copy is exhibited to the caveator's affidavit of 4 November 1975. That
former agreement was in substantially the same terms as the Sale Agreement
save that the total purchase price was $777,656, the deposit and first
instalment of the purchase price payable on execution of the former
agreement was $20,000, the next instalment was payable on 16 January 1974
and amounted to $57,765, while the balance of $699,890 was payable on 16
June 1974. Time was made the essence of all the clauses relating to payment
and in default of punctual payment of the balance there was provision for
forfeiture of the instalments already paid.
As appears from his own affidavit the caveator did default in payment on
16 June 1974 of the balance of the purchase price under the former
agreement. He sought from the caveatees an extension of three months in
which to find the $699,890; but this was refused and the caveatees claimed
to exercise their right to forfeit the instalments of $77,765 which had
already been paid. The matter was compromised by the parties entering into
the Sale Agreement on 28 June 1974. Instead of being forfeited, the sum of
$77,765 was credited to the initial deposit of $97,765 under cl 1 of the new
agreement, the price of the land was increased by $50,000, and the date for
payment of the balance of the new purchase price was 28 September 1974, a
little more than three months later than under the former agreement. The
former agreement was referred to in the recitals to the Sale Agreement. It
was there stated that the vendors and the purchaser had mutually agreed to
terminate it.
The affidavit of the caveator bears several indicia of "swearing by the
book". For instance, it starts off by referring to the former agreement of
16 December 1973, of which it says:
This agreement was not specifically cancelled or withdrawn by any
subsequent agreement in writing.
Despite the incontrovertible fact that the mutual agreement of the
parties to determine it is recited in the Sale Agreement itself. The
affidavit then goes on to say that the caveator agreed to purchase the land
for the purpose of developing it in association with some unidentified third
party from whom he was to receive certain payments. The principal assertion
in the first part of the affidavit is that the Sale Agreement does not
contain all the terms agreed between the parties but that some of them were
oral; though there is no indication as to when, where or even between whom
any oral agreement is alleged to have been made. The oral terms are
variously expressed as time should not be of the essence, the [caveatees]
would grant me all the time needed to arrange for the development of the
property in question in association with a third party, and the time
mentioned in the [Sale] Agreement was not to be enforced at all. These
alleged oral terms are in flat contradiction to the terms of the written
agreement. In their Lordships' view evidence of them is inadmissible under
ss. 91 and 92 of the Evidence Act, 1950; but that they should have been put
forward at all throws some light upon the credence to be attached to
statements made by the caveator in his affidavit. It defies belief that the
caveatees would have agreed to wait for the $699,890 balance of the purchase
price for an indefinite period and without bearing interest until some
unspecified third party had agreed to join with the caveator in developing
the property and had made to the caveator certain payments of an unspecified
amount. It likewise strains credibility that if there had been any such oral
agreement no mention of it should have been made by the caveator's
solicitors when the caveatees claimed to terminate the Sale Agreement on 30
September 1974.
The learned Judge was, in their Lordships' view, justified in rejecting
the allegations in this part of the caveator's affidavit as insufficient to
disclose that there was any serious question to be tried as to whether any
agreement for the sale of the land by the caveatees to the caveator was
still subsisting at the date of the hearing of the application.
The next matter relied upon in the caveator's affidavit is that to the
knowledge of the parties the land could not be developed until an access
road had been constructed across some adjoining State land. In January 1974,
during the currency of the former agreement, the caveatees, pursuant to its
terms, had cooperated in applying for permission to construct the approach
road under s. 390 of the National Land Code. According to his affidavit the
caveator at some date that he does not specify embarked on the construction
of the road but did not complete it until May 1975. He alleges that the
caveatees actively encouraged him to spend money on the road but does not
state that any such encouragement was given to him to do so after he had
defaulted on the payment due on 28 September 1974, when the contract was
terminated by the caveatees. He contends that because by building the
approach road he has enhanced the value of the caveatees' land they are
estopped from denying his interest in it. Their Lordships can see no legal
basis here on which to found an estoppel. The learned Judge did not refer to
it in his judgment and although the point was mentioned in the caveator's
Memorandum of Appeal to the Federal Court it was, very sensibly, abandoned
at the hearing of the appeal.
The caveator's affidavit also contains oblique and scattered references
to an alleged agreement to extend for two months until 28 November 1974 the
date for payment of the balance of the purchase price. It is first referred
to in a subordinate clause in which it is said that the caveatees purported
to terminate the agreement notwithstanding that they had agreed to grant
what has been described as an 'extension of time' for a period of two months
from 28 September 1974. There is nothing to indicate how, when, where and
between whom the agreement was made or what were its terms and what was the
consideration for it. The omission of any of these particulars was despite
the fact that in their affidavit to which the caveator was replying the
caveatees had sworn that they had never entered into such an agreement.
Later there is a reference to the caveatees having first agreed and later
refused an extension but without specifying what is the refusal that is
relied on; and finally it is said that it was the refusal for an 'extension'
[that] was unreasonable and unlawful bearing in mind all the circumstances
of the case. The suggestion that there was any such agreement is
inconsistent with the caveator's earlier assertions in the affidavit that it
had been agreed from the outset that the date of payment was to be deferred
until the third party had provided the caveator with the necessary funds;
while if one turns to the contemporaneous correspondence it is difficult to
reconcile it with the existence before 28 September 1974 for any agreement
to extend the time for payment. On 14 October 1974 the caveator's solicitors
returned to the caveatees' solicitors the issue document of title to the
land - an action quite inconsistent with the time for completion not having
expired by then. It was not until after this, on 25 October 1974, that any
reference was made to any agreement for an extension of time for payment.
That reference was in terms consistent with an agreement giving the caveator
another two months to find the money having been reached after the notice of
termination had been received. Furthermore the caveator never attempted to
comply with its provisions by tendering the balance of the purchase price on
or before 28 November 1974 or at all.
In the face of these vague, self-contradictory and implausible assertions
on the part of the caveator, the learned Judge accepted the sworn denial of
the caveatees that they had ever agreed to any extension of the time of
payment beyond 28 September 1974. Although in the normal way it is not
appropriate for a Judge to attempt to resolve conflicts of evidence on
affidavit, this does not mean that he is bound to accept uncritically, as
raising a dispute of fact which calls for further investigation, every
statement on an affidavit however equivocal, lacking in precision,
inconsistent undisputed contemporary documents or other statements by the
same deponent, or inherently improbable in itself it may be. In making such
order on the application as he may think just the Judge is vested with a
discretion which he must exercise judicially. It is for him to determine in
the first instance whether statements contained in affidavits that are
relied upon as raising a conflict of evidence upon a relevant fact have
sufficient prima facie plausibility to merit further investigation as to
their truth. Since this is a matter upon which the opinions of individual
Judges may reasonably differ, an appellate Court ought not to interfere with
the Judge's exercise of his discretion under s. 327 of the National Land
Code unless the way in which he exercised it is shown to have been
manifestly wrong. In the instant case their Lordships see no reason for
differing from the opinion of Ajaib Singh J. that the various references in
the caveator's affidavit to there having been an agreement for a two months'
extension of time were too implausible to throw any doubt upon the caveatees'
express denial upon oath that there ever had been one.
Apart altogether from implausibility as to questions of fact their
Lordships are not persuaded that an agreement of the kind alleged (so far as
this can be ascertained from the references to it in the affidavit) would be
capable in law of conferring upon the caveator any continuing interest in
the land or estopping the caveatees from denying his interest after he had
himself failed to perform it or take advantage of it by tendering the
balance of the purchase price on or before 28 November 1974.
Finally it was contended on behalf of the caveator that in so far as the
two sums forfeited exceeded ten per cent of the purchase price under the
former agreement, viz. $77,765, they amounted to a penalty against which the
Court would grant relief and that the caveator was entitled to an equitable
charge upon the land for the amount of the excess, viz. $50,000.
This contention was rejected by the learned Judge; and although it was
raised in the Memorandum of Appeal to the Federal Court it was abandoned by
Counsel for the caveator at the hearing of the appeal. So their Lordships
need say no more about it, except that the removal of the caveat will not
prevent the caveator, if he is so advised, from pursuing his claim that
monies that the caveatees have forfeited amounted to a penalty and are
recoverable.
Their Lordships therefore see no ground upon which an appellate Court
would be justified in interfering with the way in which Ajaib Singh J
exercised his discretion to order the removal of the caveat.
In the Federal Court the argument appears to have turned upon the
circumstances in which the Sale Agreement was terminated. Time being of the
essence of the provisions in the Sale Agreement for payment of the purchase
price, the failure of the caveator to pay on the due date was a breach of
condition which the caveatees were entitled to elect to treat as bringing
the contract to an end. This they did by their letters of 30 September 1974.
It would appear that the Federal Court took the view, which their Lordships
have already held to be erroneous, that once the caveator had asserted in
his affidavit that the Sale Agreement had not been lawfully terminated and
had commenced an action for specific performance of it, the Court had no
option but to leave the caveat in existence until the action was tried. The
Federal Court accordingly did not consider whether the learned Judge's
evaluation of the affidavit evidence on which he based the exercise of his
discretion was manifestly wrong.
For the reasons given earlier in this opinion their Lordships consider
that Ajaib Singh J's evaluation of the affidavit evidence was justified and
that there is no ground for an appellate Court to interfere with the way in
which his discretion was exercised.
Their Lordships will accordingly advise His Majesty the Yang di-Pertuan
Agong that this appeal should be allowed with costs here and in the Federal
Court and that the order of the High Court of 10 November 1975 should be
restored.
Appeal allowed.
