Husna binti RoslandHusna binti Rosland

Nur Farhana binti Abdul KarimNur Farhana binti Abdul Karim

Option to purchase: Caveatable interestOption to purchase: Caveatable interest

Court: appeal Judge: Syed Othman J Appellant : vendor ( Sing Lian Express Sdn Bhd) Respondant: Soh Kim Tee (purchaser)

Parties involve

The sale of the company's land, held under Certificate of Title 989, Lot No. 2922 and measuring 118 acres 1 rood 10 poles,

for $8,000 per acre. Prima facie case: extension of the period of the caveat

Appellant upon receipt of $1000 from the Respondent gave an option to be exercised within a stipulated period. The respondent did exercised the option, but however, the appellant refused to continue with the agreement. Later, respondent enter into caveat for the said land and filed an action against appellant for specific performance and alternatively, damages for breach of contract. Plus, respondent made a successful ex parte application for the caveat to be extended. The company caused a notice of intended removal of the caveat (NLC; S.326)

Summary of the issue

14th Nov. 1972

On receipt of $1000, A gave option to R to be exercised by 30th Nov. 1972

15th Nov. 1972 Option exercised. Offered to pay 10% deposit ($94,000) and ask the managing director of the company to sign a draft agreement. It was refused.

30th Nov. 1972 Stipulated time for the option end.

9th Dec. 1972 Caveat was lodged by R against the land. Plus, court action for specific performance and damages for breach of contract.

20th Jan. 1973 Company (A) caused a noticed of intended removal of the caveat issued by the Registrar of Titles. Johore. (S.326; NLC) -> serve to R

24th Jan. 1973 R made application ex parte for the caveat to be extended until the final disposal of the court action.

14th Feb. 1973 The caveat was extended.

Time frame

Note: The circumstances clearly required that the court should act ex parte and the

court did so

2 grounds

1) The court was wrong in having issued the caveat ex parte, as the company had not been given an opportunity of being heard before the grant of the extension

2) The respondent is not a person entitled to claim title to or a registrable interest in the land

Grounds for appellant

1) The company had refused the exercise of the option within the specified time in option.

2) The application first came before the court on 12th Feb 1973, few days left before the expiry of the period of one month allowed by Section 326(1)(b) of the Code for the notice of intended removal of the caveat.

Judgement of the court

1st Ground

1)Document is an inchoate agreement and it becomes complete only upon the signing of a formal agreement.2)The respondent gave an irrevocable proof of his willingness to purchase the land.

2nd Ground

Application dismissed. The option was valid, thus the respondent has

a caveatable interest on the land.

Conclusion

Opinion

Option once valid cannot be revoked within the time stipulated.

Option once exercised by the purchaser within the stipulated time become valid thus give rise to caveatable interest on that land.

Removal of caveat cannot be done before the expiry period of one month notice. ( S 326). However, the aggrieved party if any, may argue by way of Section 327 of the Code.