Can a purchaser claim for the potential loss of profit on a property successfully bid at an auction if the property bid is subsequently claimed by someone else later?
PENDAFTAR HAKMILIK PEJABAT TANAH DAN GALIAN SELANGOR & ANOR v. LAU YONG YING  5 CLJ 164
- Lau Yong Ying (“Lau”) had successfully bid for a property at a public auction (“Property”) at a price stated as RM3.51 million.
- Lau claimed that she had paid RM351,000 as ten per cent (10%) deposit (“Deposit”).
- Lau obtained a loan from Alliance Islamic Bank to finance the purchase of the Property for RM3,211,900.
- Before the transaction could be completed, Bank of Punjab (“BOP”) intervened, claiming ownership of the Property by virtue of an Anti-Money Laundering Act 2001 (“AMLA”) vesting order.
- An application was filed by BOP in the High Court against both the Pendaftar Hakmilik Pejabat Tanah dan Galian Selangor (“Selangor Land Office”) and Lau which was successful.
- The High Court found that the Selangor Land Office were liable in negligence because they failed to endorse a notice of seizure on the title to the Property after having been served with the same by the police.
- The parties appealed all the way to the Federal Court but were unsuccessful.
- As it transpired, the Property was previously purchased by a Pakistani criminal using proceeds obtained by cheating the BOP and therefore, the BOP were able to obtain a vesting order under section 61 of AMLA.
- Lau was completely unaware of the vesting order nor was she aware that the Property had been seized by the Malaysian police prior to her successfully bidding the same.
- Lau sued the Selangor Land Office and another claiming that she had suffered losses as a result of their negligence. She claimed for the refund of Deposit, loss of her Property and all associated costs of acquiring the Property including payments of the bank loan, loss of profit for re-sale of the Property, lawyer’s fees and other miscellaneous payments made to upkeep the Property whilst litigation was on-going.
- The High Court allowed Lau’s claim and Lau was awarded damages in the total sum of RM9,396,088-86.
- The Selangor Land Office therefore appealed to the Court of Appeal on the basis that the total amount awarded by the trial judge was wrong and erroneous for failing to give due consideration to the fact that the claim was wholly baseless, without sufficient evidence, unreasonable and contained an element of double counting.
- Lau showed proof that she had entered into a SPA to sell the property for RM7.2million
COURT OF APPEAL DECISION – APPEAL ALLOWED IN PART!
The Court of Appeal allowed the appeal in part on the following basis:
- The court allowed Lau’s claim for loss in value of the Property as the court found that it was a reasonable amount which must be granted as compensation to Lau especially since there was evidence she had agreed to sell the Property.
- The court also granted Lau’s claim for legal fees incurred as the court was of the view that the lawyers’ invoices clearly showed that the invoices were addressed to Lau, which meant that Lau had to pay or had paid the amount stated in the invoices.
- The court however dismissed all other claims, including the claim for Deposit, because to allow both the claims for loss of Deposit and the loss of profit on the resale of the Property would essentially profit Lau which the law did not allow.