Can a purchaser of an auction property claim trespass on the basis that it was unaware of the existence of retention pond and structures on the auction land?

BAYANGAN SEPADU SDN BHD v. JABATAN PENGAIRAN DAN SALIRAN NEGERI SELANGOR & ORS [2020] 10 CLJ 321

• Bayangan Sepadu Sdn Bhd (“Purchaser”) had purchased a piece of land through a public auction (“Said Land”).

• According to the Purchaser, when it conducted a land search on the Said Land, there was no indication that there was in existence a retention pond and permanent structures nor that the portion of the Said Land had been surrendered to the State of Selangor and other statutory bodies (collectively, the “Authorities”) by the previous owners.

• Successful in its bid, the Purchaser purchased the Said Land at RM3.66 million.

• The Purchaser carried out another land search and the search indicated that the retention pond and permanent structures were never surrendered to the Authorities.

• A survey carried out by a land surveyor engaged by the Purchaser revealed that besides the retention pond and permanent structures, there were also Tenaga Nasional Berhad’s substation, staff quarters, huts and storeroom on the Said Land.

• The Purchaser commenced an action against the Authorities at the High Court seeking, amongst others, an injunction restraining the Authorities from trespassing and an order that the Authorities remove the fence and/or other structures and restore the Said Land to the condition in which it was before such fences and/or structures were erected or constructed.

• The High Court found in favour of the Authorities and held that (i) the previous owners had given their consent and permission to surrender part of the Said Land for the purpose of flood mitigation; and (ii) there was a valid surrender of the Said Land to build the retention pond and the other structures.

• The Purchaser appealed to the Court of Appeal.

• The Court of Appeal dismissed the appeal on the basis, amongst others, that the legal maxim “let the buyer beware” must necessarily apply to this case. The Purchaser should have inspected the Said Land and make inquiries as to the Said Land which it was proposing to bid.

• If the Purchaser omitted to ascertain whether the Said Land was such as it had expected to be, then the Purchaser could not complain upon discovering the existence of the retention pond and the structures.

• The searches conducted by the Purchaser at the land office were insufficient to reveal the actual physical landscape of the Said Land.

• Furthermore, the proclamation of sale in the auction had stated that the majority of the Said Land was covered by a lake or retention pond.