FACULTY OF LAW

LW224

LAND LAW II (LAW 554)

ASSIGNMENT I

PREPARED FOR:

MADAM NUR ASMA BINTI YAHYA

PREPARED BY:

LWB04I (GROUP 4)

NAME STUDENT ID

NUR IZZATI BINTI HARIS FADZILAH 2021488192

KHAIRUNNISA BINTI HAIRULNIZAM 2021488128

NUR BALQIS ISHAMI BINTI NOR AZIZ 2021488182

NUR QISTINA AISYAH BINTI MOHD NAZARO 2021488276

DUE DATE:

21 APRIL 2023, 5 P.M.

QUESTION 1................................................................................................................................. 1
QUESTION 2................................................................................................................................. 6
BIBLIOGRAPHY......................................................................................................................... 12

1
QUESTION 1

The issue is whether Radi has the right to have his land re-transferred to him
back under a jual janji transaction and whether there is a valid sale and purchase
agreement between Tora and MM.

The definition of jual janji is a sale of a promise in the form of conditional sale
where the land is used as security to secure the loan which is small in size and value.
The definition of jual janji has not been stated in the national land code but in literal
terms, jual janji is a security transaction. Jual janji is commonly used by Muslims to
avoid interest which is prohibited in shariah law. For instance, Qys ‘sells’ her land to Ish
in exchange for a loan from Ish, with the understanding that if Qys is able to repay the
loan before the end of the time set forth by the parties, Ish will return the land to Qys by
way of a subsequent sale. There are five elements of jual janji which are lender,
borrower, loan, land and collateral agreement. As for the collateral agreement, when the
borrower has completed repaying the whole amount borrowed within the allotted period,
the land will be transferred into the lender's name, and the lender is required to return
the land to the borrower.

The purpose of jual janji can be further seen in the case of Tengku Zahara v
Che Yusuf1, judge Briggs J stated that “The whole purpose of jual janji transaction is to
provide a procedure for securing a loan without infringing the prohibition of usury which
is binding on the conscience of all good Muslims”. Nonetheless, it was declared in the
instance of the case of Kanapathi Pillay v Joseph Chong2 that non-Muslims can also
engage in jual janji. The problem comes up when you need to decide if the parties are
engaging in a land sale and purchase or a security agreement. Since the owner must
adhere to the registration of land and other requirements under the national land law,
jual janji will be impacted. Dealings have therefore been governed by the national land
code, and jual janji must follow the procedure in order to be made. The lender will

1
(1951) 17 MLJ
2
(1981) 2 MLJ 117

2
transfer back the land in accordance with the terms of the collateral agreement once the
borrower has paid the full amount owed.

The concept of jual janji includes the agreement, the transfer of land, and the
payback of the loan amount. The agreement must first be between a Borrower and a
Lender. Second, the Borrower must transfer the land to the Lender in exchange for the
loan (amount of money) borrowed from the Lender. Following the registration of Form
14A, the legal title will be transferred to the Lender.3 Finally, after agreeing to return the
loan within a set time limit, the Borrower must uphold his end of the bargain. As a result,
upon full and final repayment of the loan, the second registration under Form 14A is
required, and the Borrower is entitled to have his land retransferred to him. In the case
of Othman v Mek4, failure to repay within the specified time range results in the jual
janji transaction becoming a jual putus.

There are various jual janji elements that should be considered. First of all, the
Borrower and the Lender must first enter into a jual janji agreement. Second, the
covenant, which is the loan amount agreed to be borrowed, must be considered. Third,
a piece of land must be used as security. Fourth, in compliance with Form 14A, the legal
title to the Borrower's land must be transferred and registered in the Lender's name.
Fifth, during the loan period, the Lender may take the proceeds of the land.

There are two interpretations of a jual janji agreement which is either liberally or
strictly, depending on the context. The concepts behind these two interpretations are the
strategies used by the court system when making judgments. In general, if the court
interprets the jual janji agreement using the former method, it will treat it as a security
transaction and time will not be an essential element of the agreement. The court will
not accept the agreement as a contract of sale if the approach is used in interpreting it,
and time will be the key component of the jual janji agreement. However, according to
the liberal interpretation, the court will consider jual janji to be an equitable security

3
National Land Code 1965 (NLC)
4
[1972] 1 LNS 103

3
transaction in which the time restriction has no effect on the right to redeem. In the case
of Nawab Din v. Mohamed Sharif5, time was not regarded as the essential element of
the agreement. This can be further seen in the case of Yaacob bin Lebai Jusoh6,
where the liberal interpretation was used in this case. The fact started when the
borrower transferred his land to the lender to secure a loan of RM2,000 and the
agreement executed required that the land be resold at the same price within 3 years.
However, the lender refused to retransfer the land since the borrower did not return the
debt within specified time. The court then held that the parties' true intention was to form
a mortgage to guarantee loan repayment, where it secured the borrower's right to
redeem the land even if the duration had passed. The reasoning behind the decision
concluded in Yaacob’s case is because the court regards a jual janji transaction as an
equitable security transaction similar to that of mortgage. Even after the deadline for
repayment has passed, the borrower still has the right to redeem the property under a
collateral arrangement. From the case, it was clear that the objective was more in line
with a mortgage.

Next, the second approach is the strict approach. In this approach, time is very
crucial. Jual janji does not give the lender an inalienable claim to the land. The deal is
only a contract. The land will immediately become the lender's right if the borrower does
not make timely payments within the allotted time. In the case of Haji Abdul Rahman v
Mohamed Hassan7, with a collateral agreement that the land must be re-transferred
upon complete payment within six months, the borrower entered into a loan agreement
with the lender and transferred his land to him. The borrower then failed to repay the
loan within the agreed time and only settled the debt 18 years after the expiry of the
agreed date. Being that lien and charge is the only form of mortgage recognised in
Malaysia, jual janji is neither a security transaction nor a form of mortgage. The parties'
collateral agreement consisted of a sale contract in which time is of the essence. There
was no longer a chance for the borrower to get his land back. Moreover, in the case of

5
[1953] 19 MLJ 12
6
(1950) 16 MLJ 255
7
(1917) AC 209

4
Wong See Leng v Saraswathy Ammal8, it was argued on behalf of the respondent
that the transfer of the land in question was by way of security and the right to redeem
remained regardless of whether the period to repurchase had expired or not. The court
held that the court has no power to extend the contractual period for the exercise of the
option to repurchase contained in the collateral agreement once it expires. The option
given to the respondent to repurchase the land did not confer on the respondent any
interest. She only acquired a contractual right. In the case of Kanapathi Pillay v
Joseph Chong9, the appellant seeks compensation in order to prevent land
confiscation. The appellant went to the respondent and struck an oral agreement as a
result. The respondent then got in touch with his lawyer to have a letter or other
document created outlining the timing and duration of the agreement. The respondent
then requested the appellant to sign the document if the appellant agreed to its
conditions. The trial judge stands firm in his decision that the outcome of the research
was clear that all evidence pointed out that the land belonged to the respondent.

In applying the above law and cases, it can be said that the elements of a jual
janji transaction have been met. In this case, Mr. Manilinggam (MM) is the lender and
Radi is the borrower. Radi transferred his land as security for the RM5,000 loan given
by MM, and Radi's land in Sepang, Selangor has been used as security for the loan.
Therefore, in this case, strict interpretation may be applied in determining the
application of the jual janji transaction between Radi and MM by judicial opinion. This is
because, in the above situation, time is of the essence in the jual janji agreement
between Radi and MM, and it was agreed that payment would be made within 24
months of the date of registration of the memorandum of transfer (MOT). According to
the MOT that has been signed and agreed upon by both parties, it was made clearly
obvious that the parties' intention was to construct a jual janji agreement rather than a
mortgage. The MOT was signed on January 3, 2013, and Radi is required to pay back
the entire loan amount within twenty-four months from the date of the MOT's
registration, which is to say, after two years after they signed the MOT. Based on the

8
(1954) MLJ 141 CA
9
(1981) 2 MLJ 117

5
case of Nawab Din v. Mohamed Sharif, it is proven that Radi has the right to claim his
land to be retransferred to him again. According to the case of Yaacob bin Lebai
Jusoh, a collateral agreement is of equitable security if the parties' original intention
was to use the land as collateral, which means Radi still has the right to redeem
because it was obvious from his conduct that Radi intended to enter into a Jual Janji
agreement that would allow him to be returned as the owner of his land upon full
payment. However, the issue arose when MM made the decision to sell the land to Tora
after he had received the issue of document of title (IDT). Upon receiving the IDT, MM
and Tora entered into a sale and purchase agreement on July 21, 2013, in which MM
agreed to sell the land to Tora for RM30,000. As a result, the purchase and sale
agreement that MM and Tora made is void due to the fact that MM sold the land to Tora
while he was still in the jual janji agreement with Radi.

To conclude, jual janji agreement between Radi and MM is valid because it fulfils
the conditions and elements of a jual janji agreement. Therefore, Radi has the right to
have his land re-transferred back to him as long as he still pays his debt according to
the amount of the loan and also the time set and agreed by both parties. Thus, MM has
no right to sell the land to Tora while still in the jual janji agreement with Radi and
therefore their sale and purchase agreement is void.

6
QUESTION 2

The issue arises is whether June is entitled to claim her rights and interest on the
transferred land.

Security transaction is a loan transaction in which the lender acquires ‘temporary

right’ to hold the land of the borrower in order to secure the loan. The land will be
re-transfer to the borrower upon the full settlement of the loan, otherwise it will be used
to recover the loan. This event is also known as ‘jual putus’ or absolute sale in which the
borrower will lose his rights to the property. Jual janji is one of the security transactions
under Malay customary tenure and has been widely adopted among Muslim Malay
community to avoid paying usury as it is contrary with Syariah. The case of Tengku
Zahara v Che Yusuf10 emphasised the importance of jual janji in assisting the needy to
obtain loans from the wealthy without charging interest or usury, which violates Islamic
principles. Nevertheless, as established in A. Kanapathi Pillay v Joseph Chong11, jual
janji was also practised by non-muslim.

There are 5 components of jual janji which are the lender, borrower, loan, land and
collateral agreement. To start with, the loan amount is determined by the borrower's
needs rather than the value of the land. Second, the lender shall not charge interest for
repayment, and finally, there must be flexibility in the period to repay the loan, as agreed
between the borrower and lender. Initially, jual janji can be created in the form of an oral
agreement between the lender and the borrower, which implies that no actual
documentation or registration is required. However, following the enactment of the
National Land Code, it became mandatory for all titles to be registered, as stipulated in
Section 4(2)12. As a result, the land would be transferred into the name of the lender via
the execution of Form 14A, and a collateral agreement would be established to assure
that the lender would re-transfer the property to the borrower following loan settlement.

10
(1951) 17 MLJ
11
(1981) 2 MLJ 117
12
National Land Code 1965 (NLC)

7
The court will not assist the borrower in regaining possession of the land due to
non-payment.

On the application of jual janji, there are two judicial perspectives: strict and liberal
interpretation. According to the strict interpretation, time is of the essence, and the
parties are obligated to follow the terms of the agreement. As a result, the land transfer
and collateral agreement will be viewed solely as a contract of sale. Any noncompliance
with the requirements will be considered a breach of contract, and the borrower will be
unable to recover the land if the loan is not settled before the expiration date. This was
illustrated in the case of Haji Abdul Rahman v Hassan13, where the plaintiff failed to
repay the loan within the time frame that was agreed upon, as he only made it 18 years
later. The defendant refused to retransfer the land which raised the cause of action to
the plaintiff. There is an issue over whether the collateral agreement should be viewed
as a contract or a security transaction. Since only liens and charges have been
recognized as security transactions or mortgages in Malaysia, the court believes the
transaction is a contract and the land cannot be retransferred. This case was further
reaffirmed by Wong See Leng v Saraswathy Ammal14, as the court does not have the
competence to extend the contractual period after it has expired. This demonstrates that
time is seen as essential in the strict interpretation of jual janji.

Nevertheless, there are exceptions to the strict interpretation and the land may be
re-transferred to the borrower upon the full settlement of the loan regardless of the
expiration of the time. First exception is concerning the extension of time granted by the
lender to the borrower for the balance due of the loan. Both parties have considered
entering into a new agreement upon the extension of time, resulting in time not being
the essence of the agreement. This can be seen in the case of Ismail Haji Embong v
Lau Kong Han15, the lender provided an option to repurchase the transferred land and
house within eight months, the duration was extended since the borrower had failed to
pay it on time. The lender, on the other hand, had transferred the land and house to his
son. Despite the fact that the transfer was completed, the plaintiff is still entitled to

13
(1917) AC 209
14
(1954) MLJ 141 CA
15
(1970) 2 MLJ 213

8
repurchase the property because time is no longer of the essence. The same principle
has been used in Abdul Hamid v Aliyasak Ismail16 which both parties have entered
into the second agreement, but the sum of repayment was increased for the purpose to
make the borrower incapable of repaying the loan. The court held that such increment
indicates a breach of contract; hence time is not the essence upon the second
agreement.

The second exception arises when there is an evading of payment. It occurs when
the borrower has made an attempt of repayment, but the lender refused to accept it.
This scenario would amount to a breach of contract and the time will not be the essence
anymore. This can be seen in the case of Ahmad Bin Omar v Haji Salleh Sheik
Osman17, which the lender refused to take repayment by avoiding the borrower and
claimed the land became his after the period expired. According to the court, the
lender's refusal to accept payment establishes that time is not of the essence of the
contract, and thus the borrower is entitled to redeem the land. This also has been
applied in Hatijah Bte Rejab v Abdullah Saad18, where the lender refused to accept
the payment and claimed the transfer of title wasn’t made under jual janji transaction.
The court determined that the agreement for the borrower to repay the loan within 5
years demonstrated the parties' intention to utilise the land as security in a jual janji
transaction.

The liberal interpretation differs from the strict interpretation in that the court
regards jual janji as an equitable security transaction rather than a strictly contract of
sale. As a result, the right to redeem the land remains even when the payback time
agreed upon by the parties has expired.

It has been applied in the old case of Yaacob Bin Lebai Jusoh v. Hamisah
Saad19. In this case, the appellant had asked to directly transfer certain land to the

16
[1998] 4 CLJ 429
17
[1987] 1 MLJ 338
18
(2004) 2 AMR 665
19
(1950) 16 MLJ 255

9
appellant. On 28th October, 1944, the appellant transferred ownership of the land in
question to the respondent in exchange for $2,000 in Japanese currency. After entering
into a written agreement on 30th January, 1945, the respondent agreed to re-sell the
land to the appellant for the same price after three years, starting on 1st February 1945,
provided the appellant exercised their option to repurchase. By failing to do so, the
agreement would become null and void. Throughout the duration of the matter, the
appellant retained possession of the land in question. Therefore, the issue in hand is
whether the intention of the parties to treat the land as security or a contract of sale. The
trial court held that the parties were entering a reseller option to repurchase, as it
contained no promise by the plaintiff to repurchase. Thus, the agreement entered by
them had no effect as a valid contract should be given consideration to give an effect
towards the contract entered. It has been reaffirmed in the Court of Appeal where the
intention of the whole transaction was to mortgage the land to secure the repayment of
the sum of $2,000 and to give the plaintiff right to redeem. Thus, as has been stated in
the liberal interpretation, the agreement in nature of mortgage remained the right to
redeem even though the specified time had lapsed. This has been further illustrated in
the case Nawab Din v Mohamed Sharif20, where the court regards jual janji
transactions as in the nature of a mortgage which will not be influenced by the
requirement of time.

It is possible to examine the landmark cases of Haji Abdul Rahman21 and

Yaacob Bin Lebai Jusoh22 to determine if the current scenario comes under the strict
or liberal interpretation. The first distinction can be found in how the court evaluates the
facts of the jual janji case. As in Haji Abdul Rahman, the collateral contract entered into
by the parties was a contract to which the court applied equity principles, and the claim
will be statute barred for breach of contract agreed to. Furthermore, because Malaysia
only recognises lien and charge, the collateral contract would never be considered a
mortgage. In contrast, rather than the court viewing the same thing in the case of
Yaacob, the court refused to acknowledge the case as a contract. This is due to the

20
[1953] 19 MLJ 12
21
(1917) AC 209
22
(1950) 16 MLJ 255

10
background of the case in which the court looks at the intention of the parties in entering
the agreement.

In comparison with the previous case, the intention of the parties were to form a
contract of sale while in Yaacob Bin Lebai Jusoh, mainly to mortgage the land which
give the right to redeem for the appellant and therefore give a rise for the appellant to
remained possession on the said land even though the time has lapse beyond the
promised. This can be further seen when the plaintiff in the case of Haji Abdul Rahman,
borrowed the money from the defendant and transferred his land, as jual janji
transaction, upon the settlement where the defendant agreed to retransfer the land to
plaintiff, before the breach happened. However, in Yaacob, the intention was not to
make a loan but they entered an agreement to resell, which gave rise to the aggrieved
party to have the right to redeem over the land as the nature of the agreement in
Yaacob was a pure mortgage. Thus, as has been stated above, the court will look at the
background of the case and the intention of the parties by the time they made an
agreement.

Applying the law above to the facts of the question, the background of the case
of Lenny and June has shown that the time is the essence of the contract. This can be
seen through the nature of the agreement since both parties are consistent in following
the deadline that was agreed in the collateral agreement which is on 5 January 2018.
Besides Lenny did not give any option to June to repurchase the land, hence the liberal
interpretation in Yaacob Bin Lebai Jusoh’s23 case is not applicable. Lenny and June
had executed a collateral agreement instead of using the land as a mortgage, which is
in line with Haji Abdul Rahman’s24 case. Thus, any failure to comply with the
agreement will lead to jual putus and give rise to the lender to be in possession of the
said land.

23
(1950) 16 MLJ 255
24
(1917) AC 209

11
 Moreover, by referring to Ahmad Bin Omar’s25 case, it is clear that there is no
evading of payment since there is no attempt of payment made by June as she only
tried to reach Lenny for an extension of time. Indirectly, no refusal of payment that exists
from Lenny. On 23 December 2017, she left her bank account and notified June that
she would be difficult to reach throughout the visit. Logically, June had a whole year to
figure out her financial affairs to ensure she is able to pay off the settlement before the
deadline. Plus, the deadline is only two weeks away, on January 5, 2018. Furthermore,
knowing that Lenny would not be around, she should have reviewed her finances and
attempted to negotiate an extension before Lenny left for New Zealand.

If June wants to argue that she couldn't afford the payment since the loan was
increased from RM 10,000 to RM10,300, yet both parties had consensus in the first
agreement. Hence, June could not make it as an excuse to not repay the loan within the
stipulated time. However, it can be argued that if such increment was done with the
intent of rendering the borrower unable to repay, it constitutes a breach of contract, as
demonstrated in the case Abdul Hamid v Aliyasak26. If such a purpose exists, June will
have an opportunity to assert her entitlement because time will no longer be an essence
in the contract. Back to the context of the case, Lenny and June have been so
consistent and persistent with the expiry date which has proved time has been the
essence of the contract.

In conclusion, June is not entitled to claim her rights of the transferred land due
to the failure of settlement within the stipulated time which resulted in the breach of
contract.

25
[1987]1 MLJ 338
26
[1998] 4 CLJ 429

12
 BIBLIOGRAPHY

Abdul Hamid v Aliyasak Ismail [1998] 4 CLJ 429

Ahmad Bin Omar v Haji Salleh Sheik Osman 1 MLJ 338

A. Kanapathi Pillay v Joseph Chong (1981) 2 MLJ 117

Hatijah Bte Rejab v Abdullah Saad (2004) 2 AMR 665

Haji Abdul Rahman v Hassan (1917) AC 209

Ismail Haji Embong v Lau Kong Han (1970) 2 MLJ 213

National Land Code 1965 (Act 828)

Nawab Din v Mohamed Sharif [1953] 19 MLJ 12

Tengku Zahara v Che Yusuf (1951) 17 MLJ

Wong See Leng v Saraswathy Ammal (1954) MLJ 141 CA

Yaacob Lebai Jusoh v. Hamisah Saud (1950) 16 MLJ 255

Othman & Anor v. Mek [1968] 1 LNS 91; [1971] 2 MLJ 214

13