Cases for Indefeasibility of Title

List of cases for Indefeasibility
LAW 554 – Land Law II

azrin hafiz / sept 2012 - jan 2013

1

Adorna Properties Sdn Bhd
v
Boonsom Boonyanit
[2001] 2CLJ 133


2

Paid full purchase
price (MOT
registered on
24.5.1989)

Vendor
Mrs Boonsoom
Bonyanit
Thai Passport:
033852
-pretending to be
the RP and
obtained a
duplicate of the
title. Certified
True Copy was
procured by fraud
through a false
declaration that
the original IDT
was lost

Adorna
2 pieces of land
(Penang)
RP: Boonsom Bonyanit
Passport No. D080757

claimed as BFP4V
Court
action

Solicitor prepared S&P and SD
To correct named from Sun Yok Eng @
Boonsom Boonyanit to
Mrs Boonsoom Bonyanit


3

Continue….
• Boonsom Bonyanit claimed she‟s the
RP/ true owner of the properties and
that she has never sold them to
Adorna.
• The original IDT was at all times in her
possession.
• She also claimed that the vendor‟s
name, passport No. and signature on
MOT was not her i.e. forgery/fraud

4

Cont….
• She also tendered MOT signed in 1967
in her favour and certificate from
Royal Thai Consulate General-show
that vendor‟s passport was a forgery.


5

Decisions
• High Court: Refused to restored Mrs
Boonsom Bonyanit as RP.
• COA: decided in
Boonsom Bonyanit

favour

of

Mrs

• Federal Court: Appeal was allowed


6

Federal Court
•

Issues for consideration:1. whether the standard of proof for
forgery was that of a balance of
probabilities or beyond a reasonable
doubt
2. whether the defendant (appellant) had
acquired an indefeasible title to the land
by virtue of the proviso to s. 340(3) of
NLC

7

Cont…
• The standard of proof for forgery in a civil case is
that of a balance of probabilities.
• By virtue of the proviso to s. 340(3) of the NLC, a
purchaser in good faith and for valuable
consideration is excluded from the application of
the substantive provision of s. 340(3).This category of
registered
proprietors
obtains
immediate
indefeasible title to the lands. Thus, on the facts of
this case, even if the instrument of transfer was
forged, the respondent nevertheless obtained an
indefeasible title to the land. (Eusoff Chin CJ)

8

Cont…
• “the word „any purchaser‟ reflect the intention of
parliament to provide immediate indefeasibility, not
deferred indefeasibility to such innocent parties.”
• “The proviso says that any purchaser in good faith
and for valuable consideration or any person or
body claiming through or under him are excluded
from the application of the substantive provision of
sub-s (3). For this category of registered proprietors
they
obtained
immediate
indefeasibility
notwithstanding that they acquired their titles under
a forged document.”

9

Au Meng Nam & Anor
v
Ung Yak Chew & Ors
[2007] 4 CLJ 526


10

Entered S&P
2 rogues claimed RP

PP: RM 400,000
80% PP paid on date of
signing of S&P

Land
Au Meng Nam &
Au Ming Kong (RP)

Contended : never entered into
any agreement/ signed MOT
-lodged police report stating
transfer was fraudulent and
brought action vs D1


D1
Court
action

3 months after
the title
registeredattempted to
sell land –
valuer valued
at RM 1.2M,
valued for
stamping
purpose for
RM 1.26M
File 3rd party notice –
sued D2 & D3 i.e
Messrs Law Kok Gan &
Partners and solicitor
for purchase and
transfer of said land
for negligence-sought
for compensation and
indemnity.

Sued D4, Pentadbir
Tanah Daerah JB-for
negligence.

11

Decision
• HC: dismissed plaintiff‟s claim applying
Fed Court case. Held that D1 is a
BFP4V under sec 340(3) and acquired
indefeasibility of title. Plaintiff appeal.
• COA: allowing the appeal


12

COA
• Gopal Sri Ram JCA: refuse to follow or
apply the doctrine of stare decisis.
• Reason: Fed Crt in Adorna Properties
did not establish new principle of the
common
law.
Only
involve
interpretation of the section in the Act
of Parliament i.e. Sec 340(3) therefore,
a lower court do not need to follow it
as it was decided per incuriam

13

Gopal Sri Ram JCA
• (a)
Sec 340(3) “to whom it may
subsequently be transferred” applies
to subsequent acquirers of land taking
from RP whose title are defeasible.
Adorna is not a subsequent purchaser,
it took its title from forger.


14

Cont…
• (b) Federal Court overlooked 2 authorities
which held that NLC provided for deferred
indefeasibility i.e. Muhammad Buyong v
Pemungut Hasil Tanah Gombak & Ors and
M& J Frozen Food Sdn Bhd & Anor v Siland
Sdn Bhd & Anor
• (c) Adorna Properties equated purchasers
and registered proprietors. Federal Court
clearly overlooked the provisions of s 5 NLC
that
defined
them
separately
and
differently.

15

Cont…
• (d) the object and purpose of sec 340
NLC is to protect RP of land by
affording them certainty of titles. This is
a just result because it is unfair and
unjust that the true owner of land
should be deprived of it by the
machinations of a rogue.


16

Cont…
• (e) when a court interprets a statute, particularly
one which confers rights upon or grants protection
to persons generally or a class, its duty is to derive a
meaning that is fair or in accordance with the
purpose of the particular Act of Parliament. An
interpretation should not be placed which will
produce an unsatisfactory or unfair result. There is a
presumption that Parliament does not intend an
unfair or unjust result. Adorna Properties interpreted
s 340 NLC in a manner as to produce an unfair and
unjust result.


17

Cont…
• (f) it is central to the doctrine of indefeasibility
housed in s 340 NLC that IDT must itself be genuine.
In Adorna Properties, the instrument of transfer and
other documents were forged. But the title was
genuine. In the present appeal, IDT used to effect
the transaction itself was a forgery. Hence Adorna
Properties was clearly distinguishable from the facts
of the case.
• (f) Vendor‟s had no title to pass. You cannot give
what you do not have nemo dat quad non habet.


18

Decision
• Raus Sharif JCA: decided that Fed Court
need to review Adorna Properties but refuse
to go against doctrine of stare decisis
• held: had the learned judge taken into
account relevant facts and consideration
surrounding S&P, he would not have
concluded that D1 was BFP under sec 340(3)
NLC

19

Raus Sharif JCA
• Reasons:
– (i) D1 knew that at the time he bought the land
the purchase price was below the market value
and he had taken advantage of it by
completing the purchase of land
– (ii) D1 disregarded his obligation to investigate
the alleged property and genuineness of the
documents. BFP does not include a purchaser
who is careless/negligent (failed to take ordinary
precautions that ought to be taken)

20

Cont…
– (iii)
consideration paid by D1 was
below government valuation and also the
valuation
done
by
D1‟s
valuer
(government valuation RM 1.286M, Valuer
RM 1.2M)


21

Puran Singh v Kehar Singh










Facts: P, the registered proprietor of
4 pieces of lands.
P signed a POA to D giving power
to deal with his land.
There is a clause in POA that D can
appoint a substitute attorney. It
can be exercise once.
D substituted the attorney to Fauja
Singh (FS) but he did not signed it in
his capacity as an attorney, instead
signed it in the name of P.
FS
then
appointed
another
substitute, Bahadur Singh (BS).
BS executed an instrument to
transfer the land to D.
P challenged D‟s title over the land.


22

Decision
Court held: that the registration of the
D had been effected by means of an
"insufficient instrument".

(the instrument executed by D in his
capacity as attorney was in excess to
the POA or was based on an invalid
POA.)

23

Tan Ying Hong
v
Tan Sian San & Ors
Judgment dated 21 Jan 2010


24

Create 2 charges for loan granted to
Cini Timber Industries S/B (D2)

i.

P (RP)

P contended that
PA was forged and
that he was only
aware of the
transaction when
he received notice
of demand

Loan of RM 200k

ii.

Loan of RM 100k

D3 (UMBC)
Land
(Pahang)

P sought, among
other:
A declaration that
the said charges
are void ab initio

Power of Attorney (PA)
D1 create 2 charges and
charged the land to D3 using
PA


25

Issue
• Whether an acquirer of a registered
charge or other interest or title under
the National Land Code 1965 by
means of a forged instrument acquires
an immediate indefeasible interest or
title.”


26

Decision (FC)
• Appeal was allowed.
• Held: It is trite law that this Court may depart from its
earlier decision if the former decision sought to be
overruled is wrong, uncertain, unjust or outmoded
or obsolete in the modern condition.
• Reason: that the FC in Adorna Properties had
misconstrued s 340 (1), (2) and (3) of the NLC and
came to the erroneous conclusion that the proviso
appearing in sub-s (3) equally applies to sub-s (2).
By so doing the FC gave recognition to the
concept of immediate indefeasibility under the NLC
which we think is contrary to the provision of s 340 of
the NLC.

27

Cont…
• D3 (UMBC) is an immediate holder of the 2
charges. Therefore D3 could not take
advantage of the proviso to sub-s (3) of s
340.
• The fact that D3 acquired the interest in Q in
good faith for value is not in issue, because
once it is satisfied that the charges arose
from void instruments, it automatically
follows that they are liable to be set aside at
the instance of the RP. (Arifin Zakaria CJM)

28

Zaki Tun Azmi CJ
• “…I totally agree with the learned
CJM‟s view that the error committed
by the FC in Adorna Properties Sdn Bhd
v Boonsom Boonyanit was to read the
proviso to sub-s (3) as being a proviso
to sub-s (2) as well. The error is very
obvious because the proviso expressly
refers to “this sub-section” which must
in the context of that sub-section be
read as proviso to sub-section (3) only.

29

Cont…
• “I am legally obligated to restate the
law since the error committed in
Adorna Properties is so obvious and
blatant. It is quite a well known fact
that some unscrupulous people have
been taking advantage of this error by
falsely transferring titles to themselves. I
hope with this decision, the Land
Authorities will be extra cautious when
registering transfers.”

30

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