Saturday, January 23, 2010

Indefeasible title

In a clear reversal to its 2000 judgment, the Federal Court ruled today(21-1-2010) that its decision on the controversial Adorna Properties Sdn Bhd vs Boonsom Boonyanit case nine years ago was erroneous.

A five-member panel led by Chief Justice Zaki Azmi unanimously departed from the court's previous judgment made by a three-member panel headed by former chief justice Eusoff Chin.The others were Court of Appeal president Alauddin Mohd Sheriff, Chief Judge of Malaya Arifin Zakaria and Federal Court judges Zulkefli Ahmad Makinudin and James Foong Cheng Yuen.

The declaration was made in the case of Tan Ying Hong vs Tan Sian San, Cini Timber Industries Sdn Bhd and United Malayan Banking Corporation Bhd today.

This 1985 case, quite similar to Adorna Properties, involves Sian San who had purported to possess power of attorney (PA) to secure loans of RM200,000 and RM100,000 respectively where the loans were made for Cini Timber.

However, Ying Hong who claimed he did not sign the PA, said his signature was forged and was only aware of the matter when a notice of demand was given to him following unpaid loans.

It was not disputed that Ying Hong's signature was forged and he had not charge the land.

The legal issue
The questions pertain to "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".

This questions relates to Adorna Properties decision made by the apex court in 2000. Indefeasible by definition means it was not liable to being annulled or voided or undone.

Zaki said he was legally obligated to restate the law since the error committed was so obvious and blatant.

Following today's matter, Arifin allowed Ying Hong's appeal and allowed his application of declaration that the said charges are void and ordered the bank to deliver the land title to him.

"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 that with this decision, the land authorities will be extra cautious when registering transfers."

Meanwhile, the Chief Judge of Malaya Justice Arifin (right), in his 28-page judgment in answering the posed question in the negative, said the court holds the Federal Court decision in the Adorna Properties was misconstrued.

"It misconstrued Section 340 (1) (2) and (3) of the National Land Code and came to the erroneous conclusion that the proviso appearing in sub section (3) equally applies to subsection 2. (Note see the details of the section of NLC at the end of article)

"By equally so doing the Federal Court gave recognition to the concept of "immediate indefeasibility" under the Code which we think is contrary to the provision of section 340.

"It is interesting to note the learned representatives of UMBC and the attorney-general agreed that the Adorna Properties was wrongly decided."

As a result of this decision, landowners could now heave a sigh of relief that the transfer of land by fraudulent means would no longer be legally accepted.

The panel had deliberated on 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.

Adorna Properties Sdn Bhd vs Boonsom Boonyanit case
The case was brought to court by Boonsom Boonyanit, who was residing in Thailand and owned two plots of land in Tanjung Bungah in Penang.

In 1988, a woman who claimed to be Mrs Boonsoom Boonyanit made a statutory declaration that she had lost the original titles to the two plots.

She was able to get the Land Office to issue her a certified copy of the title and the impostor sold the land to Adorna Properties for RM12 million.

On discovering that his land was sold without his knowledge, Boonyanit sued Adorna Properties.

Bravo, justice return.....a wrong judgment make right. But as a layman, I was wonder how learned Judges can make a wrong judgment, is there any right of compensation for the victim of the wrong judgment?........a long time ah?...

If S340 of NLC open to dispute and different understanding, why don't amendment make to make the law clearer and fair to the people?....

By the way I am an ordinary citizen, not a lawyer; but the said section of NLC have been open to different interpretation and understanding even to lawyers. It is unfair to the victim of fraud land transaction, on the uncertainty, the concern has been raised by past incidents. It is actually a concern even to an ordinary citizen, not only lawyers.


S340(1) stated that " The title or interest of any person or body for the time being registered as proprietor of any land,or in whose name any lease, charge or easement is for the time being registered, shall, subject to the subsection(2), (3), (4) be indefeasible.

S340(2): The title or interest of any such person or body shall not be indefeasible if
(a) in any case of fraud or misrepresentation to which the person or body, or any agent of the person or body, was a party or privy; or
(b) where registration was obtained by forgery, or by means of an insufficient or void instrument; or
(c) where the title or interest was unlawfully acquired by the person or body in the purported exercise of any power or authority conferred by any written law.

S340(3): Where the title or interest of any person or body is defeasible by reason of any of the circumstances specified in sub section(2)
(a) it shall be liable to be set aside in the hands of any person or body to whom it may subsequently be transferred; and
(b) any interest subsequently granted thereout shall be liable to be set aside in the hands of any person or body in whom it is for the time being vested;
provided that nothing in this sub section shall affect any title or interest acquired by any purchaser in good faith and for valuable consideration,or by any person or body claiming through or under such a purchaser.


1. Federal Court says ex-CJ wrong on land title, Malaysiakini dated 21-1-2010

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