Cases for Indefeasibility of Title

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List of cases for Indefeasibility

azrin hafiz / sept 2012 - jan 2013

LAW 554 – Land Law II

azrin hafiz / sept 2012 - jan 2013 2

Adorna Properties Sdn Bhdv

Boonsom Boonyanit

[2001] 2CLJ 133


Vendor Adorna

2 pieces of land (Penang)

RP: Boonsom BonyanitPassport No. D080757

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

Solicitor prepared S&P and SDTo correct named from Sun Yok Eng @

Boonsom Boonyanit toMrs Boonsoom Bonyanit

Paid full purchase price (MOT registered on 24.5.1989)

claimed as BFP4VCourt action


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


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.


Decisions

• High Court: Refused to restored Mrs Boonsom Bonyanit as RP.

• COA: decided in favour of Mrs Boonsom Bonyanit

• Federal Court: Appeal was allowed


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


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)


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.”

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Au Meng Nam & Anorv

Ung Yak Chew & Ors

[2007] 4 CLJ 526

azrin hafiz / sept 2012 - jan 2013


2 rogues claimed RPD1

LandAu Meng Nam &

Au Ming Kong (RP)

Entered S&P

PP: RM 400,000

80% PP paid on date of signing of S&P

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.

Contended : never entered into any agreement/ signed MOT

-lodged police report stating transfer was fraudulent and brought action vs D1

3 months after the title registered-attempted to sell land –valuer valued at RM 1.2M, valued for stamping purpose for RM 1.26MCourt

action


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


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


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.


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.


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.


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.


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.


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


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)


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)

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.

22azrin hafiz / sept 2012 - jan 2013

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.)


Tan Ying Hong v

Tan Sian San & OrsJudgment dated 21 Jan 2010


P (RP)D3 (UMBC)

Land(Pahang)

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

i. Loan of RM 200k

ii. Loan of RM 100k

D1 create 2 charges and charged the land to D3 using PA

Power of Attorney (PA)

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

P sought, among other:

A declaration that the said charges are void ab initio


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.”


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.


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)


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. 29azrin hafiz / sept 2012 - jan 2013

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.”


Cases for Indefeasibility of Title

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