Federal Court overturns 'blatant error'
©The
Malay Mail (Used by permission)
by Teoh El Sen
Eusoff Chin's 2000 decision on forged land title transfer thrown out
PUTRAJAYA: The Federal Court this morning overturned a highly criticised judgment said to have wreaked havoc in land transactions for the past nine years.
The ruling had apparently caused many landowners to lose their properties to forgers.
Today's landmark decision provides better protection for property owners.
A five–member Federal Court, presided by Chief Justice Tun Zaki Azmi, ruled that the title or interest of a person who is the registered owner of a property is liable to be set aside if that title is acquired through fraudulent means.
"I am legally obligated to restate the law since the error committed in Adorna properties (see story below) 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 that with this decision, the land authorities will be extra cautious when registering transfers."
The Federal Court today ruled in favour of plaintiff Tan Yin Hong's appeal, and declared RHB's charges null and void.
The court instead ordered RHB to compensate Yin Hong RM75,000 for the case that has been dragging for the last 23 years.
The other judges were Court of Appeal President Tan Sri Alauddin Mohd Sheriff, Chief Judge of Malaya Tan Sri Arifin Zakaria, and Federal Court judges Datuk Zulkefli Ahmad Makinudin and Datuk James Foong Cheng Yuen.
The Federal Court was asked to determine the question “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”.
In deciding today's case, the Federal Court was tasked to revisit the controversial judgment of 2000 in Adorna Properties vs Boonsom Boonyanit, where the then Chief Justice Eusoff Chin had made the landmark ruling that the rightful owner of a property cannot get back a land after it has been sold to a third party, even if the title was proved to be forged.
Today’s case goes back to 1985 when Yin Hong received a letter from United Malayan Banking Corporation Bhd (now RHB Bank Bhd, the third respondent) demanding repayment of RM111,825.95 and RM197,244.01 owed under a loan agreement.
Unknown to him, a nine–acre plot in Kuantan, Pahang, had "mysteriously" become his own since 1976.
The plaintiff later discovered that a man by the name of Tan Sian San (First Respondent), who is not a relative and is now missing, had forged his (Yin Hong's) signature and charged the land to the bank in 1984 as security for loan facilities granted to Cini Timber Industries Sdn Bhd (Second Respondent).
Cini Timber subsequently defaulted in repayment and the bank commenced foreclosure proceedings on the piece of property.
In 1987, Yin Hong then sued the three respondents, asking the courts for the land charge and the forgery to be declared null and void.
At the Kuantan High Court, Justice Datuk Abu Samah Nordin dismissed Yin Hong's claim on July 4, 2003.
Appealing to the Court of Appeal, Justices Datuk Suriyadi Halim Omar, Datuk Zainun Ali and Datuk Ahmad Maarop also dismissed Yin Hong's appeal on Feb 19, 2009, holding that RHB Bank had obtained immediate indefeasibility of its interest by applying the principle in Adorna Properties.
On Oct 29, 2009, Yin Hong's counsel, T. Mura Raju, and RHB Bank's counsel, Datuk Bastian Pius Vendargon and Ong Siew Wan, submitted that the question posed to the Federal Court should be answered in the negative – that the Adorna Properties case had been wrongly decided and ought to be overruled.
Both parties emphasised that Eusoff Chin had erred as it was very clear in Section 340(3) that the proviso only applied to "this sub–section (3)". Vendargon, however, submitted that the declaratory reliefs sought by the appellant ought to be dismissed on procedural grounds.
The Pahang State government was represented by Senior Federal Counsel See Mee Chun and Azizah Nawawi. Roger Tan and Tony Woon held watching brief for the Bar Council.
The Boonsom Boonyanit case
This law is not contained in any statute book but arose out of a Federal Court decision in the case of Adorna Properties Sdn Bhd vs Boonsom Boonyanit, written by then Chief Justice Tun Eusoff Chin and delivered on Dec 22, 2000.
The case involved a Thai citizen, Boonsom Boonyanit who in her appeal claimed she was the registered proprietor of lands lots 3606 and 3607, Mukim 18, Tanjung Bungah, Penang.
She claimed she was the true Boonsom Boonyanit, holder of Thai passport No. D080757, and that another person holding a Thai passport No. 033852 bearing the name of Boonsom Boonyanit had forged her (the plaintiff’s) signature, and had sold and transferred her lands to Adorna Properties, which is the appellant in this appeal.
Before the sale, the lands had been valued by an independent property valuer.
There were negotiations on the purchase price, and on Dec 15, 1988, a sale and purchase agreement was signed, and the lands were finally transferred to the purchaser/appellant on May 24, 1989.
Adorna Properties claimed that it had no knowledge that the transfer documents were forged by someone who was not the true owner, and had no reason to suspect that they were forged.
Both the vendor and purchaser/appellant were represented by different solicitors in the sale and purchase of the lands. Further, it was not disputed that the sale was an arm’s length transaction.
Then on June 11, 1989, Boonyanit’s son chanced upon an advertisement in a Thai newspaper calling upon any heir of Boonyanit to communicate with a Penang solicitors’ firm. Boonyanit’s son became suspicious and got in touch with his mother’s solicitors in Penang to investigate the matter.
It was previously revealed that:
• An impostor claiming to be Sun Yok Eng @ Boonsom Boonyanit had affirmed a statutory declaration on June 18, 1988, that she had lost the original title to the land. The impostorthen obtained a certified copy of the title from the Land Office.
• On April 6, 1989 the impostor affirmed a second statutory declaration declaring that the names Mrs Boonsom Boonyanit and Sun Yok Eng @ Boonsom Boonyanit on the title to the land were one and the same person, that is, Mrs Boonsom Boonyanit (impostor) with a different Thai passport number.
• With this declaration, the impostor managed to perfect the registration of the memorandum of transfer in favour of Adorna. The real Boonyanit then sued for the return of the land. However, the High Court ruled in favour of Adorna. On appeal, the Court of Appeal ruled in favour of Boonyanit. Adorna then appealed, and the Federal Court held that Adorna had obtained an indefeasible title notwithstanding the forgery because it was a bona fide purchaser. This decision was severely criticised by lawyers and law academics as incorrect. Boonyanit died in May 2000.