PUTRAJAYA, Jan 21 — The Federal Court today overturned what it called the
“blatant and obvious” mistake of the controversial 2000 Adorna Properties ruling
which had resulted in victims of land fraud being unable to recover their
property, in a decision that will bring relief to land owners left exposed to
fraudulent transfers.
For the past ten years, a registered owner of a property who discovers that his
title has been fraudulently transferred to someone else would indubitably learn
that he had no legal recourse to reclaim his property.
The Federal Court changed all that today when it overturned a controversial 2000
ruling in the case of Adorna Properties vs Boonsom Boonyanit, which set the
precedent for disputes over land ownership.
In the Adorna decision made by a three-man panel led by then Chief Justice Tun
Eusoff Chin, the Federal Court ruled that a person who had obtained a title,
whether fraudulently or not, had a legal claim to the property.
A five-man bench led by current Chief Justice Tun Zaki Azmi, however,
unanimously ruled that the rightful owner of a property title can set aside the
second man’s claim even after the title has been transferred to the latter,
based on Section 340(2) of the National Land Code 1965, which states:
“The title or interest of any such person or body shall not be indefeasible -
“(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.”
“If it can be shown that the title was obtained by forgery or misrepresentation,
then his claim can be defeated,” Zaki pointed out, referring to the doctrine of
“immediate indefeasibility” which was the basis of the 2000 ruling.
He added that the second person does not have to prove he had taken part in the
alleged fraud, after Chief Judge of Malaya Tan Sri Arifin Zakaria read out the
decision.
In today’s decision, the Federal Court is seen to have righted a wrong
perpetuated for the past decade.
Zaki noted that the “error committed by the Federal Court in Adorna is so
blatant and obvious” and that it is “quite well-known that some unscrupulous
people had taken advantage [of this] to transfer land to themselves.”
“I hope the land authorities will be extra careful when they register transfers
of land,” Zaki stressed.
The landmark pronouncement was made following submissions last Oct 29 for Pahang
landowner Tan Yin Hong, who was appealing against a Court of Appeal decision in
2009.
Tan’s case dates back to 1976, when the Pahang state government had
“mysteriously” alienated and issued a land title for a 9-acre piece of land in
Kuantan in his name.
In 1985, Tan received a letter from United Malayan Banking (now known as RHB)
telling him to pay back RM300,000 as an outstanding loan given by the bank to a
timber company.
Tan investigated and found out another person named Tan Sian San (not related)
had in 1977 forged his signature and obtained “power of attorney” or a court
document to acknowledge that Sian San was representing Tan Yin Hong.
In 1984, Sian San charged the land to RHB as security for a loan to Cini Timber
Industries, and subsequently disappeared.
Tan sued the bank. In 2003, the High Court dismissed his application. The Court
of Appeal upheld that decision.
But with today’s ruling, the Federal Court decided that the bank’s charges
against Tan Yin Hong are no longer valid because of forgery.
“The charges held by the bank can be defeated,” Tan Yin Hong’s lawyer, T. Mura
Raju explained to reporters.
The Federal Court also ordered RHB to pay RM75,000 in legal costs to Tan, who is
still living in Kuantan.
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