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©The
Star (Used by permission)
by Lisa Goh
PUTRAJAYA: Agrieved landowners can heave a sigh of relief following a landmark
Federal Court judgment disallowing fraudulent land transfers.
On Thursday, a five-man Bench of the Federal Court unanimously ruled that its
judgment in 2000 on the Adorna Properties Sdn Bhd v. Boonsom Boonyanit case “was
erroneous.”
In departing from that judgment, the Bench -- comprising Chief Justice Tun Zaki
Azmi, Court of Appeal President Tan Sri Alauddin Mohd Sheriff, Chief Judge of
Malaya Tan Sri Arifin Zakaria and Federal Court judges Justices Zulkefli Ahmad
Makinudin and James Foong Cheng Yuen -- held that the erroneous conclusion in
Adorna properties needed to be remedied immediately.
Over the last decade, that apex court judgment had created a loophole in the
law, causing many legit landowners to lose their lands through unscrupulous
means via forged documents, as it allowed the transfer of a good title to a
purchaser who buys the property in good faith, notwithstanding the forgery.
“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
that with this decision, the Land Authorities will be extra cautious when
registering transfers,” Justice Zaki ruled in his four-page supporting written
judgment.
In the Adorna Properties case, the issue was over the sale of two lots of land
in Tanjung Bungah, Penang, belonging to Boonsom Boonyanit, a Thai national.
An imposter 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 imposter then managed to obtain a certified copy of the title from
the Land Office.
On April 6, 1989, the imposter 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
(imposter) with a different Thai passport number.
With the declaration, the imposter managed to perfect the registration of the
memorandum of transfer in favour of Adorna.
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, comprising then Chief Justice Tun
Eusoff Chin, Chief Judge of Malaya Tan Sri Wan Adnan Ismail and Justice Abu
Mansor Ali, held that Adorna had obtained an indefeasible title notwithstanding
the forgery because it was a bona fide purchaser.
Boonsom’s son Kobchai Sosothikul made an application on July 16, 2002, to the
Federal Court to set aside the decision. It was dismissed on Aug 27, 2004.
On Thursday, the Federal Court held that Bench in the Adorna case had
miscontrued a proviso in the Section 340 of the National Land Code (NLC) 1965 ,
and applied it to Section 340(2) of the NLC, which led to the erroneous
conclusion.
Section 340(2) of the NLC reads that the title or interest of any person shall
not be indefeasible (not liable to being annulled or undone), in any case of
fraud or misrepresentation; or where the registration was obtained by forgery;
or where a title or interest was unlawfully acquired by the person in the
purported exercise of any power conferrred by any written law.
“If it can be shown that the title was obtained by forgery or misrepresentation,
then his claim can be defeated,” Justice Zaki ruled in his 29-page judgment, in
referring to the principle of “immediate indefeasibility” on which Adorna
judgement is based.
“By so doing the Federal Court gave recognition to the concept of immediate
indefeasibility under the NLC which we think is contrary to its provisions.
“This error needs to remedied forthwith in the interest of all registered
proprietors. It is, therefore, highly regretattable that it had taken some time
before this contentious issue is put to rest,” he ruled.
The Federal Court had revisited the Adorna Properties case following an appeal
in a similar circumstanced case -- Tan Yin Hong v. Tan Sian San & 2 Ors. --
which was first brought to court in 1987.
Tan, a Pahang landowner, was appealing against a Court of Appeal’s 2009
decision, which relied heavily on the principle of “immediate indefeasibility”
in the Adorna case.
He named Tan Sian San, Cini Timber Industries Sdn Bhd and United Malayan Banking
Corporation Bhd (now known as RHB Bank) as respondents in his suit.
In Tan’s case, the Pahang government had alienated and issued a land title in
his name without his knowledge.
In 1985, Tan received a letter from the bank demanding a repayment for a sum
amounting to RM309,000 for an overdraft facility given by the bank to a Cini
Timber Industries.
Upon investigation, he discovered that a person named Tan Sian San (not related
and who has since disappeared) had forged his signature in 1977, and created a
power of attorney, a document stating that he was authorised to act on behalf of
Tan Yin Hong.
With the forged power of attorney, Sian San then charged the land to RHB Bank in
1984 as security for a loan to Cini Timber Industries, and subsequently
disappeared.
In 1987, Tan filed a suit against the bank. In 2003, the High Court dismissed
his application, based on the Adorna Properties decision. The Court of Appeal
upheld the ruling last year.
However, the Federal Court ruled Thursday that the bank’s charges against Tan
Yin Hong could be set aside as they were based on void instruments.
The Federal Court also awarded RM75,000 in costs to Tan, who is still living in
Kuantan.
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