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Published: Thursday January 21, 2010 MYT 12:47:00 PM
Updated: Thursday January 21, 2010 MYT 5:32:34 PM

Federal Court reverses its decision in landmark land case (Updated)

lisagoh@thestar.com.my

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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