Legal victory for land owners

New Straits Times

by V. Anbalagan

PUTRAJAYA: Landowners who can prove that they lost their property through fraud or forgery now stand a chance of getting them back.

The Federal Court in a landmark ruling yesterday affirmed a provision in the National Land Code which protects the constitutional right of property owners.

The much awaited decision, a unanimous pronouncement by a five-man bench led by Chief Justice Tun Zaki Azmi, has paved the way for the apex court to depart from its controversial decision delivered on Dec 22, 2000, in the case of Adorna Properties Sdn Bhd vs Boonsom Boonyanit.

In that case the apex court led by the then chief justice, Tun Eusoff Chin, held that the person in whose name the title was registered was the rightful owner of the property, even if the transfer was due to fraud or forgery.

Yesterday the court ruled that where property was transferred illegally, the original owner is entitled to its return if he can prove that it was acquired through fraud or forgery.

Such property must be returned even if the second purchaser had bought it in good faith and for a valuable consideration.

Zaki, in his brief supplementary judgment, said any attempt to transfer properties through illegal means must be defeated.

“I hope the land authorities will be more cautious in registering land titles or any instrument in land dealings,” he said.

Tan Sri Arifin Zakaria, who delivered a written judgment, said the previous three-man bench in the case of Adorna Properties misconstrued the law and came to an erroneous conclusion.

“We have to rectify the legal position for the sake of property owners,” said Arifin, who is the chief judge of Malaya.

The judges made the remarks in allowing an appeal involving a land transfer dispute.

The history of the case can be traced to early 1970 when businessman Tan Ying Hong, in the words of the High Court, “mysteriously” became the registered proprietor of a nine-acre plot of land in Kuantan.

A conman who now cannot be located had forged a power of attorney from Tan and got the land charged to United Malayan Banking Corporation (now RHB Bank Bhd) to obtain overdraft and loan facilities amounting to RM300,000 in favour of Cini Timber Industries Sdn Bhd.

Cini Timber defaulted payment and the bank started foreclosure proceedings against Tan, the registered land owner.

Tan, represented by counsel T. Mura Raju and Bob S. Arumugam, filed an application in the High Court in 1985 to seek a declaration that the charges with the bank were of no effect as they were created by a forged power of attorney.

The High Court in 2003 dismissed Tan’s application which was affirmed by the Court of Appeal in 2008.

In May last year, Tan obtained leave to appeal and the legal question posed to the Federal Court was whether an acquirer of a registered charge, title or other interest by way of forgery obtains an immediate indefeasible interest or title.

This question of law paved the way for the apex court to review the Adorna Properties case as the issue was similar.

Head of the civil division in the Attorney-General’s Chambers See Mee Chun told reporters that the nine-year dilemma had been removed following yesterday’s ruling.

“But some amendments to the land code are in the pipeline to give better protection to property owners,” said See, who last year was invited to address the court on grounds that the case was of public interest.

Bar Council representative Roger Tan said the gruelling wait was worthy because many owners who lost their land could now “see some light”.

“We are glad that the apex court has affirmed the principle of deferred indefeasibility as provided in the land code.” Meanwhile, Mura Raju said following the court ruling, the two charges created through forgery were now null and void.

“The title to the property, currently valued at RM1 million, will be reverted to Tan (the appellant).”

The Adorna Properties case revolved around a plot of land in Tanjung Bungah, Penang.

The registered proprietor was Boonsom Boonyanit, a Thai who lived in Thailand but who visited Penang from time to time.

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 firm of Penang solicitors.

Boonyanit ’s son became suspicious and got in touch with his mother’s solicitors in Penang to investigate the matter.

The probe 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 impostor then managed to obtain 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 referred to one and the same person, that is, Mrs Boonsom Boonyanit (the fraudulent) 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 filed a suit for the return of the land. The High Court ruled in favour of Adorna.

On appeal, the Court of Appeal ruled in favour of Boonyanit.

Adorna then appealed to the Federal Court which then held that Adorna had obtained an indefeasible title notwithstanding the forgery because it was a bona fide purchaser.