Property sales by forgers leave owners high and dry

The Straits Times, Singapore

By Carolyn Hong, Malaysia Bureau Chief

Lawyers seek change to law as court ruling gives land owners no recourse

KUALA LUMPUR - A SIX-YEAR-OLD land case is haunting property owners in Malaysia as dozens have suddenly found themselves with no remedy after their land was sold by forgers.

Lawyers say there are at least 17 to 20 cases where mainly elderly land owners found their lands sold to a third party by a forger.

Under the law as it stands, following a court case in 2001, they have no remedy.

The Federal Court, in the case of Adorna Properties v Boonsom Boonyanit, decided that if a property was sold through forgery to an innocent buyer, the law favours the buyer.

The decision was criticised at that time for undermining the integrity of land titles.

Lawyer Datuk Theng Book said the spate of cases suggest that there could be a syndicate at work targeting mainly elderly land owners who have left their property idle for a while.

'I won't say Adorna is wrong in law but it is not a good decision. It encourages people to steal,' he told The Straits Times.

This situation, much debated at that time, received renewed attention recently when retired judge Datuk N.H. Chan published a book lambasting this decision among several others as causing serious injustice.

He called it a case of 'most outrageous injustice' as Thai national Boonsom Boonyanit lost her two pieces of land in Penang after someone forged her signature and sold them to a third party.

The Federal Court decided that, despite the forgery, the buyer bought the land in good faith and obtained a good title.

'You do not have to be a lawyer or a judge to know that the Federal Court is plainly wrong,' he wrote.

Datuk Chan retired from the Court of Appeal in 2000.

As a result of this decision, dozens of land owners are now fighting a losing battle after discovering that their properties have been fraudulently sold.

'We have 17 cases reported to the MCA, and 80 per cent of the victims are elderly people,' said Datuk Theng Book, who is also legal adviser to the Malaysian Chinese Association's public complaints department.

The typical modus operandi is to forge the identity card of the land owner and lodge a police report claiming that the land title is lost.

A new title is obtained, and the land is then quickly sold.

The cases include the fraudulent sale of a piece of land worth RM10 million (S$4.4 million) in Cheras, Selangor.

Datuk Theng Book said the victims usually discovered the fraud when they suddenly found strangers taking possession of the property.

A few managed to find out early enough to prevent the sale from going through.

Lawyer Roger Tan, who is head of the Bar Council's conveyancing practice section, said the lawyers association was preparing a memorandum with proposed legal amendments to urge that the government rectify the law.

'The amendments will have to take into account the interests of two victims - the original land owner and the bona fide purchaser. We are looking at mechanisms in Canada and Australia where the government has set up a compensation fund for victims,' he said.

AGGRIEVED PARTIES

'The amendments will have to take into account the interests of two victims - the original land owner and the bona fide purchaser.'

LAWYER ROGER TAN, who says the Bar Council is preparing a memorandum with proposed legal amendments to urge the government to rectify the law in question.

Tighten rules to prevent land scams, govt urged

New Straits Times

KUALA LUMPUR: Businessmen, developers and landowners worried over land title fraud cases have urged the government to impose more stringent regulations.

Concerned representatives from various associations held a Press conference to urge the government to re-look legislation which they feel do not guarantee property ownership.

Associated Chinese Chambers of Commerce and Industry deputy secretary-general Datuk David Chua said the Federal Court, in the case of Adorna Properties Sdn Bhd vs Boonsom Boonyanit in 2001, allowed the party which purchased a land title in good faith to keep the land, regardless of the fact that the title was forged.

Chairman of the Conveyancing Practice Committee of the Bar Council, Roger Tan, said the original owner, clueless about the sale, was not given any compensation.

"So, even if the purchaser bought the land in good faith from a con man, he gets to keep it," he said.

It was suggested at the Press conference that a form of compensation fund or insurance scheme be initiated to protect innocent purchasers.

The MCA Public Complaints Department have received 20 complaints of this nature since 2003.

Its legal adviser, Datuk Theng Book, said last year, the department prevented a RM350,000 landed property from being sold in the nick of time.

He said since the land registry does not carry photographs of the land owners, some use the names of the land owners to get an extract of the land grant before selling the property to unscrupulous people.

He said those targeted are those in the older age group.

Also present at the Press conference were representatives from the Real Estate and Housing Developers’ Association, National House Buyers Association and the Malaysian Chapter of the International Real Estate Federation (Fiabci).

Floods round-up: Picking up the pieces to start new year

New Sunday Times

by Chuah Bee Kim and Siti Nurbaiyah Nadzmi

Malaysian Bar Council member Roger Tan (second from right) distributing a pillow and mattress to Sim Hoi Sing at Kampung Tembioh in Kota Tinggi yesterday. With them are other members of the Sim family and Bar Council representatives.

KOTA TINGGI: Celebrating the Lunar New Year is the last thing on the minds of the Sim family here. Their first priority is to get back on their feet in the aftermath of the recent floods.

"We will make do with what we have for Chinese New Year," said the patriarch of the family, Sim Hoi Sing, 76.

"My sons and grandchildren are helping out with the repairs around the house. We are not thinking about any celebrations. We’ll be happy if we can get our house back in order.

"All our furniture is ruined but our family is still together. That’s more important to us than celebrating Chinese New Year," said his daughter-in-law, 55-year-old Chai Soi Fah.

The extended family lives in a squatter settlement in Kampung Tembioh, which was flooded early this month.

Chai, her husband and three children live in one house, and her father-in-law lives with 10 other family members next door.

The families have no plans to move.

Sim has been here for 40 years. He has a special bond with the place: "All my children and grandchildren were born here. Besides, we have many friends here."

Chai feels the same way. Even though, she says, the whole family is now terrified when the sky turns dark and rain threatens.

The Sim family is one of 187 families in the village who were badly affected by the floods.

Members of the Malaysian Bar Council, led by council member Roger Tan, yesterday gave each household a mattress, pillow and blankets.

The team was assisted by members of the Malaysia St John Ambulance Kota Tinggi division, led by its area commander Pok Kim Chan.

Tan said the Bar Council had raised RM15,000 to help the flood victims, who heaved a sigh of relief that the heavy rains throughout the state over the weekend didn’t cause a third wave of flooding.

District officer Norizan Kulob said the water level in Sungai Johor, the main river which runs through the town, dropped to 0.25 metres below its normal level yesterday.

Kota Tinggi recorded 45mm of rain on Saturday, while Layang-layang, Bukit Besar and Ulu Sebol had only 6mm.

Most flood evacuation centres in the district have been closed but one was opened in Kampung Sungai Berangan near Ulu Tiram due to heavy rains on Saturday.

Only 15 people took shelter as a precaution.

As of yesterday, 40,154 flood victims were still in 93 relief centres, all in the Batu Pahat district.

A spokesperson at the Johor Baru flood operations centre said the water in Batu Pahat was receding and many had returned home.

A system that breeds misdeeds and corruption

I welcome the statement from the Menteri Besar of Selangor, Datuk Seri Dr Mohd Khir Toyo yesterday (“Khir: Zakaria told to resign before audience” - NST, Oct 31) that the MB wanted more professionals to serve on local councils.

However, he said the Local Government Act 1976 (“Act 171”) had to be first amended.

In my opinion, no amendment to Act 171 is required in order to appoint professionals who are residents of the local authority area as councillors. Section 10(2) of Act 171 is clear, that is, the state authority may appoint persons who in its opinion have achieved “distinction in any profession”.

If the Selangor state authority is unsure of this, then it should consult the National Council for Local Government set up under article 95A of the Federal Constitution.

The Article states that the federal government or any state government may consult the National Council for Local Government in respect of any matter relating to local government and its duty is to advise that government on any such matter.

Article 95A(5) also provides that it is the duty of the National Council for Local Government to formulate from time to time in consultation with the federal government and the state governments a national policy for the promotion, development and control of local government throughout the Federation and for the administration of any laws relating thereto; and the federal and state governments shall follow the formulated policy.

In fact, the National Council for Local Government is no ordinary body as it is chaired by the deputy prime minister and each state is often represented by its Chief Minister. This is the body, in my view, which should immediately sit down and formulate guidelines on the appointment and re-appointment of councillors within the ambit of section 10(2) of Act 171.

As I said in my article on Sunday (“Do laws grind the poor, and rich men rule the law?”), any state government which decides not to comply with the policy formulated by the National Council for Local Government may risk losing financial grants and loans from the federal government.

Further, if state governments cannot get their act together in effectively supervising and managing their local authorities, then the time will come when the federal government may have to assume more power and control over them.

Provisions are provided by removing ‘local government’ matters from the state list under the Ninth Schedule to the Federal Constitution and placing it under the concurrent list.

In any event, appointing professionals such as architects, engineers, surveyors, lawyers and doctors who are free from any political affiliations or personal interest to sit on the council is a step in the right direction.

It will not only form a check and balance on the manner in which powers and duties of local authority are carried out, but it also promotes good governance in local administration. It is akin to appointing independent directors to public listed companies.

Of course, professionals are not free from some of the perils of holding public office – the temptation of succumbing to corruption and self-aggrandisement.

To avoid accusations of favouritism or other sorts of improper conduct in appointing certain professionals, it is always good practice to first get their respective professional organisations to make the recommendations.

Again, the test is that the person to be appointed must have achieved professional distinction – and not those professionals who are already on the advisory panel of the local authority.

But, in practice, many professionals will be unwilling to serve because it means that their firms are prohibited from acting for the local authority, and they may also have to recuse themselves each time a matter handled by their firm arises for deliberation. This is provided for in section 35 of Act 171 which reads: “No councillor shall by himself or his partner or agent act in any professional capacity for or against the local authority of which he is a councillor.”

All said, it is still a good move to allocate two or three seats in each local authority for independent persons, such as professionals, to sit on the councils.

In the case of Datuk Zakaria Mat Deros, I could not agree more with the view of Umno vice-president, Tan Sri Muhyiddin Yassin (‘He may have tainted party’ - NST Oct 31), that elected representatives should not hold the post of municipal councillor. (Zakaria is also the state assemblyman for Port Klang.)

Muhyiddin cited Johor as an example where if one was an assemblyman or Member of Parliament, there was no necessity for him to sit in municipal councils.

He went on to say that by allowing others, such as party leaders, from the lower ranks who are not elected representatives to be local councillors, there would be better division of labour, more focus on responsibilities and no conflict of interest.

Muhyiddin was most spot-on in this issue, which is one of a conflict of interest.

This reminds me of 1980 when the menteri besar and state government of Perak were taken to court by an opposition leader, Lim Cho Hock, because the Perak state authority appointed the menteri besar as president of the Ipoh Municipal Council.

It was contended that the appointment would put the menteri besar in a conflict situation when it came to the latter exercising his powers under sections 10(7) and 165(1) of Act 171. Even though Lim failed in the action, the practice of a menteri besar also holding the post of president of municipal council, since that case, has always been frowned upon.

Article 64(1)(b) of the Selangor state constitution provides that a state assemblyman is disqualified if he holds an ‘office of profit’.

Even though an election court had ruled before that holding a position in the local authority did not fall within the meaning of ‘office of profit’ (see Lee Hie Kui @ Eric Lee v Song Swee Guan & Anor, 1998), it is, I am sure, the general view that the practice of vesting too much power in one person should always be discouraged as one should always take heed of the oft-repeated words of Lord Acton: “Power tends to corrupt, and absolute power corrupts absolutely.”

Moreover, the state assemblyman may find himself in a conflict situation if the conduct of the local authority of which he is also a councillor is debated in the State Legislative Assembly. Again, this can be another policy which the National Council for Local Government should formulate.

It is the hope of many that all local authorities will practise good governance when administering the affairs of their local authority area, always asking whether their actions will protect and benefit the local community.

May they always be guided by the definition of good governance enunciated by the United Nations Economic and Social Commission for Asia and the Pacific:

“Good governance has eight major characteristics. It is participatory, consensus oriented, accountable, transparent, responsive, effective and efficient, equitable and inclusive and follows the rule of law. It assures that corruption is minimised, the views of minorities are taken into account and that the voices of the most vulnerable in society are heard in decision-making. It is also responsive to the present and future needs of society.”