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The Malay Mail
by Teoh El Sen
Eusoff Chin's 2000
decision on forged land title transfer
thrown out
PUTRAJAYA: The
Federal Court this morning overturned a highly
criticised judgment said to have wreaked havoc in land
transactions for the past nine years.
The ruling had apparently caused many
landowners to lose their properties to forgers.
Today's landmark decision provides
better protection for property owners.
A five-member Federal Court, presided
by Chief Justice Tun Zaki Azmi, ruled that the title or
interest of a person who is the registered owner of a
property is liable to be set aside if that title is
acquired through fraudulent means.
"I am legally obligated to restate
the law since the error committed in Adorna properties
(see story below) 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."
The Federal Court today ruled in
favour of plaintiff Tan Yin Hong's appeal, and declared
RHB's charges null and void.
The court instead ordered RHB to
compensate Yin Hong RM75,000 for the case that has been
dragging for the last 23 years.
The other judges were Court of Appeal
President Tan Sri Alauddin Mohd Sheriff, Chief Judge of
Malaya Tan Sri Arifin Zakaria, and Federal Court judges
Datuk Zulkefli Ahmad Makinudin and Datuk James Foong
Cheng Yuen.
The Federal Court was asked to
determine the question “whether an acquirer of a
registered charge or other interest or title under the
National Land Code, 1965, by means of a forged
instrument acquires an immediate indefeasible interest
or title”.
In deciding today's case, the Federal
Court was tasked to revisit the controversial judgment
of 2000 in Adorna Properties vs Boonsom Boonyanit, where
the then Chief Justice Eusoff Chin had made the landmark
ruling that the rightful owner of a property cannot get
back a land after it has been sold to a third party,
even if the title was proved to be forged.
Today’s case goes back to 1985 when
Yin Hong received a letter from United Malayan Banking
Corporation Bhd (now RHB Bank Bhd, the third respondent)
demanding repayment of RM111,825.95 and RM197,244.01
owed under a loan agreement.
Unknown to him, a nine-acre plot in
Kuantan, Pahang, had "mysteriously" become his own since
1976.
The plaintiff later discovered that a
man by the name of Tan Sian San (First Respondent), who
is not a relative and is now missing, had forged his
(Yin Hong's) signature and charged the land to the bank
in 1984 as security for loan facilities granted to Cini
Timber Industries Sdn Bhd (Second Respondent).
Cini Timber subsequently defaulted in
repayment and the bank commenced foreclosure proceedings
on the piece of property.
In 1987, Yin Hong then sued the three
respondents, asking the courts for the land charge and
the forgery to be declared null and void.
At the Kuantan High Court, Justice
Datuk Abu Samah Nordin dismissed Yin Hong's claim on
July 4, 2003.
Appealing to the Court of Appeal,
Justices Datuk Suriyadi Halim Omar, Datuk Zainun Ali and
Datuk Ahmad Maarop also dismissed Yin Hong's appeal on
Feb 19, 2009, holding that RHB Bank had obtained
immediate indefeasibility of its interest by applying
the principle in Adorna Properties.
On Oct 29, 2009, Yin Hong's counsel,
T. Mura Raju, and RHB Bank's counsel, Datuk Bastian Pius
Vendargon and Ong Siew Wan, submitted that the question
posed to the Federal Court should be answered in the
negative – that the Adorna Properties case had been
wrongly decided and ought to be overruled.
Both parties emphasised that Eusoff
Chin had erred as it was very clear in Section 340(3)
that the proviso only applied to "this sub-section (3)".
Vendargon, however, submitted that the declaratory
reliefs sought by the appellant ought to be dismissed on
procedural grounds.
The Pahang State government was
represented by Senior Federal Counsel See Mee Chun and
Azizah Nawawi. Roger Tan and Tony Woon held watching
brief for the Bar Council.
The Boonsom Boonyanit case
This law is not contained in any
statute book but arose out of a Federal Court decision
in the case of Adorna Properties Sdn Bhd vs Boonsom
Boonyanit, written by then Chief Justice Tun Eusoff Chin
and delivered on Dec 22, 2000.
The case involved a Thai citizen,
Boonsom Boonyanit who in her appeal claimed she was the
registered proprietor of lands lots 3606 and 3607, Mukim
18, Tanjung Bungah, Penang.
She claimed she was the true Boonsom
Boonyanit, holder of Thai passport No. D080757, and that
another person holding a Thai passport No. 033852
bearing the name of Boonsom Boonyanit had forged her
(the plaintiff’s) signature, and had sold and
transferred her lands to Adorna Properties, which is the
appellant in this appeal.
Before the sale, the lands had been
valued by an independent property valuer.
There were negotiations on the
purchase price, and on Dec 15, 1988, a sale and purchase
agreement was signed, and the lands were finally
transferred to the purchaser/appellant on May 24, 1989.
Adorna Properties claimed that it had
no knowledge that the transfer documents were forged by
someone who was not the true owner, and had no reason to
suspect that they were forged.
Both the vendor and
purchaser/appellant were represented by different
solicitors in the sale and purchase of the lands.
Further, it was not disputed that the sale was an arm’s
length transaction.
Then 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
Penang solicitors’ firm. Boonyanit’s son became
suspicious and got in touch with his mother’s solicitors
in Penang to investigate the matter.
It was previously 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 impostorthen obtained 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 were one and
the same person, that is, Mrs Boonsom Boonyanit
(impostor) 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
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 held that Adorna had
obtained an indefeasible title notwithstanding the
forgery because it was a bona fide purchaser.
This decision was severely criticised by lawyers and law
academics as incorrect. Boonyanit died in May 2000.
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