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Ruling in Adorna Properties erroneous - Federal Court Print E-mail
Thursday, 21 January 2010

Bernama

PUTRAJAYA, Jan 21 (Bernama) -- Landowners can heave a sigh relief as the Federal Court here on Thursday pronounced a landmark decision protecting original landowners from losing their lands to forgers.

A Federal Court five-member bench led by Chief Justice Tun Zaki Azmi ruled that the controversial 2001 ruling in the case of Adorna Properties vs Boonsoom Boonyanit @ Sun Yok Eng, permitting fraudulent land transfer, was erroneous.

"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," Zaki said.

The other judges who presided with Zaki 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.

Today's decision was welcomed by the Attorney-General's Chambers and the Bar Council.

The 2001 ruling had been strongly critised by landowners, the legal fraternity and academicians because it opened an avenue for fraudsters to fraudently acquire lands by forging documents, causing the principal registered landowners to lose their land through scam.

The interpretation applied to the proviso in the National Land Code by the previous Federal Court panel led by former chief justice Tun Eusoff Chin in the 2001 ruling protected subsequent innocent buyers of properties, where the titles were forged, leaving the original owners with little recourse.

The effect of the Adorna Properties principle conferred immediate indefeasibility of land title to a registered proprietor even if the instrument of transfer was forged.

In a unanimous decision departing from the Adorna Properties principle, Arifin said the previous Federal Court panel, in deciding on the Adorna Properties case nine years ago, had misconstrued Section 340 (1), (2) and (3) of the National Land Code, thereby making an erroneous conclusion.

He said the interpretation applied by the previous Federal Court panel had gone against the clear intention of Parliament and that error needed to be remedied in the interest of all registered proprietors.

The court was requested to revisit the Adorna Properties principle by counsel representing parties in a land matter dispute involving a businessman, Tan Ying Hong, and Cini Timber Industries Sdn Bhd and United Malayan Banking Corporation Bhd.

In that case, Tan was the registered proprietor of a nine-acre plot of land in Kuantan, Pahang.

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

Cini Timber defaulted payment and the bank commenced foreclosure proceedings on Tan, the registered land owner.

Tan then commenced legal proceedings to seek a declaration that the charges with the bank were of no effect as they were created by a forged power of attorney but his claim was dismissed by the High Court in 2003.

He brought the matter to the Federal Court after the Court of Appeal affirmed the High Court's decision. Today, the Federal Court set aside the High Court decision and allowed Tan's appeal.

It also ordered that Tan be paid RM75,000 in litigation costs for court proceedings in the lower court and federal courts.

Meanwhile, outside the court, Head of the Civil Division in the Attorney-General Chambers (AGC) See Mee Chun said today's decision had addressed the contentious issue.

She said the AG's Chambers was also looking at other aspects including amendments to the National Land Code to further protect registered owners.

Counsel Roger Tan, who held a watching brief for the Bar Council, said that after nine years of waiting, many landowners could finally see some light that their properties would be safer.

He hoped the lower courts would apply this new principle when adjudicating similar court cases on land disputes.

Comments (1)add
Alan Chew: ...
I was going to caveat my own land but now that the Federal Court has overturned its own ruling I can relax. The Torrens system still lives on.
1

Friday, January 22 2010 11:23 AM
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