Visitor No since 22-10-98
Adorna overturned - a beginning, not the end Print E-mail
Monday, 08 February 2010

by Tan Siok Choo

ON Jan 21, in Tan Ying Hong v Tan Sian San and two others – a case involving a fraudulent land transfer in Pahang – the Federal Court led by Chief Justice Tun Zaki Azmi refused to follow the precedent laid down in Adorna Properties Sdn Bhd v Boonsom Boonyanit, and thus overturned it.

Euphoria over the Federal Court’s decision to consign Adorna to the judicial dustbin should not obscure the fact that more needs to be done to resolve several related issues.

First, why was the judicial ruling in Adorna – which Zaki described as an obvious and blatant error – allowed to prevail for over nine years? Since the Adorna decision in December 2000, the Federal Court passed up at least three opportunities to overturn this widely-criticised judgment.

In Adorna, a fraudster claiming to be landowner Boonsom Boonyanit, declared the original title to two pieces of land in Penang was lost. After obtaining a certified copy of the title deeds from the land office, the fraudster sold the land to Adorna for RM12 million.

Although Adorna’s claim to ownership was a result of fraud, the Federal Court – comprising then Chief Justice Tun Eusoff Chin, Chief Judge of Malaya Tan Sri Wan Adnan Ismail and Justice Abu Mansor Ali – ruled its claim prevailed over that of the original owner, Boonsom.

Adorna is pernicious because it undermines security of land ownership. After Adorna, all fraudsters had to do was to convince the land office to give them a certified copy of the title deeds. With a certified copy, fraudsters could sell the property.

Adorna thus underscores the importance of ensuring the right persons are appointed as judges.

Regulations establishing the Judicial Appointments Commission came into force last year. As it is funded by taxpayers, the public has a right to know what it is doing.

Second, although many – including the Real Estate and Housing Developers’ Association Malaysia and the National House Buyers Association (NHBA) – have called for the National Land Code to be amended to nullify the Adorna decision, for a long time, the government appeared tone deaf to these appeals. And even when action was taken, the outcome was disappointing.

In December 2007, a bill to amend the land code was passed in the Dewan Rakyat. However, the amendment failed to deal with the Adorna issue. The chairman of the Bar Council’s conveyancing practice committee, Roger Tan, lamented the government’s lack of urgency in resolving problems caused by the Adorna judgment.

In October last year, the Federal Court hearing the Tan Ying Hong case was informed the Attorney-General’s Chambers was considering amending the land code. When Zaki questioned the long delay, See Mee Chin, head of the Civil Division, said there were many issues to look into, including that of compensation.

This unconscionable delay in rectifying a judicial injustice highlights the need for a permanent law commission to propose solutions for future Adornas.

Third, police statistics suggest Adorna has been a gift for forgers. Of particular worry is the fact that value of the land involved in fraud has escalated. In 2006, there were 80 cases of fraud involving land worth RM4.9 million. Up to October 2007, the comparable numbers were 49 cases involving land worth RM10.4 million.

Furthermore, foreigners like Taiwanese businessman, Chen Wei Pin, have also become victims to Adorna-style fraud. Not only was Chen’s land sold to a company, his dismay was compounded by his inability to retrieve records of his ownership from the Land Office.

The stance adopted by the Land Office is worrying. Despite numerous suggestions to reduce opportunities for fraudulent land transfers, the Land Office appears singularly uninterested.

ACP Tan Kok Liang of the Commercial Crimes Investigation Department legal/inspectorate division proposed a simple solution – fingerprinting all those involved in land transactions, a move that would help identify impostors.

Additionally, NHBA secretary-general Chang Kim Loong has suggested setting up an insurance scheme, backed by the government, to indemnify those who lose their property through fraudulent land transfers.

The need for an insurance fund is imperative. Although Adorna has been overturned, landowners are still at risk. If a fraudster obtains a copy of the title deed and then sells the land to B who then proceeds to re-sell it to C, ownership of the land will be given to C, the second buyer, rather than the landowner.

Policymakers should remember Edmund Burke’s maxim: All that is necessary for the triumph of evil is that good men do nothing. As the Adorna case has shown, injustice triumphed for more than nine years because of the combined effect of judicial, legislative and administrative inaction.

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