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Keeping forgers away from your
property
19/05/2006 The Sun - Law & Realty
By Andrew Wong and Nicole Tan
AFTER having paid a great deal of money to own a property, and after many
years of hard work, toil and sweat to pay off your bank loan, you feel proud
and happy that your property is now free from encumbrances and yours to
enjoy. You further feel an immense sense of security as the original title
is safely tucked under your mattress or locked in a bank vault. It is
inconceivable that one fine morning, you can wake up and discover that your
property is no longer yours. It happened to Madam Boonsom Boonyanit and it
may happen to you as well.
Boonsom was a Thai national residing in Bangkok. Her husband had purchased
two plots of land in Tanjung Bungah, Penang and in 1967 he transferred the
lands to Boonsom as a gift. Thereafter the original titles were always in
her possession. The assessment and quit rents were regularly paid by an
accountant in Penang, on the instructions of Boonsom’s eldest son, Phiensak
Sosothikul. She had never transferred or sold the lands to anyone.
Sometime in June 1989, Phiensak saw an advertisement in a Thai newspaper
making reference to her mother’s lands in Penang. He immediately contacted
the accountant and requested him to investigate. The accountant discovered
that Boonsom was no longer the registered owner of the lands. She had
apparently sold and transferred the lands to Adorna Properties Sdn Bhd (“Adorna”)
sometime in May 1989.
It appeared that an impersonator, calling herself by the name of Boonsom,
had made a statutory declaration that she was the owner of the lands and had
lost the original titles. With this declaration, the fake Boonsom was able
to obtain replacement titles from the appropriate authority. The fake
Boonsom, who had also procured a forged passport, then sold the lands to
Adorna. Although the fake Boonsom was represented by a solicitor in the
sale, she signed the transfer before a land administrator and Adorna became
the registered owner of the lands.
A police report was lodged. The impersonator had vanished into thin air,
probably with RM1,865,798 in her pocket. In 1989, the real Boonsom
instituted legal proceedings and claimed to be restored as the registered
proprietor.
The relevant law on the subject is in section 340 of the National Land Code.
340(1) confers indefeasible title to any person who is registered as
proprietor of any land. Nevertheless, 340(2) provides that a title may be
defeasible in a case of fraud or misrepresentation, or where registration
was obtained by forgery, or where the title was unlawfully acquired. 340(3)
states that, where a title is defeasible, it may be set aside in the hands
of any person to whom it may subsequently be transferred, and any interest
subsequently granted may be set aside in the hands of any person in whom it
is for the time being vested.
However, nothing in 340(3) shall affect any title acquired by any purchaser
in good faith and for valuable consideration, or by any person claiming
under such a purchaser ('the proviso").
The High Court Judge was not satisfied that the transfer was forged, but
held that even if the transfer was forged, Adorna had obtained an
indefeasible title as Adorna is a purchaser in good faith and for valuable
consideration envisaged in the proviso. The learned Judge recognised that
although registered landowners should be protected from being divested of
their title through fraud or forgery, it is necessary for the economic
well-being of the nation, to retain the confidence of prospective innocent
purchasers. The Court declared that the intention of Parliament is clearly
to protect parties who are bona fide and hence to provide immediate
indefeasibility to such innocent parties.
The Court of Appeal restored Boonsom as the proprietor of the lands. Justice
Datuk Gopal Sri Ram held that Adorna became the registered proprietor by
means of a forged transfer, and hence the title it obtained is defeasible
for the reason that Adorna is not the innocent purchaser envisaged in the
proviso. The learned Judge went on to suggest that if Adorna had disposed of
the lands to a third party who, in good faith pays the purchase price, then
the third party will obtain an indefeasible title, as the third party would
be the innocent purchaser envisaged in the proviso.
Adorna took the matter to the apex court of Malaysia, and in December 2000
the Federal Court agreed with the High Court Judge that even if the transfer
was forged, Adorna had nevertheless obtained an indefeasible title as it is
an innocent purchaser envisaged in the proviso. Fortunately, Boonsom did not
suffer the agony of having to receive this judgement, as she had passed away
in May 2000.
Within the legal fraternity, the
Federal Court judgement had been severely criticised. The contention is that
it should not be allowed to stand. The Federal Court may have unwittingly
handed a carte blanche to conniving forgers. The Government must immediately
fulfil its moral and legal duty to protect the citizens’ properties as
enshrined in the Constitution by immediately amending the Code.
In the meantime, it may be necessary for a landowner, in particular of
vacant plots of land, to conduct a regular title search on his own property.
It may even be necessary to lodge a private caveat on your own property to
restrain any dealings. It would be prudent to make prompt payments of quit
rent and assessment and to check the name of owner printed thereon. This may
not be conclusive but will certainly trigger off an alarm in the event of
any discrepancy. Landowners who have charged their property to a bank as
security appear to be safe, as forgers tend to shy away from any property
which is encumbered.
The writers are members of the Conveyancing Practice Committee Bar
Council Malaysia.www.malaysianbar.org.my |
