of Boonsom Boonyanit
02/07/2005 NST-PROP By Salleh
Ask a lawyer who claims to know the National Land Code like the back of
his hands which provision he would regard as the single-most important
statute, and my guess is that he would say, “Section 340”. At least, I
hope he would.
To me, Section 340 signifies the essence of the Torrens system - a land
registration method built on two fundamental principles. These are, firstly,
the mandatory use of prescribed forms when entering into any land deal
recognised under the Code, and secondly, the registration of the deal
at the appropriate Land Office.
Once you have complied with these two basic procedures, your name is registered
on the title, whether as the new owner, chargee or lessee, and you are
safe, home and dry.
Legally speaking, you now either have indefeasibility of title (if you
are the new owner), or indefeasibility of interest (if you are the registered
chargee or lessee). That is the law as expressed in subsection (1).
Put in its most basic structure as a simple arithmetic equation that can
be readily understood by primary school pupils, the Torrens system in
this country means forms plus registration equals indefeasibility. If
only life could be so simple.
Unfortunately, section 340 has two other subsections - (2) and (3). The
Code itself is obviously not the easiest statute for the uninitiated or
the lay person.
However, matters have been made worse - and comprehension has become more
difficult and distant - as a result of the constantly growing body of
case law handed down by the judiciary in respect of subsections (2) and
A case in point is Adorna Properties Sdn Bhd vs Boonsom Boonyanit (2001,
1 AMR 665), a heart-rending tale which took more than a decade before
it finally ended with a painful outcome for the rightful landowner.
The judgment that was handed down by the highest court in the land and
the facts of the case are briefly as follows:
Boonsom, a woman of Thai descent, owned two plots of land in Tanjung Bungah,
Penang. Unknown to her, the land was transferred to a company, Adorna
Properties. A woman who held herself out to be the true owner (somebody
I shall refer to as “con artist”), made the sale.
Upon discovering what had transpired, and realising that she had become
a victim of somebody’s deceit, Boonsom went to court to challenge the
validity of the transfer of her land to Adorna Properties by the con artist.
Two grounds clearly come to mind - fraud (pretending to be who you are
not) and forgery (of the prescribed instrument of transfer).
After considering the evidence before it, the High Court held that it
could not determine whether the signature on the instrument of transfer
was a forgery or not. It demanded a higher standard of proof of forgery
from Boonsom, that she had to prove beyond reasonable doubt.
The High Court accordingly held that Adorna Properties had acquired an
indefeasible title to the land and dismissed Boonsom’s claim. She then
turned to the Court of Appeal.
Mercifully for Boonsom, the Court of Appeal arrived at a different decision.
It held that forgery was proved, ruling that the standard of proof required
to verify forgery in civil proceedings is “on the balance of probabilities”,
not “beyond reasonable doubt”.
Since the instrument of transfer was forged, the Court of Appeal held
that Adorna Properties had acquired its title by registration of a void
document, thereby making its title defeasible. The Court of Appeal then
ruled that the title be handed back to Boonsom.
Unfortunately for Boonsom, her victory was short-lived.
Dissatisfied with the decision of the Court of Appeal, Adorna Properties
appealed to the Federal Court, where it raised two important issues: One,
the standard of proof to verify forgery; and whether Adorna Properties
had acquired an indefeasible title.
The Federal Court unanimously decided in Adorna Properties’ favour. It
agreed with the Court of Appeal that the standard of proof to prove forgery
in this case is on the balance of probabilities and not beyond reasonable
However, the Federal Court held that despite the instrument of transfer
being a forgery (and therefore a void instrument), Adorna Properties had
acquired an indefeasible title because it was a bona fide purchaser (BFP)
for value without notice. The provision for a BFP is set out in subsection
Emphasising that its duty is to determine “the real intention of Parliament”
in enacting the law and to deduce that intention “from the language used”
in the Code, the Federal Court said subsection (3) protects Adorna Properties
because as a BFP, it had “obtained an immediate indefeasibility”, notwithstanding
the fact that the instrument used was “a forged document.”
When the Federal Court’s decision was finally published in the legal journals,
the reactions were as I had expected. I remember receiving e-mails from
senior lawyers expressing their unhappiness with the decision.
Thus, while there were those who said that the highest court in the land
had spoken and its decision had to be accepted and respected, there were
others who asked, “Why look at subsection (3)? Why ignore subsection (2)?
Why punish the innocent land owner and why reward the con artist for her
Subsection (2) of section 340 states that if any land dealing is affected
by a number of vitiating circumstances, such as forgery, fraud or misrepresentation,
then the interest of the acquirer (the new owner, chargee or lessee) shall
be defeasible. In this Penang case, there was clear evidence of both fraudulent
conduct by the impostor, and forgery of the instrument of transfer.
Is the Code, as it stands today, good law? Or, did something go missing
from our version of the Torrens System after we “borrowed” it from Australia
towards the close of the 19th century? Can we honestly say a law is good
law if an innocent party is made the victim?
The Federal Court decision came five years ago. Boonsom’s fight to seek
justice and the restoration of her property is now old news. We watched
her saga for about a decade before it finally concluded, with her being
the ultimate loser. Though she has the sympathy of a lot of people, her
case will, in time, be forgotten by most.
However, as events of last week have shown, her case may indeed keep coming
back to haunt us, forcing us to continue to think and reflect.
The long shadow cast by Boonsom’s case fell on the Kuala Lumpur High Court,
when it heard and deliberated a case affecting Bank Kerjasama Rakyat Malaysia
Bhd. The trial judge in this case, Datuk Arifin Zakaria (J), admitted
frankly that he had a “very difficult” case before him, but he felt obliged
to follow the Federal Court decision in the Boonsom case.
In this matter, the High Court used the Federal Court’s Boomsom judgment
to rule that a couple’s land rightfully belonged to Bank Kerjasama Rakyat
Malaysia - which had registered its interest over the property - despite
their signatures on the bank documents being forged
For details of this story, see page 6 of your New Sunday Times of June
26. For the record, Boonsom’s son tried a valiant last attempt in July
2002 to ask the Federal Court to set aside its earlier decision.
Like his mother, he also failed.
I look forward to the day - hopefully, in the not too distant future -
when another panel of the Federal Court is given the golden opportunity
to reconsider its earlier decision. Who knows - it may just reach a different
Salleh Buang is senior advisor of a company specialising
in competitive intelligence. He is also active in training and public
speaking and can be reached at firstname.lastname@example.org
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