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In urgent need of reform
04/02/2006  NST-PROP By Salleh Buang

It is only lately that residents of Peninsular Malaysia have been compelled to grapple with the problem of a registered proprietor’s indefeasibility of title, for there had been no urgent need to address the issue before the Boonsom Boonyanit case (PropertyTimes, Jan 14, 2006).

In simple language, the question in that case is, “Who should be the loser - the registered landowner who was not in any way involved in the purported sale and transfer of her land, or the purchaser, who acquired it from a third party, a con-woman, an impostor and forger?”

The Federal Court held, by an unanimous decision, that the loss should be borne by the registered landowner. Its rationale is that the bona fide purchaser’s interest should be protected.

While the question has been finally answered and the issue “settled”, public debate on it rages on - in conference halls; at training seminars; and in the pages of legal and academic journals. My belief is that it will continue to do so, though perhaps on a lower key and with less frequency.

In the past, if the Judiciary handed down a decision unacceptable or “difficult” for the Executive, or if it created problems rather than solutions, the response from the Executive would have been almost instantaneous.

Amendments would have been tabled in Parliament, and quickly passed. In due course, they would have been gazetted and a new law would have come into effect.

The problem or difficulty created by the judicial decision would have been resolved, and the perceived harm quickly removed.

Legal practitioners and law students can point to a number of well-known instances in constitutional and administrative law to this effect.

Can we expect some kind of legislative exercise as the Executive’s response to the Boonsom Boonyanit decision?

Those familiar with the National Land Code 1965 (NLC), and are equally at home with other difficult statutes such as the Penal Code and the Evidence Act, argue that our understanding of the law would be better enhanced if the NLC had adopted the drafting style of the Penal Code and the Evidence Act.

By this, they mean the existence of “Explanations” and “Illustrations” found scattered about in the two statutes, but singularly missing in the NLC.

Perhaps when the NLC comes up for extensive review later, the legal draftsmen can take a hint from these sentiments.

Section 340 of the NLC could do very well with a couple of Explanations and Illustrations.

On the issue of indefeasibility, we have to bear in mind that unlike some countries where the Torrens system is backed by one form or other of a State guarantee, such a privilege is not enjoyed here.

The question is, should we? And if so, what form should it take?

There have been calls for reform even in the Australian States of New South Wales and Victoria, where the State-backed guarantee scheme is already in place. If the present system is retained, some quarters are asking, what sort of improvements should be made?

Isn’t it time that registered landowners insure their own titles? If a State is to continue to assume the role of “insurer” of the Torrens title, shouldn’t the risk be taken over by private companies appointed by the State?

There is also a suggestion that if it is mandatory for a State to provide compensation for loss incurred as a result of the operation of the Torrens system, the circumstances under which such compensation is payable must be clearly identified.

The State may be willing to accept responsibility if the proprietor’s loss is due to the default, omission or negligence of its officers. But what if the aggrieved party cannot prove that the loss suffered resulted from negligence or other such cause on the part of the State’s officers?

Furthermore, should compensation be payable only after existing remedies against the person primarily responsible for the landowner’s loss have been exhausted? This might appear to be unduly harsh, especially if the landowner is forced to institute civil action against a certain party before seeking compensation from the State. Litigation is always time-consuming and expensive.

Also, in seeking compensation from the State, will the procedure be administrative or litigious in nature? In New South Wales, a landowner has to file his claim in court against the Registrar-General, a litigation process that is clearly taxing and tiresome.

The procedure is simpler in Victoria: It merely requires an application to the Registrar, and the matter is then disposed of administratively.

Yes, the options are many. There are several ways to tackle the issue, and many approaches we can adopt. It does not matter which route we take, as long as we move in the right direction.

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


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