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 sallehbuang@hotmail.com
