Adorna vs Boom

FEDERAL COURT OF MALAYSIA ADORNA PROPERTIES SDN BHD

- VS -

BOONSOM BOONYANIT BRIEF FACTS OF THE CASE The plaintiff who is the respondent in this appeal, and who is a Thai citizen, claimed that she was the registered proprietor of lands lots 3606 & 3607 Mukim 18, Tanjung Bungah, Penang. On May 24 1989, the defendant presented a stamped memorandum of transfer purportedly signed by plaintiff to transfer the land to the defendant and this was registered at the land office. According to the plaintiff, she did not sign the memorandum of transfer and her Thai international passport confirms that she was not in Malaysia when the memorandum of transfer was signed. She claimed that she was the true Mrs. Boonsom Boonyanit holder of Thai passport No D080757, and that another person holding a Thai passport No 033852, bearing the name of Mrs. Boonsom Boonyanit had forged her (the plaintiff’s) signature, and had sold and transferred her land to the defendant Adorna Properties Sdn Bhd which is the appellant in this appeal. Before the sale, the lands had been valued by an independent property valuer. There were negotiations on the purchase price, and on December 15, 1988 a sale and purchase

agreement was signed, and the lands were finally transferred to the purchaser / appellant on May 24, 1989. The appellant, Adorna Properties claimed that it had no knowledge that the transfer documents were forged by someone who was not the true owner, and had no reason to suspect that they were forged. Both the vendor and purchaser / appellant were represented by different solicitors in the sale and purchase of the lands. Further, it was not disputed that the sale was an arm's length transaction.

CONSIDERATIONS FOR THE CASE i.

For proof of forgery such as the one under appeal, whether the standard of proof is on balance of probabilities, or on beyond reasonable doubt?

ii.

Whether the defendant, a bona fide purchaser for valuable consideration without notice, acquired an indefeasible title to the properties (the lands) by virtue of s 340(3) of the National Land Code 1965.

ARGUMENTS AND JUDGMENT The High Court dismissed the plaintiffs claim that Mrs. Boonsom Boonyanit (plaintiff) be restored, as the registered owner of the lands. Adorna Properties Sdn Bhd (defendant) averred in their defence that it was a bona-fide purchaser of the said land for value and had acquired an indefeasible title through registration of the title. The High Court held that the plaintiff in this case had failed to prove forgery. To prove forgery, it was not enough for her to merely assert the signature was not hers and that she was not in Malaysia at the material time. According to Justice Vincent Ng, he who alleges forges must prove this beyond reasonable doubt as ‘forgery involves a high element of fraud’ and is a species of fraud under common law. The plaintiff in this case should have called a signature expert and the attestors of the signature to conclusively prove that she was not the person who signed as transferor. As this was not done, the onus was not discharged. The court further held that section 340(1) of the NLC conferred on the defendant an indefeasible title. On appeal the Court of Appeal reversed the order of the High Court. The High Court held that forgery must be proved beyond reasonable doubt, while the Court of Appeal held that it should be on a balance of probabilities. On the ground that the standard of proof required for forgery is a balance of probabilities, there was sufficient evidence to show that the plaintiff’s signature was forged. 4. The Court of Appeal held that the signature on the document of transfer was forged and hence the transaction was not legit. If further held that section 340 provides for the concept of ‘deferred indefeasibility’ rather than ‘immediate indefeasibility’ and hence the

forged instrument does not give a good title to the defendant. The appellant was reinstated as the true owner of the land. The defendant then appealed under section 340(3). Hence, both the High Court and Court of Appeal

analysed and considered carefully Doshi v Yeoh Tiong Lay [1975] 1 MLJ 85. The High

Court held that Doshi was correctly decided by the then Federal Court in that the registration conferred an immediate indefeasibility under our version of the Torrens system, whereas the Court of Appeal held otherwise. Thus High Court Judge stated that, on the facts of this case, even if the instrument of transfer was forged, the respondent nevertheless obtained an indefeasible title to the said lands. Hence Adorna Properties Sdn Bhd is the true registered proprietor of the land.

Section 340 of the NLC states 340. Registration to confer indefeasible title or interest, except in certain circumstances. (1) The title or interest of any person or body for the time being registered as proprietor of any land, or in whose name any lease, charge or easement is for the time being registered, shall, subject to the following provisions of this section, be indefeasible. (2) The title or interest of any such person or body shall not be indefeasible (a) in any case of fraud or misrepresentation to which the person or body, or any agent of the person or body, was a party or privy; or (b) where registration was obtained by forgery, or by means of an insufficient or void instrument; or (c) where the title or interest was unlawfully acquired by the person or body in the purported exercise of any power or authority conferred by any written law. (3) Where the title or interest of any person or body is defensible by reason of any of the circumstances specified in sub-section (2)(a) it shall be liable to be set aside in the hands of any person or body to whom it may subsequently be transferred; and (b) any interest subsequently granted thereout shall be liable to be set aside in the hands of any person or body in whom it is for the time being vested:

Provided that nothing in this sub-section shall affect any title or interest acquired by any purchaser in good faith and for valuable consideration, or by any person or body claiming through or under such a purchaser. (4) Nothing in this section shall prejudice or prevent (a) the exercise in respect of any land or interest of any power or forfeiture or sale conferred by this Act or any written law for the time being in force, or any power of avoidance conferred by any such law; or (b) the determination of any title or interest by operation of law.

INTERPRETATION Subsection (1) of s 340 NLC deals with as long as the person is currently a registered proprietor of that piece of the land, his title or interest is indefeasible unless caught by subsections (2) and (3). He might have become a registered proprietor of the land because he had bought it, or he got it by way of a gift, or by way of transmission upon the death of his parent or spouse. So long as his name is on the land register, his title or interest is indefeasible. Subsection (2) states that the title of any such person, i.e. any registered proprietor or coproprietor for the time being, is defeasible if one of the three circumstances in subsection (2)(a), (b) or (c) occurs. Subsection (3) says that where that title is defeasible under any of the three circumstances enumerated under subsection (2), the title of the registered proprietor to whom the land was subsequently transferred under the forged document, is liable to be set aside. Similarly, subsection 3(b) says any interest under any lease, charge or easement subsequently 'granted thereout' i.e. out of the forged document may be set aside. However, subsection (3) of s 340 NLC does not stop there. It contains a proviso. The object of a proviso is to qualify or limit something which has gone before it. The proviso cannot be divorced from the main clause to which it is attached. It must be considered together with the section or subsection of the statute to which it stands as a proviso. The proviso to subsection (3) of s 340 of the NLC dealt with only one class or category of registered proprietors for the time being. It excludes from the main provision of subsection (3)

this category of registered proprietors so that these proprietors are not caught by the main provision of this sub-section. Who are these proprietors? The proviso says that any purchaser in good faith and for valuable consideration or any person or body claiming through or under him are excluded from the application of the substantive provision of subsection (3).

CONCLUSION Based on the understanding of section 340 of NLC especially subsection 3 of s 340. For this category of registered proprietors they obtained immediate indefeasibility notwithstanding that they acquired their titles under a forged document. I, therefore, agree with the High Court Judge that, on the facts of this case, even if the instrument of transfer was forged, the respondent nevertheless obtained an indefeasible title to the said lands.