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Federal Court 'sets right' land fraud decision

PUTRAJAYA: The Federal Court today (Jan 21) departed from its earlier decision and re-opened the recourse route for property owners embroiled in disputes related to fraudulent land transfers.

In deciding on an appeal in a case brought by Tan Yin Hong against three respondents; Tan Sian San, Cini Timber Industries Sdn Bhd and United Malayan Banking Corporation Bhd (now RHB Bank Bhd)., the Federal Court's five-judge panel unanimously ruled that any person acquiring a registered title or interest on a property via a forged instrument cannot be allowed an immediate indefeasible interest or title.

In delivering the court's decision, Chief Judge of Malaya Tan Sri Arifin Zakaria acknowledged the criticisms voiced by academics and legal practitioners on the Federal Court's 2000 decision in the now infamous Adorna Properties case that conferred immediate indefeasibility to the registered proprietor.

He added that it was "highly regrettable" that the contentious issue had taken a long time to be set right.

The others judges were Chief Justice Tun Zaki Azmi, Court of Appeal President Tan Sri Alauddin Mohd Sheriff, Federal Court Judges Datuk Zulkefli Ahmad Makinudin and Datuk James Foong Cheng Yuen.

Zaki, who delivered a supporting judgement ruled that a subsequent registered owner's claim to property can be defeated if it can be shown that a property title was obtained "by forgery or misrepresentation".

This was regardless of whether the subsequent registered owner was party or privy to the allegedly fraudulent transaction.

"We are legally obliged to set right [the matter]. The error committed in Adorna Properties is so obvious and blatant. It is quite well known that some unscrupulous people have taken advantage of it to transfer land to themselves.

"I hope, with this decision, land authorities will be extra careful when registering transfers of land," Zaki said.

Prior to this, the courts were bound by the Federal Court’s earlier decision arising from the controversial case between Adorna Properties Sdn Bhd and a Thai national Boonsom Boonyanit @ Sun Yok Eng.

On Dec 13, 2000, the then Chief Justice Tun Eusoff Chin who sat with two other Federal Court judges, ruled that a subsequent acquirer of a property could obtain an immediate indefeasible title and interest from a forger, under Section 340 of the National Land Code (NLC) 1965.

Boonsom, who was the registered owner of the land in dispute, then sued Adorna Properties for the return of the two sea-front plots in Tanjung Bungah, Penang.

An imposter, one Boonsoom Boonyanit had managed to transfer the land to Adorna properties after obtaining a certified copy of the lands' titles from the land office and affirming two statutory declarations.

Boonsoom succeeded in obtaining the certified copy after affirming the first statutory declaration on June 18, 1988, stating that she had lost the original titles to the two plots of land.

On April 6, 1989, Boonsoom then affirmed a second statutory declaration declaring that the names Boonsoom Boonyanit and Boonsom Boonyanit @ Sun Yok Eng, as per the land titles, were the same person.

However, during court proceedings it was shown that Boonsoom had held a different Thai passport number from the original owner, Boonsom.

Boonsom passed away in May 2000 just before the Federal Court allowed Adorna Properties’ appeal and overturned the Court of Appeal's decision, which was in Boonsom's favour.

Her family, who resides in Bangkok, subsequently failed in two attempts at reviewing the Federal Court's decision.

The Federal Court's judgement on Jan 21 was the culmination of an appeal by Tan Yin Hong against three respondents; Tan Sian San, Cini Timber Industries Sdn Bhd and United Malayan Banking Corporation Bhd (now RHB Bank Bhd).

The apex court was asked to determine "whether an acquirer of a registered charge or other interest or title under the National Land Code, 1965 by means of a forged instrument acquires an immediate indefeasible interest or title".

In the case, the Pahang state government had issued a land title to Yin Hong in 1976, which was brought to the latter's knowledge in 1985 when United Malayan Banking Corporation Bhd (now RHB Bank Bhd) demanded repayment of RM111,825.95 and RM197,244.01 for an overdraft facility and term-loan facility granted to Cini Timber Industries Sdn Bhd.

Yin Hong later found that a Tan Sian San, who is unrelated to him, had allegedly forged Yin Hong's signature to create power of attorney to charge the land as security for a bank loan.

Yin Hong then sued Sian San, Cini Timber Industries and the bank but the Kuantan High Court dismissed his claims, which included an order that the bank charges and power of attorney established be declared void ab initio.

Yin Hong, who resides in Pahang, later also failed in his appeal at the Court of Appeal when a three-judge panel dismissed his appeal after ruling that the bank had obtained immediate indefeasibility of its interest.

The Court of Appeal, in its decision on Feb 19 last year, had followed the precedent set by the Adorna Properties case.

The Federal Court today (Jan 21) also ordered RHB Bank Bhd to pay costs of RM75,000 to Yin Hong's counsel T Mura Raju.

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