INDEFEASIBILIY OF TITLE

AND INTEREST
Najah Inani Binti Abdul Jalil
SoL,UUM.
Meaning of Indefeasibility of Title

• Indefeasibility of title strengthened the title of a

registered proprietor to his land, making it immune
from attack against the whole world.
• The terms such as 'conclusive', 'unimpeachable',
'unexaminable', or 'state guaranteed'; these terms
refer to the guarantee of title given by the State in
the absence of fraud or other vitiating factors in
the statutory provision or decision by the court.
 Meaning of Indefeasibility of
Title
Indefeasibility of Title

Ong Chat Pang & Anor v

Valiappa Chettiar [1971] 1
Frazer v Walker MLJ 224”
[1967] AC 567 The Bee v K Maruthamuthu [1977]
2 MLJ 7

“The registration defeats a

“making it “Under the prior unregistered interest
immune from Torrens system, in that land unless the
attack against the the register is party who acquires the
whole world” everything” registers title has been
guilty of fraud
 INTRODUCTION

• S 340 (1) NLC provides that:

• "the title or interest of any person or body for the
time being registered as proprietors of any land, or in
whose name any lease, charge or easement is for the
time being registered shall subject to the other
provisions of the same Section be indefeasible"
 INTRODUCTION

• S 340 (1) NLC

• If registration of a transfer, charge, lease or easement
has been affected, in law the RP will obtain
indefeasibility of title.
• To obtain indefeasibility of title, dealings must be
registered.
• Registration will defeat all prior unregistered claims,
adverse claims or encumbrances not noted in the
document title.
 INTRODUCTION

• Is it absolute?
• No, it is not absolute subject to its exceptions in S
340(2) NLC.
• Under certain circumstances, a registered title or
interest can be set aside or defeated.
Type of Indefeasibility
Immediate & Deferred
Indefeasibility
 Issue

Issue Whether or not indefeasibility of

Title is conferred upon the first
transferee when he is registered
despite the existence of defect in
the instrument of dealing ?
Defects in Instruments

Invalid
POA

Forged Signed by Insufficiently

Signature a minor stamped

Not attested
 Immediate Indefeasibility

• The register will immediately establish title to the registered title

except in cases of fraud.
• A RP will obtain his indefeasibility of title regardless that a void or
voidable instrument used to obtain registration. WHY?
• It is irrelevant that an instrument of dealing would have been defective
at common law because registration will cure the defect in the
instrument.
• Requirement:
• (1) The transferee acts in good faith
• (2) The transferee gives valuable consideration for title or interest
acquired.
 Immediate Indefeasibility

• Frazer v Walker [1967] AC 569

• A dairy farm was jointly owned by Mrs Frazer and her husband. Mrs
Frazer wished to raise some money and mortgaged the land in favour
of Mr. Radomski by forging her husband signature. She cannot pay the
instalments and Mr. Radomski (as registered charge) exercised his
power of sale to Mr. Walker. Mr. Walker registered the transfer but was
denied claim of possession to the land. Mr. Frazer (husband) applied
for an order to cancel the mortgage and the subsequent transfer to Mr.
Walker.
 Immediate Indefeasibility

• Court:
• Mortgage could not be cancelled as Mr. Radomski’s interest had
been registered. Mr. Radomski’s interest was immediate
indefeasible and was thus immune from adverse claim.
• While the legal interest of the land may have been originally
obtained by fraud, Mr. Walker was a bona fide purchaser for
value without notice.
 Deferred Indefeasibility

• Under this concept, the title of the registered owner

obtained without fraud remains open to attack if
certain circumstances exist, until the title is
transferred to another.
• The indefeasibility is deferred/postponed until the
title is transferred to a bona fide third party who will
receive a title with indefeasibility effect.
 Deferred Indefeasibility

A transferred land to B
B transfer to C
Using void instrument
(forged instrument)
From A to B
B’s title can be
attacked.
B’s title is defeasible.
B transfer to C
From B to C
C is a bona fide
purchaser for value
without notice of
earlier defect.
C’s title is
indefeasible.
 Deferred Indefeasibility

• Under deferred indefeasibility, registration will not

cure the defect in the instrument.
• Boyd v Mayor of Wellington [1924] NZLR 1174
• “registration does not cure the defects in a statutory
instruments but acts merely as a root of title”
• Mohammad B Buyong v PHT Gombak & Ors
 Exceptions to
Indefeasibility of Title
S 340(2)
Is NLC providing for deferred or immediate
indefeasibility?
 Statutory Exceptions to
Indefeasibility of Title S 340(2)
NLC
• Provides several exceptions to indefeasibility of title and these
represent situations when a registered title or interest may be
open to attack.
• (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.
 Effects in S 340(3) NLC

• Where the title or interest of any person or body is

defeasible by reason of any of the circumstances
specified in subsection (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.
 Effects in S 340(3) NLC

• When the title or interest is subsequently transferred due to the

circumstances under S 340(2) NLC, the status of title obtained
by the proprietor (title) or transferee (interest) is defeasible.
HOWEVER, PROVISO in S 340 NLC.
• Protection is given to person who can prove he is the
purchaser/agent in good faith and for valuable consideration.
• “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.”
 Conclusiveness of the Register

• S 341 NLC
• There is no way the title of the registered proprietor
can be lost to another as a result of adverse
possession however long it might have been.
Meaning to say, squatters have no right against the
RP however long they have occupied the land.
• The section further provide that Limitation Act 1935
shall not be in operative to extinguish the title of RP.
 Boonsom Boonyanit v Adorna
Properties Sdn Bhd [1995] 2 MLJ
863
• The plaintiff holding a Thai passport, owned 2 pieces of land
in Penang. On May 24 1989, the defendant presented stamped
MOT purportedly signed by the plaintiff to transfer the land to
the defendants and it was registered at the Land Office.
• The plaintiff said the MOT was procured by fraud/forgery as
she did did not sign the documents and her Thai passport
showed that she was not in Malaysia during the MOT was
executed.
• The plaintiff claim recovery and reinstatement of her right
onto the land and the transfer to the defendant was void ab
initio.
Boonsom Boonyanit v Adorna Properties
Sdn Bhd [1995] 2 MLJ 863

• The defendant defended that they obtained the land through

registration and were bona fide purchaser for value without
notice. ( The land was sold by an imposter to the defendants).
• High Court: the plaintiff had failed to prove forgery. It was
not enough for her to say the signature was not hers and she
was not in Malaysia at the material time. According to the judge,
she must prove beyond reasonable doubt as “forgery involves
a high element of fraud”.
 Boonsom Boonyanit v Adorna Properties Sdn
Bhd [1995] 2 MLJ 863

• The proviso to subsection (3) of s 340 of the Code which

reads: “Provided that nothing in this subsection 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” protects
an immediate purchaser who obtains registration of his title
or interest under a forged instrument because of the phrase
'any purchaser' appearing therein. The words 'any purchaser'
must include the first purchaser/transferee who gets onto
the register document of title in consequence of a forged
instrument.
 Boonsom Boonyanit v Adorna
Properties Sdn Bhd [1995] 2 MLJ
863
• Adorna was a bona fide purchaser for value and thus
came within the proviso to section 340(3), with the
result that they obtained a good title to the lands
notwithstanding the forgery.
• High Court applied immediate indefeasibility
Boonsom Boonyanit v Adorna Properties
Sdn Bhd [1995] 2 MLJ 863

• Court of Appeal: the plaintiff appealed. Standard of

proof required for forgery is a balance of
probabilities and the appellant had proved forgery.
• S 340 provides for the concept of “deferred
indefeasibility” rather than “immediate
indefeasibility” hence, the forged document did not
give good title to the defendant. The plaintiff was
reinstated as the true owner of the land.
 Boonsom Boonyanit v Adorna
Properties Sdn Bhd [1995] 2 MLJ
863
• The Court of Appeal held that the words 'any purchaser' in s
340 of the Code refers to a subsequent and not to an
immediate purchaser, hence creating a deferred
indefeasibility which benefits subsequent purchasers. The
title of an immediate purchaser is defeasible if tainted by
one or more of the vitiating elements set out in s 340(2)
but creates an exception in favour of a bona fide purchaser
who takes his title from such a registered proprietor. This
bifurcation makes it clear that Parliament intended to confer
deferred and not immediate indefeasibility.
Boonsom Boonyanit v Adorna Properties
Sdn Bhd [1995] 2 MLJ 863

• Federal Court:
• The court reversed the COA of appeal decision however agreed
that the burden of proof in forgery in a civil case is on a
balance of probabilities. However, the court held that the
defendants Adorna obtained an immediate indefeasibility of
title by its registration notwithstanding the forged MOT as
Adorna was considered to be bona fide purchaser without
notice for value. So, what is the implication of this
decision?
• Even if there is a forgery the title of such RP is still
indefeasible and cannot be defeated.
 Boonsom Boonyanit v Adorna
Properties Sdn Bhd [1995] 2 MLJ
863
• “The proviso to sub-s (3) of s 340 of the NLC deals with only
one class or category of registered proprietors for the time
being. It excludes from the main provision of sub section (3)
this category of registered proprietors so that these proprietors
are not caught by the main provision of this subsection. 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 sub section (3).
For this category of registered proprietors, they obtained
immediate indefeasibility notwithstanding that they
acquired their titles under a forged document…”
 Criticism towards Boonsson’
decision
• Gopal Sri Ram JCA opined the FC’s decision in Adorna was decided
per incuriam and should be treated as binding:
• (1) S 340(3) applies to subsequent acquirers of land, taking from a
registered proprietor whose title is defeasible as stipulated in S340(2)
NLC. Adorna took its title from a forger vendor.
• (2) FC overlook at least 2 authorities ( Mohammad Buyong v
Pemungut Hasiil Tanah Gombak [1981] 1LNS 114 & M& J Frozen
Food [1994] 2 BLJ 156.
• (3) FC has equated purchaser and registered proprietors overlooking
the provision of S5 of NLC which defines them separately and
differently.
 Criticism towards Boonsson’
decision
• P.K Nathan “ Nightmare for Registered Owners of
Landed Property” [2002] CLJ xxii:
• “ The decision of the Federal Court in the case of Adorna
Properties Sdn Bhd v Boonsoom Boonyanit [2001] 2 CLJ 133
has placed a registered owners of landed properties on thin ice
and in jeopardy. As a result of the decision, land owners may,
one morning find themselves no longer owning their landed
properties without any fault, doing or knowledge in their part”
 Criticism towards Boonsson’
decision
• Professor Teo Keang Sood, “Demise of Deffered
Indefeasibility Under the Malaysia Torrens System?”, Singaore
Journal of Legal Studies, 2002, pp 403-408
• “ Having misconstrued the legislative intent as embodied in S
340 the case of Adorna Properties Sdn Bhd is clearly wrongly
decided on the issue of indefeasibility involving forgery and
should not be followed. Whatever may be the advantages of
immediate indefeasibility, it is for Parliament to change the law
and until this is done, it is for the Courts to interpret the law as
it stands”
 Criticism towards Boonsson’
decision
• Malaysian Law Conference “ Basics of Indefeasibility
under the National Land Code”
• “ …also left an unwanted trail of uncertainty and
insecurity of title for landowners which the Torrens
system of land registration embodied in the NLC
seeks to avoid, not to mention the slew of conflicting
decisions pronounced in its aftermath”.
 Tan Ying Hong v Tan Sian Sang
2010 (FC)
• The plaintiff is the RP of a piece of land in Kuala Kuantan, Pahang.
The 1st defendant purporting to act under POA executed to charges in
favour of United Malayan Banking, the 3rd Defendant. The loan was
made in favour of Cini Timber Sdn Bhd, the 2nd defendant.
• The plaintiff claimed he did not sign the PA. He claimed it was forged.
He only became aware of the forgery when he received a notice of
demand from the 3rd defendant.
• Issue: Whether an acquirer of a registered charge or other interest or
title under the NLC by means of a forged instrument acquires an
immediate indefeasible interest or title?
 Tan Ying Hong v Tan Sian Sang
2010 (FC)
• Maybank in whose favour the charges was registered is an
immediate holder of the interest in the land.
• High Court decision:
• (a) The registration of the appellant in IDT was obtained by
forgery or fraud;
• (b)The appellant never charged the land to the 3rd defendant;
• (c) The appellant never granted the POA and never given
authority to 1st respondent to charge the land to the 3rd
respondent.
 Judith Sihombing, The National
Land Code, A commentary
Immediate Indefeasibility
• (1) Common law effect given to the instrument
after registration
• (2) If after the registration has occurred, the
system that ignore the substance, form and
probity of the instrument used to support
registration.
• (3) Registration has cured any defect in the
instrument being registered.
• (4) Statutory protection is given despite the
existence of any vitiating circumstances.
• MEANING: Even if the instrument was
forged, the appellant obtained an indefeasible
title to the land.
Deferred Indefeasibility
• (1) If the instrument despite registration still has
the power to affect the registered interest or
estate, the system will probably be that of
deferred indefeasibility.
• (2) Indefeasibility will only comes to be attached
to the title or interest upon subsequent transfer.
• (3) Mohammad bin Buyong, M&J Frozen.
• HENCE, the differences between immediate
and differed is on the EFFECT of
REGISTRATION.
 Tan Ying Hong v Tan Sian Sang
2010 (FC)
• The confusion arose as to the application of S 340(3) and its
proviso.
• NS Bindra’s Interpretation of Statute…”normally it does not
enlarge the section, and in most cases, it cuts down or makes an
exception form the ambit of the main provision”. A proviso to
a subsection would not apply to another subsection.
• Meaning : proviso in S 340(3) will only apply in S340(3) NLC
and not others. Although S 340(3) (a) &(b) refer to
circumstances in S 340(2) they are restricted to subsequent
transfer or to interest in the land subsequently granted thereout.
 Tan Ying Hong v Tan Sian Sang
2010 (FC)
• So, it could not apply to the immediate transferee of
any title or interest in any land. therefore, a person or
body in the position of Adorna Properties could not
take advantage of the proviso to the S340(3) to avoid
its title or interest form being impeached.
Exceptions to Indefeasibility of
Title

Fraud or Forgery Insufficient or Void

Misrepresentation Instrument S
S340(2) (a) NLC S 340(2)(b) NLC 340(2)(b) NLC

Title or Interest
Unlawfully Acquired Operation of Lw S
340 (4(b) NLC
S 340(2) (c) NLC
 Fraud
S 340 (2) (a) NLC
 Elements of Fraud

Fraud S 340
(2) (a) NLC

Actual Fraud RP is privy or Intention to

not party to Fraud Cheat
constructive or
equitable fraud
 Actual fraud

• Waimiha Sawmilling Co. Ltd. v Waione Timber Co.

Ltd. (1923) NZLR 1137
• “dishonesty - a wilful and conscious disregard and
violation of the rights of other persons”
• Stuart v Kingston (1923) 32 CLR 309
• “something in the nature of personal dishonesty or
moral turpitude”
 Hajah Aishah v Yah Binti Taib
[1949] 15 MLJ 128
• An illiterate woman was induced to sign an
instrument of transfer when she was told that she
was merely signing an instrument of charge to secure
a debt owing from her.
• The property was subsequently transferred to one
Haji Musa who then transferred it to the defendant
who was also privy to the fraud.
• Court: Defendant’s title must be set aside.
Haji Junus v Chik & Anor [1964]
30 MLJ 343
• A co-owner sold an undivided share in a piece of land to the
plaintiff who paid the purchase price in full. The first defendant
purchased the remaining half-share but obtained a transfer of
the whole land to him on the understanding that he would
retransfer half-share of the land to the plaintiff. The defendant
failed to so.
• Court: the first defendant was privy to the fraud and he was not
a bona fide purchaser for value and was not entitled to keep the
half-share of the transfer.
 Mohamed Isa v Haji Ibrahim
[1968] 1 MLJ 186
• The plaintiff had transferred his land to the first
defendant under jual janji transaction. while the
agreement was still in force, the first defendant then
transferred the land to the second defendant under
another jual janji transaction. the second defendant
knew about the first jual janji.
• Court: the defendants had committed a fraud on the
plaintiff rendering their title to be defeasible.
Ong Tin v The Seremban Motor
Garage (1917) 1 FMSLR 308
• The plaintiff had purchased a piece of land with the knowledge
that the land had previously been leased to the defendant by the
vendor. After the land had been transferred to the plaintiff, he
took step to eject defendant.
• Issue: whether the knowledge of the unregistered lease
amounted to a fraud on the part of the plaintiff ?
• Court: Mere notice of the unregistered lease alone could
not amount to fraud. The Plaintiff ’s title was indefeasible.
 Right of Chargee (Bank)

Tai Lee Finance & Co.

Public Finance Bhd v
Sdn. Bhd v Official
Narayanasamay [1971]
Assignee & Ors [1983]
2 MLJ 32 (FC)
1 MLJ 81(FC)
 Public Finance Bhd v Narayanasamay
[1971] 2 MLJ 32 (FC)

• A finance company had granted bridging loan to a housing developer.

As security for the land, the developer had charged several housing lots
which he had sold to several purchasers. The developer defaulted and
the finance company commenced foreclosure proceedings. What about
the purchaser? They intervened.
• Court: the court could not accept the view taken by the finance
company saying the purchaser has no right whatsoever except the
rights to damages against the developer for breach of contract.
• The finance company could not claim the protection given to the
purchaser for value without notice.
• HOWEVER…
 Tai Lee Finance Co. Sdn Bhd v Official
Assignee & Ors [1983] 1 MLJ 81(FC)

• The facts were not much different from Public

Bank’s case.
• Issue: whether the charge, having notice the sale of
the lots to the purchaser, could be deemed to be a
party or privy to the fraud committed on the
purchasers when the charge was registered in his
favour?
 Tai Lee Finance Co. Sdn Bhd v Official
Assignee & Ors [1983] 1 MLJ 81(FC)

• FC: rejected the decision in Public bank’s case as it adopted the

ratio in Asset’s case saying fraud means “ some dishonesty of
some sort, not what is called constructive or equitable fraud.
• The appellant bank had constructive fraud ( because the bank
would have known the beneficial interest of the purchaser if
proper inquiries were made)
• But, there were no evidences to suggest the appellant had
become a privy or party to a fraudulent agreement prior or
at the time of registration.
• The burden was on the respondent purchaser to establish fraud
of the appellants bank (and they failed to discharge).
 Tai Lee Finance Co. Sdn Bhd v Official
Assignee & Ors [1983] 1 MLJ 81(FC)

• The fraud complained must resulted in the registration of

charge in favour of the appellant bank. ( What were the
fraudulent actions by the bank which rendered the registration
of title on their behalf ?)
• The fraud must be brought to the appellants bank as if to show
he is the party or privy to the fraudulent action which resulted
in the registration of title in the appellants bank.
• The burden of proof is one of “ beyond reasonable doubt”
that the charge was guilty of “actual fraud”; not merely
constructive or equitable fraud.
 RP is Party or Privy to the
Fraud
• S 340 (2) (a) NLC + Assets Co Ltd v Mere Rohi
[1905] AC 176
• “ The fraud must be brought home to the person
whose registered title is impeached or to his agents.
Fraud by persons through whom he claims does not
affect him unless knowledge of it is brought home to
him or his agents”
 Datuk Jagindar Singh & Ors v Tara
Rajaratnam [1982] 2 MLJ 196

• The respondent, Tara was the RP who lived with her husband
and five children. Dr. Dass, her brother in law (Husband’s
brother) obtained a loan from Hong Kong and Shanghai Bank
in Singapore to finace his medical computer centre. Datuk
Jaginder(DJ), a lawyer was a guarantor to Dr. Dass’s loan. Dr
Dass consulted Tara’s husband to persuada Tara to put the land
as a security to Dr. Dass’s loan.
• DJ, his lawyer’s friend Suppiah and Sivanathan went to Tara’s
house and asked her to sign various documents. The
misrepresented to Tara that the security of land would be
effected by way of transfer. Tara transferred the land to
Suppiah. [ Fraudulent misrepresentation]
 Datuk Jagindar Singh & Ors v Tara
Rajaratnam [1982] 2 MLJ 196

• There was an agreement providing that the land would not be

sold to another person for one year without Tara’s consent, and
if the loan has been paid, the land would be transferred back to
Tara.
• However, after 18 days, Suppiah transferred the land to Arul, a
partner in a legal firm in Singapore and then, the land was again
transferred to Jet Age Construction Company, where almost
wholly owned by JG. The land was sub-divided in 70 lots and
sold to public. Tara filed against the defendants for breach of
contracts, with undue influence, for breach of trust and for
fraud.
 Datuk Jagindar Singh & Ors v Tara
Rajaratnam [1982] 2 MLJ 196

• High Court
• Undue Influence: the 1st and 2nd Defendants acted as solicitors
to plaintiff.
• Breach of Trust: the 1st and 2nd Defendants had been trusted as
solicitors by the plaintiff with the holding of the document of
transfer of security and yet they transferred the land to
themselves.
• Fraud: the 1st and 2nd Defendants were guilty of fraud
committed against the plaintiff.
 Datuk Jagindar Singh & Ors v Tara
Rajaratnam [1982] 2 MLJ 196
• FC on the issue of fraud,
• “ may also be caused by deliberately and dishonestly registering an
interest and then transferring the interest even before the ink is dry to
another person without the consent of the original proprietor”
• S 340(2)(a) NLC
• Suppiah & Arul’s title: impeached as they were “party and privy” to the
fraud.
• Construction Company’s title: defeated as the company was controlled
by the DG.
• Purchaser: They were bona fide purchaser for value without notice
hence Tara could not get back her land.
 Intention to Cheat

• Goh Hooi Yin v Lim Teong Ghee & Ors [1990] 3 MLJ 23
• “it is not enough to show that the transfer had the effect of
depriving the plaintiff of a known existing right. It must be
demonstrated that the transfer was executed with the intention
of cheating the plaintiff of such right…”
• Saminathan v Pappa [1981] 1 MLJ 121
• Fraud must be expressly pleaded and the onus is upon the
person alleging fraud to prove fraud, not on the balance of
probabilities but beyond reasonable doubts.
 Intention to Cheat

• Goh Hooi Yin v Lim Teong Ghee & Ors [1990] 3

MLJ 23
• The purchaser alleged that fraud in the transfer of
the land to the third party. High Court found that
fraud had not been made out as the plaintiff had
failed to prove an intention to cheat.
• He failed to pay balance purchase price although 2
caveat had been entered on the property.
 Misrepresentation

• There is no definition or meaning of

Misrepresentation in NLC. The term
“misrepresentation” appears to be interpreted as
“fraudulent misrepresentation & thus a specie of
“fraud”
• Court rarely point out the differences between fraud
and misrepresentation.
 Misrepresentation

• Annamalai a/l Muthu v Nagappa a/l Muthu [2002] 4 MLJ 225

• The deceased was a RP of the land, her son the defendant
fraudulently misrepresented to his mother that the transfer of
the land was to help him to get a loan. He undertook that the
IDT of the land would be given back to her. After 10 years
there was no news form the defendant. She asked for the IDT
but the defendants refused to give.
• Court:
 Remedy

• When a title or interest is found to be defeasible, it

will be set aside and the title to the land will revert
back to the original registered proprietor.
• EXCEPTION: Bona Fide Purchaser for value
without notice of fraud
• Purchaser will also include registered interest holder,
chargee and lessee.
 Remedy

• Owe Then Kooi v Au Thiam Seng & Anor [1990] 1 MLJ 234
• The plaintiff, a RP owned 1/7 undivided share in the land and was in
prison. He asked his half brother ( the defendant) to hold the land in
trust for him until he completed the sentence. The defendant told him
that he would get a lawyer to prepare the necessary documents. In
prison, the plaintiff signed the document (prepared in English)
although he was only conversant in Chinese thing the documents were
for the creation of trust. The result of the transaction vested the land
to the defendant and a charge was created.
Court: The defendant’s title was defeasible BUT the interest of the
charge bank as bona fide purchaser for value without notice of the
fraud.
FORGERY
S 340 (2) (b) NLC
 FORGERY

• Under S340(2) (b) NLC where the registration of a title or

interest is obtained by forgery, the title or interest is defeasible.
• Forgery of an instrument of dealing will vitiate the
indefeasibility of title and it make the documents void and
invalidating the transaction.
• Forgery relates to the instrument of transfer, hence there is no
need to prove the privity of the parties to the forgery.
 FORGERY

• Gibbs v Messer [1891] AC 248

• The plaintiff and her husband left the country and left her land
title and power of attorney to the custody of a solicitor, Mr.
Creswall. During their absence, Mr Creswall forged the
plaintiff ’s signature and transferred the land to Mr. Cameron , a
fictitious person. Mr. Creswall then presented himself as an
agent to Mr. Cameron then affected the transfer to Mr.
Cameron. Later on , Mr Creswall borrowed a sum of money
and secured it with a mortgage on the land.
 FORGERY

• The plaintiff returned and Mr Creswall absconded.

The plaintiff brought an action against the Registrar,
Mortgagee, and Mr Creswall and applied to cancel
the certificate of title in the name of Mr Cameron.
• Issue: whether the plaintiff could defeat the
registered mortgage on the ground of forgery?
• Held: the mortgage was invalid due to the forgery.
 FORGERY
Ong Lock Cho v Quek Shin &
Sons (1941) MLJ 88
• The RP gave his solicitor •
Document Title (DT) for
the purpose for creating a
charge. The solicitor’s
clerk by forgery created a
charge in favour of
another person.
• Held: The charge was a
nullity due to the forgery.
Lim Pang Geok v Sockalingam
Chetty (1907) Innes 90
A person who deals with a
forger cannot acquire a valid
title, although the fact of his
being a RP will enable to pass
a valid title to a third person
who is a bona fide purchaser
for value.
 FORGERY
Quah Hong Lian Neo v Seow
Teong Teck [1936] MLJ 203
• A person through trickery and
impersonation obtained a transfer
of a land by way of a forged
transfer. As RP he charged the
land to third parties.
• Held: The forged transfer was a
nullity. He had no rights by virtue
my maxims “ nemo dat quod non
habet” to pass the interest to the
chargee.
Ong Lian v Tan Eng Jin (1917)
1 FMSLR 325
• A RP by means of forged
transfer can make a good title
to bona fide purchaser for
value without notice if he is a
real person but he cannot
keep off his name from the
register by either forging the
name of the real owner or by
putting the name of a non-
existent person.
 FORGERY

• Chiew Lip Seng v Perwira Habib Bank Malaysia Berhad [1999] 1 AMR
789
• The plaintiff applied to set aside the land charge, comiited by his eldest
son who had since disappeared and his whereabouts unknown. The
chargee bank, duly-registered chargee in respect of the land, has
indefeasible interest in the plaintiff ’s land.
• The plaintiff ’s argument: he never went to the lawyer’s firm to sign the
charge document, and this was supported by the government’s
handwriting expert.
• The chargee bank did not call any witness. In the absence of any
rebuttal evidence, the court must decide based on the evidence
presented before it which heavily in favour of the plaintiff.
Boonsom Boonyanit v Adorna Properties
Sdn Bhd [1995] 2 MLJ 863

• Court of Appeal: the plaintiff appealed. Standard of

proof required for forgery is a balance of
probabilities and the appellant had proved forgery.
• S 340 provides for the concept of “deferred
indefeasibility” rather than “immediate
indefeasibility” hence, the forged document did not
give good title to the defendant. The plaintiff was
reinstated as the true owner of the land.
Boonsom Boonyanit v Adorna Properties
Sdn Bhd [1995] 2 MLJ 863

• The burden to prove forgery in S 340(2)(b) is the

civil burden of “on a balance of probabilities”. The
requirement to prove fraud do not apply in forgery’s
cases,- NO NEED TO PROVE the registered
proprietor whose title is impeached is “party” or
“privy” to the forgery.
• A strong probabilities that there was a forgery in the
document effecting the transaction is sufficient to
prove forgery under S340(2)(b) NLC.
 VOID OR
INSUFFIECIENT
INSTRUMENT
S 340(2)(b) NLC
 VOID OR INSUFFIECIENT
INSTRUMENT
• Void or insufficient instrument is an instrument of
dealing that is unfit for registration for not following
one or more conditions set out in S 301 NLC.
• Examples:
• Instrument not attested or insufficiently stamped.
• Effects:
• Insufficient or void instrument does not confer
indefeasibility of title under S 340(2)(b) NLC.
 VOID OR INSUFFIECIENT
INSTRUMENT
Tan Hee Juan v The Boon Keat
[1934] MLJ 96
• The plaintiff, a minor
executed two instruments of
transfer to the defendants.
• Held: the transfer to be
void.
Puran Singh v Kehar Singh &
Anor (1939) MLJ 71
• Instrument of dealing
signed by an attorney
pursuant to an invalid or
insufficient POA was
regarded as an “insufficient
or void instrument” and can
vitiate a title.
 VOID OR INSUFFIECIENT
INSTRUMENT
Appoo s/o Krishnan v Ellamah
d/o Ramasamy[1974] 2 MLJ 201
• An instrument of dealing effected
pursuant to a transaction which
contravened the Moneylenders
Ordinance 1951 is a void
instrument.
Halimah v Haji Mohamaed Din
[1940[ FMSLR 317
• A piece of land was
transferred to an infant and
another person as co-owners.
Later, the infant’s mother
executed an instrument of
transfer representing herself
to be an infant. Held: the
document executed by the
mother as “was at any rate an
insufficient if not a void
instrument”.
 VOID OR INSUFFIECIENT
INSTRUMENT
• UMBC Bhd v Syarikat Perumahan Luas Sdn Bhd
[1988] 3 MLJ 352
• A charge was registered in breach of a restriction in
interest of the title requiring the approval from the
State Authority.
• Held: the title of the chargee was defeasible as
Registrar of Titles in registering the charge had acted
ultra vires the powers conferred on him.
 VOID OR INSUFFIECIENT
INSTRUMENT
• Perbadanan Pembangunan Pulau Pinang v Chong Ah
Yok [1993] 2 CLJ 351
• Purchaser of land breaches an undertaking and
proceeds to register the land in his name.
• Held: the purchaser became registered as proprietor
by deceitful and unlawful means and thus the vendor
was entitled to an order that the purchaser’s title as
defeasible as his title was acquired by unlawful means.
Title or Interest unlawfully acquired
through purported exercise of any
power or authority conferred by law
S 340 (2) (c) NLC
 Title or Interest Unlawfully
Acquired
• S 340(2)(c ) NLC as an exceptions to indefeasibility
of title. The circumstances are as follows:
• (a) statutory vesting of land that is ultra vires the
statutory power;
• (b) registration of title and interest is obtained
through non-compliance with statutory requirements
of the NLC;
• Acquisition of land under invalid power of attorney.
 By operation of Law
(other Statutory Exceptions)
S 340(4)(b) NLC
 What happen when a title or
interest is declared Defeasible
under S 340(2) NLC?
S 340(3)(a)(b) NLC
 Effects

• As a consequence to the declaration that the title is

defeasible, there is no need for the party challenging
the title or interest to make a further application to
the court to set aside such title or interest as form
case law on S 340(2) NLC, a declaration that it is
defeasible is sufficient.
 Title S 340(3) (a) NLC

• (a) “ it shall be liable to be set aside in the hands of any person

or body to whom it may subsequently be transferred”
• It refers to subsequent transferee, not the immediate transferee.
Hence, any title or interest that is created after that first
“defeasible” title or interest can be set aside.
• Datuk Jaginder Sigh v Tara Rajaratnam
• TaraSuppiah Arul Developer Company.
• Both of their title can be set aside.
 Interest S 340 (3) (b) NLC

• (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”
• This refers to land being either subsequently charged, leased or
an easement has been created on the land after the first title or
interest is set aside.
• Owe Then Kooi v Au Thiam Seng
• This provision could have applied to the charge bank as the
charge was an interest created subsequently. But the bank was a
bona fide purchaser for value without notice and hence
protected under S 340(3) NLC.
 The ‘ Bona Fide Purchaser”
Protection in Proviso to S
340(3) NLC
“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”
 ‘ Bona Fide Purchaser”

• The burden is on the transferee to prove that he is a

bona fide purchaser for value without notice. He
must prove he is a purchaser not a volunteer.
• Definition of Purchaser, S 5 NLC
• "purchaser" means a person or body who in good
faith and for valuable consideration acquires title to,
or any interest in, land;
 ‘ Bona Fide Purchaser”
Purchaser & Valuable
Consideration
Must prove valuable consideration
has passed between vendor and
purchaser. Hence, transfer “borne
out of love and affection” cannot
entitle to be regarded as purchaser.
Good Faith
How to prove he is in good faith,
not knowing the fraud committed
between the parties?
Do the party invoking the proviso
need to prove he is in good faith?
The opponent can disprove by
bringing evidence of bad faith.
“He who comes to equity must
come with clean hand”
 ‘ Bona Fide Purchaser”

• In Boonsom Boonyanit’case, (Court of Appela), the

issue is whether the word purchaser in S 5 NLC
applied to Adorna?
• The word purchaser cannot apply to Adorna as
Adorna was the first transferee and only a second or
subsequent transferee may invoke the protection
under Proviso to S 340(3) NLC as they would be
regarded as purchaser and not a proprietor.
 ‘ Bona Fide Purchaser”

“X”
Adorna
Imposter Second
Sdn Bhd
Transferee

Only X Second Transferee can invoke the protection in S340(3) NLC.

This is in accordance with the principle of deferred indefeasible of title.
HOWEVER, FC rejected this argument saying other wise ( immediate
indefeasible of title) [ now overruled ]