Professional Documents
Culture Documents
A B
DEFERRED INDEFEASIBILITY
‘A’ transfers land to ‘B’ through a defective instrument. B’s title can be
defeated. If ‘B’ transfers the land to ‘C’ a bona-fide purchaser, ‘C’
gets an indefeasible title.
A B C
EXCEPTIONS TO INDEFEASIBILITY
OF TITLE
EXCEPTIONS - SECTION 340(2) NLC
1) Fraud/ Fraudulent Misrepresentation
2) Registration obtained by Forgery
3) Registration obtained by Insufficient or Void Instrument
4) Unlawfully acquired title or interest
FRAUD
The question of the existence or otherwise of fraud is one of fact to
be determined in the light of the facts and circumstances surrounding
each particular case.
(Federal Ct. in Tai Lee Finance Co. S/B v Official Assignee & Ors.
[1983] 1 MLJ 81)
ELEMENTS OF FRAUD
1) There must be ‘actual fraud’.
2) The registered proprietor whose title is to be defeated
must be party or privy to the fraud.
3) There must be intention to cheat.
ACTUAL FRAUD
Actual fraud is ‘dishonesty - a wilful and conscious disregard and
violation of the rights of other persons.’
(Waimiha Sawmilling Co. Ltd. v Waione Timber Co. Ltd. (1923) NZLR
1137, per Salmond J.)
TAI LEE FINANCE V OFFICIAL ASSIGNEE &
ORS.
Refer p.143 of your textbook.
Federal Court in this case held that there must be
actual fraud to defeat a person of his title or
interest.
Citing Assets Co. v Mere Roihi [1905] AC 176, the
Federal Court held that ‘fraud in actions seeking
to affect a registered title means actual fraud,
dishonesty of some sort, not what is called
constructive or equitable fraud.’
THE REGISTERED PROPRIETOR WHOSE TITLE IS TO BE DEFEATED
IS PARTY OR PRIVY TO THE FRAUD.
See wordings of section 340(2)(a) on this requirement.
In Assets Co. v Mere Roihi, the Privy Council observed that:
“ The fraud must be brought home to the person whose registered title is
impeached or to his agents.”
DATUK JAGINDAR SINGH V TARA RAJARATNAM
[1983] 2 MLJ 196
The registered prop., Tara, lived on the land with her husband Devan
and 5 children.
Devan’s brother, Dr. Das obtained a loan from HK and Shanghai Bank
in Singapore to finance his computer medical centre.
Dr. Das consulted Devan who persuaded Tara to put up the land as
security for the loan.
DATUK JAGINDAR’S CASE:
Jagindar, a lawyer, was a guarantor of Dr. Das’s loan. He and his 2
friends, Suppiah and Arul went to Tara’s house in March 1974 and
Tara was asked to sign several documents.
They misrepresented to Tara that the security on the land was to be
effected by a transfer.
DATUK JAGINDAR’S CASE:
Without knowing it, Tara had transferred her land to Suppiah and 18
days later, Suppiah transferred the land to Arul.
Later, the land was transferred to a developer company belonging to
Datuk Jagindar.
The land was subdivided and sold to various purchasers.
HELD:
There was fraud to defeat Suppiah’s title, Arul’s title and also the
developer company’s title.
Tara Suppiah Arul Company
Purchasers??
HELD:
The purchasers’ titles could not be defeated as they were bona-fide
purchasers for value with no notice of the fraud.
So Tara could not claim the land back and the court awarded
damages.
INTENTION TO CHEAT
Goh Hooi Yin v Lim Teong Ghee [1990]:
“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…”
ONUS TO PROVE FRAUD?
NOW:
Used to be: “On a balance of
“Beyond reasonable doubt” probabilities”
- Saminathan v Pappa [1981]
FC decision in
Letchumanan Chettiar
Alagappan v Secure
Plantations S/B
[2017] 4 MLJ 697
SEE OTHER CASES ON FRAUD:
Owe Then Kooi v Aw Thiam Seng & Anor. [1990] 1 MLJ 234
Nallammal v Karuppanan [1993] 4 CLJ 454
FORGERY
Forgery involves the act of falsifying someone else’s signature.
Although it is a species of fraud, it is not within the meaning of actual
fraud as required under the NLC.
The elements of forgery are different from fraud.
FORGERY:
Forgery invalidates the instrument of dealing, thus the focus is on the
instrument, not the act of the parties.
No need to prove that the proprietor whose title is to be defeated
was party of privy to the forgery.
Just prove that the signature on the instrument was forged.
GIBBS V MESSER
P, Mrs. Messer = proprietor of land
She had executed a POA to her husband, Mr. Messer with power to
transfer the land.
In 1884, the P and husband left the country.
She left the land title and POA in the custody of a solicitor, Mr.
Creswell.
Creswell forged Mr. Messer’s signature…
GIBBS V MESSER
And transferred the land to a ‘Mr. Cameron’, a fictitious person.
forgery
GIBBS V MESSER
Creswell, posing as an agent of Mr. Messer presented the transfer for
registration.
Transfer was registered.
Creswell then posed as agent for ‘Mr. Cameron’ and borrowed money
from the McIntyres and created a mortgage on the land in favour of
the McIntyres.
GIBBS V MESSER
In 1886, the P returned and Creswell absconded.
P brought action against the Registrar, Mortgagee and Creswell for an
order to cancel the certificate of title in the name of ‘Mr. Cameron’
and for issuance of a new title to the P, free from the mortgage.
GIBBS V MESSER
Issue:
Whether the P could defeat the mortgage on grounds of ‘forgery’?
Held:
Mortgage invalid due to forgery.
BOONSOM BOONYANIT V ADORNA PROPERTIES
SDN. BHD. [1995] 2 AMR 1828
Agreed with the High Court decision and overturned the Court of
Appeal decision.
The D, Adorna obtained an immediate indefeasible title
notwithstanding the forged M.O.T. and that the D was a bona fide
purchaser for value.
TAN YING HONG V TAN SIAN SANG & ORS.
(DELIVERED ON 21 ST JAN. 2010)
App.= RP of land in Kuantan, Pahang.
1st Resp., purportedly acting under a POA, executed 2 charges in
favour of UMBC (3rd Resp.) to secure 2 loans in favour of the 2nd Resp.
(Cini Timber Industries S/B)
App. claimed that he did not sign the POA. Claimed forgery and
sought court declaration that the charges were VOID.
ISSUE:
Whether s. 340 NLC confers immediate or deferred indefeasibility?
HELD: (FEDERAL COURT)
That the Federal Court decision in Boonsom Bunyanit was incorrectly
decided.
That the proviso to sub-section (3) of section 340 cannot apply to
subsection (2).
That Malaysia applies deferred indefeasibility.
Therefore, charges were void and appeal allowed.
DIFFERENCES BETWEEN FRAUD AND FORGERY
FRAUD FORGERY
1) Focuses on the 1) The focus is on the
‘fraudulent act’ and effect of forgery on the
‘intention to cheat’. instrument of dealing. It
nullifies the instrument
thus making it
DEFECTIVE.
FRAUD FORGERY
3) The party whose title is 3) No such requirement.
to be defeated must be Signature experts need
‘party and privy’ to the only prove that the
fraud. person who signed the
transfer was not the
transferor.
REFRESHER ON TYPES ON INDEFEASIBILITY
TWO TYPES OF INDEFEASIBILITY
1) Immediate Indefeasibility
2) Deferred Indefeasibility
A C
B (bona-fide
(transferor)
(transferee) purchaser)
CONT.:
Thus, under deferred indefeasibility, registration DOES NOT cure the
defect in the instrument.
Boyd v Mayor of Wellington [1924] NZLR 1174 – “Registration does
not cure the defects in a statutory instrument but acts merely as a root
of title.”
MOHAMMAD B BUYONG V PHT GOMBAK
& ORS. [1982] 2 MLJ 53
In this case, the Registrar had rejected the instrument of transfer as it
was signed by the transferor under an invalid power of attorney.
The transferee in this case appealed claiming to be entitled to
indefeasibility.
HELD:
Appeal dismissed as nothing in favour of the appellant had been
registered.
This case has been used to support the view that Malaysia applies
deferred indefeasibility as even if the transfer HAD been registered,
the court would still hold the appellant’s title to be defeasible due to
the invalid POA.
CONCLUSION:
Malaysia applies the concept of Deferred Indefeasibility.
The first transferee cannot claim to be a bona fide purchaser.
The title of the first transferee is still open to attack where registration
is effected through a defective instrument.