Chapter 2 - Indefeasibility of Title Flashcards
INDEFEASIBILITY OF TITLE
Overview
1) Conclusiveness of RDT
2) Setting-aside title
3) What constitutes registration
4) Indefeasibility under NLC
5) Vitiating factor - fraud or misrep
6) Vitiating factor - forgery
7) Vitiating factor - void instrument
8) Vitiating factor - unlawful title or interest
9) Subsequent bona fide purchaser
10) Exception to indefeasibility by operation of law
CONCLUSIVENESS OF RDT
Overview
1) The law
2) Effect of registration
CONCLUSIVENESS OF RDT
The law
S.89
CONCLUSIVENESS OF RDT
Effect of registration
D, AC & E, UC
1) D - No deprivation:
- title or interest cannot be deprived.
2) AC & E - No adverse claim or encumbrances:
- registered title or interest is free from adverse claim or encumbrances.
3) UC - No unregistered claim:
- registration defeats all prior and subsequent unregistered claim.
SETTING-ASIDE TITLE
The law on limitation
S.21 LA:
- Action to set aside must be brought within 12 years.
WHAT CONSTITUTES REGISTRATION
The law - trite
S.304(2)
WHAT CONSTITUTES REGISTRATION
The case - trite
Mohammad bin Buyong v Pemungut Hasil Tanah Gombak & Ors:
- making memorial under the hand & seal of the registering authority;
- w/o seal & under the hand, no registration.
INDEFASIBILITY UNDER NLC
Overview
1) The law
2) Meaning of indefeasibility
3) Scope of indefeasibility under S.340
4) Immediate & deferred indefeasibility
INDEFASIBILITY UNDER NLC
The law
S.340(1)
INDEFEASIBILITY UNDER NLC
Meaning of indefeasibility
Tan Yin Hong v Tan Sian San:
- No adverse claim can be brought against the registered proprietor.
INDEFASIBILITY UNDER NLC
Scope of indefeasibility under S.340
Mohammad bin Buyong v Pemungut Hasil Tanah Gombak & Ors:
- S.340 protects the title or interest of any person for the time being registered;
- The title shall be indefeasible.
INDEFEASIBILITY UNDER NLC
Immediate & deferred indefeasibility
Tan Yin Hong v Tan Sian San:
- Immediate indefeasibility: indefeasibility is conferred immediately despite existence of vitiating factors.
- Deferred indefeasibility: indefeasibility only comes attached upon a subsequent transfer.
- Indefeasibility under S.340, whether I or D:
- — S.340 provides for D indefeasibility.
- — In the absence or vitiating factors under S.340(2), a title is indefeasible once registered.
VITIATING FACTOR - FRAUD OR MISREPRESENTATION
Overview
1) The law
2) Meaning & scope of fraud
3) Standard of proof for fraud
4) Meaning & scope of misrepresentation
VITIATING FACTOR - FRAUD OR MISREPRESENTATION
The law & scope
1) The law - S.340(2)(a)
2) Scope - Recent - Teo Ping Tieng v Elitprop S/B (FC, 2019):
- ‘Fraud’, within the meaning of s. 340(2)(a) of the NLC, means actual fraud and not constructive or equitable fraud on the part of the person whose title or interest is being impeached.
- Whether or not fraud exists is a question of fact to be decided on the facts and circumstances of each case.
VITIATING FACTOR - FRAUD OR MISREPRESENTATION
Meaning & scope of fraud
ACTUAL FRAUD
Tai Lee Finance Co Sdn Bhd v Official Assignee & Ors:
- fraud involves actual fraud or dishonesty which was committed prior or at the time of registration.
VITIATING FACTOR - FRAUD OR MISREPRESENTATION
Meaning & scope of fraud
DISHONESTY
Waimiha Sawmilling Co Ltd v Walone Timber Co:
- fraud involves dishonesty or some sort of violation of rights of other persons.
VITIATING FACTOR - FRAUD OR MISREPRESENTATION
Meaning & scope of fraud
OBJECTIVE-BASED
Loi Hieng Cheong v Kon Tek Shin:
- fraud is committed when the object is to cheat a man of a known existing right.
VITIATING FACTOR - FRAUD OR MISREPRESENTATION
Meaning & scope of fraud
DEPRIVING REGISTRATION
Loke Yew v Port Swettenham Rubber Co:
- Dishonest is a deliberate & dishonest attempt to deprive the unregistered claimant of his claim or interest.
VITIATING FACTOR - FRAUD OR MISREPRESENTATION
Standard of proof for fraud
Sinnaiyah & Sons v Damai Setia Sdn Bhd:
- on balance of probabilities.
VITIATING FACTOR - FRAUD OR MISREPRESENTATION
Meaning of misrepresentation
Loke Yew v Port Swettenham Rubber Co:
- Misrepresentation under S.340 is a fraudulent misrepresentation;
- It is a specie of fraud.
VITIATING FACTOR - FORGERY
Overview
1) The law
2) Scope of forgery
3) Whether forgery is a fraud
4) Standard of proof for forgery
5) Proving forgery via expert opinion
6) Proving forgery without expert opinion
VITIATING FACTOR - FORGERY
The law
S.340(2)(b)
VITIATING FACTOR - FORGERY
Scope of forgery
- only requires that the registration is obtained by forged instrument or document.
VITIATING FACTOR - FORGERY
Whether forgery is a fraud
Letchumanan Chettiar Alagappan v Secure Plantations Sdn Bhd:
- A complaint of forgery is a complaint of fraud;
- This is so for the purpose of ascertaining standard of proof & pleading.
VITIATING FACTOR - FORGERY
Standard of proof for forgery
Adorna Properties Sdn Bhd v Boonsom Boonyanit:
- On balance of probabilities.
VITIATING FACTOR - FORGERY
Proving forgery via expert opinion
Theow Say Kow Henry v Graceful Frontiers:
- Even if the court is assisted by experts, it is ultimately up to the court to decide.
VITIATING FACTOR - FORGERY
Proving forgery without expert opinion
Letchumanan Chettiar Alagappan v Secure Plantations Sdn Bhd:
- Finding of forgery can be made w/o opinion of handwriting expert.
- This is so if the feature of the writing & signature are so glaring that the court can form its own opinion.
VITIATING FACTOR - VOID OR INSUFFICIENT INSTRUMENT
Overview
1) The law
2) Meaning of void or insufficient instrument
3) Scope of void or insufficient instrument
4) Test for void or insufficient instrument
5) Examples of void or insufficient instrument
6) Examples of not void or insufficient instrument
VITIATING FACTOR - VOID OR INSUFFICIENT INSTRUMENT
The law
S.340(2)(b)
VITIATING FACTOR - VOID OR INSUFFICIENT INSTRUMENT
Meaning of void or insufficient instrument
Tan Tock Kwee & Anor v Tiey Siew Cha:
- Insufficient instrument: failure to comply with the procedures or formalities under NLC.
- Void instrument: relates to the prohibition imposed by NLC or other law.
VITIATING FACTOR - VOID OR INSUFFICIENT INSTRUMENT
Scope of void or insufficient instrument
Mook Meng Sun v Lo Aa Kau:
- Void or insufficient instrument relates to the character of the instrument itself.
VITIATING FACTOR - VOID OR INSUFFICIENT INSTRUMENT
Test of void or insufficient instrument
Malaysian Building Society v KCSB Konsortium Sdn Bhd:
- the instrument alone must be considered without resorting to other extraneous document.
VITIATING FACTOR - VOID OR INSUFFICIENT INSTRUMENT
Examples of void or insufficient instrument - non-compliance with NLC
M&J Frozen Food v Siland Sdn Bhd:
- Failure to comply with NLC was not just mere irregularities;
- It was an illegality.
- The certificate of sale issued is liable to be set aside.
VITIATING FACTOR - VOID OR INSUFFICIENT INSTRUMENT
Examples of void or insufficient instrument - forged instrument
Tan Yin Hong v Tan Sian San:
- Forged instrument is a void instrument;
- Indefeasibility can be rebutted if it is obtained by void instrument.
VITIATING FACTOR - VOID OR INSUFFICIENT INSTRUMENT
Examples of void or insufficient instrument - Invalid power of attorney
Puran Singh v Kehar Singh:
- Instrument of dealing signed by invalid or insufficient power of attorney is regarded as insufficient or void instrument.
VITIATING FACTOR - VOID OR INSUFFICIENT INSTRUMENT
Examples of void or insufficient instrument - dealing in contravention with restriction in interest
Toh Huat Khay v Lim A Chang:
- Transfer when it is prohibited.
UMBC v Syarikat Perumahan Luas:
- Charge when it is prohibited.
VITIATING FACTOR - VOID OR INSUFFICIENT INSTRUMENT
Examples of void or insufficient instrument - dealing with minor
Tan Hee Juan v Teh Boon Keat:
- Instrument of dealing effected in favour of or by a minor is invalid.
VITIATING FACTOR - VOID OR INSUFFICIENT INSTRUMENT
Examples of not void or insufficient instrument - existence of PO
Mook Meng Sun v Lo Aa Kau:
- Existence of PO cannot affect the character of the instrument so as to render the instrument void;
- PO is extraneous to the instrument that has nothing to do with the character of the instrument.
VITIATING FACTOR - VOID OR INSUFFICIENT INSTRUMENT
Examples of not void or insufficient instrument - Wrong charge created
Malaysia Building Society Sdn Bhd v KCSB Konsortium:
- First party charge is created instead of 3rd party charge;
- All other procedures are complied with;
- Held: Form 16A filed is NOT an insufficient instrument.
VITIATING FACTOR - UNLAWFUL TITLE OR INTEREST
Overview
1) The law
2) Examples of unlawful title or interest
VITIATING FACTOR - UNLAWFUL TITLE OR INTEREST
The law
S.340(2)(c)
VITIATING FACTOR - UNLAWFUL TITLE OR INTEREST
Example - In contravention of restriction of interest
Toh Huat Khay v Lim A Chang:
- Transfer when it is prohibited.
UMBC v Syarikat Perumahan Luas:
- Charge when it is prohibited.
VITIATING FACTOR - UNLAWFUL TITLE OR INTEREST
Example - improper exercise of power
M&J Frozen Food v Siland Sdn Bhd:
- SAR issued the certificate of sale despite the failure of the parties to comply with the procedures under NLC;
- The act of SAR is ultra vires;
- The title acquired by the ultra vires act of the SAR is unlawful.
VITIATING FACTOR - UNLAWFUL TITLE OR INTEREST
Example - existence of caveat
Woon Kim Poh v Sa’amah bte Hj. Kassim:
- Transfer effected when there is a caveat shall be voidable;
- The caveat shall be removed first before effecting the transfer;
- If the SAR go on & effect the transfer, his act is ultra vires & the title acquired is unlawful.
SUBSEQUENT BONA FIDE PURCHASER
Overview
1) The law
2) Meaning of purchaser
3) Whether bank is a purchaser
4) Meaning of good faith
5) Example of good faith
6) Example of bad faith
SUBSEQUENT BONA FIDE PURCHASER
The law
S.340(3)
SUBSEQUENT BONA FIDE PURCHASER
Meaning of purchaser
S.5
- includes both title & interest acquirer.
SUBSEQUENT BONA FIDE PURCHASER
Whether bank is a purchaser
FC, 2017
CIMB Bank Berhad v Ambank Berhad:
- A chargee comes within the meaning of purchaser under S.340(3);
- therefore, a bank is a purchaser within the meaning of proviso.
SUBSEQUENT BONA FIDE PURCHASER
Meaning of good faith
FC, 2018
T Sivam A/L Tharamalingam v Public Bank Bhd:
- ordinary prudence has been exercised according to standards of a reasonable man.
- an honest effort & determination to ascertain the facts;
- essential elements of good faith are honesty free from fraud or taint.
SUBSEQUENT BONA FIDE PURCHASER
Example of good faith
State Tailor Sdn Bhd v Nallapan:
- The purchaser has no knowledge or no means of knowledge.
SUBSEQUENT BONA FIDE PURCHASER
Example of bad faith
Au Meng Nam v Ung Yak Chew:
- The purchaser bought the land below market price;
- He was not involved with defrauding P;
- But he was negligent for not carrying due diligence to ascertain facts.
SUBSEQUENT BONA FIDE PURCHASER
Burden of proving good faith - recent
CA, 2007
Abu Bakar Ismail & Ors v Ismail Hussin:
- On the person asserting that he is a good faith purchaser.
SUBSEQUENT BONA FIDE PURCHASER
Burden of proving good faith - trite
Datuk Jagindar Singh & Ors v Tara Rajaratnam:
- FC suggested the burden is on the person who dispute the title, i.e. to prove the purchaser is acting on bad faith.
EXCEPTION TO INDEFEASIBILITY BY OPERATION OF LAW
Overview
1) The law
2) Scope of the law
3) Purpose of the law
EXCEPTION TO INDEFEASIBILITY BY OPERATION OF LAW
The law
S.340(4)
EXCEPTION TO INDEFEASIBILITY BY OPERATION OF LAW
Scope of the law
FC, 1997
Krishnadas Achutan Nair & Ors v Maniyam Samykano:
- enable reliefs to be granted when there are failure to perform contractual obligations.
- i.e. if a registered proprietor enters into a contract to transfer a title, he is obliged to do so.
- If he fails to do so, his title may be defeasible under S.340(4).
EXCEPTION TO INDEFEASIBILITY BY OPERATION OF LAW
Purpose of the law
Dr. Benjamin George & Ors v Majlis Perbandaran Ampang Jaya:
- to preserve the in personam rights (contractual or equitable) existing between the developer and the purchaser of an apartment by virtue of the sale and purchase agreement for an apartment entered into by the parties.
EXCEPTION TO INDEFEASIBILITY BY OPERATION OF LAW
Purpose of the law
FC, 1997
Krishnadas Achutan Nair & Ors v Maniyam Samykano:
- to deal with fact patterns that do not fall squarely within the other exceptions to indefeasibility that appear in the second sub-section to s. 340 of the Code.
- It is impossible & undesirable to predict with certainty the wide range of cases that may yet come within the scope of s. 340(4)(b);
- But example is case decided under the Moneylenders Act 1951.
