Friday January 22, 2010
It’s no longer legal to buy land from fraudulent ‘owner’
By LISA GOH
lisagoh@thestar.com.myPUTRAJAYA: A decade-old decision by the Federal Court has finally been corrected in a rare joint effort by the entire legal fraternity including the four highest ranking judges – leading to a landmark decision by the apex court.
It is now no longer legal for anyone to buy a piece of land from another person who got hold of the property through fraudulent means.
Chief Judge of Malaya Tan Sri Arifin Zakaria, one of the five-man Bench presiding over the case, said it was “highly regrettable that it had taken some time before this contentious issue was put to rest”.
The Bench ruled yesterday that the decision in the contentious Adorna Properties case was wrong. In that case, the then Chief Justice Tun Eusoffe Chin had ruled that the person whose property was “stolen” via forged documents could not take legal action against the third party who bought the land from the “thief”.
The opposing parties in yesterday’s case, which had similar facts and circumstances as the Adorna case, submitted to the country’s highest court to overturn the decision and the justices gladly obliged and erased a blemish in the country’s judicial pride.
“I am legally obligated to restate the law since the error committed in Adorna Properties is so obvious and blatant,” declared Chief Justice Tun Zaki Azmi.
“It is quite a well-known fact that some unscrupulous people have been taking advantage of this error by falsely transferring titles to themselves. I hope that with this decision, the land authorities will be extra cautious when registering transfers,” Justice Zaki ruled in his four-page supporting written judgment.
The Bench also held that the judges in the Adorna Properties case had misconstrued a proviso in the Section 340 of the National Land Code (NLC) 1965.
“If it can be shown that the title was obtained by forgery or misrepresentation, the buyer’s claim can be defeated,” said Justice Zaki.
In the case before the Federal Court yesterday, Pahang landowner Tan Yin Hong had appealed against a Court of Appeal’s decision last year, which had relied heavily on the Adorna Properties case.
When it was first brought to court in 1987, Yin Hong had named one Tan Sian San (a person he said had forged his signature to use the land for a bank loan), Cini Timber Indus-tries Sdn Bhd and United Malayan Banking Corporation Bhd (now known as RHB Bank) as respondents in his suit.
In 1985, he received a letter from the bank demanding a repayment for a sum amounting to RM309,000 for an overdraft facility given by the bank to Cini Timber Industries using his land as security.
In 1987, he filed a suit against the bank but lost his case in 2003 as the High Court was bound by the judgment in the Adorna Properties case.
Yesterday, the Federal Court ruled that the bank’s charges against Yin Hong could be set aside as these were based on void instruments and awarded him RM75,000 in costs.
Strangely enough, both Cini and RHB were in favour of yesterday’s judgment.
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