BOONSOOM
BOONYANIT V. ADORNA PROPERTIES SDN. BHD.
COURT OF APPEAL, KUALA LUMPUR
GOPAL SRI RAM JCA SITI NORMA YAAKOB JCA AHMAD FAIRUZ JCA
[CIVIL APPEAL NO: P-02-268-1995]
17 MARCH 1997
[Appeal allowed.]
JUDGMENT
Gopal Sri Ram JCA:
Facts and Background
Boonsom Boonyanit, the appellant before us, is a Thai national. She resides
in Thailand, but visited this country from time to time. During her visits,
she was always accompanied by her eldest son, Phiensak Sosothikul (PW2). She
was - until the occurrence of those events to which we will refer in a
moment - the registered proprietor of the land held under Lots 3606 and
3607, Mukim 18, in the Town of Tanjung Bungah, Pulau Pinang ('the said
land'). But she is no longer on the register. It is the respondent company
which is at present the registered proprietor. This change in the ownership
of the said land occurred in the following way.
In late October 1988, one of its directors, Mr. Fong Wah Tan (DW1), was
approached by a Mr. Lim Chan Hwa (DW2) of C.A. Lim & G.E. Tan Sdn. Bhd.,
valuers and estate agents. DW2 asked DW1 if the respondent would be
interested in buying two pieces of land having beach frontage. The said land
was identified as the property that was available for purchase. The asking
price was RM30 per square foot. There was some negotiation after which the
price was agreed at RM22 per square foot. Later, DW2 obtained an option in
favour of C.A. Lim & G.E. Tan Sdn. Bhd. at the agreed price and produced it
to DW1. The respondent company duly exercised the option through its
solicitor, Mr. Cheong Wai Meng and later entered into a sale and purchase
agreement with the vendor. On completion of the purchase, a memorandum of
transfer in respect of the said land was purportedly executed by the
appellant on 7 April 1989 and registered in the respondent's favour on 24
May 1989.
On 11 June 1989, an advertisement appeared in a Thai newspaper called "Thairat".
It was placed by M/s. Khor, Ong & Co. a firm of solicitors in Butterworth.
After setting out the description of the said land, it called upon, inter
alia, any heir of the appellant to communicate with the aforesaid
solicitors. PW2 read the advertisement. His suspicions were aroused. He
therefore got in touch with his mother's solicitors, M/s. Lim Kean Siew &
Co. to conduct investigations.
Inquiries made by the appellant's solicitors revealed the following:
(1) Someone calling herself
"Sun Yok Eng @ Boonsoom Boonyanit" had affirmed a statutory declaration on
18 June 1988 ('the first statutory declaration') stating that she was the
owner of the said land and that she had lost the original title to it. The
passport number of the declarant in the first statutory declaration
appears as "K/p Tailand No: 000386".
(2) The first statutory declaration was used to apply for and obtain a
certified copy of the title from the appropriate authority.
(3) Mrs. Boonsoom Boonyanit had affirmed a statutory declaration on 6
April 1989 ('the second statutory declaration') in which she declared that
"the names Mrs. Boonsoom Boonyanit in my International Passport No.
N-033852 and Sun Yok Eng @ Boonsom Boonyanit in the said A.C.T. (meaning
the title to the said land) in respect of the said property refer to the
same and one person that is Mrs. Boonsoom Boonyanit"
(4) The second statutory declaration was used to effect registration of
the memorandum of transfer in the respondent's favour.
It may be added, for completeness, that the documents of title to the said
land was not lost as alleged in the first statutory declaration, but was,
at all material times, in the appellant's custody.
Following the inquiries made by her solicitors, the appellant, after
lodging a police report, instituted proceedings in which she claimed the
following relief:
(1) for a declaration:
(i) that her right title
and interest in and to the said land is not affected by the purported
transfer to the respondent;
(ii) that the transfer in favour of the respondent is void ab initio;
(iii) that the appellant is the registered owner of the said land.
(2) for an order that the
Registrar of Land Titles do:
(i) cancel the entries or
memorials in the register of Land Titles in favour of the respondent
and
(ii) restore the appellant's name as the registered owner of the said
land.
(3) Costs
(4) Damages
(5) Such other relief as the Court deems fit.
The basis of the appellant's
claim for the foregoing relief appears in para. 4 of her amended statement
of claim which reads as follows:
4. The plaintiff's claim against the defendant is for the recovery and
reinstatement of all her right, title and interest in and to the said land
and the removal of the defendant's name from the register of the land titles
on the grounds that the said transfer of the 7th of April, 1989 was procured
by forgery and/or fraud, particulars of which are set out below.
Particulars
a. The purported transferor of
the said land was not the plaintiff.
b. The plaintiff did not dispose of the land nor authorised anyone to
dispose of the same on her behalf.
c. The plaintiff did not enter into any agreement with the defendant nor
executed the said memorandum of transfer in favour of the defendant nor
authorised anyone to do the same on her behalf.
d. The plaintiff did not affirm a statutory declaration dated the 6th of
April, 1989 to effect a change of name from Sun Yok Eng @ Boonsom
Boonyanit to Mrs. Boonsoom Boonyanit.
e. The plaintiff is Mrs. Boonsom Boonyanit holding Thai passport No. D
080757 and not the purported transferor holding herself out to be Mrs.
Boonsom Boonyanit holding Thai passport No. 033852 as endorsed in the
title deeds in respect of the said land.
f. The original title deed has at all material times been in the
possession of the plaintiff but a certified copy thereof was procured by
fraud through a false declaration that the original title deed was lost.
It is clear from these averments
that the essence of the appellant's pleaded case in the Court below was that
the respondent had acquired its title to the said land on the strength of a
forged instrument of transfer.
The case for the respondent appears sufficiently from the following
paragraphs of its amended defence:
4. The defendant denies that
the said transfer of the 7th of April 1989 was procured by forgery and/or
fraud as alleged in para. 4 of the amended statement of claim and the
particulars appended thereto and therefore denies that the plaintiff is
entitled to the remedies sought.
5. The defendant further states that if the said transfer was procured by
fraud and/or forgery, which is denied, the defendant did not procure the
said transfer by fraud and/or forgery and was not a party to the said
alleged fraud and/or forgery.
6. The defendant is a bona fide purchaser of the said land or value and
acquired an indefeasible title in the said land through the completion of
the sale and purchase agreement dated the 15th of December, 1998 and/or
the subsequent registration of the transfer thereof by the said Mrs.
Boonsoom Boonyanit (Thai Passport No. 033852) in the defendant's favour.
7. Further and/or alternatively, the defendant's title and interest in the
said land and its proprietorship thereof was acquired for valuable
consideration and in good faith and the plaintiff is accordingly not
entitled to the remedies sought.
So much for the pleadings.
The appellant gave evidence at the trial of her action. She was shown the
first and second statutory declarations as well as the impugned memorandum
of transfer. She denied that she had executed these documents. She also
denied that she had sold the land. Her passport was produced. It showed that
she had been in Thailand at the material time. Her son, PW2, testified under
crossexamination that the signature appearing on the impugned memorandum of
transfer was not that of his mother's. He however identified her signature
on certain other documents that are not the subject of challenge. Evidence
was also adduced in the form of a certificate from the Royal Thai Consulate-
General certifying that Passport No. N 033852 was a forgery.
The evidence led on the respondent's behalf confirmed that the respondent
had throughout acted by its solicitors. As far as the respondent was
concerned, the sale was an arms length transaction in which the vendor had
been separately represented. The respondent did not, however, call the
vendor's solicitor to give evidence. The position adopted on the
respondent's behalf was that the burden of proof lay upon the appellant and
it was for her to call the solicitor who attended to the transaction on
behalf of the vendor.
The learned Judge identified the following four issues as arising from the
joinder disclosed in the pleadings:
1. Whether the appellant was
the registered proprietor of the said land prior to its transfer to the
respondent.
2. Whether forgery, when raised in civil proceedings, had to be
established beyond a reasonable doubt or whether it was sufficient to
prove it on a balance of probabilities.
3. Whether the memorandum of transfer in favour of the respondent was a
forgery.
4. If it was, then, whether the respondent had acquired an indefeasible
title to the said land.
The learned Judge resolved the
first issue in the appellant's favour. There is a cross-appeal by the
respondent against this finding. It may be conveniently disposed of at this
stage as it was not pursued before us with any vigour. Indeed, Encik Ghazi
did not even mention it in passing during his argument. Nor did he advance
any reasons to show why the learned Judge erred in holding that the
appellant was the registered proprietor of the said land. Any difficulty
which the learned Judge encountered on the point was occasioned by a failure
on his part to appreciate the interim measures taken to convert land tenure
in Penang from the system of unregistered title to the Torrens system of
registered title pursuant to the National Land Code (Penang And Malacca
Titles) Act, 1963. But it must be said in fairness to the learned Judge that
he carried out a meticulous examination of the evidence before determining
the issue in the appellant's favour and we have been unable to detect any
error on his part. The complaint in the cross appeal that the learned Judge
ought not to have been prepared to accept proof of title upon a balance of
probabilities is utterly devoid of merit. Once she produced the interim form
of title issued to her by the appropriate authority she proved ownership. It
was then up to the respondent to call such evidence as it deemed necessary
to rebut the prima facie case made out by the appellant. Needless to say
that no such proof was forthcoming. The Judge was therefore quite correct in
accepting the evidence of the appellant on the point.
As regards the second issue, the learned Judge held that the standard of
proving forgery in civil proceedings was the same as that in a criminal
case, namely, that it had to be established beyond reasonable doubt.
Applying this test, he resolved the third issue by holding that the
appellant had failed to prove, beyond a reasonable doubt, that the signature
of the vendor appearing in the impugned memorandum of transfer was not
genuine. The learned Judge went on to hold that even if the appellant had
succeeded in meeting the required standard of proof, the respondent was a
bona fide purchaser for value so that its title became indefeasible
immediately upon registration. Accordingly, he resolved the fourth issue
against the appellant.
Before us, Mr. Lim Kean Siew has attacked the conclusions of the learned
Judge upon several grounds. Encik Ghazi has, with usual ability, sought to
defend the judgment appealed against. The arguments of Counsel raise
important questions of law. So important, that it caused us to reserve
judgment.
Was the Issue of Forgery Regularly Tried?
Before we deal with these questions, it is necessary to dispose of a matter
that was a source of some concern when we heard argument. It is a point that
also forms part of the respondent's cross appeal. It was drawn to our
attention by Encik Ghazi during argument. It has to do with the question of
proving documents that were tendered by one side or the other at the trial.
Encik Ghazi complained that the trial Judge had ruled that the proof of each
document tendered by the appellant was to be tested, not then and there, but
only at the end of the trial. This, he said, placed him in a rather
difficult position in dealing with each document produced by the appellant
and her witnesses. If this was indeed what the learned Judge directed, then,
it would mean that the issue of forgery had not been regularly tried, thus
necessitating a re-trial of the suit.
The learned Judge's direction on the proof of documentary evidence is
contained in the following passage of his judgment:
At the outset of the case, when the Court enquired why there was no agreed
bundle, Mr. Ghazi replied that the defendant would not agree to most of the
documents in the plaintiff's bundle. Hence, as neither party had sought an
adjournment to identify and to compile an agreed bundle of the documents
that they had agreed to, the Court directed that since this was a
long-standing case, it could nevertheless proceed and the parties could
object to the admission of the documents concerned as and when they are
tendered.
This was the approach I adopted as defendant's Counsel did not specify the
admission of which document in the plaintiff's bundle they had intended to
object and thus the plaintiff would only be put on notice that she was
required to call the maker thereof (or its attesting witness) as and when
such objections are made on each individual document.
It would thus be impermissible for either party (as the defendant here) to
select in their submission, only after the close of evidence, the admission
of which document they would object to. This situation goes only to
demonstrate the imprudence of insisting that trial could proceed in the
absence of an agreed bundle.
In our judgment the direction given by the learned Judge and his conduct of
the case vis a vis the proof of documentary evidence was entirely proper. He
did the best that he could in the circumstances in which he had been placed
by the parties' failure to agree upon the proof of the documents tendered by
the appellant. In view of his direction it was certainly not open to the
respondent to remain silent at the moment of production and take the
objection in final argument.
The law of evidence draws a distinction between the admissibility of a
document and the mode of proving it. If a document is declared inadmissible
by a statute, then, failure to object to the inadmissible document at the
first available opportunity does not prevent the party adversely affected
from raising the matter on appeal. Inadmissible evidence, whether in civil
or criminal proceedings, remains inadmissible despite any failure to object
to its admission. See, Malaysia National Insurance Sdn. Bhd. v. Malaysia
Rubber Development Corporation [1986] 2 MLJ 124.
On the other hand, where, as in the present case, the complaint is directed,
not at admissibility, but at the mode of proof, that is to say, the
procedure by which a particular document is to be proved, objection must be
taken at the earliest opportunity. Failure to do so results in the point
being no longer open at the appellate stage.
These propositions are supported by the authority of the Privy Council
decision in Gopal Das & Anor v. Sri Thakurji & Ors AIR [1943] PC 83, 87,
where Sir George Rankin, when delivering the advice of the Board said:
Where the objection to be taken is not that the document is in itself
inadmissible but that the mode of proof put forward is irregular or
insufficient it is essential that the objection should be taken at the trial
before the document is marked as an exhibit and admitted to the record. A
party cannot lie by until the case comes before a Court of appeal and then
complain for the first time of the mode of proof. A strictly formal proof
might or might not have been forthcoming had it been insisted on at the
trial.
For these reasons, we are satisfied that the issue of forgery, as a question
of fact, was regularly tried from a procedural standpoint and that there is
no substance in the respondent's complaint that forms part of its cross
appeal.
The Issues in the Appeal
We now turn to the issues that have arisen in this appeal. In logical
sequence, these are:
(1) whether the appellant had established her case in accordance with the
standard required by law;
(2) if the first issue is answered in the affirmative, then, whether the
respondent has acquired an indefeasible title to the said land.
The First Issue
In respect of the first issue, two subsidiary questions arise for
resolution. They are as follows:
(1) Did the learned Judge direct himself correctly upon the standard of
proof that is required to prove forgery in a civil cause?
(2) Was there judicial appreciation of the evidence led at the trial?
The Standard of Proof
The learned Judge, after a discussion of the relevant authorities on the
proof of fraud in civil proceedings, held that the allegation of forgery had
to be established by the appellant beyond a reasonable doubt. This is how he
put it:
Neither Counsel for the parties herein nor the Court is able to locate any
Malaysian authority concerning the probative burden of proof required in
cases of forgery. Be that as it may, as forgery involves a high element of
fraud, and is indeed, a species of fraud under Common Law, with both being
criminal in nature, I am of the considered opinion that he who alleges
forgery should be required to discharge the same onerous probative burden of
proof as was established in M. Ratnavale (M. Ratnavale v. S. Lourdenadin
[1988] 2 MLJ 371) and Chu Choon Moi (Chu Choon Moi v. Ngan Sew Tin
[1986] 1 MLJ 34) (supra). I therefore hold that that is the probative
burden or requisite standard of proof the plaintiff here would have to
discharge to prove that forgery had been committed on P8, being proof beyond
reasonable doubt and not proof on the balance of probability, which - in
lighter vein and unorthodox language - could perhaps be expressed as proof
on the balance of curial suspicion based on indeterminate or inexact
evidence.
Mr. Lim Kean Siew has argued that this constitutes a misdirection by the
learned Judge upon the standard of proof. He submitted that the learned
Judge placed too high a burden upon the appellant because an allegation of
forgery in civil proceedings need only be established on a balance of
probabilities.
We consider these submissions to be well-founded. But, before we state our
reasons for accepting Mr. Lim Kean Siew's argument, we consider it
appropriate to identify and discuss the rules that operate in this area of
adjectival law.
Now, it is a general rule of the common law that, in the absence of a
statutory provision to the contrary, proof in civil proceedings of facts
amounting to the commission of a crime need only be on a balance of
probabilities. The general rule finds expression in the judgment of the High
Court of Australia (Barwick CJ, Kitto, Taylor, Menzies JJ in Rejfek v.
McElroy [1965] 112 CLR 517, a case of fraudulent misrepresentation.
The common law of Malaysia has provided an exception to this rule in one
case alone. Where fraud is alleged in civil proceedings, it must be proved
beyond a reasonable doubt. The exception rests upon the following
observation of Lord Atkin in Narayanan Chettyar v. Official Assignee,
Rangoon AIR [1941] PC 93, 95:
There are other difficulties in the plaintiffs' way which have been
sufficiently considered in the judgments of the High Court. Fraud of this
nature, like any other charge of a criminal offence whether made in civil or
criminal proceedings, must be established beyond reasonable doubt. The High
Court were justified in holding that the trial Judge's finding was largely
based on suspicion and conjecture. (Emphasis added.)
This passage was applied by Rose CJ in the Singapore High Court in
Nederlandsche Handel-Maatschappij N.V. (Netherlands Trading Society)
v. Koh Kim Guan [1959] MLJ 173 which in turn was applied by the former
Federal Court in Tan Chye Chew & Anor. v. Eastern Mining & Metals Co.
Ltd. [1965] 1 MLJ 201. It has also been applied by our Courts in later
cases. See, for example, Tai Lee Finance Co. Sdn. Bhd. v. Official
Assignee & Ors. [1983] 1 MLJ 81, per Abdul Hamid FJ (later, Chief
Justice of Malaysia) at p. 84.
The Privy Council has recognised the departure made by our common law upon
the question of proof of fraud in civil proceedings. In Saminathan v.
Pappa [1981] 1 MLJ 121, 126, Lord Diplock when delivering the advice of
the Board said that:
The onus of proof of fraud in Malaysia is proof beyond reasonable doubt.
We pause to observe that the dictum of Lord Atkin in Narayanan Chettyar
(supra) has not received universal acceptance.
In Rejfek (supra), the High Court of Australia rejected the Atkin test for
reasons that appear in the following passage of the judgment:
This Court decided in 1940 in Helton v. Allen [1940] 63 CLR 691 that in a
civil proceeding facts which amount to the commission of a crime have only
to be established to the reasonable satisfaction of the tribunal of fact, a
satisfaction which may be attained on a consideration of the probabilities.
This decision was arrived at after due consideration of the dictum of Lord
Atkin in the case of New York v. Heirs of Phillips Dec'd [1939] 3 All ER
952, 955 and a careful examination of its meaning and its acceptability.
Helton v. Allen thus established that the criminal standard of proof is
inappropriate to the determination of any such fact in any civil action
tried in any Court in Australia where there are no statutory provisions to
the contrary.
That decision is binding on all Courts in Australia unless and until there
is a precise decision to the contrary by the Court or by the Privy Council.
However, the Full Court of Queensland in King v. Crowe [1942] St. R. Qd. 288
appears to have thought that a sentence in the judgment of the Privy Council
delivered by Lord Atkin in Narayanan Chettyar v. Official Assignee of the
High Court, Rangoon was a decision to the contrary of this Court's decision
in Helton v. Allen; and, accordingly, did not follow that case.
But, in our opinion, it is abundantly clear that the sentence in the
judgment delivered in Narayanan Chettyar v. Official Assignee of the High
Court, Rangoon was obiter: the preceding and the following sentence of the
judgment make that evident.
The question of the appropriate standard of proof does not appear to have
been considered by their Lordships in that case as a matter arising before
them nor were any authorities discussed; in particular, the decision of this
Court in Helton v. Allen does not appear to have been considered.
Further, the validity of the proposition of law which that sentence in the
judgment of the Privy Council appears to assert was examined by Davidson J
in Hocking v. Bell [1944] 44 SR (NSW) 468, 478 in the course of a careful
and full review of the relevant authorities. The judgment of Davidson J as
to the standard of proof in a civil proceeding was expressly accepted by
Latham CJ and Dixon J (as he then was) in that case on appeal to this Court:
Hocking v. Bell [1945] 71 CLR 430, 464, 500. Although the course taken by
the other Justices participating in that appeal did not call for any
pronouncement by them on the point, there is nothing in any of the reasons
of those Justices to suggest disapproval of the judgment of Davidson J in
presently relevant respects. Dixon J (as he then was) expressed his clear
opinion that 'the solid body of authority against introducing the criminal
standard of persuasion into civil causes cannot be shaken by the
unconsidered statement of Lord Atkin in the case from Allahabad' being
Narayanan Chettyar v. Official Assignee of the High Court, Rangoon.
The proof of forgery in civil proceedings, unlike fraud, comes within the
general rule earlier adverted to. That it need only be established on a
balance of probabilities was laid down as long ago as 1855 by the Privy
Council in Doe D. Devine v. Wilson [1855] 14 ER 581, where Sir John Patteson,
when delivering the advice of the Board said (at p. 592):
Now, there is a great distinction between a civil and a criminal case, when
a question of forgery arises. In a civil case the onus of proving the
genuineness of a deed is cast upon the party who produces it, and asserts
its validity. If there be conflicting evidence as to the genuineness, either
by reason of alleged forgery, or otherwise, the party asserting the deed
must satisfy the jury that it is genuine. The jury must weigh the
conflicting evidence, consider all the probabilities of the case, not
excluding the ordinary presumption of innocence, and must determine the
question according to the balance of those probabilities.
In a criminal case the onus of proving the forgery is cast on the prosecutor
who asserts it, and unless he can satisfy the jury that the instrument is
forged to the exclusion of reasonable doubt, the prisoner must be acquitted.
There are two comments which we make upon the law expounded in the foregoing
passage.
First, the reference by the Privy Council to the trial of the issue of
forgery by a jury applies with equal force to a trial of the identical issue
by a Judge sitting alone. In the latter case, a direction on the relevant
law administered to himself by a Judge as trier of both fact and law must be
treated as a direction by a Judge to a jury. A misdirection by a Judge on
the law is therefore equated to a misdirection to a jury.
Second, our researches have not shown any subsequent case where the passage
quoted above was dissented from. Neither has our attention been drawn by
Counsel for the respondent to any criticism of the case by academic writers.
On the contrary, we find that the case has been consistently applied by the
High Court of Australia and noted by the editors of Dr. Cross' work on the
law of evidence, Australian edition, as well as the editors of Woodroffe and
Ameer Ali on "The Law of Evidence", 16th Edn. with no adverse comment. We
are, therefore, of the view that the proposition formulated by the Privy
Council in Doe D. Devine v. Wilson (supra), having stood unchallenged for
more than a century, is, and remains, good law.
Further, our apex Court has, independently of the advice of the Board in Doe
D. Devine v. Wilson, held that forgery when raised in a civil proceeding
need only be proved on a balance of probabilities.
In United Asian Bank Bhd. V. Tai Soon Heng Construction Sdn. Bhd [1993] 2
BLJ 8, Anuar J (now CJ, Malaya) said:
Another important matter has been raised by the appellant in connection with
the issue of forgery. It was argued for the appellant both in the Court
below and before us that the standard of proof required in cases such as
this should be beyond a reasonable doubt and Syarikat Perkapalan Timor v.
United Malayan Banking Corp. Bhd. [1982] 2 MLJ 193 was cited in support. We
have examined this decision with some care but we are unable to agree with
the appellant's Counsel that it is authority for the proposition that is put
forward for the appellant.
In our judgment, a customer who alleges that his banker honoured forged
cheques drawn on his account need only establish the charge of forgery on a
balance of probabilities and in this respect, we agree with the statement of
the law by Gunn Chit Tuan J (as he then was) in Syarikat Islamiyah v.
Bank Bumiputra Malaysia Bhd. [1988] 3 MLJ 218 where at p. 220 the
learned Judge said:
In this case although it would appear that there was no or insufficient
evidence to prove beyond reasonable doubt for purposes of criminal
proceedings that the signatures on the cheques concerned were forged by the
said Awang alias Che Mah bin Che Lob, yet I was satisfied that there was
evidence adduced to prove on a balance of probabilities in this case that
the signatures on the cheques were not those of the plaintiff's but were
forged or placed thereon without the plaintiff's authority and were
therefore wholly inoperative.
We are therefore of the opinion that the learned Judge did not misdirect
himself on the measure of proof that is required to bring home a case of
forgery on the facts of such a case as the one before us.
Since the approach adopted by the trial Judge in the present case is against
well-established authority of high repute, as well as binding precedent, we
would answer the first of the two subsidiary questions under the first issue
in the negative. In other words, the learned Judge did not apply the
standard of proof required by law in order to determine whether the
appellant had established her allegation of forgery.
Appreciation of Evidence
It is trite that, apart from applying the standard of proof required by law,
a trier of fact, in order to arrive at a decision according to law, must
judicially appreciate the evidence led before him upon the issue called for
resolution. A decision arrived in the absence of a judicial appreciation of
evidence is liable to appellate correction. Judicial appreciation is
concerned with the process of evaluating the evidence for the purpose of
discovering where the truth lies in a particular case. It includes, but is
not limited to, identifying the nature and quality of the evidence,
assigning such weight to it as the trier of fact deems appropriate, testing
the credibility of oral evidence against contemporaneous documents as well
as the probabilities of the case and assessing the demeanour of witnesses.
In the present case, it was incumbent upon the learned Judge to evaluate the
evidence of the parties and their witnesses upon the critical issue of
forgery and to either accept or to reject the testimony of such of them as
he considered to be truthful or untruthful, as the case may be. No doubt,
the learned Judge, in his written judgment, carefully set out the substance
of the evidence of each of the several witnesses who had testified before
him. But, nowhere in his judgment did the learned Judge express any view
upon the credibility of the appellant or her witnesses. He did not say that
he disbelieved them or any of them. Equally, he did not say that he believed
some or all of them. There was simply no evaluation at all.
Further, the learned Judge classified the appellant's evidence as
circumstantial. It was not. The evidence in question was direct, not
circumstantial. In our view, Mr. Lim Kean Siew, with justification,
complained about the following passages in the judgment of the learned
Judge:
The other point of material consideration is that, neither Arifin bin Awang,
Penolong Pentadbir Tanah Daerah, Seberang Prai Tengah, Bukit Mertajam who
attested the transfer dated 7/4/89 (P8) nor the solicitor from Messrs.
Khor, Ong & Co. who represented Mrs. Boonsom Boonyanit in the said transfer
was called to testify as to whether the plaintiff was the transferor/vendor
who signed P8. Considering the heavy burden placed on the plaintiff's
shoulders it is insufficient merely to assert that that signature was not
hers and that she was not in Malaysia at the material time, but she ought to
have called a signature expert and Encik Arifin Awang who attested P8 or the
lawyer from M/s. Khor, Ong & Company to clearly and conclusively prove that
she was not the person who signed as transferor in P8. Regrettably, this
onus she had failed to discharge within the standard required in M.
Ratnavale (supra).
Due to the nature and circumstances of the sale transaction it is
unreasonable for the Court to expect the defendant's Counsel to challenge
the plaintiff that she did sign P6, P7, Dl5 or P8. The Court has to be
mindful of the common ground between the parties that from the date of
execution of D15 until the completion of the sale, the vendor and purchaser
were represented by different solicitors; P8 was attested by the Penolong
Pentadbir Tanah Daerah Encik Arifin bin Awang and was executed about eight
months after Dl5 was signed, sealed and delivered and a total sum of
RM1,865,798 was paid to the vendor by the defendant for the said properties.
It is also obvious that by virtue of P7, M/s Khor, Ong & Company had at the
material time held out that they represent the registered proprietor of the
said properties, one Mrs. Boonsoom Boonyanit also known as Sun Yoke Eng @
Boonsom Boonyanit.
In conclusion, my view is that the sum total of the plaintiff's evidence may
at the very most constitute circumstantial evidence, which may be sufficient
to show on the balance of probability that her signature had been forged,
but the nature of such evidence, short of independent affirmative evidence,
is insufficient to found proof beyond reasonable doubt, of the falsity of
the signature per se in P8. This surely is the crucial element of proof
required when one alleges forgery, as forgery by its very nature,
essentially concerns signatures rather than alibi of signatories - the focus
in martialling (sic) evidence to prove forgery should not be misplaced.
Be it noted that, in arriving at my decision I have adopted solely the
beyond-reasonable-doubt test, although I am of the view that the plaintiff
would have failed to establish forgery even had I applied the preponderance
- of - probability test as in Bater v. Bater [1951] p. 35 as they had not
called any of the vital witnesses aforesaid. (Emphasis added.)
Counsel for the appellant drew our attention to the decision of the Privy
Council in Gian Singh & Co. Ltd. V. Banque De L'indochine [1972] 1 LNS 35.
He read the following passage (at pp. 1237-8 of the report) from the opinion
of Lord Diplock, who delivered the advice of the Board which seems apposite
to the instant case:
At the trial in the High Court before Chua J, Balwant Singh gave evidence
that he had not signed the certificate and that what purported to be his
signature was a forgery. His own passport was produced. Its authenticity was
not in doubt. It showed that he had not left Singapore at any time after 26
April 1967. More important, it bore the date of issue, 18 September 1964,
whereas on the certificate the date of issue of passport No. E-13276 is
stated by the signatory to be 11 November 1964.
The evidence of the assistant controller of immigration was that 'it is not
possible for another passport issued on another day to bear the same
number.' The inference is therefore that the passport No. E-13276 handed to
the beneficiary by Mr. Chew was itself a forgery.
Chua J, however, found Balwant Singh to be an unsatisfactory witness. On a
number of matters his evidence conflicted with that of the manager of the
issuing bank, and where this was so the Judge preferred the evidence of the
latter. He also disbelieved Balwant Singh's story that he had not signed the
certificate, though here there was no direct evidence to the contrary.
His reasons for rejecting this part of Balwant Singh's evidence were: (1)
that no hand-writing expert had been called to say that the signature on the
certificate was a forgery; (2) that the certificate was on the customer's
letter-head and Balwant Singh was not able to explain how this came about,
and (3) that he, the Judge, himself thought the signature on the certificate
was 'much like' Balwant Singh's signature on his genuine passport and on the
application for the documentary credit.
The Court of Appeal (Wee Chong Jin CJ, Tan Ah Tah J and Choor Singh J)
unanimously reversed the finding of fact of Chua J that the signature on the
certificate was not a forgery. It has been contended before their Lordships
that the Judge's finding depended upon his assessment of the credibility of
Balwant Singh and that an appellate Court was not entitled to reverse this
finding. Their Lordships agree that an appellate Court is seldom justified
in holding that the trial Judge was wrong in disbelieving evidence given by
a witness whom he had an opportunity of hearing and observing in the witness
box - an advantage which the appellate Court does not share. But, in the
instant case, the only direct evidence as to whether the signature on the
certificate was genuine or not was that of Balwant Singh. There was no
evidence which conflicted with it except the Judge's own impression that the
signature on the certificate was much like a specimen of Balwant Singh's
signature which was admittedly genuine. This, however, is a common feature
of successful forgeries, and it is notoriously dangerous for Judges, in the
absence of expert evidence, to rely upon their own impression as to whether
two signatures are by the same hand. Nevertheless, if there had been no
circumstantial evidence to support the bare denial by Balwant Singh that he
had signed the certificate it might well have been improper for the Court of
Appeal to reverse the judge's finding.
In their Lordships' view, however, there was powerful circumstantial
evidence corroborating the direct evidence of Balwant Singh which it is
clear the Judge had overlooked in making up his mind as to the credibility
of Balwant Singh's evidence on the issue of forgery. (Emphasis added.)
The failure of the learned trial Judge, in the passage in his judgment
earlier quoted, to recognise the distinction between direct and
circumstantial evidence - a distinction so elementary and fundamental to the
law of evidence - is, in our judgment a serious misdirection that has
occasioned a miscarriage of justice in this case. He treated the appellant's
absence from Malaysia at the material time to amount to an alibi, having no
bearing upon the issue of forgery. In this he was plainly wrong. That
absence, coupled with the unchallenged evidence that the passport number
appearing in the impugned documents belongs to a forged passport, in our
view, constitutes powerful circumstantial evidence in support of the
appellant's assertion that she never executed the relevant instrument of
transfer. The denial by the appellant that the signature of the vendor
appearing in the impugned memorandum of transfer was not hers was not
contradicted by the evidence from the respondent's witnesses. Consequently,
the learned Judge ought to have concluded that the appellant had brought
home the allegation of forgery to a high standard of conviction.
There are two other matters that arise from the judgment of the learned
Judge and call for comment. First, in the passage which we have reproduced
from his judgment, the Judge relied on the failure of the appellant to call
Arifin Awang, the Penolong Pentadbir Tanah who attested the impugned
memorandum of transfer and the attending solicitor from M/s. Khor, Ong & Co.
as her witnesses to prove her case.
Mr. Lim Kean Siew has argued that the learned Judge was clearly wrong in
this respect because there was no obligation on the appellant to call these
persons. He says that the evidence led by the appellant upon the issue of
forgery was sufficient and that it was up to the respondent to call these
two individuals if it wished to disprove the appellant's case.
We are in agreement with these submissions. The appellant had, at the close
of her case, by means of cogent evidence, both direct and circumstantial,
brought home the allegation of forgery. There was no rebuttal from the
respondent upon any of the salient points raised by the appellant. Yet, it
appears that there was no recognition of these matters by the learned Judge
anywhere in his judgment. The language employed by him makes it plain that
he drew an adverse inference against the appellant for her failure to call
the two persons aforementioned - the Penolong Pentadbir Tanah and the
attending solicitor for the purported vendor - because of what he perceived
to be the higher standard of proof that the law placed upon the appellant.
Second, the learned Judge found against the appellant on the footing that
she ought to have called a "signature expert" (we think he meant a
handwriting expert or qualified document examiner) to prove her case instead
of relying on what he erroneously perceived to be an alibi. In this he was
wrong, because he failed to appreciate that there was direct evidence from
the appellant's son that the signature appearing on the impugned instrument
of transfer was not that of the appellant. This evidence came as a result of
cross-examination by Counsel for the respondent. It was then not suggested
to the witness while still under cross-examination that he was wrong or that
he was unfamiliar with his mother's handwriting or usual signature.
That the learned Judge's expectation of proof upon the issue to be
forthcoming from an expert was misplaced is sufficiently demonstrated by the
following observation by Hashim Yeop A. Sani J (as he then was) in Public
Prosecutor V. Mohamed Kassim Bin Yatim [1976] 1 LNS 105:
It is settled law that evidence by a handwriting expert can never be
conclusive because it is only opinion evidence - see Ishwari Prasad v.
Mohd. Isa AIR [1963] SC 1728.
The assessment of evidence of handwriting experts was also dealt with in
Indar Datt v. Emperor AIR 1931 Lah. 408, 413.
In that case In re B. Venkata Row ILR 36 Mad. 159 was cited and also a
quotation from Dr. Lawson's work on the Law of Expert and Opinion Evidence,
which runs as follows:
The evidence of the genuineness of the signature based upon the comparison
of handwriting and of the opinion of experts is entitled to proper
consideration and weight. It must be confessed however that it is of the
lowest order of evidence or of the most unsatisfactory character. We believe
that in this opinion experienced laymen unite with the members of the legal
profession. Of all kinds of evidence admitted in a Court this is the most
unsatisfactory. It is so weak and decrepit as scarcely to deserve a place in
our system of jurisprudence.
Although these remarks were made in the context of a criminal trial, they
are, in our view, of universal application.
We are conscious that as an appellate Court we have not had the opportunity
of seeing and hearing the witnesses who gave their evidence at the trial.
But the learned Judge, for the reasons we have thus far given, did not take
advantage of the benefit that was available to him. He did not, as we
earlier observed, reject the appellant's evidence as being untrue. He merely
said that the evidence adduced by her did not establish the allegation of
forgery either beyond reasonable doubt or even upon a balance of
probabilities. His error in this instance was occasioned by his failure to
judicially appreciate the nature and quality of the evidence before him and
to take advantage of the audiovisual opportunity made available to him by
the law.
We are equally conscious of our duty and function as an appellate Court. The
present appeal is by way of re-hearing and we are obliged to exercise those
statutory powers conferred upon us in order to achieve substantial justice.
And in the performance of the task entrusted to us by Parliament, we remind
ourselves of what was said by Lord Pearce in his dissent in Onassis &
Calogeropoulos v. Vergottis [1968] 2 Lloyd's Rep. 403 , 430:
The function of a Court of Appeal is to set aside a judgment that should not
be allowed to stand because it occasions a substantial wrong or a
miscarriage of justice. That wrong or miscarriage of justice may consist of
a judgment in favour of the wrong party. It may also consist of a failure in
the judicial process to which both parties are entitled as of right, namely,
the weighing of their respective cases and contentions. Such failure may
constitute a wrong or miscarriage of justice even though it may appear that
the appellant may in the end fail to secure a judgment in his favour. But
the fact that the right party seems to have succeeded in the Court below
will naturally make a Court of Appeal extremely reluctant to interfere, and
it would only do so in the rarest cases.
Such matters are questions of degree.
We are satisfied that if the learned Judge had directed himself correctly
upon the standard of proof and judicially appreciated the evidence before
him, he would have come to the conclusion that the appellant had established
her case and proved that the impugned instrument of transfer was a forgery.
The direct evidence of the appellant is neither inherently incredible nor
inherently improbable. Indeed, it is, as we have observed earlier,
corroborated by the evidence of surrounding circumstances. As such, in the
present instance, we will be in dereliction of our statutory duty if we
decline to intervene and substitute our views for those expressed by the
Judge.
For the reasons given, we would answer the second subsidiary question in the
negative and resolve the first issue in the appellant's favour.
The Second Issue: Deferred or Immediate Indefeasibility?
There is no dispute between the parties as to the relevant written law that
is to be applied to the facts of this case. It is the National Land Code (Penang
And Malacca Titles) Act 1963. By reason of its provisions, the certainty of
title is to be determined by reference to the National Land Code, 1965 ('the
Code'). However, the question that has arisen for acute decision in the
present appeal is one that, so far as we are aware, has not been decided by
any Court in this country. We are therefore compelled to treat this as a
case of first impression upon the important question whether the Code
creates immediate or deferred indefeasibility in favour of a registered
proprietor of land.
As we observed very early in this judgment, the learned Judge held that even
if the instrument of transfer in question was forged, the respondent
nevertheless obtained an indefeasible title to the said land. He therefore
ruled in favour of immediate indefeasibility. In coming to this conclusion,
the learned Judge rejected the following opinion expressed by Dr. David Wong
at p. 361 of his work "Tenure and Land Dealings in Malay States":
Forgery as a ground for vitiating a registered title, as set out in s.
340(2)(b) of the Malaysian National Land Code, marks a focal point of
difference between the Malaysian Torrens system and those where Frazer v.
Walker [1967] AC 569 applies. In Choo Loong v. Lip Kwai Kow [1930] 7 FMSLR
213 a person by a trick induced an illiterate proprietor of land to hand her
grant (document of title) to him, and created a registered charge in favour
of another person by way of a forgery. The proprietor succeeded in this
action for an order to have the charge cancelled. In Ong Lock Cho v. Quek
Shin & Sons Ltd. [1941] MLJ 88, a registered proprietor entrusted his
document of title to his solicitor for the purpose of creating a charge. A
clerk in the solicitor's firm by forgery created a different charge in
favour of another person. It was held that the forged charge was a nullity
and must be set aside.
These two cases were decisions under s. 42 of the former FMS Land Code which
as has been noted was substantially similar to the present s. 340.
Even prior to the former FMS Land Code, when the early registration of
titles legislation in its principal 'indefeasibility' provision only
specified 'fraud' and 'misrepresentation' as the exceptions thereto, the
Courts in the Malay States had recognised forgery as a ground for defeating
a registered title. In one of these decisions, namely Ong Lian v. Tan Eng
Jin [1917] l FMSLR 325, it was held by the Court of Appeal that a bona fide
purchaser for value, taking from a proprietor who had come onto the register
by registration of a forged transfer, acquired an indefeasible title. The
protection for subsequent purchasers is now clearly provided for by the
present s. 340(3).
It will be realised that 'forgery' under the Malaysian provision is a
distinct ground on its own. The Singapore Land Titles Act, Cap. 276, also
expressly sets out 'forgery' as an exception to indefeasibility, but places
'forgery' side by side with 'fraud' subject to the same limitation, viz.,
that for a registered title to be vulnerable in either case the proprietor
(or his agent) must be a party to or have colluded in the 'fraud' or
'forgery'. This would appear to treat forgery as a species of fraud. Under
the Malaysian provision, the very fact of forgery suffices by itself in
making a registered title defeasible irrespective of the absence of
knowledge or implication on the part of the proprietor.
In other words, it affects the immediate proprietor even if he be an
innocent purchaser for value.
The learned Judge also rejected a similar view expressed by Teoh Keang Sood
and Khaw Lake Tee in "Land Law in Malaysia - Cases and Commentary", 1st Edn.
and by Judith Sihombing in the 2nd Edn. of her work "National Land Code - A
Commentary". His reasons for this rejection may be conveniently summarised
as follows:
1. The Privy Council in Frazer v. Walker [1967] AC 569 had resolved the
conflict of opinion that had arisen between its earlier decisions in Gibbs
v. Messer [1891] AC 248 and Assets Co. Ltd. v. Mere Roihi [1905] AC 176 by
ruling in favour of immediate indefeasibility;
2.Section 340 of the Code is at variance with its precursor, s. 42 of the
F.M.S. Land Code (Cap. 138) on the effect of forgery upon the title of a
registered proprietor. Whereas sub-s. (iii) of s. 42 expressly provided that
registration obtained by forgery "shall be void", s. 340(2)(b) of the Code
merely says that the title or interest of a registered proprietor shall not
be indefeasible "where registration was obtained by forgery". Therefore,
registration obtained by forgery is not void.
3. The former Federal Court in Doshi V. Yeoh Tiong Lay [1974] 1 LNS 30
correctly held that registration under the Code conferred a title that was
immediately indefeasible. The criticism of this decision by Judith Sihombing
in the second edition of her work is unwarranted because there is a
distinction between a forged instrument of transfer and the effect of
registration of such an instrument.
4. The proviso to sub-s. (3) of the Code which reads:
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 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.
5. The appellant had asked for a declaration which is essentially a
discretionary form of relief. The respondent was not a party to the fraud
that resulted in the forgery of the impugned transfer. Therefore, discretion
should be exercised in its favour and the relief should be refused. Unless
the Code expressly declared a transfer to be void (as did s. 42(iii) of the
Land Code) the principles of common law ought to apply.
The learned Judge then concluded in the following terms:
For the above reasons, I hold that even had I found that forgery had been
proved beyond reasonable doubt, the defendant is nevertheless protected and
has acquired indefeasible title over the said properties by virtue of the
proviso in s. 340(3) of the National Land Code. Thus, the law on forgery
obtaining in other Torrens systems is also applicable in our Torrens system.
It is true that registered landowners should be protected from being
divested of their registered interest through fraud or forgery, yet it is
also necessary, for the economic well-being of the nation to retain the
confidence of prospective innocent purchasers of landed property.
Counsel for the appellant has submitted that the Judge misdirected himself
upon the law relating to the indefeasibility of title. It is Mr. Lim Kean
Siew's argument that the academic writers with whom the learned Judge found
himself in disagreement are correct in the views expressed by them. The
learned Judge, on the other hand, was wrong in relying - as did the former
Federal Court in Doshi(supra) - upon the pronouncement of the Judicial
Committee in Frazer v. Walker (supra) to hold that registration conferred
immediate indefeasibility under our version of the Torrens system. The
decision in Frazer turned upon the construction of the particular provision
in the New Zealand statute that governed the case. That provision is
constructed in language that is fundamentally different from s. 340 of the
Code. It is therefore wrong to treat the decision in Frazer as concluding
without question the meaning that is to be attached to the Torrens doctrine
of indefeasibility housed in the Code. On a proper construction of s. 340, a
registration obtained by forgery is null and void and of no effect. The
words "any purchaser" appearing in the proviso to s. 340(3) refer to a
subsequent and not to an immediate purchaser. The indefeasibility conferred
by the Code is therefore deferred and not immediate.
Encik Ghazi in supporting the judgment appealed against, argued that the
words of the proviso should be given their plain and ordinary meaning.
Parliament intended for there to be immediate indefeasibility. Hence the use
of the phrase "any purchaser".
Having considered the rival contentions advanced before us and having
examined the law upon the subject, we are persuaded that there is merit in
the submissions made by Mr. Lim Kean Siew. Our reasons in accepting his
arguments in preference to the views expressed by the learned Judge are as
follows.
First, we are of opinion that the proper approach is to interpret s. 340 of
the Code as a whole, uninfluenced by any judicial or academic comment upon
its effect. When read as a whole, the section makes it clear that, save in
the limited cases enumerated in its second sub-s., the title of a registered
proprietor shall be indefeasible; that is to say, that it cannot be
impeached. But such title, in the words of the legislature, "shall not be
indefeasible" in each of the instances set out in the second sub-s. to s.
340. This means that in each situation envisaged by the Code under s.
340(2), the title of a registered proprietor shall be defeated or, in other
words, liable to be set aside.
Second, registration under the Code is not an abstract concept. The Code (in
Parts 13 through 17) after identifying the kinds of dealings that may be had
under it, goes on to specify (in Part 18) the method by which each dealing
may be secured by registration. Section 292, sets out the instruments that
may be registered, while s. 304 describes, inter alia, the manner in which
registration is to be effected. We find that a reading of the relevant
provisions under Part 18 of the Code makes it amply clear that there cannot
be any registration without an instrument. It follows that the trial Judge
was wrong in drawing a distinction between a forged instrument and the
effect of its registration. The decision in Doshi (supra) which the Judge
relied upon in making the distinction must, of course, be addressed
separately. But what calls for attention is the fact that one of the methods
that may be employed to defeat the title of a registered proprietor is
impugning the very instrument of transfer by means of which he obtained his
title. If, on the facts of a given case, it is demonstrated to the
satisfaction of the Court that the particular instrument was forged, or was,
for some other reason, insufficient or void, then, the title of the
registered proprietor may be set aside. This rather elementary principle was
unfortunately overlooked by the learned Judge.
Third, it is axiomatic that a forged instrument is null and void and of no
effect. (See, Kreditbank Cassel G.M.B.H. v. Schenkers Ltd. [1927] 1 KB 826,
at p. 834, per Bankes LJ). It is not merely voidable. In the absence of an
express statutory direction to the contrary, no rights whatsoever arise in
favour of one who acquires title under a void instrument. The extent to
which statute has intervened in the case of a registration of title obtained
by means of a forged instrument is a matter that we will deal with
separately at a later stage. For the present it is sufficient to note that
there are passages in the judgment of the learned Judge which are certainly
open to the interpretation that he regarded the effect of forgery under s.
340(2)(b) of the Code to merely render the relevant instrument voidable. And
he appears to have reached that conclusion based upon his impression that s.
340(2)(b) is differently constructed from its precursor. In this the Judge
was clearly in error. As pointed out by the Federal Court in Krishnadas a/l
Achutan Nair & Ors. v. Maniyam a/l Samykano [1997] 1 CLJ 636 , the
difference in language between these two sections does not result in any
difference either in meaning or consequence. Accordingly, we are of the
opinion that the difference in language between the two provisions, namely,
s. 42(iii) of the Land Code (Cap. 138) and s. 340(2)(b) does not produce any
difference in consequence. No doubt, the former provision expressly declared
that registration obtained, inter alia, by forgery "shall be void", whereas
the latter does not. But what the latter does is to render defeasible,
registration obtained by a forged instrument. Defeasibility is occasioned in
this instance because a forged instrument is a nullity, incapable of
conferring any right, interest or title in favour of the acquirer of
immovable property.
It follows from what we have said in the preceding paragraph - and this is
the fourth reason we advance for disagreeing with the learned Judge - that
s. 340 is constructed in such a fashion as to make defeasible only the title
of the immediate acquirer of land. The section, however, protects a
purchaser who, in good faith and for valuable consideration, acquires title
to land. It also protects the successors in title of such a purchaser. In
our judgment, the words "any purchaser" appearing in the proviso to s.
340(3) do not include a registered proprietor whose immediate title is
rendered defeasible by one or more of the vitiating elements specified in
the second sub-s. to s. 340 of the Code. Any other construction would, in
our view, denude sub-s. (2) of all effect. The section should be read as
making defeasible the title of a proprietor who gets onto the register by
means of one or more of the methods specified in the second subsection.
However, if such a registered proprietor were to dispose of the land to a
third party who, in good faith pays the purchase price, then, the latter, as
well as all those who come onto the register after him, take title free of
any taint.
In our judgment, the learned Judge was wrong in applying the decision of the
Privy Council in Frazer v. Walker (supra) to support the conclusion that
under the Code an acquirer of land who places himself upon the register by
means of a forged document obtains an immediately indefeasible title if he
is a bonafide purchaser for value. The decision in Frazer turned upon the
meaning to be attached to certain provisions of the Land Transfer Act 1952
of New Zealand, in particular ss. 62, 182 and 183 thereof which read as
follows:
62. Notwithstanding the existence in any other person of any estate or
interest, whether derived by grant from the Crown or otherwise, which but
for this Act might be held to be paramount or to have priority, [but subject
to the provisions of Part 1 of the Land Transfer Amendment Act 1963], the
registered proprietor of land or of any estate or interest in land under the
provisions of this Act shall, except in case of fraud, hold the same subject
to such encumbrances, liens, estates, or interests as may be notified on the
folium of the register constituted by the grant or certificate of title of
the land, but absolutely free from all other encumbrances, liens, estates,
or interests whatsoever,
(a) Except the estate or interest of a proprietor claiming the same land
under a prior certificate of title or under a prior grant registered under
the provisions of this Act; and
(b) Except so far as regards the omission or misdescription of any right of
way or other easement created in or existing upon any land; and
(c) Except so far as regards any portion of land that may be erroneously
included in the grant, certificate of title, lease, or other instrument
evidencing the title of the registered proprietor by wrong description of
parcels or of boundaries.
Except in the case of fraud, no person contracting or dealing with or taking
or proposing to take a transfer from the registered proprietor of any
registered estate or interest shall be required or in any manner concerned
to inquire into or ascertain the circumstances in or the consideration for
which that registered owner or any previous registered owner of the estate
or interest in question is or was registered, or to see to the application
of the purchase money or of any part thereof, or shall be affected by
notice, direct or constructive, of any trust or unregistered interest, any
rule of law or equity to the contrary notwithstanding, and the knowledge
that any such trust or unregistered interest is in existence shall not of
itself be imputed as fraud.
183(1) Nothing in this Act shall be so interpreted as to render subject to
action for recovery of damages, or for possession, or to deprivation of the
estate or interest in respect of which he is registered as proprietor, any
purchaser or mortgagee bona fide for valuable consideration of land under
the provisions of this Act on the ground that his vendor or mortgagor may
have been registered as proprietor through fraud or error, or under any void
or voidable instrument, or may have derived from or through a person
registered as proprietor through fraud or error, or under any void or
voidable instrument, and this whether the fraud or error consists in wrong
description of the boundaries or of the parcels of any land, or otherwise
howsoever.
(2) This section shall be read subject to the provisions of ss. 77 and 79
hereof.
The New Zealand provisions giving effect to the Torrens doctrine of
indefeasibility are therefore fundamentally different from s. 340 of the
Code. It follows that cases decided under the New Zealand statute must not
be treated as concluding the effect of indefeasibility under our law. We do
not propose to enter upon a detailed analysis of the differences between the
New Zealand provisions and those in the Code. Suffice to say that the
sections of the Land Transfer Act 1952 reproduced above, when properly
construed, create immediate indefeasibility in favour of an acquirer of land
in New Zealand. On the other hand, s. 340 of the Code makes defeasible the
title of a registered proprietor tainted by one or more of the vitiating
elements set out in its second subsection 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.
That brings us to the rather controversial decision in Doshi V. Yeoh Tiong
Lay [1974] 1 LNS 30 where Gill CJ (Malaya) appears to have made the
following pronouncement which appears to favour the doctrine of immediate
indefeasibility under the Code:
I am also of the opinion that third parties can acquire rights where a
contract is merely unenforceable and not illegal.
Assuming that the loan agreement was illegal so that for that reason the
transfer from Chooi Mun Sou to Equitable Nominees was void, and assuming
that that transfer was also void because of the falsity of the attestation
clause, registration of the transfer from Equitable Nominees to the
respondent was effective to vest title in him as a registered proprietor
notwithstanding that he acquired his interest under an instrument that was
void. (See Frazer v. Walker). In Breskvar v. Wall [1972] 46 ALJR 68, 70,
Barwick CJ said:
The Torrens system of registered title of which the Act is a form is not a
system of registration of title but a system of title by registration. That
which the certificate of title describes is not the title which the
registered proprietor formerly had, or which but for registration would have
had. The title it certifies is not historical or derivative. It is the title
which registration itself has vested in the proprietor. Consequently a
registration which results from a void instrument is effective according to
the terms of the registration. It matters not what the cause or reason for
which the instrument is void. The affirmation by the Privy Council in Frazer
v. Walker of the decision of the Supreme Court of New Zealand in Boyd
v.Mayor of Wellington, [1924] NZLR 1174,
1223, now places that conclusion beyond question.' (Emphasis added.)
It is plain that the learned Chief Justice of Malaya relied upon the
decision in Frazer to arrive at his conclusion. As we have pointed out, the
Privy Council in that case was considering statutory provisions that bear as
much similarity to those in the Code as cheese does to chalk. The
observations of Gill CJ (Malaya) in Doshi V. Yeoh Tiong Lay [1974] 1 LNS 30
above quoted, made, as they were, without an analysis of s. 340 of the Code
and an appreciation of the material differences between the New Zealand
statute and our written law must be regarded as per incuriam. It therefore
comes as no surprise that authors of Malaysian texts upon the subject have
unanimously rejected the views expressed by the learned Chief Justice of
Malaya in the foregoing passage.
In our judgment, the following opinion expressed by Dr. Visu Sinnadurai in
his work entitled "Sale and Purchase of Real Property in Malaysia"
accurately summarises the position that obtains under the Code:
In Malaysia, it is submitted that under s. 340 of the National Land Code,
deferred indefeasibility applies. The registered proprietor who had acquired
his title by registration of a void or voidable instrument does not acquire
an indefeasible title under s. 340(2)(b). The indefeasibility is postponed
until the time when a subsequent purchaser acquires the title in good faith
and for valuable consideration.
In other words, a registered proprietor, the vendor, under a sale and
purchase agreement, even though he himself does not possess an indefeasible
title, may give an indefeasible title to a bona fide purchaser.
We would add that the following obiter dictum of Hashim Yeop A. Sani J
(later CJ, Malaya) in Mohammad bin Buyong v. Pemungut Hasil Tanah Gombak &
Ors [1982] 2 MLJ 53, 54 reasonably supports the view held by such academic
writers as Dr. David Wong and Judith Sihombing in their respective works
which is to the like effect as that expressed by Dr. Visu Sinnadurai:
What the appellant is claiming is in fact the protection of s. 340 of the
National Land Code. The doctrine carried in s. 340 is the doctrine of
indefeasibility. What that section protects is that the title or interest of
any person for the time being registered as proprietor of any land shall be
indefeasible. Sub-s. (2) of the section provides for the exceptions in that
the title or interest shall not be indefeasible in any case of fraud or
misrepresentation or where registration was obtained by forgery or by means
of an insufficient or void instrument or where the title or interest was
unlawfully acquired. This provision deals with what is called 'deferred
indefeasibility' about which we are not presently concerned.
We express our agreement with the foregoing interpretation placed upon s.
340 of the Code by this eminent Judge. We also consider the following
passage in the judgment of Dixon J in Clements v. Ellis [1934] 51 CLR 217,
237, (a decision under the Transfer of Land Act 1915 of Victoria) to be a
more appropriate description of the kind of indefeasibility that obtains
under the Code:
The principle, in my opinion, is that a prior registered estate or interest,
for the removal of which from the register there is no authority but a
forged or void instrument, is not destroyed unless afterwards a person, who,
according to the existing condition of the register is entitled to do so,
gives a registrable instrument which is taken bona fide for value and
registered.
The justification for destroying an existing legal estate or interest, which
has already been duly established upon the register, is, in other words,
found only in the necessity of protecting those who subsequently deal in
good faith and for value in a manner, which, upon its face, the register
appears to authorize, and who then obtain registration.
We therefore resolve the second issue in the appellant's favour and hold
that the respondent did not obtain an indefeasible title to the said lands.
The Result
For the reasons that we have given in this judgment the appeal succeeds. The
judgment and orders made by the Judge are hereby set aside. In their stead
there shall be judgment for the appellant in terms of prayers (1) and (2) of
her amended statement of claim. The declarations and orders sought by her in
these prayers are accordingly granted. The orders sought in prayer (2) shall
take effect forthwith. However her claim for damages is denied. The costs of
this appeal and all proceedings in the Court below shall be taxed and be
paid by the respondent to the appellant. The cross appeal fails and is, for
the reasons already given, also dismissed with costs. Lastly, by way of
consequential order, we direct that the respondent do forthwith surrender
the duplicate issue document of title to the said lands to the appropriate
authority for cancellation.
Before we conclude, we wish to thank both Counsel for their assistance
during argument. We must also express our thanks to the several academic
writers whose works have proved to be of immense value to us during our
deliberations in this matter. It is unusual for a Court to single out any
particular author or academic. But we propose to make an exception in this
case. The works by Dr. David Wong and Judith Sihombing have been of
particular assistance, although we have found ourselves being unable to
agree with all that they may have said upon the subject.
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