FEDERAL COURT OF MALAYSIA

13 DECEMBER 2000

Adorna Properties Sdn Bhd

- vs -

Boonsom Boonyanit
 

Coram

MOHD EUSOFF CHIN CJ (MALAYSIA)
WAN ADNAN ISMAIL CJ (MALAYA)
ABU MANSOR ALI FCJ


Judgment

Mohd Eusoff Chin, CJ (Malaysia)
(delivering the judgment of the court)

1. For the purpose of this appeal it is sufficient to give only the brief facts of the case.

   • The plaintiff who is the respondent in this appeal, and who is a Thai citizen, claimed that she was the registered proprietor of lands lots 3606 & 3607 Mukim 18, Tanjung Bungah, Penang.

   • She claimed that she was the true Mrs. Boonsom Boonyanit holder of Thai passport No D080757, and that another person holding a Thai passport No 033852, bearing the name of Mrs. Boonsom Boonyanit had forged her (the plaintiffs) signature, and had sold and transferred her lands to the defendant Adorna Properties Sdn Bhd which is the appellant in this appeal.

   • Before the sale, the lands had been valued by an independent property valuer. There were negotiations on the purchase price, and on December 15, 1988 a sale and purchase agreement was signed, and the lands were finally transferred to the purchaser / appellant on May 24, 1989.

   • The appellant, Adorna Properties claimed that it had no knowledge that the transfer documents were forged by someone who was not the true owner, and had no reason to suspect that they were forged. Both the vendor and purchaser / appellant were represented by different solicitors in the sale and purchase of the lands. Further, it was not disputed that the sale was an arm's length transaction.

The detailed facts of this case can be found in the High Court judgment which is reported in [1995] 2 AMR 1828.

2. The High Court dismissed the plaintiffs claim that she (plaintiff) be restored, as the registered owner of the lands. On appeal the Court of Appeal reversed the order of the High Court. Hence this appeal to the Federal Court. The Court of Appeal judgment is reported in [1997] 2 AMR 1813.
    

3. Before us, two questions of law were posed for decision and the first is -
    

   1. For proof of forgery such as the one under appeal, whether the standard of proof is on balance of probabilities, or on beyond reasonable doubt?
      The same arguments which the parties had put before both the High Court and the Court of Appeal were again argued before us. The High Court held that forgery must be proved beyond reasonable doubt, while the Court of Appeal held that it should be on a balance of probabilities. For the reasons given by the Court of Appeal - see [1997] 2 AMR 1813 at 1833-1838, we entirely agree that the standard of proof required to prove 'forgery' in civil cases is one on a balance of probabilities.
       

   The other question put for argument and decision in this appeal is -

    

   1. Whether the defendant, a bona fide purchaser for valuable consideration without notice, acquired an indefeasible title to the properties (the lands) by virtue of s 340(3) of the National Land Code 1965?
       

4. The Court of Appeal held that the signature on the document of transfer was forged. The High Court Judge had stated in his judgment that had he adopted the balance of probability standard of proof, there was sufficient evidence to show that the plaintiffs signature was forged.
    

5. Both the High Court and Court of Appeal analysed the authorities as early as the year 1917, i.e. Ong Lian v Tan Eng Jin [1917] 1 FM SLR 327, Choo Loong v Lip Kwai Kow [1930] 7 FM SLR 213; Ong Lock Cho v Quek Shin & Sons Ltd [1941] MLJ 88; Frazer v Walker [1967] AC 569; Doshi v Yeoh Tiong Lay [1975] 1 MLJ 85; all based on earlier legislations i.e.. s 42 FMS Land Code and ss 62, 182, 183 of the New Zealand Land Transfer Act 1952. Both courts also considered carefully Doshi v Yeoh Tiong Lay [1975] 1 MLJ 85. The High Court held that Doshi was correctly decided by the then Federal Court in that the registration conferred an immediate indefeasibility under our version of the Torrens system, whereas the Court of Appeal held otherwise.
    

6. The present National Land Code (NLC) was enacted by Parliament in 1965 to be applied to all the states in West Malaysia. In doing so s 338 of the NLC repealed all earlier land enactments of the States, and those enactments repealed, are enumerated in the Eleventh Schedule to the NLC.
    

7. We are aware that any sovereign country may adopt and apply the Torrens system, but in adopting the system, it may modify the system to suit its own needs. Our Parliament did not slavishly follow the wordings of ss 62, 182 and 183 of Land Transfer Act 1952 of New Zealand, nor the wordings of s 42 of the FMS Land Code. Therefore, to follow the arguments in earlier decisions not based on s 340 of the NLC would only lead to utter confusion. We would therefore proceed to interpret s 340 NLC as it stands, and find what was the real intention of Parliament when enacting it, for, the object of interpretation is to discover the intention of Parliament, and the intention of Parliament must be deduced from the language used.
    

8. Section 340 of the NLC states -
   
   340.Registration to confer indefeasible title or interest, except in certain circumstances.
   
   (1) The title or interest of any person or body for the time being registered as proprietor of any land, or in whose name any lease, charge or easement is for the time being registered, shall, subject to the following provisions of this section, be indefeasible.
   
   (2) The title or interest of any such person or body shall not be indefeasible -
   
   (a) in any case of fraud or misrepresentation to which the person or body, or any agent of the person or body, was a party or privy; or
   
   (b) where registration was obtained by forgery, or by means of an insufficient or void instrument; or
   
   
   
   (c)
   where the title or interest was unlawfully acquired by the person or body in the purported exercise of any power or authority conferred by any written law.
   
   
   (3)
   Where the title or interest of any person or body is defensible by reason of any of the circumstances specified in sub-section (2)-
   
   
   
   (a)
   it shall be liable to be set aside in the hands of any person or body to whom it may subsequently be transferred; and
   
   
   
   (b)
   any interest subsequently granted thereout shall be liable to be set aside in the hands of any person or body in whom it is for the time being vested:
   
   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.
   
   
   (4)
   Nothing in this section shall prejudice or prevent -
   
   
   
   (a)
   the exercise in respect of any land or interest of any power or forfeiture or sale conferred by this Act or any written law for the time being in force, or any power of avoidance conferred by any such law; or
   
   
   
   (b)
   the determination of any title or interest by operation of law.
   
   [emphasis added]
   
   
   Subsection (1) of s 340 of the NLC is worded in plain language. It says that the "title or interest of any person for the time being registered as proprietor of any land... shall be indefeasible" subject to the provisions contained in the section.
   
   We must bear in mind that a person may be registered as the sole proprietor or as a co-proprietor of a piece of land, but he is for the purpose of this section, still a registered proprietor. He might have become a registered proprietor of the land because he had bought it, or he got it by way of a gift, or by way of transmission upon the death of his parent or spouse. Therefore, a piece of land may have one proprietor or many co-proprietors. Subsection (1) of s 340 NLC deals with everyone of them as long as he is currently a registered proprietor of that piece of land. So long as his name is on the land register, his title or interest is indefeasible unless caught by subsections (2) and (3).
   
   Subsection (2) of s 340 NLC uses the word "such". When the word "such" occurs in a section it must not be ignored, but must be read as referring back to the preceding provision - Ellis v Ellis [1962] 1 WLR 227.
   
   Subsection (2) states that the title of any such person, i.e. any registered proprietor or co-proprietor for the time being, is defeasible if one of the three circumstances in subsection (2)(a), (b) or (c) occurs. We are concerned here with subsection (2)(b) where the registration had been obtained by forgery.
   
   Subsection (3) says that where that title is defeasible under any of the three circumstances enumerated under subsection (2), the title of the registered proprietor to whom the land was subsequently transferred under the forged document, is liable to be set aside. Similarly, subsection 3(b) says any interest under any lease, charge or easement subsequently 'granted thereout' i.e. out of the forged document may be set aside.
   
   However, subsection (3) of s 340 NLC does not stop there. It contains a proviso.
   
   It is a cardinal rule of interpretation that a proviso to a particular section or provision of a statute only embraces the field which is covered by the main provision. The object of a proviso is to qualify or limit something which has gone before it. Its proper function is to except and deal with a case which would otherwise fall within the general language of the main provision of the statute, and its effect is confined to that case. In other words, the object of a proviso is to carve out from the substantive section or clause of a statute, a class or category of persons or things to whom or to which the main section does not apply. The proviso cannot be divorced from the main clause to which it is attached. It must be considered together with the section or subsection of the statute to which it stands as a proviso.
   
   The proviso to subsection (3) of s 340 of the NLC dealt with only one class or category of registered proprietors for the time being. It excludes from the main provision of subsection (3) this category of registered proprietors so that these proprietors are not caught by the main provision of this sub-section. Who are these proprietors? The proviso says that any purchaser in good faith and for valuable consideration or any person or body claiming through or under him are excluded from the application of the substantive provision of subsection (3).
   
   For this category of registered proprietors they obtained immediate indefeasibility notwithstanding that they acquired their titles under a forged document. We, therefore, agree with the High Court Judge that, on the facts of this case, even if the instrument of transfer was forged, the respondent nevertheless obtained an indefeasible title to the said lands.
   
   We allow this appeal with costs here and the courts below to be taxed and paid by the respondent to the appellant.[a]
   
   
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   Cases
   
   Boonsom Boonyanit v Adorna Properties Sdn Bhd [1995] 2 AMR 1828; Boonsom Boonyanit v Adorna Properties Sdn Bhd [1997] 2 AMR 1813; Choo Loong v Lip Kwai Kow [1930] 7 FM SLR 213; Doshi v Yeoh Tiong Lay [1975] 1 MLJ 85; Ellis v Ellis [1962] 1WLR 227; Frazer v Walker [1967] AC 569; Ong Lian v Tan Eng Jin [1917] 1 FM SLR 327; Ong Lock Cho v Quek Shin & Sons Ltd [1941] MLJ 881
   
   Legislations
   
   Malaysia
   
   FMS Land Code: s.42
   
   National Land Code 1965: s.338, s.340
   
   New Zealand
   
   Land Transfer Act 1952: s.62, s.182, s.183
   
   Representations
   
   Ghazi Ishak, Murali Navaratnam and K.L. Ong (Ghazi & Lim) for Appellant
   
   K.C. Lim, B.S. Sidhu and Gerald Samuel (Lim Kean Siew & Co) for Respondent.
   
   Notes:-
   
   This decision is also reported at [2001] 1 AMR 665.
   
   
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   [a] The landowner filed a motion under Rule 137 of the Rules of the Federal Court 1995 (FCR) to review the decision. On 27 August 2004, the Federal Court (PS Gill FCJ, Rahmah Hussain FCJ, Richard Malanjum JCA) dismissed that motion on account of a preliminary objection by the company. PS Gill FCJ, delivered the judgment of the court..
   
   27 AUGUST 2004
   
   
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   Judgment
   
   PS Gill FCJ
   
   (delivering the judgment of the court)
   
   Before us is an application by way of notice of motion made pursuant to Rule 137 of the Rules of the Federal Court 1995. The applicant, Kobchai Sosothikul, is the substituted party for his late mother Boonsom Boonyanit the former registered owner of parcels of land known as Lots 3606 & 3607 Mukim 18, Tanjung Bungah, Penang ("the said lands"). One of the orders sought in this application is "that the judgment of this honourable court pronounced on December 22, 2000 be set aside and that this appeal be reheard by this honourable court on a date to be fixed'.
   
   On December 22, 2000 this court delivered its judgment ("the main judgment") in an appeal by the respondent in this application whereby it was held, inter alia, that in view of the proviso in subsection (3) of s 340 of the National Land Code 1965 any purchaser of land in good faith and for valuable consideration is excluded from the application of the substantive provision of subsection (3) thereof. Thus, he obtains an immediate indefeasible title even if the instrument of transfer is forged. Accordingly this court held that "on the facts of this case", the appellant ("the respondent herein") obtained an indefeasible title to the said lands'
   
   Now, the facts of this case upon which the present application arises have been well rehearsed in the main judgment as well in the judgment of the Court of Appeal, (see Adorna Properties Sdn Bhd v Boonsom Boonyanit [2001] 1 AMR 665; [2001] 1 MLJ 241 and Boonsom Boonyanit v Adorna Properties Sdn Bhd [1997] 2 AMR 1812; [1997] 2 MLJ 62).
   
   And it is not in dispute that the present applicant being dissatisfied with the main judgment filed an application by way of notice of motion on February 16, 2001 ("the first application") ("encl.30") pursuant to the same Rule 137 of the Rules of the Federal Court 1995 seeking orders, inter alia, "that the judgment of this honourable court pronounced on December 22, 2000 be set aside and that this appeal be reheard by this honourable court on a date to be fixed" (prayer 3). The main ground advanced was coram failure in that when the main judgment was delivered "the honourable Justice Mohd Eusoff Chin had retired on December 19, 2000'.
   
   On February 26, 2001 this court comprising of Mr. Justice Steve LK Shim CJ (Sabah & Sarawak) together with Mr. Justice Haidar Mohd Noor FCJ (as he then was) and the late Justice Mohtar Abdullah FCJ heard the first application and having listened to the submissions of all the parties, proceeded to dismiss it with costs.
   
   At the outset of the hearing before us learned counsel for the respondent raised a preliminary objection on the jurisdiction of this court to hear this present application. It was submitted that the order prayed for in the present application had already been dealt with in the first application. It was also contended that the order in respect of the main judgment had been perfected in that it had been sealed and extracted. He urged this court to dismiss this present application notwithstanding the ground relied upon, namely, "in the interest of justice and to prevent injustice". Learned counsel said that there should be finality to any litigation. It was also submitted that no party should be permitted to ventilate his grievances by way of instalment as was done by the applicant in this present application. And in answer to our query learned counsel conceded that under Rule 137 successive applications are permissible provided grave injustice could be shown.
   
   In response to the preliminary objection learned counsel for the applicant submitted, inter alia, that there should be no issue of res judicata since for the doctrine to apply abuse must be shown. He also contended that since there was no judicial determination as such the main judgment should be set aside on the ground of nullity. It was also submitted that injustice had occasioned in that the main judgment resulted in the rightful owner losing her lands vide forged documents. A distinction was also drawn between the first and the present application in that the latter relies on the residuary jurisdiction or inherent jurisdiction of this court to set aside the main judgment in the interest of justice and to prevent injustice.
   
   We took time to consider the preliminary issue raised in view of the implication that may arise from our decision. We deferred hearing the merits or his application since our decision on the preliminary objection could have a determining effect on the matter as a whole. And in the course of our deliberation we read and re-read Rule 137 and its application as pronounced by this court in several cases. (See: Lye Thai Sang v Faber Merlin (M) Sdn Bhd [1986] 1 MLJ 166; Tai Choi Yu v The Chief Registrar of the Federal Court [1998] 2 AMR 1184; [1998] 2 MLJ 474; Chia Yan Tek v Ng Swee Kiat [2001] 4 AMR 3921; [2001] 4 MLJ 1; MGG Pillai v Vincent Tan [2002] 3 AMR 2917; [2002] 2 MLJ 673 and Megat Najmuddin v Bank Bumiputra Bhd [2002] 1 AMR 1089; [2002] 1 MLJ 385).
   
   For convenience, Rule 137 reads:
   
   For the removal of doubt it is hereby declared that nothing in these Rules shall be deemed to limit or affect the inherent powers of the court to hear any application or to make any order as may be necessary to prevent injustice or to prevent an abuse of the process of the court.
   
   
   Without rendering our view on the legal position of Rule 137 vis-à-vis of the Courts of Judicature Act 1964, being the enabling statute, and whilst not endorsing any view that the earlier decisions of this court on the said rule set the parameters on the jurisdiction of this court in respect thereof, we are inclined to sustain the preliminary objection and that this present application should therefore be dismissed in limine.
   
   Our reasons may be shortly stated. Firstly, although the consequence and effect of the main judgment may be harsh when viewed without the benefit of the relevant statutory provision, we do not think this is a case where "grave injustice had occasioned" due to clear infringement of any principle of law thereby making it permissible for successive application to be made under the said rule. Without going into the merits of this application we find that the substance of the main judgment revolves in the interpretation of s 340 subsection (3) including the proviso thereof of the National Land Code. That provision reads:
   
   (3)
   Where the title or interest of any person or body is defeasible by reason of any of the circumstances specified in subsection (2) -
   
   (a)
   it shall be liable to be set aside in the hands of any person or body to whom it may subsequently be transferred; and
   
   (b)
   any interest subsequently granted thereout shall be liable to be set aside in the hands of-any person or body in whom it is for the time being vested:
   
   
   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.
   
   
   And having read the reasoning therein and bearing in mind the words used in the said subsection including the proviso we are not convinced that the interpretation given in the main judgment is patently wrong thereby resulting in grave injustice thus warranting successive application under Rule 137. And even if we are wrong in our view, it should be left to another occasion to further debate on the issue. For now we are of the opinion that despite the concession made by learned counsel for the respondent on the issue of successive application this is not a proper case for us to proceed to hear the merits or to grant the order as sought.
   
   Secondly, there is much force to be given to the contention that there should be finality to any litigation. The main judgment was handed down by this court which is the apex court of this country. If the application of Rule 137 is made liberally the likely consequence would be chaos to our system of judicial hierarchy. There would then be nothing to prevent any aggrieved litigant from challenging any decision of this court on the ground of "injustice" vide Rule 137. And if he succeeds in his application there is also nothing to bar the other party from making his own application to overturn such success. In short, there will be no end to the matter. We do not think that was the intention of the legislature when promulgating the said rule.
   
   Thirdly, this present application is weakened by the fact that there was the first application heard and dismissed by this court. And it was never suggested that the ground advanced in this application was not available then. The only reason given before us was "human error". We do not think that is sufficient for us to overlook the implication that to allow this application would tantamount to permitting the applicant to advance his grievances by instalment.
   
   Fourthly, there is also the element of delay on the part of the applicant. The first application was made in 2001 and after its disposal there was a lapse of almost 18 months before the present application was filed on July 12, 2002.
   
   Thus not only the grounds were submitted by way of instalment, there was delay as well. We do not think this court should condone, let alone encourage, such an attitude. A court of law is duty-bound to ensure that the interests of all parties appearing before it are equally safeguarded. Public interest expects it. And it would be highly undesirable and prejudicial to a successful litigant to be kept in limbo while the unsuccessful party ponders as to his next course of action.
   
   This present application is therefore dismissed with costs. Preliminary objection sustained.