Beyond Boonsom Boonyanit
21/01/2006
NST-PROP BY Salleh Buang
In an earlier column titled “How safe are your titles?” (PropertyTimes Nov
26, 2005) I noted that according to the United Nations Guidelines on Land
Administration, a good system should, among other things, provide State
guarantee of land ownership and security of tenure.
For whatever it is worth, our National Land Code 1965 attempted to do just
that under Section 340, read with a couple of other provisions in the same
statute. And since January 1966, when the Code came into force, it has been
generally thought that landowners are adequately protected.
However, that was before the decision of the Federal Court in Adorna
Properties Sdn Bhd vs Boonsom Boonyanit, handed down on Dec 13, 2000. (For
full text of the judgment, visit www.ipsofactoj.com/appeal/2001/Part1/app2001(1)-005.htm.)
The short thrust of the decision is that a registered landowner can lose his
or her property to a bona fide purchaser if the deal was conducted in a
dubious way, where a third party forged the owner’s signature on the
instrument of transfer.
I am not surprised to find that opinion on this judgment is still divided.
There are those, whom I consider to be in the majority, who feel very
strongly that the registered landowner, Boonsom Boonyanit, should continue
to be protected. After all, that is what State guarantee of ownership and
security of tenure is all about.
However, the minority group is equally strong in its belief that the
innocent, bona fide purchaser, should also be protected. After all, the
purchaser was not a party to the fraud or the forgery.
Then there are senior practising lawyers and seasoned academicians who view
the Federal Court decision not from the perspective of the landowner or the
purchaser, but objectively from the words of the law. They seem to be in
agreement that the Federal Court missed the point in construing Section 340
and its three subsections.
Indeed, it is a pity that when the landowner’s son tried to get a subsequent
panel of the Federal Court to review the December 2000 decision, the court
declined to do so. In its Aug 27, 2004 judgment dismissing the son’s
application, the court said, “This was not a case where grave injustice had
occasioned”.
It went on to say, “… the interpretation given by the court was not patently
wrong, thereby resulting in grave injustice warranting a successive
application ...”.
As I read these sentences, I wondered whether there are different shades or
levels of injustice in law - grave and not so grave.
Apart from declaring the earlier decision in 2000 “not patently wrong” and
that it had not resulted in “grave injustice”, the subsequent panel of the
Federal Court also alluded to the principle of “finality in litigation”.
I think most Malaysians can accept that provided “finality” means justice
has been rendered to all parties.
The harsh reality is that since the doors of the judiciary are closed to all
landowners in such cases, what is the solution (or remedy) that the law or
the Government should provide?
As it stands today, the Code is not of much help. The highest court in the
land has spoken. While it is possible, in the future, for another panel of
the Federal Court to decide differently, I am not going to place any big
hope on it.
So, that leaves us with two alternatives: Amend the law, or put in place an
assurance fund. Some friends, former top officials with the Federal land
authority, share my view for an amended law to make it crystal clear that
registered landowners such as Boonsom will have nothing more to worry; that
they will not run the risk of losing their titles in similar circumstances.
Their interests should clearly be protected.
The second alternative will be to put in place either an assurance fund or a
title insurance scheme. The latter take two forms - Government-backed or at
an owner’s initiative. The former will obviously be compulsory, while the
latter (as is the case in several countries) can be at the landowner’s
discretion.
Before we make any final decision on the options that are available in the
second alternative, we should remind ourselves that not all countries
implementing the Torrens system have put in place an assurance fund. Other
than Malaysia, they include Sudan, Fiji, West Germany and Austria.
The point is that the assurance fund is not necessarily an obligatory
component of the Torrens system.
However, in light of Boonsom’s case, should we consider implementing it? If
the assurance fund is not palatable, what of the other alternative - the two
forms of the insurance scheme?
Needless to say, we have to act cautiously. An assurance fund or a title
insurance scheme, whether Government-backed or at the owner’s initiative,
may have worked in other countries - but that’s no guarantee they will
succeed here.
We should carefully weigh the pros and cons. There is abundant literature to
chew on, with our thinking caps put on.
Time for us to think out of the box: How do we get out of the Boonsom
Boonyanit trap?
Salleh Buang is senior advisor of a company specialising in competitive
intelligence. He is also active in training and public speaking and can be
reached at sallehbuang@hotmail.com
