LAND LAW II

(INDEFEASIBILITY)
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2
Lecture Outline
Definition
Types of Indefeasibility
Exceptions to Indefeasibility (Sec 340(2) NLC)
Fraud;
Misrepresentation;
Forgery; and
Insufficient/ void instrument
Title/ interest unlawfully acquired in purported
exercise of power conferred by written law
Bona Fide Purchaser for Value
3
Introduction
Indefeasibility is fundamental to the Torrens system.
the concept of indefeasibility of title is so deeply embedded in
our land law that it seems almost trite to restate it (Raja Azlan
Shah in PJTV Denson (M) Sdn Bhd v Roxy (M) Sdn Bhd [1980]
136)
Under the Torrens system, the register is conclusive
evidence (Sec 89 NLC) of entries thereon so long as the
instrument had complied with 3 conditions precedent:-
The transaction was one which was recognised by NLC as one
capable of being registered i.e Transfer, lease, charge/ easement;
The instrument used for registration was in statutory form and
the IDT has been produced at the time of registration; and
The transaction was not void or otherwise defective.
4
Cont
It was observed in Mohammad Buyong v
Pemungut Hasil Tanah Gombak [1982] 2
MLJ 53 that registration is perfected by
making of a prescribed memorial of the dealing
in the register document of title under the
hand and seal of the registering authority.

5
Definition
the immunity from attack by adverse claim to the
land or interest in respect of which he is registered,
which a registered proprietor enjoys. The conception is
central in the system of registration. (Frazier v Walker
(1967)
an immunity given to any person whose name got into
the register document of title as having the title or
interest in the land from the attack by an adversed
claim
Also described as conclusive, unimpeachable, state
guaranteed, unchallengeable, unexaminable and
unquestionable.
6
Cont
Section 340(1) NLC provides that upon
registration, the title/interest shall be
indefeasible-immune from attack by adverse
claim.
(General provision conferring indefeasibility).
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
7
Cont
Sec 340 (2) the title or interest of any person or body
shall not be indefeasible-
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
Where registration was obtained by forgery, or by means of an
insufficient or void instrument; or
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.
8
Cont
Sec 340 (3) where the title or interest of any person or
body is defeasible -by reason of any of the
circumstances specified in sub-section (2)
It shall be liable to be set aside in the hands of any person or
body to whom it may subsequently be transferred; and
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.
TYPES OF INDEFEASIBILITY
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1.Immediate Indefeasibility
If a person gets a registered title, he is not having
been guilty of any fraud, his title is conclusive thus
has immediate indefeasibility.
Principle confirmed in Frazer v Walker apart from
fraud of the registered proprietor, his title on
registration is immediately indefeasible subject only
to his in personam (means any relief granted could
result only in an enforceable claim against the
proprietor personally, but not against the land)
11
Cont

Immediate indefeasibility means that the
immediate registered title or interest of the
proprietor or transferee immediately to the
vitiating circumstances will be conferred
statutory protection despite the existence of any
vitiating circumstances.

Example:
When Mr. X was registered as
owner of the land, he is, in
fact, the owner, even if he
became the registered owner
fraudulently.
13
Cont(IIT)
Immediate IOT: Immediate transferee who acts
in good faith and for value obtains indefeasible
title notwithstanding vitiating elements
A ------------------X
(transferor)
(Immediate
transferee)
Forgery by X
Result: X gets immediate indefeasibility
14
Cont
RP
Land

BFP4V
(transfree)

Element
under section
340(2)
As provided
under Section
340(3)
Immediate
2. Deferred Indefeasibility
This is where the indefeasible title is
deferred to the innocent person
dealing with the person who has
been registered as owner due to
fraud, forgery, misrepresentation etc
(sec 340(2))


Another example!!!
X obtained title from Y by way of fraud. Then X
registered as proprietor.
X will not get indefeasibilty of title as it is
deferred to the next party due to the existence
of fraud
Then X transfer title to Z. Z gets indefeasibilty of
title against Y. So here Y cannot be restored as
the proprietor but will claim for damages from X
for the lost of the title.
17
Cont
Result: IP gets defeasible title
notwithstanding he acts in good faith and
for value; SP sacquire indefeasible title
(gets statutory protection under sec 340(3)


Element under section 340(2)

SP(BFP4V)
Deferred
IP
RP
18
Cont
DI was confirmed in Mohammad Bin Buyong v Pemungut Hasil Tanah
Gombak & Ors [1982] 2MLJ 53

The doctrine carried in section 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. Subsection (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. It
would seem clear that one has to be registered as proprietor first before ones
title can be described as indefeasible. In other words, registration is a pre-
requisite of indefeasibility (at p 54)
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Who is aBona Fide Purchaser for Value ?
The meaning of purchaser also includes chargee or other
interest holder. (Owe Then Kooi v Au Thiam Seng [1990]
1 MLJ 234)
Land was transferred to the transferee by way of fraud.
Subsequently it was charge to the bank.
Held: the interest obtained by the chargee was indefeasible.
I would interpret this to mean that once it is found that the title or
interest is defeasible in sub (2), namely, fraud as in this case, the
title or interest may be set aside by any person or body to whom it
may subsequently be transferred or in whom it is subsequently
vested. subsequently must mean after the event of fraud and in
our present situation, it is the D2 in whom the interest is
subsequently granted.
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Criteria of a BFP:
Bona Fide Purchaser must have the following
factors:-
Pays consideration.
Consideration must be valuable or real (money or moneys
worth).
Not merely consideration for natural love and affection or
nominal consideration
Chu Choon Moi v Ngan Siew Tin [1986] 1 MLJ 34
The hus transferred his lates father property to the wife
without any consideration. She in not considered as BFPFV

21
Cont..
No consideration- one who takes title or an interest to
land without giving value or consideration treated as
a volunteer.
Mohamed Moidu Mohamed v Hasan Kadir [2001]
4 MLJ 292
The defendants were volunteers by reason of the registration of
the title into their names being through devolution. They were not
and could not be termed as bona fide purchasers for value for the
reason that they pay no consideration. In such a situation their title to
the land was defeasible by the equitable interests created and
subsisting by the deed of sale and as such their ownership could not
fall within the rule of indefeasibility as envisaged under s 340(1) of the
NLC.
22
Cont
Acts in good faith
No notice/knowledge whether actual or
constructive
Actual notice of the proprietor or his agent. Eg the
entry of a caveat to protect the competing interest
Adequate in keeping with the propertys
value
Au Meng Nam & Anor v Ung Yak Chew & Ors
[2007] 4 CLJ 526
23
Cont

had the learned trial judge taken the above facts and
circumstances into consideration, he cannot possibly conclude that
the 1st defendant was a bona fide purchaser for valuable
consideration, so as to be protected under s. 340(3) of the Code. .

the 1st defendant knew at the time he bought the said land, the
purchase price was below the market value. But he wanted to take
advantage of the low price. He did a fast track to complete the
purchase. In doing so he disregarded his obligations to investigate
the alleged proprietors and the genuineness of the documents. My
respectful view is that a purchaser in good faith does not include a
purchaser who is careless or who had been negligent.
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The History!!!
1965-2001: West Malaysia applied the concept of deferred
indefeasibility (Mohammad Buyong v Pemungut Hasil Tanah
Gombak & MJ Frozen Food Sdn Bhd & Anor v Siland Sdn Bhd)

2001-2010: Federal Court adopted the immediate indefeasibility
approach (Adorna Properties Sdn Bhd v Boonsom Boonyanit)

Jan 2010: applied the concept of deferred indefeasibility (Tan Ying
Hong v Tan Sian San & Ors)
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Exceptions to Indefeasibility
Exceptions :
A title or interest is defeasible due to any of the
followings:-
Statutory exceptions under Section 340(2) eg. Fraud,
misrepresentation, forgery etc
Exceptions under equity such as equitable ownership,
equitable charge, equitable lien etc.
Other exceptions based on custom and islamic law
such as hibah/ harta sepencarian.
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Statutory exceptions under Section 340(2)
s 340(2)(a) NLC:-
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

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What is fraud under s
340(2)(a)?
1. must be actual fraud. It is defined as:-
dishonesty- a willful and conscious disregard and
violation of the rights of other persons (Waimiha
Sawmilling Co Ltd v Waione Timber Co Ltd)
something in the nature of personal dishonesty or
moral turpitude (Stuart v Kingston)
fraud means if the design object if transaction is to
cheat a man or by delivered dishonest act caused a
person losses his existing right (Loi Hieng Chong v
Kon Tek Shin (1983) 1 MLJ 31
28
Cont.
Example of actual and constructive fraud:-
Actual fraud (direct)-
Apoo v Ellamah [1974] 2 MLJ 201
Where the registered proprietor thought he was executing a
charge document but instead the transferee asked him to
sign a transfer form and subsequently obtained registration
of a transfer
Owe Then Kooi v Au Thiam Seng [1990] 1 MLJ 234
Where a registered proprietor can only read Chinese but
signed document written in English which he thought made
his brother as trustee instead a document allowed the land to
be transferred to the brother
29
Cont
Datuk Jaginder Singh v Tara Rajaratnam [1983]
2 MLJ 127
Where P transferred her land to D as security for
debts with a condition that the land cannot be
transferred to any 3
rd
party without her consent and
the land would be transferred back to her within 1
year for RM 220,000. However, after 18 days, D
transferred the land to developer and eventually sold
to public.
30
Cont
Constructive fraud/ implied fraud

Tai lee Finance Co. Sdn Bhd v Official Assignee & Anor [1983] 1 MLJ 81
The registered proprietor executed 2 charges over the land in favour of App, both of
which were registered. The chargor was a land developer who had contracted with 2
nd
-
7
th
Res to build houses on individual lots (sub-purchaser). On default, OFS was made.
The purchasers opposed OFS on the basis that the chargee should have enquired to see
if they had interests in the lands.

Held (on appeal): when the charge was registered it was not to defraud the sub-
purchaser. Fraud must be an actual fraud and do not exist in this case. If ever fraud
exist, it is only a constructive fraud or implied fraud, when chargee applied OFS
without having regard to the right of sub purchaser in the land.
Constructive notice of beneficial interest was not of itself fraud.
..fraud as used in section 340must be actual fraud and mere knowledge of the
existence of an unregistered interest shall not of itself be imputed as fraud within the
meaning envisaged by section 340.(Abdul Hamid FJ)
31
Cont
2. Fraud must be committed by the person
or his agent and as a result his name was
registered in RDT/IDT
If the person is not the party or privy to the
fraud then his title will be indefeasible
32
Cont
Chu Choon Moi v Ngan Sew Tin [1986] 1 MLJ 34

App sought a declaration that the property in Q belonged to her
hus and should be transferred to his estate on his death. Res was
wife of the deceaseds son who had been responsible for
transferring the property to his wife instead of including it in the
estate of the deceased father.
Held (SC): that the transfer to Res was fraudulent; the wife had
no grounds for keeping an indefeasible title for she was a party
to the fraud, she lacked bone fides and had not given value.

33
Cont
Ismail Bin Mohamad v Ismail Bin Husin [2007] 4 MLJ 489
Facts: the solicitor in charge collaborated with D to defraud P by inducing him to
sign a sale and purchase agreement but later he used Ps title to create a charge
in favour of one of the Ds. The bank had no knowledge of the fraudulent
conduct but appointed the same solicitor to prepare and register the charge
document. P appealled for the cancelation of the charge in favour of D (bank).
Held: the fraudulent conduct of the agent is imputed on the banks interest,
therefore the charge is considered as defeasible and cancelled of from the register
document of title.
D2 and D3 were the agents of D4 and D2 was not just privy but a party to the fraud
concerned, the charge registered in favour of D4 could not be held to be valid and
indefeasible

In establishing fraud, the onus is on the party alleging fraud.
Particulars of fraud must be pleaded in the pleading.
Burden of proof is on the balance of probabilities (prior to Adorna, B.o.p
was beyond reasonable doubt)
34
Cont.
Misrepresentation [s 340(2)(a) NLC]:-
no definition in NLC. It is part of fraud.

Datuk Jaginder Singh v Tara Rajaratnam [1983] 2 MLJ 127
P transferred her land to D as security for debts with a condition that
the land cannot be transferred to any 3
rd
party without her consent and
the land would be transferred back to her within 1 year for RM 220,000..
However, after 18 days, D transferred the land to developer and
eventually sold to public.
Held: the title was defeasible. They were not honest. Ds never intended
to fulfill the agreement. They merely wanted P to sign the transfer form
so they can get the land.

35
Cont
Loke Yew v Port Swettenham Rubber Co Ltd (1913) 2 MLJ
D managed to get owner to sign the transfer form
by way of misrepresentation that the land
belonged to P will be excluded from the transfer. P
bought part of the land in cash but did not register
his name in the title deed.
Held: Since he was aware that if not for his
statement/undertaking, he could not obtain
execution of transfer, therefore by denying Ps
interest in the land will render his title defeasible.

36
Cont
s 340(2)(a) NLC:-
1) Forgery:-an act of one person to sign in the
name of the registered proprietor or any person
who has an interest in the land on any
instrument of dealing or used of a forged
document to complete the dealing.




Ong Lock Choo v Quek Shin (1941) MLJ 88
The registered proprietor gave his IDT to solicitor and the clerk
forged his signature and charges to 3
rd
party.
Held: forged transfer was a nullity. Void document will render
the charge defeasible.

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38
Cont..

Quah Hong Lian Neo v Seow Teong Teck (1936) MLJ 161
A person through trickery and impersonation obtained a transfer of a piece
of land and later charged the property.
Held: the forgers title is defeasible. Since forged document is a nullity,
therefore that chargees interest is also defeasible.

OCBC v Pendaftar Hakmilik Negeri Johor [1999] 2 MLJ 511
the registration of a transfer of the title of the property to A was obtained
by forgery of the instrument of transfer by the use of another persons
thumbprint and not that of the true proprietor of the land i.e B (NH Chan
JCA)

Adorna Properties Sdn Bhd v Boonson Boonyanit @ Sun Yok Eng[2001] 2 CLJ
133
Tan Ying Hong v Tan Sian San & Ors [2010] CLJ (SE) 1
39
Cont.
2. Insufficient/ void instrument
Void means instrument of dealing is defective as it
contrary to rule of law or illegal.
Examples:-
Void contract-
Tan Hee Juan v The Boon Keat [1934] MLJ 96,
A minor signed an instrument to transfer 2 pieces of land
in Mentakab to D. it was held that according to Contract
Act, a contract entered by a minor is void. The instrument
of transfer signed by the minor is also void.
40
Cont
Invalid Power of Attorney-
Puran Singh v Kehar Singh [1939] MLJ 71
State Tailor Sdn Bhd v Nallapan [2005] 2 MLJ 589.
Against any existing law
Appoo v Ellamah [1974] 2 MLJ 201
UMBC v Syarikat Perumahan Luas [1988] 3 MLJ 352


41
Cont..
Section 340(2)(c) NLC:- Title or interest was
unlawfully acquired in purported exercise of
power conferred by written law
M&J Frozen Food Sdn Bhd & Anor v Siland Sdn Bhd
[1994] 1 MLJ 294
RP
MJ Frozen (higher bidder)
-paid 25% of purchase price as deposit and
balance to be settled within 30 days (was not
complied-b.o.ct)
Transfer the title to MJ
Frozen using Certificate of
sale (COS) which was
issued by Senior Ass
Registrar (SAR)-years later
after MJ Frozen forwarded
balance sum.
RP claimed for a rescission of the contract
and forfeiture of the deposit paid by MJ
Frozen.
42
Cont..
Trial Court: declared the deposit forfeited,
annulled the certificate of sale issues by SAR
and cancelled the registration of transfer in
respect of the property
The judge also made orders for the return of
the IDT and ordered the property to be resold.

43
Cont..
(appeal)-dismissed.
(Wan Yahya SCJ): the certificate issued by the
SAR was ultra vires the statutory provision of
the NLC and the title was unlawfully
acquired by the purchaser. This is when
registration is obtained through void
instrument. The title is ineffective and
defeasible if it violates any written law or is
against the law.
44
Cont..

In the case where the vendors title is good but the
instrument which was used by a purchaser for
registration is void or voidable, the effect on such
registration will only confer on the person in
whose name the land is registered, what is usually
referred to as deferred indefeasibility. Under this
principle, the registration of the insufficient or
void instrument can be set aside.
45
Cont..
It was held that failure to comply with the statutory
requirements of para (a) and (b) of s 258 and para (c) of s.
261(1) of the NLC was not just a mere irregularity, but
was an illegality which struck at the root of the (first
respondent) R1s right to be heard.
Therefore, the certificate issued by the Senior Assisstant
Registrar was ultra vires the statutory provisions of the
NLC and the title was unlawfully acquired by first
appellant (A1). The title of the A1 was defeasible under s
340(2)(c) of the NLC and the learned judge had arrived
at a correct decision when he made the order for the
cancellation of the registration of the transfer.
46
Effect of title under Sec 340(2)
Title or interest obtained under the
circumstances in section 340(2)(a), (b) & (c) NLC
will be defeasible.
The title and interest can be set aside in the hand
of person or body to whom it is subsequently
transferred or vested.
Laches
Laches is a defense to a proceeding in which a plaintiff
seeks equitable relief.
Cases in Equity are distinguished from cases at law by
the type of remedy, or judicial relief, sought by the
plaintiff.
Generally, law cases involve a problem that can be
solved by the payment of monetary damages.
Equity cases involve remedies directed by the court
against a party.

47
Cont
Laches is based on the legal maxim "Equity aids the
vigilant, not those who slumber on their rights."
Laches recognizes that a party to an action can lose
evidence, witnesses, and a fair chance to defend himself
or herself after the passage of time from the date the
wrong was committed.
If the defendant can show disadvantages because for a
long time he or she relied on the fact that no lawsuit
would be started, then the case should be dismissed in
the interests of justice.

48
Cont
The law encourages a speedy resolution for every
dispute. Cases in law are governed by STATUTES OF
LIMITATIONS, i.e the Limitation Act, which are laws that
determine how long a person has to file a lawsuit before
the right to sue expires.
Laches is the equitable equivalent of statutes of
limitations. Unlike statutes of limitations, laches leaves it
up to the court to determine, based on the unique facts
of the case, whether a plaintiff has waited too long to
seek relief.
49
Example where defence of laches is
applicable:
If the neighbor observes the construction of the garage
on her property and does not file suit until the garage is
completed, the defendant may plead laches, arguing that
the neighbor had ample time to protect her property
rights before the construction was completed, and the
court may find it unfair to order that the garage be torn
down.
50
s.341
Adverse posession: to acquire title to real
property by occupying it for a period of
time (not by the RP)
S. 341 does not put a limitation to RP or
those who have registered interest in the
land to bring action for the recovery of the
land vs adverse posessor.
51
Cont
S. 341 is a mean to put aside the defence
of laches under equity for recovery of land
by the RP
52
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