The court affirmed that competing interests in real property must be determined by the validity of prior sales agreements and the bona fide status of subsequent purchasers, emphasizing the necessity of due diligence.

Azimah Omar JCA:

A. Background Facts

[1] The two Appeals before us concern a claim by co-administrators cum beneficiaries ("the Plaintiffs") of a deceased's estate ("the estate") for unlawful transfers of two (2) of the deceased's estate's properties devised by Pembangunan Tanah dan Perumahan Sdn Bhd ("the 1st Defendant") in which the 1st Defendant had wrongfully sold the same two (2) properties of the estate to multiple purchasers (firstly being the estate and the other purchaser being Q Development Sdn Bhd ("the 2nd Defendant").

[2] It remains clear to us that as far as the Plaintiffs and the 2nd Defendant are concerned, they are both the 1st Layer of immediate purchasers and supposed immediate transferees of the 2 properties. Thus, contrary to the parties' submissions and the High Court's analysis, the dispute between the Plaintiffs and the 2nd Defendant should not have been on the premise of Deferred Indefeasibility under s 340(3) of the National Land Code .

[3] Instead, the dispute should have appropriately been approached and deliberated on the premise of competing legal/equitable interests between two competing purchasers of the same 2 properties. The fact that the 'repeated' sale of the 2 properties to the 2nd Defendant occurred only decades after the 1st sale of the 2 properties to the deceased does not at all mean that there was a 'subsequent purchaser' or subsequent transferee of the 2 properties within the context of the principle of Deferred Indefeasibility. Thus, from the outset we can clearly identify that the parties' submissions (and subsequently the High Court's analysis) had embarked from the wrong tangent and trajectory. Now, although we agree with the High Court's ultimate decision to allow the Plaintiffs' claim, we are minded to state that we similarly find so on a totally different analysis and basis. In any case, the parties shall herein be referred to in their original capacities as they were before the High Court.

[4] On the other hand, Malayan Banking Berhad ("the Bank") is claiming for Deferred Indefeasible title as subsequent chargee over the 2 properties when the 2nd Defendant charged the 2 properties as collateral for the Bank's Term Loan facilities.

[5] The Plaintiffs' case was allowed by the High Court. The 1st Defendant did not appeal against the High Court's decision and finding of unlawful transfer. Nor did the 1st Defendant appeal against the High Court's positive finding of the validity of the Sale and Purchase Agreements in which the deceased had entered into to purchase the 2 properties. The 2nd Defendant appealed against the High Court's decision via appeal number J-02(NCVC)(W)-549- 03/2022 ("Appeal 549") in an attempt to vitiate the estate's claim over the 2 properties. Meanwhile, the Bank appealed against the same decision via appeal number J-02(NCVC)(W)-452-03/2022 ("Appeal 452") to insist on the Bank's Deferred Indefeasibility over the 2 properties as bona fide second purchaser of the properties through the charge created subsequent to the 2 properties' transfer to the 2nd Defendant.

Sale And Purchase Of The 2 Properties Between The Deceased & The 1st Defendant

[6] One of the core contentions by the 2nd Defendant was that the 2nd Defendant was attempting to impugn the validity of the sale and purchase of the 2 properties between the deceased and the 1st Defendant primarily on the ground of privity of contract. This was purportedly because t