The incapacity of a bona fide purchaser to acquire indefeasible title in cases of forgery under the Sabah Land Ordinance was established.

Introduction

[1] This is an appeal by the appellants (the defendants in the High Court) against the decision of the Court of Appeal in affirming the decision of the High Court. The Court of Appeal ruled that the title of the appellants is defeasible on the basis that the Power of Attorney that was used as authority to transfer the said land to the appellants is a forged instrument even though the land in question had been registered in the name of the appellants. That being the case, the Court of Appeal held that the appellants could not have acquired a valid title to the land.

Leave To Appeal

[2] This Court had, on 5 December 2012, granted leave to the appellants to appeal against the decision of the Court of Appeal on the following questions of law:

"(i) Whether bona fide purchasers for value and without notice, obtained good title to land immediately upon registration of the transfer under s 88 of the Land Ordinance (Sabah Cap 68) (" ") and is therefore an indefeasible registered interest in land?; and,

(ii) Whether the concept of deferred indefeasibility as adopted in Tan Ying Hong v. Tan Sian San & Ors, 2010 MarsdenLR 744 which was a case based on s 340 of the National Land Code should be distinguished from the interpretation of s 88 of the Land Ordinance since there is no similar provision in the ?"

Background Facts

[3] The background facts of the case are these. The respondents (plaintiffs in the High Court) were the registered owners of a piece of land held under CL015029213 measuring 25 acres located in the district of Menggatal, Kota Kinabalu (hereinafter referred to as "the land"). The custody of the title deed of the land was with the 2nd respondent (now deceased) until it was given to the 7th respondent allegedly for valuation purposes. It is not disputed that the 7th respondent had intended to sell the land and for that purpose he informed one Tong Chung Hing (Tong) that he may be agreeable to a sale price of RM2.53 million. Tong later informed the 7th respondent that a certain Mr Ling was interested to purchase the land for RM2.53 million and is willing to pay in cash after Mr Ling had seen the original title and had valued the land. Upon the request of Tong, the 7th respondent gave the title deed to the land to Mr Ling for valuation purposes but the title deed was never returned to the 7th respondent. It was discovered later that the appellants had become the registered owners by virtue of a sale and purchase agreement dated 19 March 2004 with the 7th respondent signing for himself and on behalf of the 1st to 6th respondents pursuant to a power of attorney which the 1st to 6th respondents had allegedly given to the 7th respondent. The respondents contended that their signatures in the sale and purchase agreement dated 12 February 2004, the power of attorney dated 19 March 2004, the memorandum of transfer dated 25 March 2004 and Form PDS 15 were forged.

Proceedings In The High Court

[4] In their claim, the respondents asked for, among others: an order that the transfer of the land effected under the Memorandum of Transfer dated 25 March 2004 to the 1st to 4th appellants be set aside and annulled on the ground of forgery; an order directing the 5th defendant (the Assistant Collector of Land Revenue, Kota Kinabalu) to expunge from the register and records at the Central Land Office the registration of the transfer dated 25 March 2004 and any other dealings effected by the 1st to 4th appellants after 25 March 2004; and, a declaration that the respondents are the registered co-owner of the land on 25 March 2004.

[5] In opposing the claim, the appellants averred that they were not aware of any forg