A chargee can be protected as a bona fide purchaser for value under the National Land Code, even when the original title is defeasible due to fraud.

[1] There are two appeals before us arising from two civil actions filed by the respective parties. The two civil actions were heard one after the other in the High Court in view of the fact that they relate to competing claims between the affected parties over the same piece of land ["the Land"].

[2] In the first appeal [Civil Appeal No: 01(f)-5-03-2017(B)] the appellants, See Leong Chye @ Sze Leong Chye and See Ewe Lin ["the See Brothers"] were the plaintiffs in the High Court Civil Suit No: 22-233-2010 ["Suit 233"], while the respondents [United Overseas Bank Berhad ["UOB"] and Heveaplast Marketing Sdn Bhd ["Heveaplast"] were the 2nd and 1st defendants respectively.

[3] In the second appeal [Civil Appeal No. 02(f)-8-02-2017(B) the appellant, United Overseas Bank (Malaysia) Berhad ["UOB"] was the 2nd defendant and Heveaplast Marketing Sdn Bhd ["Heveaplast"] was the 1st defendant in the High Court Civil Suit No: 22-216-2010 ["Suit 216"] while the respondent, Kum Hoi Engineering Industries Sdn Bhd ["Kum Hoi"] was the plaintiff.

Background Facts

[4] The relevant background facts of these two appeal cases are as follows:

The See Brothers are joint owners of the Land. Heveaplast claimed to have entered into a Sale and Purchase Agreement [1st SPA] to purchase the Land from the See Brothers. The 1st SPA was signed and dated 26 December 2008. Heveaplast became the registered owner of the Land with effect from 22 April 2009 and the Memorandum of Transfer of the Land was duly executed ["1st MOT"]. The balance of the purchase price was paid on 28 April 2009 through financing provided by UOB to Heveaplast.

[5] By way of letters of offer dated 8 April 2009 and 6 August 2009, UOB offered a fixed loan to Heveaplast to part finance the purchase of the Land. The fixed loan was secured by charges in UOB's favour [UOB Charges]. The UOB Charges were registered over the Land on 22 April 2009.

[6] Heveaplast then entered into a Sale and Purchase Agreement ["2nd SPA"] to sell the Land to Kum Hoi. The 2nd SPA was dated 12 February 2009. Pursuant to the 2nd SPA, Kum Hoi paid RM889,555.60 to Heveaplast as deposit and obtained financing from Public Bank Berhad ["PBB"] to pay the balance purchase price. Kum Hoi agreed to charge the Land to PBB as security for PBB's financing. On 5 June 2009, Heveaplast signed the 2nd Memorandum of Transfer ["2nd MOT"] in favour of Kum Hoi.

[7] On 19 June 2009, Heveaplast executed a letter of undertaking to refund the monies released by PBB if the Land could not be transferred to Kum Hoi. On 29 July 2009, UOB gave a redemption statement and letter of undertaking to refund the redemption sum to PBB if the discharge of the UOB Charges could not be registered for any reasons attributable to UOB ["UOB Undertaking"]. PBB released the redemption sum of RM3,255,211.58 to UOB on 21 August 2009. Messrs Ong & Kok released the title for the Land and the discharge of charge forms to PBB's solicitors on 11 September 2009.

[8] In early September 2009, the See Brothers discovered that the Land was transferred to Heveaplast. Police reports were lodged. Upon the See Brothers' application, a Registrar's caveat was registered on the Land on 14 September 2009. The See Brothers also notified PBB about the fraudulent transfer to Heveaplast by way of a letter dated 14 September 2009. On 15 September 2009, PBB's solicitors unsuccessfully presented the 2nd MOT