Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2024 MarsdenLR 35

FEDERAL COURT PUTRAJAYA
SETIAKON ENGINEERING SDN BHD – Appellant
Versus
MAK YAN TAI & ANOR – Respondent
[Civil Appeal No: 02(f)-55-09-2023(W)]

Petitioner Advocates:Cyrus Das,Winston Ng Peng Cheang,John Foo Tiang Chuan ,Respondent Advocate: Krishna V Dallumah,Charlie Lee Hong Yap,Joseph Ting,Hooi Kit Yi,Yong Yoong Hui

Indefeasibility of land title under the National Land Code is subject to provisions regarding fraud, and the burden of proof lies on the purchaser to establish good faith and valuable consideration.

Headnote:(A) National Land Code – Sections 89 and 340 – Indefeasibility of title – The court addressed the issue of indefeasibility of land title under the National Land Code, emphasizing that registration confers ownership but not absolute indefeasibility, which is subject to provisions of s 340. The court found that the appellant's title was defeasible due to fraud in the original transfer. (Paras 1-2, 38-40, 60-62)

(B) Fraud – Burden of proof – The court ruled that the burden of proof lies on the appellant to establish good faith and valuable consideration in the purchase of land, which was not met due to suspicious circumstances surrounding the transaction. (Paras 78-80, 118-120)

(C) Natural justice – The court held that setting aside a judgment in default does not automatically invalidate third-party titles without due process and notice to those parties. (Paras 200-202)

Facts of the case: The appeal involved a dispute over land title following a fraudulent transfer from the deceased to a third party, with the original owner’s children contesting the validity of subsequent registrations. (Paras 7-8, 19-20)

Findings of Court: The court found that the appellant failed to prove it was a bona fide purchaser for value, and the fraudulent nature of the transactions rendered the titles defeasible. (Paras 40, 60-62)

Issues: The main issues included whether the setting aside of a judgment in default nullified subsequent transactions and the burden of proof regarding good faith in land purchases. (Paras 1-2, 38-40)

Ratio Decidendi: The court emphasized that while registration confers ownership, it does not guarantee indefeasibility if the title is tainted by fraud. The appellant's failure to conduct due diligence was critical in determining the outcome. (Paras 78-80, 118-120)

Result: The appeal was dismissed, affirming the court of Appeal's decision that the appellant's title was defeasible. (Paras 268-269)

JUDGMENT

Abdul Rahman Sebli CJSS (Majority):

[1] This appeal concerns the indefeasibility of a land title that was transferred to a subsequent purchaser under s 340(3) and vested in it by s 89 of the National Land Code ("the Land Code") which reads as follows:

" Section 89
Conclusiveness of register of documents of title
Every register document of title duly registered under this Chapter shall, subject to the provisions of this Act, be conclusive evidence-
(a) that title to the land described therein is vested in the person or body for the time being named therein as proprietor; and
(b) of the conditions, restrictions in interest and other provisions subject to which the land is for the time being held by that person or body, so far as the same are required by any provision of this Act to be specified or referred to in that document."

[2] While the provision provides for conclusiveness of title, the conclusiveness of the title is "subject to the provisions of this Act". A provision of the Act that s 89 is subject to is s 340 which confers indefeasibility of title upon registration except in certain circumstances, which means indefeasibility of title is not absolute even after registration. The section is reproduced below:

"Registration to confer indefeasible title or interest, except in certain circumstances
340. (1) 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.
(2) The title or interest of any such person or body shall not be indefeasible-
(a) 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
(b) where registration was obtained by forgery, or by means of an insufficient instrument or void instrument; or
(c) 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.
(3) Where the title or interest of any person or body is defeasible by reason of any of the circumstances specified in subsection (2)-
(a) it shall be liable to be set aside in the hands of any person or body to whom it may subsequently be transferred; and
(b) 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 subsection 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 purchaser.
(4) Nothing in this section shall prejudice or prevent
(a) the exercise in respect of any land or interest of any power of forfeiture or sale conferred by this Act or any other written law for the time being in force, or any power of avoidance conferred by any such law; or
(b) the determination of any title or interest by operation of law."

[3] The expression "indefeasibility of title" is a convenient description of the immunity from attack by adverse claim to the land or interest in respect of which the registered proprietor enjoys: per Lord Wilberforce in the Privy Council case of Frazer v. Walker [1967] 1 AC 569 ; [1967] 2 WLR 411; [1967] 1 All ER 649 which emanated from New Zealand. He went on to say that this conception, which is central in the system of registration, does not mean that the registered proprietor is protected from any claim whatsoever as there were provisions in the New Zealand Land Transfer Act 1952 by which the entry in the register may be cancelled or corrected, or he may be exposed to claims in personam. While recognising the immunity of the registered proprietor from adverse claims, the learned judge clarified at p 585 (AC):

"First, in following and approving in this respect the two decisions in Assets Co Ltd v. Mere Roihi and Boyd v. Mayor, Etc., of Welli

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2024 MarsdenLR 35

FEDERAL COURT PUTRAJAYASETIAKON ENGINEERING SDN BHD – AppellantVersusMAK YAN TAI & ANOR – Respondent[Civil Appeal No: 02(f)-55-09-2023(W)]

Indefeasibility of land title under the National Land Code is subject to provisions regarding fraud, and the burden of proof lies on the purchaser to establish good faith and valuable consideration.

Cases Referred (1)

FEDERAL COURT PUTRAJAYA
SETIAKON ENGINEERING SDN BHD – Appellant
Versus
MAK YAN TAI & ANOR – Respondent
[Civil Appeal No: 02(f)-55-09-2023(W)]