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2025 MarsdenLR 2757
COURT OF APPEAL PUTRAJAYA
LEE KOK CHIAN – Appellant
Versus
CHEOK LAM CHUAN & ANOTHER APPEAL – Respondent
[Civil Appeal No: N-01(NCVC)(W)-52-02/2023 & N-01(NCVC)(W)-56-02/2023]
The court established that defendants are not bona fide purchasers due to inadequate proof of funds and suspicious timing of property transactions, emphasizing the necessity for due diligence in land ownership claims.
Headnote:(A) National Land Code, Act 828 - Section 340 - Fraudulent land transfer - Disputes over ownership and bona fide purchasers - Plaintiff claimed rightful ownership over land fraudulently transferred to defendants - Court found defendants failed to prove their status as bona fide purchasers due to questionable transactions - Court emphasized the importance of due diligence and evidence in establishing ownership claims in land disputes. (Paras 21, 24, 30, 72, 86)
(B) Aggravated damages - Award of aggravated damages without pleading constitutes misdirection - No sufficient evidence of exceptional conduct to warrant such damages - Court set aside aggravated damages awarded to plaintiff. (Paras 79, 80, 86)
Facts of the case:
The plaintiff claimed ownership of land that had been fraudulently transferred to defendants. The court determined that the defendants failed to substantiate their claims of being bona fide purchasers due to the suspicious timing and lack of due diligence in the transactions.
Findings of Court:
The court found that the defendants had not proven their claims of being bona fide purchasers within the legal framework and regarded their transactions as suspicious and not credible, which undermined their claims of ownership.
Issues: The court addressed the legitimacy of fraudulently transferred property, the allegations of negligence against the defendants, and whether they were bona fide purchasers for valuable consideration.
Ratio Decidendi: The court ruled that the lack of proper documentation and the questionable circumstances over the transactions precluded the defendants from qualifying as bona fide purchasers. The court’s reasoning emphasized the importance of conducting thorough investigations when dealing with property transactions.
Result: Appeals dismissed, but the aggravated damages award set aside.
| Table of Content |
|---|
| 1. appeals relate to land ownership dispute. (Para 1 , 2 , 3 , 5 , 10) |
| 2. plaintiff claims fraudulent land transfer. (Para 6 , 17 , 18 , 19) |
| 3. court questions bona fide purchaser status. (Para 20 , 22 , 24) |
| 4. bona fide purchasers must prove good faith. (Para 32 , 34 , 38) |
| 5. court affirms no indefeasibility due to fraud. (Para 73 , 81) |
Introduction
[1] There are 2 appeals before us, namely, Appeal No: N-01(NCVC)(W)-52-02/2023 ("Appeal 52") and Appeal No: N- 01(NCVC)(W)-56-02/2023 ("Appeal 56"). The appeals are directed at the decision of the Learned Judge of the High Court ("the Judge") delivered on 10 January 2023 after a full trial in High Court Suit No NA-21 NCvC-8-11/2018 ("Suit 8").
[2] The Plaintiff in Suit 8 is Mr Cheok Lam Chuan ("Plaintiff"). The Plaintiff claimed that at all material times he, together with Cheok Yit Tuck ("the deceased") were the legal registered owners of land held under Geran 159176, Lot 14182, Pekan Lukut, Daerah Port Dickson, Negeri Sembilan ("the subject land"). It is the Plaintiff's pleaded case that he and the deceased held the land as trustees pursuant to a Declaration of Trust dated 24 May 1982 ("the Trust") which was duly registered with the relevant Land Office. At all times the Plaintiff held and continued to hold the issue document of title ("IDT") for the land.
[3] According to the Plaintiff the subject land was fraudulently transferred to Fu Zhi Mao Group Sdn Bhd (1st Defendant -"D1"). The 2nd Defendant, Thana Balan A/L Rajamanickam ("D2") and Abdullah Zubair Chan bin Abdullah (3rd Defendant - "D3") were directors of D1. It is the Plaintiff's pleaded case that D2 and D3 are involved in land scams and had perpetrated fraudulent land transfers involving other lands.
[4] It was alleged that after the subject land was fraudulently transferred and registered in D1's name, it was subsequently transferred to the 5th Defendant ("D5"). Thereafter, D5 transferred the subject land to the 6th Defendant ("D6") via Nombor Perserahan: 27739/2016 on 1 November 2016.
[5] At the time of filing of Suit 8, the subject land was in D6's name as the registered owner. Essentially, via Suit 8 the Plaintiff sought to obtain a declaration that he was/is the lawful registered owner of the subject land and various consequential orders to nullify the transfer of the subject land to D6, and for the land to be re-transferred to his name.
[6] Before the commencement of the trial, judgment in default ("JID") had been entered against D1, D2 and D3 on 12 April 2019. Thus, as a result of the JID, the Plaintiff is deemed in law as having proven fraud against D1, D2 and D3. The legal position in this regard may be gathered from paragraph [9] of the Federal Court's decision in Kamarulzaman Omar & Ors v. Yakub Husin & Ors ; ; [2014] 1 AMR 493 (FC) , where it was stated that when parties against whom fraud is alleged, do not defend the claim and judgment in default is entered against them, it is assumed that fraud has been proven against these parties.
[7] Initially, the Plaintiff had claimed against the 4th Defendant ("D4"). D4 was the conveyancing solicitor for D5 with respect to the transfer of the subject land from D1 to D5. The Plaintiff alleged that D4 failed to detect the various "red flags" and the inherent infirmities in the purported conveyancing transaction. The Plaintiff also alleged that D4 was part of a wider conspiracy to defraud. The Plaintiff also claimed against the Pendaftar Hakmilik Negeri Sembilan ("D7") and Pengarah Tanah dan Galian Negeri Sembilan ("D8") for their negligence in facilitating the impugned transfers for the subject land. However, the claim against D4 was withdrawn and the trial proceeded only against D5, D6, D7 and D8.
[8] The Judge made a finding that D5 and D6 were subsequent purchasers and that they had failed to prove that they were bona fide purchasers for valuable consideration. As for D7 and D8 the Judge found that they were negligent and ordered them to canc
