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2025 MarsdenLR 1169
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]
Subsequent purchasers cannot claim indefeasibility of title without proving bona fide purchase and conducting proper due diligence in cases involving fraudulent transfers.
Headnote:(A) National Land Code (Revised 2020) Act 828 - Section 340 - Fraudulent transfer of land and the principles of indefeasibility of title - Plaintiff seeking declaration of rightful ownership of land fraudulently transferred - Defendants failed to prove bona fide purchase, the court determined D5 and D6 were subsequent purchasers without indefeasible title due to the suspicious circumstances surrounding transactions and failure to conduct proper due diligence - The short time frame of transfers raised red flags, leading the court to conclude that D5 and D6 were not bona fide purchasers for value and their titles were defeatably by reason of fraud. (Paras 70-72)
Facts of the case:
The plaintiff claimed ownership of land fraudulently transferred first to D1 and subsequently to D5 and D6 within suspiciously short time frames without proper proof of payment or due diligence. (Paras 2-7, 21-28)
Findings of Court:
The court found that both D5 and D6 failed to establish that they were bona fide purchasers, thus ruling that they could not claim indefeasibility of title. (Paras 76-86)
Issues: The main issues included whether D5 and D6 could be considered bona fide purchasers for value and the implications of their lack of diligence in verifying ownership.
Ratio Decidendi: The court concluded that the haste in the transactions and failure to properly investigate the legitimacy of the title effectively negated the claims of good faith by D5 and D6. (Paras 64-66, 81)
Result: Appeals by D5 and D6 dismissed with costs awarded to the plaintiff, but the order of aggravated damages was set aside. (Para 86)
| Table of Content |
|---|
| 1. overview of the appeals and claims. (Para 1 , 2 , 3 , 4 , 5 , 6 , 7 , 8 , 9 , 10) |
| 2. allegations of fraudulent transfer and conspiracy. (Para 14 , 15 , 17 , 18 , 19) |
| 3. plaintiff's claims regarding d5's and d6's actions. (Para 30 , 37 , 38 , 39) |
| 4. court's observations on fraud and good faith. (Para 32 , 36 , 40) |
| 5. potential implications of cash payments. (Para 47 , 56 , 57) |
| 6. conclusion on d5's and d6's status as bona fide purchasers. (Para 69 , 71 , 76) |
| 7. final decision outcome. (Para 82) |
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 fa
