FIFTEEN years ago, a woman of Thai descent named Boonsom Boonyanit was told by her son that her land, situated in Penang, had been sold by a con-woman and a forger to a Malaysian registered company. The con-woman had been able to do it by convincing the buyer that she was indeed Boonsom Boonyanit and was thus able, through forgery of the instrument of transfer, to convey the property to the buyer.
Boonsom lost no time in bringing the matter to the High Court to seek justice — the return of her property. But the court let her down because the High Court judge made a terrible blunder. The judge said that the plaintiff had filed her case alleging forgery. To do that, she must prove forgery beyond reasonable doubt. Since she was not able to discharge that high burden of proof, her claim was dismissed.
Everyone knows that this was a civil suit, not a criminal prosecution. The judge should have held that in a civil suit, the burden of proof is merely on a balance of probabilities, not beyond reasonable doubt. This judicial error had caused injustice to the landowner.
Boonsom appealed to the Court of Appeal. Here, she tasted victory. The Court of Appeal held that on the evidence adduced at the trial stage, Boonsom had succeeded in proving her case on a balance of probabilities. The Court of Appeal set aside the decision of the High Court and ordered the land to be restored to Boonsom.
Boonsom’s victory was, however, short-lived because the buyer subsequently obtained leave to appeal to the Federal Court. In December 2000, Tun Eusoff Chin (delivering the judgment of the Federal Court) allowed the appeal and held that the buyer had obtained good title, despite the forgery committed by the con-woman, who had since disappeared — see Adorna Properties v Boonsom Boonyanit [2001] 1 MLJ 241.
He made that erroneous decision after holding that, in Malaysia, we practise immediate indefeasibility. This was a grievous judicial error because there was abundant case-law (judicial precedents) clearly showing that we actually practise deferred indefeasibility.
The Federal Court had once again caused injustice to Boonsom. It took another panel of the Federal Court a decade later to correct the error. That was done in Tan Ying Hong v Tan Sian San [2010] 2 MLJ 1 FC.
In simple language, the situation can be explained as follows. Until the judicial error in Boonsom’s case was corrected, a landowner can lose her land even without her fault because a forger can effectively give good title to a buyer (who purchased the land from the impostor/forger). In such a situation, the landowner would be the losing party, whilst the buyer would get good title.
After the judicial error was corrected, if the same set of facts were to arise again, the landowner would be able to get back her title, whilst the buyer would be the losing party. That is the essence of the principle known as “security of tenure”. If your name is registered on the title, you have indefeasibility unless there are vitiating circumstances, such as fraud or forgery. This is reflected in the oft-quoted judicial pronouncement “Under the Torrens system, the register is everything”.
Whilst the judicial error has now been corrected, one thing remains the same. In any situation where there has been fraud or forgery, someone will lose. Under the Boonsom case, the landowner would lose. Under the Tan Ying Hong case (which corrected the error), it would be the buyer who would lose.
The question is this: where can this losing party turn to, to get compensation for the loss he has suffered? The short answer to that is “There is no such place for him”. Malaysia does not have an assurance fund or something equivalent to that.
It was like when we sent someone in the late 19th century to Australia to learn the Torrens system with a view to transplanting it here, either we did not learn everything, or if we did, we forget to implement everything — because the assurance fund has been the missing element all these years.
Somehow we forgot what Sir Robert Richard Torrens (former premier of South Australia and author of the land registration system which now carries his name) once said, “A state guarantee is an integral part of a system of registration of titles”.
In British Columbia, Canada, a Government Assurance Fund is provided for in its Land Titles Act 1996. Section 296(2) of the act states that a claimant who “is deprived” of any estate or interest in land because of “fraud or a wrongful act in respect of the registration of a person other than the claimant as owner of the land” can claim damages in court “against the person by whose fraud or wrongful act the claimant has been deprived of the land". This means the victim must first sue the fraudster who caused his loss.
In suing the perpetrator of the fraud under section 296(2), the victim must also cite the minister as “a nominal party defendant” as a condition for recovering damages and costs from the assurance fund. If the fraudster is dead or cannot be found, a claimant may (instead of suing that person) file action in court for damages and costs directly against the minister as the nominal defendant and recover the amount of the damages and costs from the assurance fund. The claim for damages or compensation must be brought within three years of the loss.
While Section 296 states that a claimant must initiate proceedings in court before any compensation can be obtained, Section 305(1) of the Land Titles Act allows the minister, “without a proceeding being brought”, to admit or compromise a claim made against the assurance fund, and authorise payment of all or part of the claim.
We should consider having something like that in our National Land Code. Alternatively, we should consider title insurance.
We understand that the director-general of Lands and Mines is now reviewing the National Land Code with a view to bringing it up to meet the challenges of the digital age. We hope he can look into this missing element in our land law.
A legal “security of tenure” is meaningless without its economic component.
The writer formerly served in the
Attorney-General’s Chambers before he left for private practice, the corporate sector and then academia