Land Deal: Court of Appeal declares ... Federal Court ruling wrong
14/07/2007 NST By  V. Anbalagan

Members of the appellate court, Datuk Md Raus Sharif (left) and Datuk Hasan Lah, have called for a review of the case but say they are bound by the apex court’s ruling in line with the doctrine of binding precedent.

PUTRAJAYA: In deciding for two brothers who had lost their land to forgers, the Court of Appeal yesterday declared that a controversial Federal Court ruling on a similar case in 2001 was wrongly decided.

Judge Datuk Gopal Sri Ram presided at the hearing

Two members of the appellate court, Datuk Md Raus Sharif and Datuk Hasan Lah, asked for a review but said they were nevertheless bound by the apex court’s ruling, in line with the doctrine of binding precedent.

But presiding judge Datuk Gopal Sri Ram went a step further and affirmed that the principle set out in Adorna Properties Sdn Bhd v Boonsom Boonyanit, which ruled in favour of a bona fide purchaser of land whose ownership had been forged, should not be followed as it was contrary to the National Land Code.

The judges allowed an appeal with costs by two brothers, Au Meng Nam and Ming Kong, who lost their land to forgers. The Court of Appeal also ordered that the title to the property be registered in their names.

The case came about when the two forgers who claimed to be proprietors to the land sold the property to Ung Yak Chew 11 years ago.

The brothers then filed an action at the High Court in Johor Baru, which dismissed their suit on the grounds that Ung was a bona fide purchaser.

The trial judge found that the instrument of transfer was a forged document but in applying the principle propounded in the Federal Court ruling, he held that Ung was a genuine purchaser and had acquired an indefeasible title to the property.

The then chief justice Tun Eusoff Chin, who led a three-man panel in overturning a Court of Appeal decision, said the code conferred an "immediate indefeasible title to a bona fide purchaser for value".

The decision was widely criticised by academics, lawyers and the public.

Raus, who wrote the judgment, said he could understand the trial judge’s reluctance to depart from the Federal Court ruling.

"I join his view. To depart would be to go against the doctrine of stare decisis (doctrine of binding precedent)," he said, adding that the Federal Court should review the decision in Adorna Properties.

Ung’s title, however, was open to challenge as the registration was obtained by forgery and he was the immediate purchaser, not a subsequent buyer, Raus said.

He said Section 340 (3) of the Code had no application as it referred to subsequent buyers and not the immediate purchaser. "Thus, the plaintiffs would have succeeded in this appeal if not for the Federal Court’s interpretation."

Raus, however, said the appeal should be allowed because Ung was not a bona fide purchaser.

He said Ung, who bought the property at RM400,000 from the forgers, was attempting to sell it to a third party at RM1.2 million.

The judge said the existence of a sale and purchase agreement and a purchase price paid in full were not the only indicators to show whether a person was a bona fide purchaser.

"The purchase price was RM400,000. However, 80 per cent of the purchase price was paid on the date of signing the agreement and the balance was paid in three months."

He said about three months after the property was registered in his name, Ung attempted to sell the land for RM1.2 million.

Raus said the two rogue "vendors" who sold the property to Ung only possessed temporary identity cards when the sale and purchase agreement was signed.

"Ung is under an obligation to investigate and not blindly accept what was claimed by the vendors as correct and genuine," Raus said, adding that the omission did not entitle him the protection of the court.

He said Ung also failed to discharge the evidential burden that he was not a party or privy to the forgery.