1. AreejTorla areej@iium.edu.my

2.  Registration confers an indefeasible title or
interest i.e. a title/interest which is free from
all adverse claims or encumbrances not noted
on the register.
 All registered title and interests are
guaranteed by the State to be good against
the whole world in the absence of fraud or
other vitiating circumstances statutorily
specified or judicially laid down

3.  The concept of indefeasibility is, however,
not defined in the NLC.
 An explanation of the concept can be found
in Frazer vWalker [1967] AC 569:
“ the immunity from attack by adverse claim to
the land or interest in respect of which he is
registered, which a registered proprietor
enjoys.This conception is central in the system
of registration”.

4.  Section 340
 Indefeasibility is, however, not absolute.
 Under certain circumstances, a registered
title or interest may be set aside or defeated.
 The exceptions to indefeasibility are laid
down in Section 340(2).

5.  2 types:
1. Immediate indefeasibility
2. Deferred indefeasibility

6.  The registered title or interest of the transferee
immediately to the vitiating factors (immediate
transferee) will be conferred statutory
protection i.e. indefeasibility, the vitiating
factors notwithstanding.
 Immediate indefeasibility will attach so long as
the immediate proprietor or transferee acts in
good faith and gives valuable consideration for
the title or interest acquired. (Bona fide
purchaser for value or “BFPV”)

7. Transferor
Immediate
Transferee
(BFPV)
FORGERY
Indefeasible title

8.  Statutory protection is conferred on the
subsequent transferee who is a bona fide
purchaser for value.
 Indefeasibility is postponed in favour of a
transferee who subsequently acquires the title
or interest.

9. Boyd v Mayor ofWellington:
“Registration does not cure the defects in a
statutory instrument but acts merely as a root
of title”.

10. Transferor
Immediate
transferee
(BFPV)
Subsequent
transferee
(BFPV)
FORGERY
TITLE IS
DEFEASIBLE
INDEFEASIBLE
TITLE

11. Does the NLC provide for immediate
indefeasibility or deferred indefeasibility???
 Read Section 340 of the NLC
 (Subsections 1-3)

12. “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.”

13.  Explanation:
 The proprietor in whose favour registration
has been effected will obtain an indefeasible
title to or interest in the land.

14. “The title or interest of any such person or body
shall not be indefeasible
(a) in any case of fraud… 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 or void
instrument; or
(c) where the title or interest was unlawfully
acquired…”

15.  Explanation:
 However, the title or interest so acquired is liable to be set aside
under section 340(2) where it has been obtained by, inter alia,
fraud or forgery.
 In the case of fraud, section 340(2)(a) provides for the title or
interest obtained to be defeasible where the proprietor or his
agent is a party or privy to the fraud.
 In the case of forgery, section 340(2)(b) provides for the title or
interest so acquired by the proprietor or
transferee immediately to the forgery to be defeasible and liable
to be set aside. This is so irrespective of whether the said
proprietor or transferee acted in good faith in acquiring the title or
interest. This is because there is no similar requirement, as in the
case of fraud, that he must also be a party or privy to the forgery.

16. “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.”

17.  Explanation:
 Where the title or interest is subsequently
transferred, section 340(3)(a) provides that
the subsequent proprietor or transferee will
similarly obtain a defeasible title or interest.
 Also under section 340(3)(b), any interest
subsequently granted out of a title which is
defeasible under section 340(2)(a) and (b) will
attract the same consequence.

18. “Provided that nothing in this sub-section 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 a purchaser.”

19.  Explanation:
 However, where the subsequent proprietor or
transferee acts in good faith and gives
valuable consideration for the title or
interest in question, the proviso to section
340(3) confers protection on such
a subsequent proprietor or transferee such
that his title or interest will be indefeasible.

20. Immediate Subsequent
purchaser purchaser
A B C

21.  Boonsom Boonyanit v Adorna Properties
 1995 High Court: immediate indefeasibility
 1997 COA: deferred indefeasibility
 2001 FederalCourt: immediate indefeasibility
 TanYing Hong vTan Sian Sang [2010]
 2010 FederalCourt: deferred indefeasibility

22.  Facts:
 BB was the registered proprietor of the lands in
question. She discovered that the lands had
been transferred to and registered in the name
of Adorna Prop.
 A person bearing her name, Boonsom
Boonyanit, had forged her signature on the
documents of transfer and sold the lands to
Adorna.
 Adorna had no knowledge that the transfer
documents were forged and had no reason to
suspect that they were forged.

23.  WhetherAdorna Properties, a bona
fide purchaser for valuable
consideration without
notice, acquired an indefeasible title
to the land by virtue of Section
340(3) of the NLC.

24.  High Court:
 The proviso to sub-s (3) of s 340 of the Code which reads:
 “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 a purchaser” protects an immediate
purchaser who obtains registration of his title or interest
under a forged instrument because of the phrase 'any
purchaser' appearing therein. The words 'any purchaser'
must include the first purchaser/transferee who gets onto
the register document of title in consequence of a forged
instrument.

25.  Adorna was a bona fide purchaser for value
and thus came within the proviso to section
340(3), with the result that they obtained a
good title to the lands notwithstanding the
forgery.
 High Court applied immediate indefeasibility

26.  The Court of Appeal held that the words 'any
purchaser' in s 340 of the Code refers to a subsequent
and not to an immediate purchaser, hence creating a
deferred indefeasibility which benefits subsequent
purchasers. The title of an immediate purchaser is
defeasible if tainted by one or more of the vitiating
elements set out in s 340(2) but creates an exception
in favour of a bona fide purchaser who takes his title
from such a registered proprietor. This bifurcation
makes it clear that Parliament intended to confer
deferred and not immediate indefeasibility.

27.  The COA reversed the decision of the High
Court, and reinstated the deferred
indefeasibility concept in section 340.
 Adorna’s registered title was defeasible under
section 340(2) and that the proviso to section
340(3) had no application.
 The COA applied deferred indefeasibility

28.  “The proviso to sub-s (3) of s 340 of the NLC deals with
only one class or category of registered proprietors for the
time being. It excludes from the main provision of sub-s (3)
this category of registered proprietors so that these
proprietors are not caught by the main provision of this
subsection. Who are these proprietors? The proviso says
that any purchaser in good faith and for valuable
consideration or any person or body claiming through or
under him are excluded from the application of the
substantive provision of sub-s (3). For this category of
registered proprietors, they obtained immediate
indefeasibility notwithstanding that they acquired their
titles under a forged document…”

29. “…We therefore, agree with the High Court Judge
that, on the facts of this case, even if the
instrument of transfer was forged, the respondent
nevertheless obtained an indefeasible title to the
said lands.”

30.  Thus, it was held by the Federal Court that:
 By virtue of the proviso to sub-s (3) of s 340 of the
NLC, any purchaser in good faith and for valuable
consideration are excluded from the application of the
substantive provision of sub-s (3). For this category of
registered proprietors, they obtained immediate
indefeasible title to the lands. Therefore, on the facts
of this case, even if the instrument of transfer was
forged, the respondent nevertheless obtained an
indefeasible title to the land.
 The Federal Court applied immediate indefeasibility.

31.  This decision drew much criticism from
academics as being clearly wrong.
 It also caused grave concern amongst land
owners who became vulnerable to losing
their land even through the use of forged
instruments of transfer.
 Many courts reluctantly followed this case as
it was a judgment of the highest court in
Malaysia.

32.  Land was charged to bank under a POA.
 Landowner was only aware of the
charge when he received a notice of
demand. He claimed that he had not
signed the POA, that it was forged.

33.  High Court found that registration was obtained by
forgery.
 However the court was bound by the decision of the
Federal Court in Adorna Properties which held, inter
alia, that by virtue of the proviso to s 340(3) any
purchaser in good faith for valuable consideration
enjoyed immediate indefeasible title to the lands.
 This meant that despite the court's finding that there
was forgery, the third respondent obtained an
indefeasible title to the land.
 The appellant (landowner) appealed against the
decision.

34.  The issue before the FederalCourt:
 Whether an acquirer of a registered charge or
other interest or title under the NLC by
means of a forged instrument acquires an
immediate interest or title.

35.  From the authorities it was clear that a proviso
to a subsection would not apply to another
subsection and that a proviso carved out an
exception to the provision immediately
preceding the proviso and to no other. As such
the proviso immediately after s 340(3) of the
NLC is directed towards s 340(3) alone and not
to the earlier subsection. This is supported by
the use of the words 'in this subsection' in the
proviso. Therefore its application could not be
projected into the sphere or ambit of any other
provisions of s 340

36.  Further, even though s 340(3)(a) and (b) refer to the circumstances
specified in s 340(2) they are restricted to a subsequent transfer of
an interest in the land.
 Therefore, a person or body in the position of Adorna Properties
could not take advantage of the proviso to s 340(3) to avoid its title
or interest from being impeached.
 It is trite law that this court may depart from its earlier decision if
the former decision sought to be overruled was
wrong, uncertain, unjust or outmoded or obsolete in the modern
conditions. As it was clear that the Federal Court in the Adorna
Properties case had misconstrued s 340(1), (2) and (3) of the NLC
and thus come to the erroneous conclusion that the proviso to s
340(3) applied equally to s 340(2), this error needed to be
remedied forthwith in the interest of all registered proprietors

37.  The FederalCourt applied deferred
indefeasibility.
 Did not follow the FC decision in Adorna
Properties.

38. Other cases….

39.  The prevailing view was that S 340 confers
deferred indefeasibility.
 Mohammad bin Buyong v PHT Gombak [1982]
2 MLJ 53
 OCBC Bank (M) Bhd v Pendaftar
Hakmilik,Johor 1999
 M&J Frozen Food v Siland [1994] 2 CLJ 14

40. forgery charge
COA: Deferred indefeasibility
BA Bank

41.  Cases after Adorna Prop (FederalCourt) but
before TanYing Hong 2010.
 2005 Ismail Mohammad (High Court)

42.  High Court
 The bank, the registered chargee had no
knowledge of the fraud/forgery perpetrated by
the other defendants on the plaintiffs who were
the registered proprietors and vendors of the
lands in question.
 The bank was a purchaser in good faith and for
valuable consideration, therefore acquired an
indefeasible interest i.e. registered
charge, pursuant to the proviso to section
340(3), notwithstanding the forgery.

43.  The High Court applied immediate
indefeasibility since it was bound by the
decision of the Federal Court in Adorna
Properties.