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11
A
Sad Case of Forgery
MANY
YEARS AGO, a Thai woman bought a piece of land in Penang. She lived in
Bangkok. Taking advantage of her absence a forger forged her signature
and transferred the land to a company called Adorna Properties Berhad.
On
discovering the fraud the Thai woman sued Adorna for return of the
stolen land. The case was reported in the Malayan Law Journal as Boonsom
Boonnyanit against Adorna Properties Berhad
The
Court of Appeal in a closely argued judgment which took up 22 pages of
the Malayan Law Journal report held that the forged document conferred
no title to the land on Adorna. It followed seven high court and two supreme
court (court of final appeal) decisions
Adorna
went on appeal to the Federal Court (the renamed final appeal court)
In
a 12 page judgment delivered the end of last year the Federal Court reversed
the Court of Appeal and Adorna emerged the winner
The
judgment of the final court of appeal was an astonishing document
given the importance of the issue plus the fact that 9 courts had held
that a forged document was only a useless piece of paper and conferred
nothing on its holder. Of the 14 pages of the typewritten judgment one
was the title page, five pages recited the facts and the issues before
the court, and three pages reproduced the relevant section of the National
Land Code. Only three and half pages contained the reasoning of the court.
(2)
The
title or interest of any such person or body shall not be indefeasible
—
(a)
in
any case of fraud of misrepresentation 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 by the person or body in
the purported exercise of any power or authority conferred by any written
law.
(3)
Where
the title or interest of any person or body is defeasible by reason
of any of the circumstances specified in sub-section (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:
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.
(4)
Nothing
in this section shall prejudice or prevent —
(a) the
exercise in respect of any land or interest of any (power of ) forfeiture
or sale conferred by this Act or any other (written) law for the time being
in force, or any power of avoidance conferred by any such law: or
(b)
the
determination of any title or interest by operation of law
“We
must bear in mind that a person may be registered as the sole proprietor
or co-proprietor of a piece of land, but he is for the purpose of this
section, still
a
registered
proprietor. He might have become a registered proprietor of the land because
he had bought it, or he got
it by
way of a gift, or by way of transmission upon the death of his parent or
spouse. Therefore, a piece of
land
may have
one proprietor or many co-proprietors.
Subsection (1)
of
section
340 NLC deals with everyone of them as long as he is currently a registered
proprietor of that
piece of land.
So
long as his name is on the land register, his
title
or
interest
is
indefeasible
unless caught by subsections(2)
and
(3)".
“Subsection(2)
of
section
340 NLC uses the word “such”. When
the
word “such” occurs in a section it must not be
ignored,
but
must be read as referring back to the preceding provision - Ellis v. Ellis
(1962] 1 W.L.R. 227".
“Subsection
(2) states that the title of any such person i.e. any
registered proprietor or co-proprietor for the time being is indefeasible
if the circumstances in subsection (2)(a), (b) or (c) occurs. We are concerned
here with subsection (2)(b) where the registration has been obtained by
forgery".
“Subsection
(3) says that where that title is defeasible
under
any of the 3 circumstances
enumerated
under
subsection (2),the
title
of
the
registered proprietor to whom
the
land
was subsequently transferred under the forged
document,
is
liable
to
be
set aside. Similarly, subsection3(b)
says
any
interest
under
any lease, charge
or easement subsequently
'granted thereout’ i.e. out of the forged document may be set aside".
“However,subsection(3)ofsection
340 NLC does not stop there.
It contains
a proviso".
“It
is
a
cardinal
rule
of
interpretation that a proviso
to
a
particular section, or provision of a statute only
embraces
the
field
which is
covered by
the
main provision. The
object,
of
a proviso is to qualify or limit something which has gone before it. Its
proper function is to except and deal with a case which would otherwise
fall within the general language of the main provision of the statute,
and its effect is confined to that case. In other words, the object of
a proviso is to carve out from the substantive section or clause of a statute,
a class or category of persons or things to whom or to which, the main
section does not apply. The proviso cannot be divorced from the main clause
to which it is attached. It must be considered
together
with the section, or subsection of the statute to which it stands as a
proviso".
“The
proviso
to
subsection(3)
of Section 340 of the NLC dealt with only one class or category
of registered proprietors
for the
time being. It excludes from the main provision
of
subsection(3)
this
category
of registered proprietors
so that
these proprietors are not caught by the main
provision
of
this
sub-section.
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 subsection (3)".
“For
this category of registered proprietors they obtained immediate indefeasibility
notwithstanding that they acquired their titles under a forged document
“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".
“We
allow this appeal with costs here and the courts below to be taxed and
paid by the respondent to the appellant".
“13th
December 2000.”
Shorn of its inconsequential paragraphs of non sequiturs the reasoning of the court is contained in the two short paragraphs we have italicised above. The careful analysis of the court of appeal is simply ignored; the leading text book writers quoted by the court of appeal are similarly consigned to the scrap heap.
We
fear that the Federal Court may have unwittingly handed a blank cheque
to scheming cheats and rascals. Parliament must step in to
nullify
the effects of the decision.