LAND LAW II TUTORIAL 2

NO. GROUP MEMBERS ID

1. DANICA DIVYA A/P SELVARAJAH 1171100151
2. KARTHIKA A/P MOHGAN 1181300039
3. YEW JIE MING 1171100137
4. FELICIA JOAN GOMES 1171100557
5 NAVNEETAA A/P KEERBANANTHAN 1171100536

Question 3
A is the registered proprietor of a piece of land on which stands a house. He leases the house
to B for 10 years. A then enters into an agreement to sell the house to C. Unknown to C, A
had previously entered into a sale and purchase agreement to sell the land to D. C is now
registered as owner of the land.
(a) Is C bound by the interests, if any, of B and D?

The issue is whether C as registered proprietor of the land is bound by the interest of B and
D.
S.340(1) of the NLC states that 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. The term ‘indefeasible’ is used in S.340 of the NLC but it was not defined by
NLC. In Frazer v Walker, court held that the concept of indefeasibility is the “immunity
from any attack by adverse claim to the land or interest in respect of which he is registered,
which a registered proprietor enjoys. In S.340(3) of the NLC, it was stated that where the
title or interest of any person or body is defeasible by reason of any of the circumstances
specified in subsection it shall be liable to be set aside in the hands of any person or body to
whom it may subsequently be transferred; and any interest subsequently granted thereof 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 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.
In Adorna Properties Sdn Bhd v Boonsom Boonyani, it was held that registered
proprietors obtain immediate indefeasible title to the land even if they acquired title through
instruments of transfer which are forged. However, this was overruled in Tan Ying Hong v
Tan Sian San & Ors, where in regards to the issue of whether an acquirer of a title acquires an
immediate title, the Federal Court restored the principle of deferred indefeasibility by stating
that only subsequent acquirers can rely on proviso of S.340(3) of the NLC which allows
bona fide purchaser for valuable consideration to retain the title. Thus, subsection (3) was
restricted to subsequent transfers or interests in the land. It did not apply to an immediate
transferee of any title or interest in land.
Applying all these rules to the present situation, by virtue of S.340(1) of the NLC, since C is
the registered proprietor of the land, his title will be indefeasible. In this situation, if B and D
were to bring an action against C, they have to rely on S.340(3) of the NLC as C did not
obtain the title by any unlawful means. B is an immediate holder of the lease, thus he cannot
bring any action to claim back his interest in the land from C because based on Tan Ying
Hong v Tan Sian San & Ors, only subsequent acquirers can rely on the proviso of
subsection (3) to prove himself as the bona fide acquirer for valuable consideration.
Similarly, D is an immediate holder of the equitable title of the land, thus he also cannot rely
on proviso of subsection (3). Moreover, facts show that C had no knowledge of the previous
transactions. Thus, he acquired a good title of the land and it is open to attack until it is
transferred to a subsequent transferee.
In conclusion, C will not be bound by the interest of B and D.

(b) Assuming that C knew of A’s agreement with D but went ahead nevertheless with the
agreement. Does D have any remedy against C?

The issue here is whether D can set aside C’s title of the land which was obtained by means
of fraud when C knowing of the earlier agreement of A with D, had induced A to sell the land
to him instead of to D.
S.340(2)(a) of the NLC states that the title or interest of such person or body will be
defeasible if there is an act of fraud or misrepresentation to the person or body or any agent of
the person of body who was a party or privy. In order to prove an act of fraud, there are three
elements to be fulfilled.
The first element is there must be an actual fraud. In the case of Waimiha Sawmilling Co
Ltd v Waione Timber Co Ltd, it was held that actual fraud is an act of dishonesty. The term
dishonesty means a wilful and conscious disregard and violation of the rights of other
persons. In the case of Tai Lee Finance Co Sdn Bhd v Official Assignee & Ors, the
developer has entered into a sales and purchase agreement to sell house to respondent in
1966. In 1970, the developer charged the land to appellant as security for two loans. The
respondent was aware of such charge and lodged a private caveat to protect their interest as
purchaser. Appellant applied for an order for sale of the land. Purchasers opposed and argued
that appellant had failed to make inquiries before executing the charge. If appellant had done
so, they would have found out that the houses on the land had been sold to the purchasers.
The federal court when citing Assetts v Mere Roihi held that a fraud that seek to affect a
registered title is an actual fraud but not constructive or equitable fraud in order to defeat a
person of his title or interest.
The second element is that the party whose title he seeks to defeat is a party or privy to the
fraud. In the case of Assets Co Ltd v Mere Roihi, the fraud must be brought home to the
person whose registered title is impeached or to his agents and that fraud by persons through
whom he claims does not affect him unless knowledge of it is brought home to him or his
agents. In Datuk Jagindar Singh & Ors v Tara Rajaratnam, Tara was the registered proprietor
who lived on the land with her husband and five children. Her brother in law, Dr. Das,
obtained a loan from Hong Kong and Shanghai bank in Singapore to obtain a loan for his
computer medical centre. Dr Das consulted Tara’s husband who persuaded Tara to put up the
land as security for the loan. Jagindar, a lawyer, was a guarantor for the loan. He and his
friends, Suppiah and Arul, went to Tara’s house and asked her to sign a few documents. They
misrepresented to Tara that the security was to be effected by a transfer. Without knowing it,
Tara had transferred her land to Suppiah and 18 days later he transferred it to Arul. Later, the
land was transferred to a developer company belonging to Datuk Jagindar and sold it to the
purchaser. The federal court held that the appellant guilty of fraud and awarded damages to
Tara. Tara could not get back her land as it had fallen into the hands of bona fide purchasers.
The court found that Suppiah and Arul’s title in the transaction could clearly be impeached as
they were party and privy to the fraud. The title to the developer company could also be
defeated as being actual fact under the control of Jaginder. However, the purchasers’ titles
could not be defeated since they were bona fide purchasers for value without notice of the
fraud.
The last element is that there must be an intention to cheat. In Goh Hooi Yin v Lim Teong
Ghee & Ors, it is a case relating to the sale and purchase of land where the purchaser alleged
fraud in the transfer of the land to a third party. High court held that fraud had not been made
out as the plaintiff failed to prove an intention to cheat. According to Edgar Joseph Jr J, it is
insufficient to show that the transfer had the effect of depriving the plaintiff of his known
right. It must be demonstrated that the transfer was executed with the intention of cheating
the plaintiff of such right.
In applying the above laws to the given situation, in order to prove that D can set aside C’s
title, the three elements of fraud must be fulfilled. C knew that there was a previous
agreement of A to sell the land to D. Nevertheless, C went ahead with the agreement to buy
the land from A. Applying the case of Waimiha Sawmilling Co Ltd v Waione Timber Co
Ltd, C had committed the act of dishonesty because C had the knowledge that A n D have an
agreement regarding the purchase of the land. C was conscious if he continues with the
purchase agreement with A, it would violate the rights of D. Similarly, as the case of Tai
Lee Finance Co Sdn Bhd v Official Assignee & Ors, the act of C is deemed as an actual act
of fraud since as such act of fraud will result in violating the right of A which had a sales and
purchase agreement with D. Hence, the first element of fraud has been fulfilled. As for the
second element, applying the case of Datuk Jagindar Singh & Ors v Tara Rajaratnam,
the fact that C went ahead with the agreement with A to purchase the land even though C
knew that there was an agreement made previously between A and D which would result in
infringement of D’s right towards the registered title of the house shows that C as the
registered proprietor of the land is a party to the fraud. Thus, C can be impeached as a party
to the fraud. As for the last element, C have the actual knowledge that there was a previous
sales and purchases agreement between A and D but C still went ahead into entering an
agreement with A. This can be proved there is an intention on the part of C to cheat D on his
right as provided under Goh Hooi Yin v Lim Teong Ghee & Ors. Hence, C will be liable
for fraud under S.340(2)(a) of NLC as all the elements of fraud has been fulfilled.
In conclusion, D can set aside C’s title of the land which was obtained by means of fraud
when C knowing of the earlier agreement of A with D, had induced A to sell the land to him
instead of to D.
(c) Again, on the assumption that C knew of the earlier agreement, would your answer be
different if C had induced A to sell the land to him instead of to D?

The issue here is whether D can set aside C’s title which was obtained by means of fraud
when C knowing of the earlier agreement of A with D, had induced A to sell the land to him
instead of to D.
According to S.340(2)(a) of the NLC, the title or interest of such person or body will be
defeasible if there is an act of fraud or misrepresentation to the person or body or any agent of
the person of body who was a party or privy. There are three elements to be fulfilled in order
to prove an act of fraud.
The first element is that there must be an actual fraud. According to Waimiha Sawmilling
Co Ltd v Waione Timber Co Ltd, actual fraud is an act of dishonesty. The term dishonesty
means a wilful and conscious disregard and violation of the rights of other persons. In the
case of Tai Lee Finance Co Sdn Bhd v Official Assignee and Ors, the developer has
entered into a sales and purchase agreement to sell house to respondent in 1966. In 1970, the
developer charged the land to appellant as security for two loans. The respondent aware of
such charge and lodged a private caveat to protect their interest as purchaser. Appellant
applied for an order for sale of the land. Purchasers opposed and argued that appellant had
failed to make inquiries before executing the charge. If appellant had done so, they would
have found out that the houses on the land had been sold to the purchasers. The federal court
when citing Assetts v Mere Roihi held that a fraud that seek to affect a registered title is an
actual fraud but not constructive or equitable fraud in order to defeat a person of his title or
interest.
The second element is that the party whose title he seeks to defeat is a party or privy to the
fraud. In the case of Assets Co Ltd v Mere Roihi, the fraud must be brought home to the
person whose registered title is impeached or to his agents and that fraud by persons through
whom he claims does not affect him unless knowledge of it is brought home to him or his
agents. In Datuk Jagindar Singh & Ors v Tara Rajaratnam, Tara was the registered
proprietor who lived on the land with her husband and five children. Her brother in law, Dr.
Das, obtained a loan from Hong Kong and Shanghai bank in Singapore to obtain a loan for
his computer medical centre. Dr Das consulted Tara’s husband who persuaded Tara to put up
the land as security for the loan. Jagindar, a lawyer, was a guarantor for the loan. He and his
friends, Suppiah and Arul, went to Tara’s house and asked her to sign a few documents. They
misrepresented to Tara that the security was to be effected by a transfer. Without knowing it,
Tara had transferred her land to Suppiah and 18 days later he transferred it to Arul. Later, the
land was transferred to a developer company belonging to Datuk Jagindar and sold it to the
purchaser. The federal court held that the appellant guilty of fraud and awarded damages to
Tara. Tara could not get back her land as it had fallen into the hands of bona fide purchasers.
The court found that Suppiah and Arul’s title in the transaction could clearly be impeached as
they were party and privy to the fraud. The title to the developer company could also be
defeated as being actual fact under the control of Jaginder. However, the purchasers’ titles
could not be defeated since they were bona fide purchasers for value without notice of the
fraud.
The last element is there must be an intention to cheat. According to the case of Goh Hooi
Yin v Lim Teong Ghee & Ors, it is a case relating to the sale and purchase of land where
the purchaser alleged fraud in the transfer of the land to a third party. High court held that
fraud had not been made out as the plaintiff failed to prove an intention to cheat. According
to Edgar Joseph Jr J, it is insufficient to show that the transfer had the effect of depriving the
plaintiff of his known right. It must be demonstrated that the transfer was executed with the
intention of cheating the plaintiff of such right.
Applying the above laws to the current situation, C knew that there was a previous agreement
between A and D and still induced A to sell the house to C. This is deemed as an actual act of
fraud as such act of fraud will result in violating the right of A which had a sales and
purchase agreement with D. Thus, A will have to pay damages due to breach of the sales and
purchase agreement with D as under Waimiha Sawmilling Co Ltd v Waione Timber Co
Ltd. As a result, there is an actual act of fraud in which will affect the registered title and will
defeat the registered title of D as under Tai Lee Finance Co Sdn Bhd v Official Assignee
and Ors. Hence, the first element of fraud has been fulfilled. As for the second element, C
can be impeached as a party to the fraud since C had induced A to transfer the house to C
even though C knew that there was an agreement made previously between A and D as under
Datuk Jagindar Singh & Ors v Tara Rajaratnam which would result in violating the D’s
right towards the registered title of the house. For the last element, C have the actual
knowledge that there was a previous sales and purchases agreement between A and D but C
still induced A into entering an agreement with C. This can be proved there is an intention on
the part of C to cheat D on his right as provided under Goh Hooi Yin v Lim Teong Ghee &
Ors. Hence, C will be liable for fraud as under S340(2)(a) of National Land Code as all the
elements of fraud has been fulfilled.
In conclusion, D can set aside C’s title which was obtained by means of fraud when C
knowing of the earlier agreement of A with D, had induced A to sell the land to him instead
of to D.

(d) Assume that A and his wife, Z are registered co-owners of the land. A forges Z’s
signature and transfers the land to C. C is now registered. Can Z set aside C’s title?

The issue here is whether Z can set aside C’s title which was obtained by means of forgery.
S.340(1) of the NLC provides that the proprietor in whose favour registration has been
effected will obtain an indefeasible title to or interest in the land. However, S.340(2)(b) of
the NLC 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. It was stated in S.340(3)
of the NLC that where the title or interest of any person or body is defeasible by reason of
any of the circumstances specified in subsection (2), it shall be liable to be set aside in the
hands of any person or body to whom it may subsequently be transferred and 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. In the
case of Tan Ying Hong V Tan Sian Sang, the appellant is the registered proprietor of the
land. The respondent purporting to act under a power of attorney executed two charges in
favour of bank to secure the loans. Appellant claimed that he did not sign the power of
attorney and it was forged. But the bank claim that they already obtain indefeasibility. The
issue is 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. The court decided that
Adorna Properties case was wrongly decided. Indefeasibility is only granted to subsequent
purchaser if he is a bona fide purchaser. As the bank was an immediate purchaser, he could
not get protected under S.340(3) of the NLC.
Applying S.340(2)(b) of the NLC to the given situation, C will not obtain an indefeasible
title or interest in the land by virtue of S.340(1) of the NLC since A forged Z’s signature to
transfer the land to C. C’ title to the land is defeasible and liable to be set aside. This is so
irrespective of whether C acted in good faith in acquiring the title or interest. This is because,
applying the principle in Tan Ying Hong V Tan Sian Sang, since C is an immediate purchaser
and not the subsequent purchaser, C will not be protected under S.340(3) of the NLC.
In conclusion, Z will can set aside C’s title which was obtained by means of forgery.

(e) Assume that Z does not know of A’s deceit. C charges the land to Bank Anda. C is now in
default and Bank Anda plans to obtain an order to sell the land. Has Z any remedy at this
stage?

The issue is whether Z has title or interest in the land that was subsequently charged to Bank
Anda without Z’s knowledge.
S.340(2) of the NLC states that the title or interest so acquired is liable to be set aside where
it has been obtained by, inter alia, fraud, forgery, or by means of an insufficient or void, or if
the title or interest was unlawfully acquired. S.340(3)(a) of the NLC provides that where the
title or interest is subsequently transferred, the subsequent proprietor or transferee will
similarly obtain a defeasible title or interest. Besides, it was provided under S.340(3)(b) of
the NLC that where the title or interest of any person or body is defeasible by reason of any
of the circumstances specified in subsection (2), it shall be liable to be set aside in the hands
of any person or body to whom it may subsequently be transferred and 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. In the
case of Ismail Mohmad & Anor v Ismail Husin & Ors, the bank, registered chargee had no
knowledge of the fraud or 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 and therefore acquired an indefeasible
interest. The High Court applied immediate indefeasibility since it was bound by the decision
of the Federal Court in Adorna Properties. In the case of Tan Ying Hong V Tan Sian Sang,
the appellant is the registered proprietor of the land. The respondent purporting to act under a
power of attorney executed two charges in favour of bank to secure the loans. Appellant
claimed that he did not sign the power of attorney and it was forged. But the bank claim that
they already obtain indefeasibility. The issue is 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. The court decided that Adorna Properties case was wrongly decided.
Indefeasibility is only granted to subsequent purchaser if he is a bona fide purchaser. As the
bank was an immediate purchaser, he could not get protected under S.340(3) of the NLC.
Applying the above laws to the given situation, despite the fact that the title of the land was
transferred to C by forgery of Z’s signature and could be set aside as per S.340(2) of the
NLC, however, the position of Bank Anda is that of a subsequent purchaser. Applying
S.340(3) of the NLC, the facts did not disclose whether Bank Anda is aware of A’s deceit.
Thus, assuming Bank Anda has acted in good faith and gives valuable consideration for the
title or interest in question, the proviso to S.340(3) of the NLC would confer protection on
Bank Anda such that the bank’s title or interest will be indefeasible. Applying the principle in
the case of Ismail Mohmad & Anor v Ismail Husin & Ors, Bank Anda would be able to
acquire an indefeasible interest pursuant to S.340(3) of the NLC as the bank had no
knowledge of the forgery perpetrated by A and was a purchaser in good faith and for valuable
consideration. As contrasted to the case of Tan Ying Hong V Tan Sian Sang, Bank Anda
would be protected under the S.340(3) of the NLC as Bank Anda is a subsequent purchaser
unlike in the previous case where the proviso did not apply as the bank in that case was an
immediate purchaser. Z cannot claim any remedy against Bank Anda since Z has no title or
interest to the land.
In conclusion, Z does not have title or interest in the land that was subsequently charged to
Bank Anda without Z’s knowledge.