HIGH COURT OF MALAYA
|
www.ipsofactoJ.com/highcourt/index.htm [2005] Part 4 Case 12 [HCM] |
|
|
HIGH COURT OF MALAYA |
| Coram |
Ismail Mohmad - vs - Ismail Husin |
|
|
ARIFIN ZAKARIA, FCJ |
25 JUNE 2005 |
Judgment
Ariffin Zakaria, FCJ
The plaintiffs, husband and wife, were the registered proprietors of the pieces of land namely. Lot No 1334, Lot No 1335 and Lot No 1336, all in Mukim 15, District of Seberang Perai Selatan, Negeri Pulau Pinang ("the said lands"). The first plaintiff had since passed away and had been duly substituted by his son, Abu Bakar Ismail, by order of court dated September 28, 2004. They entered into a sale and purchase agreement dated July 30, 1999 ("the agreement") whereby the plaintiffs agreed to sell and the first defendant agreed to purchase the said lands for a total consideration of RM7.5m. The agreement was prepared by the second defendant, an advocate and solicitor, practising under the name of Sajali & Aziz, the third defendant in the present suit. Under the agreement a sum of RM150,000 was to be paid on the date of the execution of the agreement and a further sum of RM50,000 was to be paid within a period of one month from the date of the agreement, and the balance sum of RM7,300,000 was to be paid to the third defendant as stake holder within 3 months from the date of the agreement.
It is not in dispute that the two sums of RM150,000 and RM50,000 were paid by the first defendant as agreed, leaving the balance sum of RM7,300,000 remaining unpaid. Upon enquiry, the plaintiffs discovered that the said lands had been charged to the fourth defendant as security for a term loan of RM16m to the fifth defendant, out of which RM10m had already been disbursed to the fifth defendant. The plaintiffs claimed that they have no knowledge of the charge and that they had never signed the charge document "P1-1D" nor the charge annexure "P1-E". They further claimed that what purported to be their signatures on the charge document and the charge annexure were forgeries.
Prior to the hearing of this suit, the plaintiffs obtained an order of the learned senior assistant registrar for examination of these documents by the government chemist. The chemist's report was tendered and marked as "P1" In his evidence Mr. Lim Yoh Chan (SP-2), the chemist, confirmed that the signatures in documents "P1A" and "P1E" were of different authorship from the specimen signatures of the plaintiffs which were marked as "P10", "P1A", "P1B", "P1C". The testimony of SP2 in this regard was never challenged. Based on the above, learned counsel for the plaintiffs contended that the purported signatures of the plaintiffs were forgeries and not that of the plaintiffs.
It is further alleged on behalf of the plaintiffs, that the charge came about as a result of the fraud and/or misrepresentation committed by first and the second defendants on the plaintiffs, and at all material times the second defendant was acting as solicitors of the fourth defendant in the preparation and presentation or the loan documentation. As such, it is contended for the plaintiffs that the second defendant was in law the agent of the fourth defendant.
The plaintiffs' case, to put it briefly, is that the intention to defraud the plaintiffs had been conceived even before the agreement was entered into by the plaintiffs. The scheme was that the first defendant will enter into a sale and purchase agreement with the plaintiffs for the purchase of the said lands and without the knowledge of the plaintiffs, the said lands will then be charged to a financial institution as security for a loan to the fifth defendant. The loan amount will be far in excess of the purchase price of the said lands. In the present case the purchase price of the said lands was only RM7.3m, but the said lands were subsequently charged to the fourth defendant as security for a loan facility of RM16m. Under the annexure to the charge, the plaintiffs, as guarantors, are further rendered Iiable to the fourth defendant for the sum exceeding RM23,528,346 in the event the fifth defendant defaulted in servicing the loan.
In the present case a sum of RM10m had already been disbursed to the fifth defendant and not a single payment had been made by the fifth defendant to the fourth defendant. According to first defendant, the manager of the fifth defendant (Wong Kim Leng), had absconded with the money to China.
On the evidence before me, I agree with the plaintiffs' contention that the second defendant is not just privy to the fraud and/misrepresentation but was a central figure, in planning the whole scheme with the first defendant and the representatives of the fifth defendant. It is common ground that the third defendant, the firm of solicitors, was retained by the fourth defendant to prepare the necessary legal documentation for the loan, therefore, the legal consequence is that the second and third defendants were for all intent and purpose the agents of the fourth defendant in the said transaction. (See Banco Exterior Internacional SA v Thomas [1997] 1 WLR 221; El Ajou v Dollar Land Holdings Plc (No 1) [1994] 2 All ER 685; Toh Theam Hock v Kemajuan Perwira Management Corp Sdn Bhd [1988] 1 MLJ 116; Lee Yoke Chye v Toh Theam Bock & Co [1987] 1 MLJ 122.)
It is submitted for the plaintiffs that in the circumstances, the interest registered by way of a charge in favour of the fourth defendant, is defeasible under one or more of the grounds set out in s 340(2) of the National Land Code ("NLC"). The relevant provisions of s 340 read:
|
340. |
Registration to confer indefeasible title or interest, except in certain circumstances
|
EXCEPTIONS TO INDEFEASIBILITY UNDER SECTION 340(2)(a)
(i) Fraud
The NLC does not define what conduct may constitute fraud. The judicial interpretation of the term is found in the Privy Council's case of Assets Co Ltd v Mere Roihi [1905] AC 176 where at p 210 it said:
|
In Waimiha Sawmilling Co Ltd v Waione Timber Co Ltd [1926] AC 101 at p 106 Lord Buckmaster observed as follows:
|
By fraud in these (Torrens) Acts is meant actual fraud, i.e. dishonesty of some sort, not what is called constructive or equitable fraud.
This definition has been consistently followed by our courts. (See Mohamedisa v lbrahim [1968] 1 MLJ 186). Raja Azlan Shah CJ (Malaya) (as His Royal Highness then was) in the Federal Court case of PJTV Dennon (M) Sdn Bhd v Roxy (M) Sdn Bhd [1980] 2 MLJ 136 at p 138, observed:
|
Whether fraud exists is a question of fact, to be decided upon the circumstances of each particular case. Decided cases are only illustrative of fraud. Fraud must mean "actual fraud, i.e. dishonesty of some sort" for which the registered proprietor is a party or privy. "Fraud is the same in all courts, but such expressions as 'constructive fraud' are .... inaccurate." but "'fraud' .... implies a wilful act, on the part of one, whereby another is sought to be deprived, by unjustifiable means, of what he is entitled." (per Romilly MR. in Green v Nixon (1857) 23 Beav 530 & 535; 53 ER 208). Thus in Waimiha Sawmilling Co Ltd v Waione Timber Co Ltd [1926] AC 101 & 106 it was said that "if the designed object of a transfer be to cheat a man of a known existing right, that is fraudulent .... |
Where the registered purchaser's title is being challenged on the ground of fraud, Lord Lindley in Assets Co Ltd, supra, observed as follows:
|
The fraud which must proved in order to invalidate the title of a registered purchaser for value, whether he buys from a prior registered owner or from a person claiming under a title certified under the Native Land Acts, must be brought home to the person whose registered title is impeached or to his agents. Fraud by persons from whom he claims does not affect him unless knowledge of it is brought home to him or his agents. |
(ii) Misrepresentation
"Misrepresentation" in this context was said to mean "fraudulent misrepresentation" and is a species of fraud. See Loke Yew v Port Swettenham Rubber Co Ltd [1913] AC 491; Jagindar Singh v Tara Rajaratnam [1983] 2 MLJ 196. In the latter case it has been said that the word "or" appearing after "fraud" in paragraph (a) would appear to have a disjunctive effect and hence what requires to be proved is either actual fraud or fraudulent misrepresentation or both.
Whether there exist fraud or fraudulent misrepresentation in a given case will depend on the facts and circumstances of the case. In this case it would appear from the evidence of the first defendant himself that he came to know from one Henry Voon that the fifth defendant was looking for land to be charged for the purpose of getting a loan. At that time arrangement had already been made by one Zolkeplee with Bank Rakyat (fourth defendant) for the loan. Further, according to second defendant, he and his firm, the third defendant, had been informed of the transaction and they agreed to act on behalf of fourth defendant in the said transaction. Therefore, from the evidence it is pretty obvious that the first defendant had entered into the sale and purchase agreement not with the genuine intention of acquiring the said lands but merely to use the said lands as security for a loan to be obtained from a financial institution. I am satisfied that all these were done not only with the knowledge of second defendant but with his full cooperation. The transaction could not have gone through without the second defendant's cooperation. Both the charge and the charge annexure emanated from the second defendant's office and presumably the forgery must have originated from there as well. Even though there is no clear evidence as to who actually forged the plaintiffs' signatures on the charge and the charge annexure, but one thing is clear it could not have been done without the second defendant's knowledge or connivance. It is, therefore, not unreasonable to assert that second defendant was not just privy to the fraud and/or misrepresentation, but he was in fact a party to the fraud and/or misrepresentation.
In Jasbir Kaur v Tharumber Singh [1974] 1 MLJ 224 the Federal Court held that it was sufficient for the purpose of s 340(2) of the NLC to support an allegation of fraud or misrepresentation to prove that by means of fraud or misrepresentation the registration of the transfer was obtained and the first appellant there was a party to the fraud or misrepresentation. In the present case I am satisfied that the first and second defendants were privy to or a parry to the fraud or misrepresentation. However, that the same could not be said of fourth defendant. There was no evidence before me showing that the fourth defendant or any of its officer was privy to or a party to the fraud or misrepresentation. As submitted by learned counsel for the fourth defendant there was not a shred of evidence to suggest the participation or involvement of the fourth defendant in the fraud. The fourth defendant was not at all involved in the sale transaction, neither was it the financier for the said transaction. The evidence conclusively shows that the fourth defendant was merely concerned with the provision of the loan to the fifth defendant for its working capital and for the purchase of machineries. There was nothing fraudulent about that. Perhaps the only thing that may militate against the fourth defendant is the fact that the second defendant was the solicitor acting on its behalf, therefore, in law he was the agent of the fourth defendant.
It is, however, contended for the fourth defendant, relying on the authority Doshi v Yeoh Tiong Lay [1975] 1 MLJ 85 that knowledge of the fraud by second defendant in his capacity as solicitor of the fourth defendant could not be imputed to fourth defendant. The Federal Court in that case stated at p 88 as follows:
|
Now the general rule is that the knowledge of a solicitor is the knowledge of the client, so that it is not open to the client to say that the solicitor did not disclose the true facts to him. Thus in Rolland v Hart (1870) 6 Ch App 678 at p 681 which was followed by the High Court of Australia in Stuart v Kingston (1923) 32 CLR 309 Lord Hatherley LC said:
In Bradley v Riches (1878) 9 Ch D 189 it was held that the presumption that a solicitor has communicated to his client facts which he ought to have made known cannot be rebutted by proof that it was the solicitor's interest to conceal the facts. There is, however, an important exception to the above rule in cases of fraud, which is stated in 14 Halsbury's Laws (3 edn) paragraph 1019 (at p 543) as follows:
It is thus clear that his solicitor's knowledge of fraud, if any, cannot be imputed to the respondent. I must therefore reject the appellant's contention that if the respondent had notice by his agent of the previous transactions, then his entering into an agreement to purchase the premises was tantamount to fraud. It is contended for the appellant that if the respondent had knowledge by his agent of the illegality of the loan transaction and consequently of the transfer by Chooi Mun Sou to the nominee company being void he cannot be a bona fide purchaser. The authority relied on for this contention is the old case of Le Neve v Le Neve (1747) Amb 436; 26 ER 1172. But the doctrine of constructive notice, which is all that the respondent can be said to have had in this case, is inapplicable, as a rule, to systems of registration in relation to transactions where priority and notice are governed by priority in or the fact of registration. (See 14 Halsbury's Laws of England (3rd edn) paragraph 1023 at p 545). Where the effect of constructive notice would be to invalidate a transaction in relation to sale of land, the court will not readily apply the doctrine. (See 14 Halsbury's Laws of England (3rd edn) paragraph 1022 at p 545.) |
Likewise in the present case knowledge of second defendant could not appropriately be imputed to the fourth defendant who was not privy to the fraud. The doctrine of constructive notice clearly is inapplicable to the facts in the present case.
Learned counsel for the plaintiffs further urged the court to draw an adverse inference against the fourth defendant for failing to call one Mr. Khalid Sufat, the former managing director of the fourth defendant. It was contended that he was the person who was involved with the loan transaction from the beginning and the first defendant admitted having met him with regard to the said loan. However, I find there was no evidence to suggest that he was in any manner involved in only fraud or misrepresentation. As I see it, in so far as the fourth defendant is concern, it was a straight forward term loan application to be used as part finance of machinery and additional working capital as disclosed in the letter "P9". In the circumstances) I hold that no adverse inference could be drawn against the fourth defendant for failing to call Mr. Khalid.
For the above reasons I hold that the interest of the fourth defendant is not defeasible under s 340(2) (a) of the NLC.
EXCEPTION TO INDEFEASIBILITY UNDER SECTION 340(2)(b)
Where registration was obtained by forgery
The further plank of attack by the plaintiffs is that, the charge is defeasible under s 340 (2) (b) on the ground that it was obtained by way of forged document. From the evidence before me, I am satisfied, on balance of probabilities, that the signatures of the plaintiffs both on the charge and the annexure to the charge were forgeries, therefore, I agree with the plaintiffs that the provisions of s 340(2)(b) would on the face of it operate against fourth defendant.
Section 340(3) provides that where the title or interest of any person or body is defeasible by reason 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. The aforesaid provision is, however, subject to one important proviso that nothing in that 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.
Learned counsel for the fourth defendant contended chat the fourth defendant had acquired the interest in the said lands in good faith and for valuable consideration, therefore, the proviso would apply to the facts in the present case. He contended the NLC confers upon purchasers such as the fourth defendant immediate indefeasibility of title or interest. He said the old belief that under our Torrens system that registration does not confer immediate indefeasibility in circumstances falling under s 340(2) of the NLC is no longer correct as was held by the Federal Court in the landmark case of Adorna Properties Sdn Bhd v Boonsom Boonyanit [2001] 1 AMR 665; [2001] 1 MLJ 241. At pp 670-671 (AMR); p 244 (MLJ) the Federal Court stated the position as follows:
|
The present National Land Code ("the NLC") was enacted by Parliament in 1965 to be applied to all the states in West Malaysia. In doing so, s 338 of the NLC repealed all earlier land enactments of the states, and those enactments repealed are enumerated in the Eleventh Schedule to the NLC: We are aware that any sovereign country may adopt and apply the Torrens system, but in adopting the system, it may modify the system to suit its own needs. Our Parliament did not slavishly follow the wordings of ss 62, 182 and 183 of the Land Transfer Act 1952 of New Zealand, nor the wordings of s 42 of the FMS Land Code. Therefore, to follow the arguments in earlier decisions not based on s 340 of the NLC would only lead to utter confusion. We would therefore proceed to interpret s 340 NLC as it stands, and find what the real intention of Parliament was when enacting it, for the object of interpretation is to discover the intention of Parliament, and the intention of Parliament must be deduced from the language used. |
Further down at p 673 (AMR); p 245 (MLJ) the court said:
|
Subsection (3) says that where that title is defeasible under any of the three 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, subsection (3)(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) of s 340 of the 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 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 subsection (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 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. |
Learned counsel for the plaintiffs contended that the decision of the Federal Court in so tar as it relates to the interpretation or the proviso to subsection (3) of s 340 of the NLC is not binding on this court for three reasons.
Firstly it was a mere obiter;
secondly because the court therein failed to consider earlier authorities on the same issue; and
thirdly, it is contended that the reasoning of the court runs counter to express words of the section.
On the first point he contended that the High Court did not decide the case on the basis that there was forgery but went on frolic to consider that even if forgery was proved, the defendant nevertheless obtained an indefeasible title to the land in dispute. He contended chat forgery was not in issue before the learned High Court judge, therefore, it was not necessary for the court to decide on the issue. With respect, I am unable to agree with learned counsel as I find from my reading of both the judgments of the High Court and the Court of Appeal, forgery was clearly a point in issue. It was the plaintiffs case that the defendant's interest in the land in question is defeasible because it was acquired by way of forged instrument. Reliance was placed on s 340(2)(b) of the NLC.
The learned High Court judge, in his judgment which is reported in [1995] 2 AMR 1828 at p 1857; [1995] 2 MLJ 863 at p 887 said:
|
For the above reasons, I hold that even had I found that forgery had been proved beyond reasonable doubt, the defendant is nevertheless protected and has acquired indefeasible title over the said properties by virtue of the proviso in s 340(3) of the NLC. Thus, the law on forgery obtaining in other Torrens systems is also applicable in our Torrens system. It is true that registered landowners should be protected from being divested of their registered interest through fraud or forgery, yet it is also necessary, for the economic well-being of the nation to retain the confidence of prospective innocent purchasers of landed property. |
On appeal to the Court of Appeal, the court reversed the finding of the learned trial judge on the premise that the impugned instrument of transfer was a forgery. (See Boonsom Boonyanit v Adorna Properties Sdn Bhd [1997] 2 AMR 1813; [1997] 2 MLJ 62). Based on that finding the court held that the respondent's title is not indefeasible under s 340(2)(b) of the NLC. Gopal Sri Ram JCA in delivering judgment of the court at pp 1852-1854 (AMR); p 87 (MLJ) observed as follows:
|
The New Zealand provisions giving effect to the Torrens doctrine of indefeasibility are therefore fundamentally different from s 340 of the Code. It follows that cases decided under the New Zealand statute must not be treated as concluding the effect of indefeasibility under our law. We do not propose to enter upon a detailed analysis of the differences between the New Zealand provisions and those in the Code. Suffice to say that the sections of the Land Transfer Act 1952 reproduced above, when properly construed, create immediate indefeasibility in favour of an acquirer of land in New Zealand. On the other hand, s 340 of the Code makes defeasible the title of a registered proprietor tainted by one or more of the vitiating elements set out in its second subsection 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. That brings us to the rather controversial decision in Doshi v Yeoh Tiong Lay [1975] 1 MLJ 85 at p 88 where Gill CJ (Malaya) appears to have made the following pronouncement which appears to favour the doctrine of immediate indefeasibility under the Code:
It is plain that the learned Chief Justice of Malaya relied upon the decision in Frazer to arrive at his conclusion. As we have pointed out, the Privy Council in that case was considering statutory provisions that bear as much similarity to those in the Code as cheese does to chalk. The observations of Gill CJ (Malaya) in Doshi v Yeoh Tiong Lay above-quoted, made, as they were, without an analysis of s 340 of the Code and an appreciation of the material differences between the New Zealand statute and our written law must be regarded as per incuriam. It therefore comes as no surprise that authors of Malaysian texts upon the subject have unanimously rejected the views expressed by the learned Chief Justice of Malaya in the foregoing passage. In our judgment, the following opinion expressed by Dr Visu Sinnadurai in his work entitled Sale and Purchase of Real Property in Malaysia accurately summarises the position that obtains under the Code:
We would add that the following obiter dictum of Hashirn Yeop A Sani J (as he then was) in Muhammad Buyong v Pemungut Hasil Tanah Gombak [1982] 2 MLJ 53 at p 54 reasonably supports the view held by such academic writers as Dr David Wong and Judith Sihombing in their respective works which is to the like effect as that expressed by Dr Visu Sinnadurai:
We express our agreement with the foregoing interpretation placed upon s 340 of the Code by this eminent judge. |
The Court of Appeal held that the words "any purchaser" in s 340 of the NLC refers to a subsequent purchaser and not an immediate purchaser, hence creating what is often referred to as deferred indefeasibility which only benefits subsequent purchaser.
In Adorna Properties Sdn Bhd v Boonsom Boonyanit, supra, the Federal Court reversed the decision of the Court of Appeal. It held that by virtue of the proviso to subsection (3) of s 340 of the NLC, any purchaser for valuable consideration are excluded from the application of the substantive provision of subsection (3). It said that for this category of registered proprietors, they obtained immediate indefeasible title to the lands. On the facts of the case the Federal Court held that even if the instrument of transfer was forged, the respondent therein nevertheless obtained an indefeasible title to the land. Eusoff Chin CJ at pp 672-673 (AMR); p 245 (MLJ) reasoned as follows:
|
Subsection (2) of s 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 WLR 227. Subsection (2) states that the title of any such person, i.e. any registered proprietor or co-proprietor for the time being, is defeasible if one of the three circumstances in subsection (2) (a), (b) or (c) occurs. We are concerned here with subsection (2) (b) where the registration had been obtained by forgery. Subsection (3) says that where that title is defeasible under any of the three 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, subsection (3)(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) of the s 340 NLC does not stop there. It contains a proviso:
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. |
From the above it is clear that the crucial issue for the consideration of the court is whether the signature was forged. The High Court did not make a clear finding on this, but went on to hold that even if there had been a forgery, the defendant's title is still indefeasible under the NLC. It is clear from the judgment of the Federal Court that in view of the proviso in subsection (3) of s 340 of the NLC any purchaser of land in good faith and for valuable consideration is excluded from the provision of subsection (3) thereof. It necessarily follows that such a purchaser would obtain an immediate indefeasible title even if the instrument of transfer was forged. I am of the view that the above finding is not a mere obiter but the ratio decidendi in the said case. This is confirmed by the finding of the Federal Court in Adorna Properties Sdn Bhd v Kobchai Sosothikul [2005] 1 AMR 501; [2005] 1 CLJ 565, where an application was made pursuant to Rule 137 of the Rules of the Federal Court 1995, to set aside the order of the court pronounced on December 22, 2000. Therefore, on that premise I would dismiss the first ground relied upon by learned counsel for the plaintiffs. Similarly I find no merit in the second and third grounds advanced herein. I am of the view that the decision of the Federal Court is binding on this court despite whatever criticism that may be levelled against it. To hold otherwise would be to go against the principle of stare decisis.
The good faith of the fourth defendant was questioned by learned counsel for the plaintiffs for failing to make enquiry as to the financial standing of the plaintiffs to determine whether they had the capacity to fulfil their obligation under the charge. It is further contended that the fourth defendant ought not to have accepted the valuation of the property by the valuer of the fifth defendant without question. All these, he contended, point to the lack of good faith on the part of the fourth defendant. On the first issue I think it would be going too far to require the fourth defendant, a bank, to make such an enquiry. It is, in my view, a matter strictly within the discretion of the bank whether to do so or not. Failure to make such an enquiry could not be construed as pointing to the lack of good faith on the part of the fourth defendant. Similarly, I think, it is for the fourth defendant whether to accept the valuation done by the fifth defendant or to have a further valuation done by their own valuer. Failure to do so, could not be treated as evidence of lack of good faith on their part.
In the circumstances, I hold that the fourth defendant, being the purchaser in good faith for valuable consideration, had acquired an indefeasible interest in the said lands notwithstanding that the signatures on the charge document and the annexure were forged.
Further on the facts I find that it was the first, second and fifth defendants who were the cause of the loss suffered by the plaintiffs and on that ground I hold that the first and second defendants together with the third defendant, the firm of solicitors in which the second defendant is a partner, are jointly and severally liable to the plaintiffs for the loss. However, I made no order as against the fifth defendant as the claim against it had earlier on been withdrawn.
On the basis of the foregoing I made the following orders:
prayer (a) of the statement of claim is hereby dismissed;
order in terms of prayers (d) and (e) as against first, second and third defendants to be assessed by learned senior assistant registrar with interest at the rate of 8% p.a. from the date of filing of summons to the date of realisation;
aggravated and exemplary damages against the first, second and third defendants to be assessed by learned senior assistant registrar;
by consent of the fourth defendant the liability of the plaintiffs to the fourth defendant shall be limited only to the said lands;
the first, second and third defendants are further ordered to pay the plaintiffs costs and the costs of the fourth defendant.
Cases
Adorna Properties Sdn Bhd v Boonsom Boonyanit [2001] 1 AMR 665; [2001] 1 MLJ 241, FC; Adorna Properties Sdn Bhd v Kobchai Sosothikul [2005] 1 AMR 501; [2005] 1 CLJ 565, FC; Assets co Ltd v Mere Roihi [1905] AC 176, PC; Banco Exterior Internacional SA v Thomas [1997] 1 WLR 221; Boonsom Boonyanit v Adorna Properties Sdn Bhd [1995] 2 AMR 1828; [1995] 2 MLJ 863, HC; Boonsom Boonyanit v Adorna Properties Sdn Bhd [1997] 2 AMR 1813; [1997] 2 MLJ 62, CA; Doshi v Yeoh Tiong Lay [1975] 1 MLJ 85, FC; El Ajou v Dollar Land Holdings Plc (No.1) [1994] 2 ALL ER 685, CA; Jagindar Singh v Tara Rajaratnam [1983] 2 MLJ 196, FC; Jasbir Kaur v Tharumber Singh [1974] 1 MLJ 224, FC; Lee Yoke Chye v Toh Theam Bock & Co [1987] 1 MLJ 122, SC; Loke yew v Port Swettenham Rubber Co Ltd [1913] AC 491, PC; Mohamed Isa v Ibrahim [1968] 1 MLJ 186, FC; PJTV Denson (M) Sdn Bhd v Roxy (M) Sdn Bhd [1980] 2 MLJ 136, FC; Toh Theam Hock v Kemajuan Perwira Management Corp Sdn Bhd [1988] 1 MLJ 116, SC.
Legislations
National Land Code: s.340
Rules of the Federal Court 1995: Rule 137
Representations
Jerald Gomez (Jerald Gomez & Associates) for plaintiffs
M Danish & Ahmad Badri ldris (Ram Reza & Muhammad) for first defendant
Azlan Khamis (Nasira Aziz) for second & third defendants
Mohd Fuad Husaini (Othman Hashim & Co) for fourth defendant
Notes:-
This decision is also being reported at [2005] 6 AMR 123.
|
|
all rights reserved taiking.thing pte ltd |
|
|
