MUHAMMAD AIZAT AFIFI BIN ZAINUDDIN

2010746161
TEST 2
LAND LAW 2
QUESTION (a)
The issue is whether Toman can challenge the indefeasibility of charge in favour of Bank
Haruan Berhad on the ground of fraud.
Indefeasibility is fundanmental to the torrens system as in the case of PJTV Denson (M) Sdn
Bhd v Roxy (M) Sdn Bhd stated that the concept of indefeasibility of title is so deeply
embedded in our land law that it seems almost trite to restate it. Based on section 89 of
National Land Code (NLC), the register is conclusive evidence of entries thereon so long as
the instrument had complied with 3 conditions precedent which are the transaction was one
which was recognized by NLC as one capable of being registered, the instrument used for
registration was in statutory form and the IDT has been produced at the time of registration
and the transaction was not void or otherwise defective. In the case of Mohammad Buyong v
Pemungut Hasil Tanah Gombak it was observed by the court that registration is perfected by
the making of a prescribed memorial of the dealing in the register document title under the
hand and seal of the registering authority.
Based on the case of Frazier v Walker, indefeasibility is a convenient description of the
immunity from attack by adverse claim to the land or interest in respect of which he is
registered. Indefeasibility means that the state guarantees the title or interest is
unimpeachable, unchallengeable and unquestionable. Indefeasibility concept is used to
protect the registered owner or interest against adverse claims.
Moreover, there are two types of indefeasibility. Firstly, immediate indefeasibility is one of
the indefeasibility. It is the concept when a person is registered as owner or interest holder
the he is immediately guaranteed that his title or interest is free and immune from any claim.
This principle confirmed in Frazier v Walker whereby apart from fraud of the registered
proprietor, his title on registration is immediately indefeasible subject only to his personam
(means any relief granted could result only in an enforceable claim against the proprietor
personally but not against the land). This concept in not applicable in Malaysia. Secondly,
deferred indefeasibility is applied in Malaysia. Deferred indefeasibility means upon
registration the title or interest obtained can be challenge if certain circumstances exist. It will
remain potentially attacked if it is obtained by way of fraud, forgery, insufficient or void

instrument until it is transferred to a bona fide purchased for value. Based on the Tan Ying
Hong case, the indefeasibility only comes to be attached to the title or interest upon a
subsequent transfer. If immediate transferee, it is still defeasible. In this case, without the
knowledge of the appellant, the State Government had alienated and issued the document
of title of a piece of land in Kuantan in favour of him. A dispute arose when a defendant used
a forged power of attorney of the appellant, the original registered owner, to charge the
Appellants property to the bank to obtain overdraft and loan facilities in favour of Cini
Timber. When Cini Timber defaulted in payment, the bank commenced foreclosure
proceedings against appellant. In an unusual move, the counsels for both parties in this case
called on the Federal Court to re-examine and overrule the Adornas case, because Eusoff
Chin had erred as it was very clear in section 340(3) that the proviso only applied to this
sub-section (3).
On the facts of Tan Ying Hong case, the Federal Court held that as the bank is an immediate
chargee as well as an immediate purchaser within the meaning of section 340(2), the
proviso in section 340(3) that protects a subsequent bona fide purchaser for value will not
assist the respondent bank. The Court added that it is immaterial that the land was alienated
to the appellant without his knowledge as the validity of the alienation was not even
challenged by the respondent bank. The Court then awarded a sum of RM75,000 as costs to
the appellant, and the ownership of the land which now should be worth a few millions of
ringgit reverts to the appellant.
Under NLC, section 340(1) of provides that upon registration, the title or interest shall be
indefeasible and immune from attack by adverse claim. In addition, under section 340 (2), it
stated that the title or interest will be defeasible if the title is obtained by way of fraud or
misrepresentation, forgery, insufficient or void instrument or unlawfully acquired by the
person or body in the purported exercise of any power or authority conferred by any written
law. Furthermore, under section 340(3) stated that the title or interest will be indefeasible if
transfer to third party which is bona fide purchaser for value. Generally, only subsequent
transferee may claim bona fide purchaser under section 340(3) if fulfilled two requirements
which are pays consideration and acts in good faith.
On the other hand, exceptions to indefeasibility based on section 340(2) stated three
exception which are fraud or misrepresentation, forgery or void instrument and unlawfully
acquired by the person or body in the purported exercise of any power or authority conferred
by any written law. The title or interest will be defeasible if fall under those exception.
Firstly, under fraud there are three elements to consider as fraud which are actual fraud,
intention to cheat and party or privy to the fraud or misrepresentation. Misrepresentation is
also part of fraud as what stated in Datuk Jaginder case. Actual fraud is defined as

dishonesty of some sort (mens rea) and it was affirmed in the case of Assets Co v Mere
Roihi whereby fraud means actual fraud that is dishonesty of some sort and not merely
constructive fraud. Example of actual fraud can be seen in the case of Apoo v Ellamah
whereby the registered thought he was executing a charge document but instead the
transferee asked him to sign a transfer form and subsequently obtained registration of a
transfer. That show a dishonesty on the part of the transferee. The constructive fraud could
not considered as fraud where in the case of Ong Tin v Seremban Motor Garage the court of
appeal decided that mere notice of the unregistered interest could not amount to fraud.
Moreover, intention to cheat is the intention to commit fraud on the part of the fraudulent
party. It can be seen on the case of Jasbir Kaur v Tarumber Singh, whereby a transferee
had intention to cheat when he fraudulently obtained transfer signed by registered proprietor,
falsely declared to the registrar that IDT is missing, upon receipt of new title deed transfer
the property to himself. Last element is fraud must be committed by the person or his agent
and as a result his name was registered in the RDT/IDT. If the person is not party or privy to
the fraud then the title will be indefeasible. Based on the appeal case of Abu Bakar Ismail v
Ismail Mohamad whereby the plaintiff was the former registered proprietor of the land sold
the land to the defendant for 7.5 million. Unknown to him the land was charged to secure a
loan amounting to 16 million (higher than the purchase price offered to him). The charged
and the money was in favour of another defendant. The plaintiff claimed for recovery of the
said land and for cancellation of the charge with the 4th defendant. The court of appeal held
that the charge in favour of Bank Kerjasama Berhad be removed on the ground of fraud. It
was concluded by the judge that the 2nd defendant was privy to the fraud and the legal firm
was an agent of the 4th defendant also agent to the fraud, therefore the charge should be
rendered defeasible in the hand of 4th defendant as the agent fraudulent conduct could be
imputed to the chargee bank.
Next, forgery is also one of the exception to indefeasibility. Forgery is act of one
person(forger) to sign in the name of a registered proprietor or any instrument dealings. The
forger falsely represented to a third party that he is registered proprietor and later sign the
transfer form in the name of the registered proprietor. The registered proprietor has no
knowledge at all of the transaction. In the case of Ong Lock Choo v Quek Shin, the
registered proprietor gave his IDT to solicitor and the clerk forged his signature and charged
to third party. The court held that the forged transfer was a nullity and the transaction can be
set aside on the ground of void instruments.
On the other hand, last exception to section 340 (2) is 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. It can be seen in the case of M&J Frozen Sdn Bhd v Siland Sdn Bhd

where the payment of balance of auction price was made after the extension od time given
by chargee without first obtaining consent from chargor. The court of appeal decided the
registrar was ultra vires the section 258(c) and the title was unlawfully acquired by the first
appellant. The title was defeasible under section 340(2)(c).
In applying to the situation, Toman is the registered proprietor and Mahmud is not yet
registered proprietor as the transfer transaction is still pending. It is because Mahmud still
not paid the full amount of the land as Toman only received rm90,000. The agreement
stated that Mahmud should paid the balance within 3 months but Mahmud still not paid the
balance. Moreover, Bank Haruan Berhad is considered as immediate transferee as the
execution of transfer between Toman and Mahmud is still pending. Its make the title can be
challenge under section 340(2) as Bank was immediate transferee. Bank cannot claim for
bona fide purchaser under section 340(3) as bank was immediate transferee.
Based on section 340(2)(a), Toman may challenge the indefeasibility of charge in favour of
Bank Haruan Berhad on the ground of fraud. Based on first element of fraud, there is actual
fraud on the land dealings as Mahmud entered into a sale and purchase agreement with
Toman and without Toman knowledge, the said land would be charge to a financial
institution as security for a loan in favour of Mahmud. That show the dishonesty of Mahmud
and Messrs Midah & Partners who prepare the charge. The charge also higher than a price
of the said land as the purchase price was only rm900,000 but the charge loan worth rm 2
million. Futhermore, there is also intention to cheat on the part of Mahmud and Messrs
Midah & Partners when they already planned to defraud Toman even before the signing of
the sale and purchase agreement.
In addition, the fraudulent act had been committed by the party or privy to the fraud. It can be
seen Mahmud is the privy to the fraud. While, Messrs Midah & Partners is agent of fraud to
the Bank Haruan Berhad. Thus, the charge in favour of Bank Haruan Berhad should be
removed as bank is party to fraud and the agents fraudulent conduct could be imputed to
the chargee bank. Therefore, the charge can be considered as defeasible as all the
elements fraud is fulfilled. The land dealings itself is void on the ground it contain fraud
element that make Toman suffers loss.
Conclusion, Toman can challenge the indefeasibility of charge in favour of Bank Haruan
Berhad on the ground of fraud.

QUESTION (b)

The issue is whether Toman can challenge the indefeasibility of charge in favour of Bank
Haruan Berhad on the ground of forgery and whether Bank Haruan Berhad can claim bona
fide purchaser for value.
Based on the case of Frazier v Walker, indefeasibility is a convenient description of the
immunity from attack by adverse claim to the land or interest in respect of which he is
registered. Indefeasibility means that the state guarantees the title or interest is
unimpeachable, unchallengeable and unquestionable. Indefeasibility concept is used to
protect the registered owner or interest against adverse claims.
Moreover, there are two types of indefeasibility. Firstly, immediate indefeasibility is one of
the indefeasibility. It is the concept when a person is registered as owner or interest holder
the he is immediately guaranteed that his title or interest is free and immune from any claim.
This principle confirmed in Frazier v Walker whereby apart from fraud of the registered
proprietor, his title on registration is immediately indefeasible subject only to his personam
(means any relief granted could result only in an enforceable claim against the proprietor
personally but not against the land). This concept in not applicable in Malaysia. Secondly,
deferred indefeasibility is applied in Malaysia. Deferred indefeasibility means upon
registration the title or interest obtained can be challenge if certain circumstances exist. It will
remain potentially attacked if it is obtained by way of fraud, forgery, insufficient or void
instrument until it is transferred to a bona fide purchased for value. Based on the Tan Ying
Hong case, the indefeasibility only comes to be attached to the title or interest upon a
subsequent transfer. If immediate transferee, it is still defeasible. In this case, without the
knowledge of the appellant, the State Government had alienated and issued the document
of title of a piece of land in Kuantan in favour of him. A dispute arose when a defendant used
a forged power of attorney of the appellant, the original registered owner, to charge the
Appellants property to the bank to obtain overdraft and loan facilities in favour of Cini
Timber. When Cini Timber defaulted in payment, the bank commenced foreclosure
proceedings against appellant. In an unusual move, the counsels for both parties in this case
called on the Federal Court to re-examine and overrule the Adornas case, because Eusoff
Chin had erred as it was very clear in section 340(3) that the proviso only applied to this
sub-section (3).
On the facts of Tan Ying Hong case, the Federal Court held that as the bank is an immediate
chargee as well as an immediate purchaser within the meaning of section 340(2), the

proviso in section 340(3) that protects a subsequent bona fide purchaser for value will not
assist the respondent bank. The Court added that it is immaterial that the land was alienated
to the appellant without his knowledge as the validity of the alienation was not even
challenged by the respondent bank. The Court then awarded a sum of RM75,000 as costs to
the appellant, and the ownership of the land which now should be worth a few millions of
ringgit reverts to the appellant.
Under NLC, section 340(1) of provides that upon registration, the title or interest shall be
indefeasible and immune from attack by adverse claim. In addition, under section 340 (2), it
stated that the title or interest will be defeasible if the title is obtained by way of fraud or
misrepresentation, forgery, insufficient or void instrument or unlawfully acquired by the
person or body in the purported exercise of any power or authority conferred by any written
law. Furthermore, under section 340(3) stated that the title or interest will be indefeasible if
transfer to third party which is bona fide purchaser for value. Based on the case of Owe
Then Kooi v Au Thiam Seng, the land was transferred to transferee by fraud. Later it was
charger to the bank. The court held that the charge created in favour of the bank is
indefeasible as chargee is bona fide purchaser for value. Generally, only subsequent
transferee may claim bona fide purchaser under section 340(3) if fulfilled two requirements
which are pays consideration and acts in good faith. First requirement is person who pays
consideration. It must be valuable or real (money or money worth) and it is not merely for
natural love and affection or nominal consideration. It can be seen in the case of Chu Choon
Moi v Ngan Siew Tin, the husband transferred his late father property to the wife and without
consideration. Thus, she is not considered as bona fide purchaser for value. Second
requirements is person who acts in good faith. It means that he had no knowledge whether
actual or constructive that the title or interest is bad in law. It can be referred to the case of
Au Meng Nam v Ung Yak Chiew whereby the judge stated the purchaser was under failed to
investigate properly all matters relating to the sale of land as defendant purchase property
beloiw market value.
On the other hand, exceptions to indefeasibility based on section 340(2) stated three
exception which are fraud or misrepresentation, forgery or void instrument and unlawfully
acquired by the person or body in the purported exercise of any power or authority conferred
by any written law. The title or interest will be defeasible if fall under those exception.
Firstly, under fraud there are three elements to consider as fraud which are actual fraud,
intention to cheat and party or privy to the fraud or misrepresentation. Misrepresentation is
also part of fraud as what stated in Datuk Jaginder case. Actual fraud is defined as
dishonesty of some sort (mens rea) and it was affirmed in the case of Assets Co v Mere

Roihi whereby fraud means actual fraud that is dishonesty of some sort and not merely
constructive fraud. Example of actual fraud can be seen in the case of Apoo v Ellamah
whereby the registered thought he was executing a charge document but instead the
transferee asked him to sign a transfer form and subsequently obtained registration of a
transfer. That show a dishonesty on the part of the transferee. The constructive fraud could
not considered as fraud where in the case of Ong Tin v Seremban Motor Garage the court of
appeal decided that mere notice of the unregistered interest could not amount to fraud.
Moreover, intention to cheat is the intention to commit fraud on the part of the fraudulent
party. It can be seen on the case of Jasbir Kaur v Tarumber Singh, whereby a transferee
had intention to cheat when he fraudulently obtained transfer signed by registered proprietor,
falsely declared to the registrar that IDT is missing, upon receipt of new title deed transfer
the property to himself. Last element is fraud must be committed by the person or his agent
and as a result his name was registered in the RDT/IDT. If the person is not party or privy to
the fraud then the title will be indefeasible. Based on the appeal case of Abu Bakar Ismail v
Ismail Mohamad whereby the plaintiff was the former registered proprietor of the land sold
the land to the defendant for 7.5 million. Unknown to him the land was charged to secure a
loan amounting to 16 million (higher than the purchase price offered to him). The charged
and the money was in favour of another defendant. The plaintiff claimed for recovery of the
said land and for cancellation of the charge with the 4th defendant. The court of appeal held
that the charge in favour of Bank Kerjasama Berhad be removed on the ground of fraud. It
was concluded by the judge that the 2nd defendant was privy to the fraud and the legal firm
was an agent of the 4th defendant also agent to the fraud, therefore the charge should be
rendered defeasible in the hand of 4th defendant as the agent fraudulent conduct could be
imputed to the chargee bank.
Next, forgery or void instrument is also one of the exception to indefeasibility. Forgery is act
of one person(forger) to sign in the name of a registered proprietor or any instrument
dealings. The forger falsely represented to a third party that he is registered proprietor and
later sign the transfer form in the name of the registered proprietor. The registered proprietor
has no knowledge at all of the transaction. In the case of Ong Lock Choo v Quek Shin, the
registered proprietor gave his IDT to solicitor and the clerk forged his signature and charged
to third party. The court held that the forged transfer was a nullity and the transaction can be
set aside on the ground of void instruments. By virtue the case of Tan Ying Hong, the
Federal Court held that as the bank is an immediate chargee as well as an immediate
purchaser within the meaning of section 340(2), the proviso in section 340(3) that protects a
subsequent bona fide purchaser for value will not assist the respondent bank. The Court
added that it is immaterial that the land was alienated to the appellant without his knowledge

as the validity of the alienation was not even challenged by the respondent bank. The court
also stated only the subsequent transferee may claim for bona fide purchaser under section
340(3) and immediate transferee cannot do so.
On the other hand, last exception to section 340 (2) is 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. It can be seen in the case of M&J Frozen Sdn Bhd v Siland Sdn Bhd
where the payment of balance of auction price was made after the extension od time given
by chargee without first obtaining consent from chargor. The court of appeal decided the
registrar was ultra vires the section 258(c) and the title was unlawfully acquired by the first
appellant. The title was defeasible under section 340(2)(c).
In application, Mahmud act by forged Toman signature on the said document and
transferred the land to himself before creating a charge in favour of Bank Haruan Berhad
can be considered as forgery under section 340(2)(b). After that land dealings, its makes
Mahmud as an immediate transferee as he transferred to himself first while Bank Haruan
Berhad is subsequent transferee as obtained the interest from Mahmud. The dealings can
be considered void and the title will be defeasible. However, as Bank Haruan Berhad was a
subsequent transferee, it can claim of bona fide purchaser for value under section 340(3)
and the title will be indefeasible.
As regard to the bona fide purchaser for value, Bank Haruan Berhad had fulfilled the two
elements of bona fide as Bank had pays consideration when giving the rm 2 million loan
towards Mahmud and Bank had acted in good faith in that particular land dealing. It is
because Bank had no knowledge that the title is bad in law. Based on RDT, it shows that
Mahmud is immediate transferee. Thus it makes Bank a subsequent transferee on the RDT.
Eventhough, Mahmud obtained the title by way of forgery, Bank Haruan Berhad had no
knowledge about that and the title can be considered as indefeasible on the ground of bona
fide purchaser for value.
Conclusion, Toman cannot challenge the indefeasibility of charge in favour of Bank Haruan
Berhad as Bank Haruan Berhad is a bona fide purchaser for value as protected under
section 340(3) and the charge created in favour of Bank Haruan Berhad is indefeasible .

QUESTION (c)
The issue is whether Toman is entitled of registrar caveat on his land by virtue section 320 of
NLC.
Caveat is defined under section 5 of NLC as registered caveat. It is designed to protect the
unregistered interest. The person who lodged caveat is known as caveator and the person
whose land was being lodged with caveat known as caveatee. Moreover, there are 4
purposes of caveat. First purpose is retrains the registered proprietor from dealing with his
land. Second purpose is gives interim protection to the caveator until the dispute is settled or
his interest in the land is registered. It can be seen in the case of Butler v Fairclough, it
stated that caveat operates as a notice to all the world that the registered proprietor title is
subject to the equitable interests alleged in the caveat. Third purpose is caveat as a notice to
the world that the caveator has interest in the said land and by caveatingt he is protecting
that interest. The party in land dealing must conduct a land search to ensure that the title is
genuine. Last purpose is to freezes the situation and maintaining status quo of all parties
until the issues is settled. It can be seen in the case of Temenggung Securities LTD, it stated
that the purpose of caveat is to preserve the status quo pending the taking timeous steps by
the applicant to enforce his claim to an interest in the land by proceedings in court.
Registrar caveat is a privilege accorded to the registrar by the code to assist the person
under section 320(1) of NLC to restrain the registered proprietor from further dealing with his
land. The applicant must make a request via letters and state the reason for applying
registrar caveat. In addition, section 320(1) provides that the registrar may enter registrar
caveat and registrar has discretion to enter caveat upon received the application by
applicant. By virtue the case of AR Palaniappa Chettiar, Judge Wong Kim Fatt stated that
registrar is not bound to act on every information or request made by any applicant as the
discretion is on part of registrar. However that power must be exercised reasonably in good
faith.
In evaluating the application made by the applicant, the registrar will look into the facts
supplied or information received by him. The police report also is strong evidence in applying
registrar caveat as it is an offence anyone who makes a false report. It can be seen in the
case of Lim Ah Hun v Pendaftar Hakmilik Pulau Pinang, it was decided by the court that the
registrar had acted rightly when he decided to enter registrar caveat based on police report
and information of the court proceedings supplied by the applicant.
Based on section 320(1) of NLC, it stated four reasons for entry registrar caveat. First
reason is for the prevention fraud or improper dealing. An applicant may request to the

registrar to enter registrar caveat if he feels that he is being cheated or somebody has
committed a fraudulent conduct in any land dealing that caused him to suffer loss. Fraud
must be actual fraud and it has been committed or about to be committed. Improper dealing
includes any land dealing carried out by the parties not in equitable manner. The aggrieved
party suffered lost because of the unfair terms. It can be seen the case of Seet Soh Ngoh v
Vebkateswara Sdn Bhd, in this case the defendant was a developer alleged that the plaintiff
who purchased the house will not be able to pay the purchase price in full. For this reason
the defendant terminated and the sale agreement and intended to sell the same unit to
another purchaser at the same price. On the other hand, the plaintiff had paid the
progressive payment and the payment made is more than the actual progressive work
completed by the defendant. The plaintiff prayed for specific performance and the registrar to
enter registrar caveat. It was decided by court that the defendant had wrongfully terminated
the sale agreement because plaintiff did not breach the agreement. The defendant conduct
was improper and therefore registrar should enter registrar caveat.
Second reason is for protecting the interest of the federal government or the state authority.
Interest of the federal government or state authority must be interest related to the land. If
interest is not related to the land, it is not proper for registrar to enter registrar caveat. In the
case of Registrar of Title Johore v Temenggung Securities, the court decided that income
tax was a personal debt of the proprietor that was not related to the land in question. Thus,
the registrar caveat had to be removed.
Next, the provision was later amended and a new clause under section 320(1)(ba) was
introduced that provides registrar caveat can be entered to protect interest of the federal and
state government to satisfy the whole or part of the debt due to the federal or state authority
whether such debt is secured or unsecured or whether or not judgment has been obtained.
Based on the case of MBF Finance Bhd v Pendaftar Hakmilik Negeri Perak, it was stated
that once dect due from the proprietor to the federal or state government is established the
registrar can enter caveat. However it was also noted by the learned judge that as for priority
between the charge and the registrar caveat, the charge takes priority.
Last reason for entry registrar caveat is by reason of some error appearing to the registrar
have been made in RDT or IDT. By caveating the land the registrar can ascertain as to
whether the error could be ratified or some adjustments need to be done.
Based on section 320(2), the operation of registrar caveat is retrospective as it will inhibit
any instrument or application for entry from proceeding where that instrument or application
has been lodged prior to entry of registrar caveat but not yet finalizes.

On the other hand, registrar caveat shall continue in force until it is cancelled by registrar
based on 3 factors under section 321(3)(a)-(c). First, removal by registrar on motion as
stated in section 321(3)(a). Second, withdrawal by registrar on an application by the
proprietor of the caveated land as stated under section 321(3)(b). Last, removal by registrar
pursuant to court order under section 321(3)(c) if there is party who aggrieved by the
existence of caveat.
In applying, Toman had been cheated by Mahmud and Messrs Midah & Partners in the land
dealing between Toman and Mahmud. Mahmud and Messrs Midah & Partners had
committed fraudulent conduct in the sale and purchase agreement of Toman land and make
Toman suffers loss. It can be considered as one of the reason to enter registrar caveat
particularly in fraud and improper dealing under section 320(1)(a). The land dealing between
Toman and Mahmud is an improper dealing and been carried out not in equitable manner. it
is because Toman had no knowledge as regard to the charge been made to the Bank
Haruan Berhad that worth rm 2 million in favour of Mahmud and his land as a security.
As regard to the Toman lodged a police report against Mahmud and Messrs Midah &
Partners upon hearing that his land will be sold in a public auction, it could be considered as
the strong evidence to affirmed the application of registrar caveat. It advisable to lodged a
police report before apply for registrar caveat as it has high probative value.
As a registrar, I can and will enter the registrar caveat for Toman on the ground that Toman
been cheated in a improper land dealing by Mahmud and Messrs Midah & Partners plus
Toman had lodged the police report to described the seriousness of the claim. Registrar has
a discretionary power to enter registrar caveat on that matter.
Conclusion, I as the registrar can enter registrar caveat on Toman land by virtue section
320(1)(a) of NLC.