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REGISTRATION OF TITLE SYSTEM UNDER THE MALAYSIAN LAW

The 'Torrens system', named after Sir Robert Torrens3 and introduced in South Australia in 1858, is perhaps
the best known system of the registration of title (Willoughby and Wilkinson, 1995). The introduction of a
Torrens system in Malaysia was a slow and complex process spreading over a long period of time (Sood
and Tee, 2008).

Apart from the Torrens system, the Malaysian land law had also been influenced by the Islamic and
customary laws. Such influence could be seen from the concept of harta sepencarian or 'jointly-acquired
property'. Under the concept, the right of a wife towards the property or land is recognised as long as it had
been acquired during the marriage even if the property was under the name of the husband and the wife is a
fulltime housewife since the contribution of the wife to the family must be recognised. However, a declaration
to such effect by the court is required and is usually given upon the division of such property upon death or
divorce.
1 MLJ lxvi at lxviii

The reason for the influence of Islamic law is not difficult to understand. Since 1400, (since the establishment
of the Sultanate of Malacca), the locals (the Malays) have been professing the religion of Islam, a
characteristic that remained until after independence.4 Although the Malaya States were occupied by various
countries for 446 years, they were not occupied comprehensively (with the exception of the short period of
Japanese occupation) and autonomy largely remained.5 The policy of various states was mostly one of 'non-
interference' and the Sultans or local leaders had de facto control over land matter. 6 This was explained by
Salleh Abbas LP, the former Lord President, as follows:

there can be no doubt that before the British intervention, the Sultan was an absolute ruler of his state in whom powers
to make laws and to govern the state were vested, and that he exercised these powers presumably after advice of, or
more appropriately, consultations with his orang-orang besar (Ministers), was sought or held. After the British
intervention however, he still remained an absolute ruler but was required to administer the state with the advice of a
7
British Resident.

In another case, Shaik Abdul Latif & Ors v Shaik Elias Bux,8 Edmonds JC further said that 'the only law
applicable to the Malays in the Malay States before the arrival of British administrators is Islamic law
modified by local custom'. Concerning the customary land, Horne J stated that:
1 MLJ lxvi at lxix

'Customary land' is land the title to which has been endorsed 'customary land' and that the expression 'customary land'
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meant land which was ancestral property (harta pesaka) as opposed to acquired land (harta carian).

Before the introduction of Torrens system to Malaysia, the rights over land allegedly belonged to the Sultans
but the people were given the liberty to occupy and use it.10 Sir Benson Maxwell CJ in Sahrip v Mitchell &
Anor11 summarised the legal position by stating that:

It is well known that by the old Malay law or custom of Malacca, while the sovereign was the owner of the soil, every
man had nevertheless the right to clear and occupy all forest and waste land, subject to the payment, to the sovereign,
of one-tenth of the produce of the land so taken ... If he abandoned the paddy land or fruit trees for more than three
12
years, his right ceased and the land reverted to the sovereign.

After the British occupation, common law and equity principles were introduced into the Federated Malay
States ('FMS') as the new sources of land law, in addition to the local customary land tenure (Maidin, 2008).
Moreover, the laws governing lands in these FMS were characterised by the Torrens system, instead of
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Islamic land law.13 This marked the beginning of a new regime of the registration of title law akin to the
Torrens system in Australia on the basis of the Real Property Act 1857 of South Australia. The four states of
Perak, Selangor, Negeri Sembilan and Pahang, which later became the Federated Malay States were the
first to enact laws introducing Torrens title for use in a Malaysia setting (Sood and Tee, 2008). The
registration of title system was first introduced in Perak by way of the General Land Regulations 1879; in
Selangor by way of the General Land Regulations 1882, in Negeri Sembilan by
1 MLJ lxvi at lxx
way of the General Land Regulations 1887 and in Pahang by way of the General Land Regulations 1889 (Sood
and Tee, 2008). By 1911, a unified Federated Malay States land enactment was passed. Currently, the main
registration of title statute in Malaysia is the National Land Code ('NLC'). According to Suriyadi J in the case of
Sime Bank Bhd v Mohd Hassan bin Sulaiman:14

the National Land Code 1965 was made effective from 1 January 1966 whereby thenceforth a uniform system of land
tenure and dealing existed throughout Peninsular Malaysia. Penang and Malacca were also absorbed into the system
by the promulgation of the National Land Code (Penang and Malacca Titles) 1963, effective also on 1 January 1966.

Dealings recognised under the NLC may be divided into those capable of registration like transfers, charges,
leases and easements and those which are not capable of registration including tenancies exempted from
registration, statutory liens and lien holder's caveat (Sood and Tee, 2008).

At the beginning, the concept of indefeasibility under the registration of title system was well received in
Malaysia as it purported to bring certainty to land transactions. In PJTV Denson (M) Sdn Bhd & Ors v Roxy
(Malaysia) Sdn Bhd,15 Raja Azlan Shah CJ reiterated that:

The concept of indefeasibility of title is so deeply embedded in our land law that it seems almost trite to restate it.
Therefore, the registration of the transfer of the said land under the National Land Code defeats all prior unregistered
interests in that land unless the party who acquires the registered title has been guilty of fraud (see s 340(2)(a) of the
National Land Code).

Unfortunately, the registration of title system in Malaysia failed to address the important issues concerning
indefeasibility and ownership. One major problem was with regards to the conflicting interests of the original
owner and the third party bona fide purchaser. Under the registration of title system, the original owner might
lose his land without negligence or fault of his own when someone forged his signature and sold his land to
an innocent third party purchaser. On the other hand, if the system allows for rectification and 'returns' the
land to the original owner, it will cause injustice to the innocent purchaser as he was not negligent and had
merely relied on the register of title to complete his land transaction. The matter will become worse when
there is no compensation or indemnity fund provided to protect the interests of the
1 MLJ lxvi at lxxi
16
parties. In recent Federal Court decision of Tan Ying Hong v Tan Sian San & Ors, the court overruled the
problematic case of Adorna Properties Sdn Bhd v Boonsoom Boonyanit @ Sun Yok Eng 17 ('the Adorna
case') and restored the concept of deferred indefeasibility under s 340 of the NLC. 18 While the situation has
been improved with this latest landmark judgment, it is submitted that the interests of the innocent parties are
inadequately protected under the existing registration of title law of Malaysia.19
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The Torrens title system works on three principles:

1. The Mirror Principle: The land titles Register accurately and completely reflects the current
ownership and interests about a person's land.
2. The Curtain Principle: Because the land titles Register contains all the information about the person's
land, it means that ownership and other interests do not have to be proved by long complicated
documents, such as title deeds.
3. The Insurance Principle: Government guarantee provides for compensation to a person who suffers
loss of land or a registered interest.

Teh Bee v Maruthamuthu [1977] 2 MLJ 7; [1977] 1 LNS 134 –

“Under the Torrens System the register is everything.‟

Creelmon & Anor v. Hudson Bay Insurance Co. [1920] AC 194 (PC) as per Lord Buckmaster at 197:

“… to enable an investigation to take place as to the right of the person to appear upon the register when he
holds the certificate which is the evidence of his title, would be to defeat the very purpose and object of the
statute of registration.‟

Benefit of Torren System

The changeover to the Torrens System relieved buyers and sellers of examining long, complicated deeds
and dealing with owners who might withhold or lose their deeds and even try to commit fraud. Today, a
prospective buyer is not required to look beyond the record in the government-managed registry.

The Torrens System operates on the principle of “title by registration” rather than “registration of title.” A
buyer can only receive a title if it is first registered, rather than buying a piece of land and then register it
later.

In the registry, each piece of land is identified by a unique number and title. Each title has a description of
the exact dimensions of the land and its boundaries. A title shows the names of the registered owners and
any legal interests that have been applied against the title and which consequently affect ownership. Also,
the registry is open to and may be fully searched by the general public.

The four main principles of the Torrens System help buyers and sellers feel secure about conducting land
ownership transactions. They are:
Conclusive evidence of ownership – This is called the principle of indefeasibility. Because the government
has records of all land titles and is responsible for cataloguing and preserving them, buyers are guaranteed
their land purchase is exactly as the title describes it.
Facility to transfer – Title owners can transfer ownership to others more easily as there are several well-
defined categories of ownership.
Compulsory registration of titles – All titles must be registered in the government’s land registry
system. This rule ensures that accurate records of all transactions related to land ownership are kept.
An assurance fund – In the extremely rare case that an owner is defrauded or suffers a financial loss due to
some error in the system, an assurance fund is in place to compensate the owner for such losses.

Deed Registration

Deeds registration is a land management system whereby all important instruments which relate to the
common law title to parcels of land are registered on a government-maintained register. Deeds
registration systems were set up to facilitate the transfer of title.
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In contrast to the Torrens system in which basically the one who registered in a land registry as owner
of a piece or parcel of land has an indefeasible title of the land, deeds registration system is merely a
registration of all important instruments related to that land. In order to establish one's title to the land, a
person (or usually their purchaser's attorney) will ascertain, for example:

 all the title documents have been properly executed,

 "a chain of title" is established, i.e. the proper ownerships from the granting of the land from the
government to the current owner,
 there are no encumbrances on the land that probably will harm the title of the land

Differences Between Torren System and Deed System

Title is the legal way of saying you own a right to something. For real estate purposes, title refers to
ownership of the property, meaning that you have the rights to use that property. It may be a partial interest
in the property or it may be the full. However, because you have title, you can access the land and potentially
modify it as you see fit. Title also means that you can transfer that interest or portion that you own to others.
However, you can never legally transfer more than you own.

Deeds, on the other hand, are actually the legal documents that transfer title from one person to another. It
must be a written document, according to the Statute of Frauds. Sometimes the Deed is referred to as the
vehicle of the property interest transfer. The transfers can be less than the title that you actually have. Deeds
must be recorded in the courthouse or assessor's office to make them fully binding in most states, but a
failure to file them does not change the transfer of title. It just means that the Deed is not perfected. An
imperfect Deed does not mean that there is a problem with the title. It's just a problem with the way that the
paperwork surrounding the Deed was handled.

Torrens system under the National Land Code, Sabah Land Ordinance and Sarawak Land Code

Forms of Torrens system in Peninsular Malaysia (NLC)

 Mirror & curtain principles but no assurance fund.
 Main features:

- Tan Ying Hong v Tan Sian San (2010) – deferred indefeasibility (ss 89, 92(1) and 340) [mirror]
overruled Adorna Properties v Boonsom Boonyanit (FC 2001) – immediate indefeasibility

- Registration – necessary to vest and divest title (Buxton v. Supreme Finance [1992] 2 MLJ 481 SC)

- Any interest effected in accordance with requirements of common law which when contained in
statutory form and duly stamped in capable of registration, yet before then is able to be protected by
entry of caveat [curtain]

 4 types of caveat (private, Registrar, trust & lien-holder) and prohibitory order. Special position in
Penang and Malacca: to convert existing deeds system into a registration of title system by
establishing a special or interim register.

AN OVERVIEW OF „DEALINGS‟ UNDER THE NATIONAL LAND CODE 1965

 In order that a title or interest is validly created in respect of land, the provisions of NLC must be complied
with: ss 207-212.
 Dealings recognised and capable of being created under NLC may be divided into those which are capable
of registration and those which are not: ss 205(1), 206(1) and (2)
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APPLICABILITY OF ENGLISH DOCTRINE OF EQUITY RELATING TO LAND IN MALAYSIA

• What is not clear about the Torrens system which is being practised in Malaysia is the extent to which
it seeks to exclude the application of English equitable principles to land matters in Malaysia.

Is the National Land Code free of English land law?

Judicial Approaches to the Scope & Effect of s 6

(I) s 6 prohibits only English common law

 Devi v Francis [1969] 2 MLJ 169
 Woo Yok Wan v Loo Pek Chee [1975] 1 MLJ 156
 Alfred Templeton v Low Yat Holdings Sdn. Bhd. [1989] 2 MLJ 202 at 222-223
 Wong Ah Yan v Lee Joo Eng [1997] 1 CLJ Supp 282

(II) s 6 prohibits both English common law & rules of equity

 Datin Siti Hajar v Murugasu [1970] 2 MLJ 153
 T Damodaran v Choe Kuan Him [1979] 2 MLJ 267 Chin Choy v Collector of Stamp Duties
[1981] 2 MLJ 67
 UMBC v Pemungut Hasil Tanah Kota Tinggi [1984] 2 MLJ 87 PC
 Pemungut Hasil Tanah Kota Tinggi v UMBC [1981] 2 MLJ 264 FC
 Tan Wee Choon v Ong Peck Seng [1986] 1 MLJ 322
 Oriental Bank v Chup Seng Restaurant (Butterworth) Sdn. Bhd. [1990] 3 MLJ 493 at 495

Judicial Approaches to ss 206 & 340 of the National Land Code 1965

( a) Section 206(3)
s 206(3) states that the provisions of NLC requiring dealings to be effected in the statutorily prescribed
manner shall „not affect the contractual operation of any transaction relating to alienated land or any interest
therein‟.

Templeton v Low Yat Holdings Sdn. Bhd. [1993] 1 MLJ 443 at 459
Kimlin Housing Development Sdn. Bhd. v Bank Bumiputra (M) Sdn. Bhd. [1997] 2 MLJ 805
Kwong Hing Realty Sdn. Bhd. v Malaysia Building Society Bhd. [1997] 1 CLJ Supp 167
Wong Ah Yah v Lee Joo Eng [1997] 1 CLJ Supp 28
Tan Chiw Thoo v Tee Kim Kuay [1997] 2 MLJ 221
Wan Salimah v Mahmood Omar [1998] 1 CLJ 48

(b) Section 340(4)(b)

Ong Chat Pang v Valliappa Chettiar [1971] 1 MLJ 224
Krishnadas v Maniyam [1997] 1 MLJ 94