Indefeasibility of title PDF

Preview

Summary

Download Indefeasibility of title PDF

Description

Indefeasibility of title

1. Definition

-

The concept of indefeasibility is, however, not defined in the NLC. An explanation of the concept can be found in Frazer  v Walker [1967] AC 569: “The immunity from attack by an adverse claim to the land or interest in respect of which he is registered, which a registered proprietor enjoys. This conception is central in the system of registration”

-

-

Sec. 340(1) confers indefeasibility for the time being upon registration. Sec. 340(2): The title or interest shall be defeasible where it was obtained through (a) fraud or misrepresentation (b) forgery or an insufficient or void instrument (c) unlawfully acquired by a person in the exercise of his power of authority Sec. 340(3): Where the title or interest is defeasible for any one of the reasons (a) the title may be set aside to whomever it may subsequently be transferred (b) any interest may be set aside in the hands of any person in whom it is vested Provided that the title and interest was not acquired by a person in good faith and for valuable consideration (bona fide purchaser for value)

-

-

2. Types of indefeasibility

0520

Immediate indefeasibility -

Registration immediately establishes indefeasibility to the registered title except in cases of fraud

-

The transferor (true owner) -> Forger -> Immediate transferee

Deferred Indefeasibility -

Upon registration, the title of the registered owner remains potentially open to attack as the title will only be indefeasible for the time being.

-

Indefeasibility only established until the

-

-

3. Exceptions of indefeasibility (Section 304(2) NLC)

0520

-

Immediate indefeasibility will attach so long as the immediate proprietor or transferee acts in good faith and gives valuable consideration for the title or interest acquired. (Bona fide purchaser for value or “BFPV”) The act of registration cures the defect in the instrument

title is transferred to a bona fide party. -

The transferor (true owner) -> Forger -> Immediate transferee ->  Subsequent purchaser (bona fide purchaser for value)

-

Registration does not cure any imperfection in the instrument.

-

If the title or interest is obtained through a forgery, or a void  or insufficient instrument, it will still be open to attack. Thus, under this principle fraud is not the only ground on which the title or interest can be challenged.

-

Boyd v Mayor of Wellington – registration does not cure the defects in the statutory instrument but acts merely as a root of title.

Sec. 340(2): The title or interest shall be defeasible (a) in any case of fraud or misrepresentation to which the person was a party or privy (b) where registration was obtained by forgery, or an insufficient or void instrument (c) where it was unlawfully acquired by a person in exercise of any power of authority

4. Section 340(2)(a) Fraud or misrepresentation

-

-

provides for the title or interest obtained to be defeasible where the proprietor or his agent is a party or privy to the fraud In establishing fraud, the burden of proof is on the party alleging it. It must be proven that:

a) There was actual fraud and not constructive fraud (mere knowledge) - Waimiha Sawmilling Co. Ltd [1923] “dishonesty – a willful and conscious disregard and violation of the rights of other persons” - Tai Lee Finance: Mere knowledge of the existence of an unregistered interest shall not be imputed as fraud b) The person accused of fraud must be a party or privy to the fraud - Datuk Jagindar Singh: Fraud must be committed by the person or his agent and as a result his name was registered on the RDT and IDT. If a person is not a party or privy to the fraud, his title is indefeasible. -

Lim Kim Hua v Ho Chui Lan: The plaintiff who was old, illiterate, had poor memory and was dependent on the defendant, sought for a declaration that the transfer of the shophouse to the defendant was null and void as it was obtained through fraud or dishonesty. The defendant, who was fully aware of the contents of the will, had actively concealed the matter. Held: The transfer was found to be null and void as fraud was established against the defendant as she had a moral duty to lay all information regarding the contents of the will to the plaintiff.

c) There was an intention to cheat - Goh Hooi Yin: It is insufficient to show that the transfer had the effect of depriving the plaintiff of a known existing right. The transfer must have been executed with the intention of cheating the plaintiff of such right.

0520

5. Section 340(2)(b) Forgery or void/ insufficient instrument

-

-

-

Forgery is when, without the knowledge of the registered proprietor: A person copies the signature of the registered proprietor on any instrument of dealings, or An imposter falsely represents to a third party that he is the registered proprietor and signs the transfer form in the name of the registered proprietor No need to prove that the RP is party or privy to the forgery. The focus is on the instrument, and not the act of the parties. Forgery relates to the instrument of transfer. Forgery invalidates the instrument of dealing. The instrument becomes a defective instrument of dealing

Cases: - Boonsom Boonyanit v Adorna Properties Facts: A holding a Thai passport, was the RP of lands in Penang. R presented astamped MOT purportedly signed by A to transfer the land to R. A claimed that the said MOT was procured by forgery as she did not enter into agreement with R. R claimed that they were bona-fide purchasers of the said land for value. Held: in FC, the appeal was dismissed. It held the burden to prove forgery in a civil case is on a balance of probabilities. R obtained an immediate indefeasible title by its registration notwithstanding the forged MOT. The court held that R was a bona fide purchaser for value within the proviso to s340(3)

0520

-

Tan Yin Hong v Tan Sian Sang: Issue: 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. Held: M’sia applies deferred indefeasibility, and the court decided that Adorna Properties case was wrong decided. Indefeasibility is only granted to subsequent purchasers if he is a bona fide purchaser. As the bank was an immediate purchaser, he could not get protected under s340(3)

-

Gibbs v Messer: Mrs. Messer (the RP) executed a POA to her husband, Mr. Messer, with power to transfer the land. Both of them left the country and left the title in the custody

of a solicitor, Mr. Creswell. Creswell forged Mr. Messer’s signature and transferred the land to a Mr.Cameron (a fictitious person). Creswell posed as an agent of Messer and presented the transfer for registration. The transfer was registered. He then posed as an agent for ‘Mr. Cameron’, who was now the RP, and created a mortgage over the land. When Mrs. Messer returned, Creswell absconded. Mrs. Messer brought an action for an order to cancel the certificate of title in the name of Mr. Cameron and for the issuance of a new title free from the mortgage. Issue: Whether Mrs. Messer could defeat the mortgage on the grounds of forgery Held: The mortgage was invalid due to forgery. Messer >(transfer)> “Cameron” (fictitious person)>(mortgage)> mortgagee -

Frazer v Walker: The Court held in favour of immediate indefeasibility. The title of the Radonskis was an indefeasible title from the time of registration. Even though the mortgage was a void document at common law, it did not affect the indefeasibility of their title. The Court’s decision in Frazer v Walker did not overrule Gibbs v Messer but distinguished it on the basis that Gibbs  v Messer involved a fictitious person.

Mr Frazer >(mortgage)> Radonskis>(transfer)> Walker Insufficient or Void Instrument Insufficient or void instrument is an instrument of dealing that is unfit for registration for not fulfilling the conditions set out under Sec. 301, and thus cannot pass a good title

-

0520

DEFECTIVE INSTRUMENTS Other circumstances where registration is obtained by a defective instrument of dealing: It was signed by a minor It was signed under an invalid POA Insufficiently stamped Not attested Effect: The instrument becomes void/voidable It will not be conferred indefeasibility under s340(2)(b)

6. Section 304(2) (c) Unlawfully acquired title or interest

-

deals with the exception of power of authority which will render it as an exception of indefeasibility: Statutory vesting of land that is ultra vires the statutory power Where RIT is obtained through non-compliance with NLC Acquisition of land under an invalid PA

Case: - UMBC Bhd. v Syarikat Perumahan Luas Sdn. Bhd Where a charge was registered in breach of a restriction in interest on the title requiring the express sanction of the State Authority, such charge is defeasible as the Registrar, in registering the charge, had acted ultra-vires. -

7. Section 304 (3) Bona fide purchaser

Sec. 340(3): Where the title or interest is defeasible under any one of the exceptions (a) the title may be set aside to whomever it may subsequently be transferred (b) any interest may be set aside in the hands of any person in whom it is vested -

Provided that the title and interest was not acquired by a person in good faith and for valuable consideration (bona fide purchaser for value)

-

Sec. 340(3) does not apply until and unless a registered title or interest is found to be defeasible under Sec. 340(2) Even after the title or interest is found to be defeasible, Sec. 340(3) will only apply to a purchaser who subsequently purchase from the registered proprietor The title or interest of the subsequent purchaser can then be

-

-

0520

M & J Frozen Food v Siland:  The certificate of sale issued by the senior assistant registrar was ultra vires the statutory provisions of the Code and thus, the title was unlawfully acquired by the appellant. Failure to comply with the statutory requirements in Sec. 258(a) & (b) and Sec. 261(c) was not a mere irregularity, but was an illegal which struck at the root of the respondents right. Once the title is unlawfully acquired, it thus becomes defeasible.

-

-

set aside unless he falls within the proviso to Sec. 340(3) that is a bona fide purchaser for value if the subsequent purchaser can prove that he acted in good faith, he had nothing to do with the forgery, and was not aware that the title is defeasible and had paid valuable consideration this proviso is only applicable to those parties in s.340(3) subsequent purchaser only, x apply to immediate purchaser defective title can only be perfected by a subsequent purchaser, immediate cannot do that by claiming that he is a bona fide purchaser (immediate purchaser falls under subsection 2)

How to prove that someone is a bona fide purchaser: - Prove that there is absence of ‘mala fide’ at the time of registration of your title/ interest. - Prove that you are a ‘purchaser’ and NOT a VOLUNTEER. - Under sec 5, ‘purchaser’ is a person or body who in good faith and for valuable consideration acquires title, or any interest in land Cases: - Tan Yin Hong: It is immaterial whether or not an immediate purchaser is a bona fide purchaser for value, as the proviso to Sec. 340(3) only applies to subsequent purchasers. As the bank in this case was an immediate holder of the charges, and not a subsequent holder, regardless of whether the bank was a bona fide purchaser for value, the title to the property must be reverted back to the appellant. Notes: - The fact that s340(2) admits the circumstances of exceptions to indefeasibility, it must reflect that s340 applies the concept of deferred. - As one who is registered in suchways cannot be said to have an immediate indefeasibility. - To hold that the 1st transferee can claim to be a bona-fide purchaser runs contrary to the express wordings of s340(2) stating that ‘the title or interest of any such person or body shall not be indefeasible.

0520...