Land Law - National Land Code - Form 14A

DALAM MAHKAMAH RAYUAN MALAYSIA

(BIDANG KUASA RAYUAN)

DI ANTARA

STATE TAILOR SDN BHD …. PERAYU

DAN

NALLAPAN …. RESPONDEN

(Dalam Mahkamah Tinggi Malaya di Temerloh Dalam Negeri Pahang, Malaysia)

(Guaman Sibil No. 22 – 231 – 1986)

Di antara

NALLAPAN ….PLAINTIF

Dan

1. MARIMUTHU

2. STATE TAILOR SDN BHD …DEFENDAN-DEFENDAN)

CORAM: Richard Malanjum JCA
Hashim bin Dato' Hj. Yusoff JCA
Tengku Baharudin Shah Tengku Mahmud JCA

JUDGMENT OF THE COURT

1. Before us is an appeal against the decision of the High Court sitting at Temerloh, Pahang granting the Respondent the following orders, namely:

2. Unfortunately no written judgment was rendered by the learned Judge prior to his retirement.

3. What we have before us now are the Notes of Proceeding and some of the documents tendered during the trial. Hence when the appeal came up for hearing we were tempted to promptly order a retrial.

4. But on further perusal of the Appeal Record and having heard the submissions of learned counsel for the parties including the fact that they left it to this Court to decide on the issue of retrial but at the same time stating the disadvantages of having it, we were and are convinced that basically the primary issues involved are questions of law requiring no or minimum findings on disputed facts. And even on factual matrix we are of the view that demeanour of witnesses plays no or minimal role. Hence the question of absence of appreciation of the evidence by the trial Judge should hardly arise.

5. In our view the undisputed facts and admitted facts together with the documentary evidence tendered during the trial are more than sufficient materials upon which the answers to the issues raised by the respective parties could be found thereby determining the fate of the orders granted by the trial Court. Indeed neither of the parties ever raised the issue of being prejudiced by the absence of a written judgment from the trial court. And for that we are reminded of what Edgar Joseph Jr. SCJ said in Dewan Undangan Negeri Kelantan & Anor v Nordin bin Salleh & Anor[1992] 1 MLJ 697 at p 724:

6. Further, we are conscious of the fact that the Respondent is now an old man of over 90 years. A retrial would therefore serve no purpose other than to cause further delay and injustice to the parties since the case was filed in 1986. Thus, for the foregoing reasons we find no valid ground to order a retrial.

7. This is rather a sad and unfortunate case. The basic facts of this case as we can gather form from the Notes of Proceeding and the documents available are as follows.

8. The Respondent is an illiterate old man. He had a piece of land held under EMR 434, Lot No. 905 measuring a little over 3 acres (‘the subject land'). It is situated in Karak, in the Mukim of Sabai, Bentong District, in the State of Pahang.

9. Sometime in 1981 he was approached by one Simanca a/l Juggiah together with a person by the name of Marimuthu s/o K. Pallaniappan who is the 1^st Defendant in this case. The meeting was in connection with the interest of the 1^st Defendant to develop the subject land into a housing estate. The Respondent agreed with the proposal. An Agreement (‘the Agreement') was therefore executed between the Respondent and the 1^st Defendant in which the former would be allotted ‘a net figure of 20% of all the completed units with shop houses, terrace and semi detached houses'.

10. Although acknowledging that he did affix his thumb prints on the Agreement in 1981, the Respondent said that the contents thereof were never explained to him. He denied ever meeting any lawyer in Kuala Lumpur to sign any document. He also said that he never met a Chinese lawyer in connection with the subject land.

11. In respect of the two Powers of Attorney purportedly given by him to the 1^st Defendant, the Respondent denied ever giving any, let alone the power to sell and transfer the subject land.

12. Upon knowing that the subject land had been transferred to a third party the Respondent went to see a lawyer for assistance. He also lodged a caveat on 15.05.1986 against the title of the subject land. This instant action under appeal was also filed seeking for the return of the subject land to him.

13. From the Notes of Proceeding it is clear that the Respondent had consistently maintained that he never sold the subject land, never signed the Borang 14A and never received any payment of its value.

14. During the trial, the 1^st Defendant also gave his account of the events. He testified that he agreed with the Respondent to develop the subject land on a joint venture basis. An agreement between the Respondent and his firm, Syarikat East Coast Company, was therefore prepared and signed. It was one of the terms in the Agreement that upon its execution the Respondent had to hand over the issued document of title in respect of the subject land to the office of Messrs Paul F. Decruz & Co. the solicitor who attested their signatures in the Agreement.

15. And it was also the evidence of the 1^st Defendant that since he did not have the money to pay for the surveyor's fee in connection with the application for the subdivision of the subject land he had to take a loan using the subject land as the security. We note that there is no provision in the Agreement which allowed the 1^st Defendant or his firm to use the subject land as a security for any loan prior to the issuance of separate subdivided title deeds. Even at that stage the Agreement provided that it was the Respondent who would execute any relevant legal charges. There was no mention of any power of attorney to be given to the 1^st Defendant by the Respondent.

16. However the 1^st Defendant claimed to have told the Respondent about his intention to take a loan in order to develop the subject land. Hence, he managed to find a lender for the sum of RM30,000.00 with the help of one Kandasamy (DW2). And in order to secure the loan he went to the office of one Cheong Tian Fook together with Kandasamy and the Respondent where only a clerk attended to them. He was made to sign a set of blank forms but he could not remember the nature of those forms. He denied knowing that those were transfer forms. When shown the Borang 14A the 1^st Defendant admitted that the signature found therein was his. He also said that when he signed the forms the Respondent was present at the request of Cheong Tian Fook. But at that time the name of the Respondent was not inserted in the forms. As for the issued document of title he gave it to DW2 before he signed the set of forms. Obviously it would appear that the term in the Agreement relating to the security and retention of the issued document of title was not observed. The 1^st Defendant also testified that he only received RM24,000.00 or RM25,000.00 from the total loan since there was an immediate deduction for interest which was at the rate of 5% per month.

17. Notwithstanding the absence of any provision in the Agreement in which the Respondent was contractually obliged to execute a power of attorney in favour of the 1^st Defendant or any other party, it was also the evidence of the 1^st Defendant that he secured two powers of attorney from the Respondent appointing him as his attorney. The first was in relation to the development of the subject land while the second was in connection with the loan. In respect of the second, the 1^st Defendant said that he was just following the instruction of DW2 since he needed the loan badly. But the 1^st Defendant admitted that the Respondent did not sign the second power of attorney in Cheong Tian Fook's office but in the office of Sodhy & Ang. Due to the economic recession he could not pay back the loan resulting in the transfer of the subject land to the Appellant which was never his intention in the first place.

18. Subsequently he went to the office of the Appellant twice with a view to have the subject land retransferred to the Respondent. During the first visit he was asked to pay RM30,000.00 but on the second visit a sum of RM200,000.00 was demanded on the ground that with the development of the surrounding lands the value of the subject land had also appreciated.

19. As for the proposed development of the subject land the 1^st Defendant disclosed that the Pahang State Government rejected the development proposal. Unfortunately he could not produce any rejection letter.

20. Mr. Lee Siew Chu (DW1) gave evidence for the Appellant. DW1 said that initially she purchased the subject land together with one Chai Sai Eng vide an agreement dated 30.06.1982 (D.2). At that time the Appellant was yet to be incorporated. It took her nine months after the purchase to register the Appellant. Hence she only signed the Borang 14A in March 1983 and thus the date inserted was 09.03.1983.

21. DW1 went on to state the following, inter alia:

1. that she did not know the Respondent though she knew that he was the former registered owner of the subject land;
2. that during the negotiation for the sale she did not deal with the Respondent. She dealt with the 1^st Defendant since he had the power of attorney. It was the 1^st Defendant who sold the subject land to her and Chai Sai Eng;
3. that she used the services of a lawyer by the name of Cheong Thiam Fook, in the purchase of the subject land;
4. that she paid RM32,000.00 for the subject land;
5. that in her presence the 1^st Defendant signed the agreement (D2) and the Borang 14A. The Respondent was not present;
6. that at the time of signing the documents the 1^st Defendant also gave the power of attorney to her lawyer;
7. that she was informed by her lawyer that since the 1^st Defendant had the power of attorney he could sign both the documents;
8. that initially she did not know the 1^st Defendant. It was Chai Sai Eng who came to know him through a broker; and
9. that the lawyer who handled the transaction had migrated and was no longer in practice.

22. We also note that D2 made no reference to any power of attorney or the fact that the 1^st Defendant was acting as the attorney for the Respondent.

23. Similarly the Borang 14A dated 09.03.1983 was signed by the 1^st Defendant with no indication that he was doing so as the attorney for the Respondent. There was thus no reference to any power of attorney, not even an indication of a power of attorney which has complied with section 4 of the Powers of Attorney Act 1949.

24. Before us, learned counsel for the Appellant submitted that the Orders of the trial court should be reversed for the following reasons, in summary:

1. that his client had acquired an indefeasible title to the subject land vide the Borang 14A which was signed by the 1^st Defendant as the attorney for the Respondent;
2. that it was not alleged by the Respondent that the act of the 1^st Defendant in signing the Borang 14A was outside the scope of his powers as the attorney and that it was done with a view of cheating him. The case of Goh Hooi Yin v Lim Teong Ghee & Ors (1990) 3MLJ 23 was referred;
3. that the Land Office had registered the Borang 14A;
4. that the omission of any reference to the power of attorney in the Borang 14A was just an irregularity since the 1^st Defendant did have the power to sign it in the first place;
5. that the failure to register or deposit the power of attorney with the Land Office at the time of the transfer was not fatal. The Land Office would be able to rectify the process. The case of Choo Ah Kow v Yeow Yew Chiam (1989) 1MLJ 187 and Mohamed bin Buyong v Pemungut Hasil Tanah Gombak & Ors (1982) 2MLJ 53 were cited in support of the proposition;
6. that the case for the Respondent rested squarely on the allegation of forgery and not on insufficient or void instrument which is a separate and distinct ground albeit housed together with forgery in subsection (2) (b) of section 340 of the National Land Code (‘NLC'). There was no prayer for a declaration to invoke this second limb of the subsection. The Respondent should not go beyond his pleaded case. The case of Government of Perak v Muniandy (1986) 1 MLJ 490 was relied on in support;
7. that the Respondent had ratified the sale of the subject land by the 1^st Defendant to the Appellant as evidenced by the Ratification Agreement signed by the Respondent and the 1^st Defendant and the telegrams sent by the Respondent or his agent to the 1^st Defendant;
8. that the Appellant was in no way involved or implicated in the alleged forgery of the Borang 14A; and
9. that the Appellant was a bona fide purchaser for value and thus entitled to claim indefeasibility of title or interest in the subject land. The cases of Tai Lee Finance Co. Sdn Bhd v Official Assignee & Ors (1983)1MLJ 81 and Adorna Properties Sdn Bhd v Boonsom Boonyanit (2001)2 CLJ 133 were cited as the authorities as well as subsection (3) of section 340 of NLC.

25. Learned counsel for the Respondent in his rebuttal basically submitted the following:

1. that his client's case was based on forgery in which the Appellant was not required to be a party. Hence the issue of fraud did not arise;
2. that the Borang 14A was not signed by the 1^st Defendant as the attorney for the Respondent;
3. that the concept of bona fide purchaser for value in subsection (3) of NLC applies only to a subsequent purchaser and not to an immediate purchaser;
4. that the question of ratification should not arise since the purported Ratification Agreement was never marked as an exhibit during the trial; and
5. that even the 1^st Defendant admitted that the Respondent did not know about the transfer and the signature in the Borang 14A purporting to transfer the subject land.

26. Now, having perused the Appeal Record and the Notes of Proceeding and having heard the submissions of learned counsel for the parties we are of the view that the basic questions to ask in this appeal are these:

1. What was the status of the signature of the 1^st Defendant in the Borang 14A?
2. whether the 1^st Defendant in fact signed the Borang 14A as the attorney for the Respondent pursuant to the power of attorney?
3. That if the Appellant had acquired the title or interest in the subject land through a forged instrument, could it not rely on the doctrine of bona fide purchaser for value housed in the proviso to section 340 (3) of NLC? and
4. Whether the Ratification Agreement entered into by the 1^st Defendant with the Respondent is of any assistance to the Appellant to maintain its title or interest on the subject land.

27. There was no dispute that the signature of the transferor appearing in the Borang 14A did not belong to the Respondent. At any rate the denial of the Respondent was unchallenged. (See: Gian Singh & Co Ltd v Banque De L'Indochine [1974] 2 MLJ 177 PC). Hence, in truth the Respondent never signed the Borang 14A for the purpose of transferring the ownership of the subject land to the Appellant. Accordingly the instrument of transfer, that is the Borang 14A, was insufficient and void when it was presented for registration, a distinct vitiating factor to the doctrine of indefeasibility of title as provided under section 340 of NLC. However that was not the pleaded case of the Respondent. Hence we do not intend to dwell into that point or the implied view of immediate indefeasibility as expressed albeit obiter in Doshi v. Yeoh Tiong Lay [1975] 1 MLJ 85.

28. Meanwhile the 1^st Defendant admitted that the signature found in the Borang 14A purporting to be the transferor was his own signature. DW1, a director of the Appellant, did not dispute the claim. Instead she admitted and confirmed that she was present when the 1^st Defendant signed the Borang 14A. Thus on plain reading of the Borang 14A that bore the signature of the 1^st Defendant and presented for registration, the inevitable conclusion would be that the signature represented to the whole world that it belonged to the Respondent. Obviously the Land Office perceived that to be the case when the Borang 14A was accepted for registration. Without the signature the instrument would have been incomplete. In our judgment therefore the insertion of his signature by the 1^st Defendant without more and thus representing to be the transferor is a plain forgery. Hence section 340 (2) (b) of the NLC is relevant and applicable. (See: Chiew Lip Seng v Perwira Habib Bank (M) Bhd [1999] 1 MLJ 310; Dr David Wong, Tenure and Land Dealings in the Malay States at p. 361; OCBC Bank (M) Bhd v Pendaftar Hakmilik, Negeri Johor Darul Takzim [1999] 2 MLJ 511).

29. Accordingly the title or interest of the Appellant in the subject land would not be indefeasible on account of the forged signature in the instrument of transfer. Section 340 of the NLC reads:

30. On the above ground alone that this appeal should be dismissed.

31. While not denying that the author of the signature in the Borang 14A was the 1^st Defendant, the Appellant however strenuously asserted that the 1^st Defendant signed on it as the attorney for the Respondent and that the omission to refer or include the power of attorney was not fatal to its registration.

32. The Respondent however gave evidence protesting against the assertion that he had given the power of attorney to the 1^st Defendant. Unfortunately for the Respondent it was in evidence as exhibits two such powers of attorney duly executed by him and there was no challenge as to their authenticity. And it is in the second power of attorney that the power to sign the Borang 14A is asserted.

33. The pertinent question therefore is whether on the balance of probabilities the assertion by the Appellant could be accepted as true based on the evidence, oral and documentary, and the surrounding circumstances at the material time.

34. From the relevant documentary evidence we note the following:

1. Other than the signature is attested by a solicitor there is nothing else in the Borang 14A to indicate that the 1^st Defendant did sign it as the attorney for the Respondent. Not even the registration number of the power of attorney was stated as should have been done if indeed the Borang 14A was signed by the attorney of the transferor. Such number would have been available since it was mentioned in the Ratification Agreement dated 16.04.1985 (AB-p.8-9) entered into between the Respondent and the 1^st Defendant that a power of attorney dated 22.02.1982 appointing the latter as the attorney of the former had been deposited with the High Court Registry Kuala Lumpur;
2. D2 did not make any reference to any power of attorney although the signatures therein were attested by the same solicitor who did the attestation in the Borang 14A. The Respondent's name was inserted as the vendor while the signature was that of the 1^st Defendant without any mention of his capacity in so doing; and
3. The Ratification Agreement did not state that the 1^st Defendant was exercising his powers as the attorney for the Respondent when he transferred the subject land to the Appellant.

35. From the oral testimonies of witnesses there were crucial and startling disclosures made, for instance:

1. the 1^st Defendant (DW3) testified that although he signed a set of forms in the office of a lawyer by the name of Cheong Tian Fook no lawyer was present at that time. He was only attended to by a female clerk named Shirley who did not explain the nature and contents of those forms to him. This piece of evidence was not challenged. Neither the lawyer nor the clerk was called to rebut this assertion. The 1^st Defendant went on to say that his intention was only to get the loan which was arranged by one Kandasamy (DW 2). He never intended to transfer the subject land to anyone and it was his understanding that the second power of attorney did not empower him to do such act;
2. DW2 in his evidence said that the purpose of the 1^st Defendant signing the forms was for a loan. There was no sale involved. This witness also testified that he did not know the contents of the forms when the 1^st Defendant signed on them;
3. SP1, Encik Zainal bin Abidin, the Penolong Pegawai Daerah (Tanah) Jabatan Tanah Bentong said that the transfer of the subject land had no connection with any power of attorney since no reference was made to any, not even a registration number of a power of attorney. According to this witness the Borang 14A was not preceded by the power of attorney or accompanied by it when it was sent for registration. SP1 went on to say that the transfer was done through the services of a lawyer whose attestation of the signature appearing therein would clear any doubt that it belonged to the transferor. It was also the evidence of this witness that his office would have rejected the Borang 14A if the signature therein was known to be not that of the Respondent; and
4. DW1 in her evidence said that she was advised by her lawyer that the 1^st Defendant could sign the documents in respect of the sale of the subject land as he was the attorney of the Respondent.

36. The documentary evidence is self-evident. (See: Cheong Khean Sheng v Public Prosecutor [1970] 2 MLJ 175). There was absolutely no reference to any power of attorney vis-à-vis the signature of the 1^st Defendant in the Borang 14A. Thus, our conclusion is that it would be inconceivable to say that when the 1^st Defendant signed on the Borang 14A he was exercising his power as the attorney of the Respondent. The oral evidence also supports such a conclusion. Based on the evidence of the 1^st Defendant it could not be said that when he signed the Borang 14A he had the power of attorney in mind or that he was doing so as the attorney of the Respondent. Hence if the signatory himself did not assert such a fact it would be unjustified to conclude or even assume without further proof that he did.

37. We are further convinced in our conclusion by the fact that after the registration of the Borang 14A the Appellant or DW1 made no attempt to rectify the process by forwarding the power of attorney to the Land Office or took such other action indicative of what is now asserted. Indeed it was the evidence of DW1 that after the registration she had a peaceful possession of the subject land until she was served with the Writ of Summons of the Respondent. In other words she was quite contented with the status of the signature of the 1^st Defendant as found in the Borang 14A.

38. Of course she could argue that she left the matter with her lawyer to deal. But her lawyer was her agent. And the general rule is that the knowledge of a solicitor is the knowledge of his client thereby depriving a client of the plea of lack or absence of knowledge due to the failure of his solicitor to disclose the true facts to him. (See: Doshi v Yeoh Tiong Lay (1975) 1 MLJ 85). Thus, we do not think such argument is of any help to the Appellant.

39. Learned counsel for the Appellant relied quite heavily on the case of Mohamed bin Buyong v Pemungut Hasil Tanah Gombak & Ors (supra), to buttress his contention that any error as found in the process of registering the Borang 14A could be rectified.

40. With respect we are unable to agree that the cited authority can be of help to the case of the Appellant. The basic difference is the purpose of the rectification. In the case of Mohamed bin Buyong (supra) it was to halt the perpetuation of errors or omissions committed. In the instant case to rectify the process would produce a contrary result. Indeed it was the evidence of SP1 that the Borang 14A should not have been registered as it was not in order.

41. Further in Mohamed bin Buyong (supra) the office copy of the power of attorney was submitted together with the relevant Borang 14A. It was also not in dispute that the registration number of the power of attorney was given. The errors were that it was subsequently shown that the power of attorney was never signed by the purported donor and that at the time of presenting the Borang 14A the issued document of title was missing.

42. In the instant case the power of attorney was never given to the Land Office whether before or at the time of presenting the Borang 14A for registration. There was also no evidence adduced to indicate that the Land Office was informed of the true status of the signature of the 1^st Defendant. In fact, from the evidence of SP1 it would appear that based on the documents presented the impression given was that the signature found in Borang 14A belonged to the Respondent. Moreover it was never shown that the power of attorney complied with the requirements of the Powers of Attorney Act 1949 including its registration with the court's registry. But we are not inclined to consider this aspect of the power of attorney as it would be going beyond the pleaded case of the Respondent.

43. Our answer to question (ii) is therefore in the negative.

44. The term ‘bona fide purchaser' has been used in a host of cases. Simply put it means a buyer in good faith. And the basic element of good faith is the absence of fraud, deceit or dishonesty and the knowledge or means of knowledge of such at the time of entry into a transaction. But the overriding consideration is ‘the particular circumstances of each case'. (See: Pekan Nenas Industries Sdn Bhd v Chang Ching Chuen & Ors [1998] 1 MLJ 465; Ong Ban Chai & Ors v Seah Siang Mong [1998] 3 MLJ 346).

45. In the instant case there are at least three crucial facts or circumstances that warrant consideration, namely the undisputed signature of the 1^st Defendant in the Borang 14A, the admission by DW1 that she was present when the 1^st Defendant signed the document and the availability of the services of a solicitor to DW1.

46. But even before coming to any conclusion on the issue we note that in its Statement of Defence the Appellant did not plead or rely on the doctrine of bona fide purchaser for value. As such there is therefore no necessity for us to deal with the issue. We are guided by the basic procedural principle in that a party in a suit is bound by its own pleadings. (See: Government of Perak v Muniandy (supra).

47. But even if we were to consider that aspect of the submission of learned counsel for the Appellant our answer would be in the negative. The simple reason is that DW1 who was then the actual person who concluded the transaction knew of the falsity of the signature of the 1^st Defendant as found in the Borang 14A since she was present at the time it was put down. She was aware of the deceit involved and practiced upon not only to the Respondent but also to the Land Office. Yet DW1 and her solicitor at that time allowed it to happen and in fact benefited from such deception and falsity. Reliance upon the power of attorney is not the answer. We have already made our conclusion on that issue. Hence being the ‘nominee' of DW1 as pleaded the Appellant should not and could not be heard to cry for the invocation of the proviso to section 340 (3) of the NLC.

48. Reliance on the Ratification Agreement was also not the pleaded case of the Appellant. In fact the Statement of Defence only relied on one issue, namely, that the 1^st Defendant was the attorney of the Respondent. Thus we are not obliged and should not make any conclusion on this issue otherwise we would be venturing into an area that was not properly before the trial Court. (See: Tajjul Ariffin bin Mustafa v Heng Cheng Hon [1993] 2 MLJ 143).

49. At any rate we do not find the Ratification Agreement is of any assistance to the Appellant. Firstly, it was not a privy to it. It may only be relevant due to the purported acknowledgment therein by the Respondent of the transfer of the subject land to the Appellant. But the acknowledgement itself did not indicate that the Respondent also acknowledged that the transfer was done properly by his attorney. Secondly, we find the terms in the said agreement conflicting. Even with the benefit of hindsight it was never expressed that the 1^st Defendant acted as the attorney of the Respondent when he signed the Borang 14A or that he was exercising his power under the power of attorney. Thirdly, if indeed the Respondent agreed and consented to the transfer it was not stated the reason or ground for the demand of retransfer. And the promise by the 1^st Defendant to endeavour to secure the retransfer would also have been unnecessary. Accordingly in our view the terms in the said agreement only strengthened the assertion that when the Borang 14A was signed by the 1^st Defendant something was amiss and known to those involved.

50. We have considered the other points raised by learned counsel for the parties in the course of hearing this appeal. We do not think our views on them would have any effect on the overall conclusion that we have arrived at in this appeal.

51. Accordingly for the reasons given above we are inclined to dismiss this appeal and affirm the decision and orders of the High Court as given. We also order costs to the Respondent in this appeal to be taxed. Deposit is to be paid to the Respondent on account of taxed costs.

(DATO' RICHARD MALANJUM)
Judge
Court of Appeal
Malaysia

Date: 23.02.2005

Counsel for the Appellant: Mr. Malik Imtiaz Sarwar with Arthur Wang Ming Way

Solicitors for the Appellant: M/s Arthur Wang, Lian & Associates, Kuala Lumpur.

Counsel for the Respondent: Mr. Syed Sharhani Ahmad

Solicitors for the Respondent: M/s Syed and Associates, Kuala Lumpur