The respondents are the children of Retnasamy Naina ("the deceased) by his second wife. The appellant was the 3rd defendant in the court below. There were 3 other defendants before the High Court but they are not appealing against the orders made by the learned judge. The 3rd defendant purchased the land held under EMR 6693 for Lot No 5079 in the Mukim of Kapar ("the subject land") from one Supia, the deceased’s son by his first wife and the 1st defendant in the court below. The learned judge found that the subject land was trust property, that the 1st defendant had obtained the issue document of title from the 1st respondent, that the 1st defendant had no interest in the subject land and that the appellant was not a bona fide purchaser. He accordingly granted the respondents a declaration that the transfer to the appellant was null and void, set aside the transfer and made other consequential orders.

The learned judge’s finding that since the 1st defendant had no interest in the land he was incapable of passing any to the appellant is, in my judgment a correct direction of law. It finds support from the decision of the Supreme Court in M & J Frozen Foods Sdn Bhd v. Siland Sdn Bhd [1994] 2 CLJ 15. There is a passage in the judgment of Wan Yahya SCJ in that case which is directly applicable to the present appeal:

Applying the nemo dat rule, the 1st defendant had nothing and could therefore pass nothing to the appellant. The appellant may have obtained good title if he had been a bona fide purchaser of the subject land. But he was found – and in my view, correctly found – by the learned judge not to be a bona fide purchaser. So, as a matter of law, the learned judge was right in setting aside the transfer to the appellant.

I have used the expression "may" advisedly because, in my judgment, it is important to appreciate the circumstances to which the proviso to s. 340(3) of the National Land Code 1965 ("the Code") applies. For that purpose it is best that I set out the whole of s. 340. It reads as follows:

There are some observations I would make of this provision. First, the section only comes into play when the title of a registered proprietor is challenged in an action brought for that purpose. It is at that point in time that the court must determine whether – to quote s. 340(1) – "the title or interest of any person or body for the time being registered as proprietor of any land" is indefeasible. If there is no challenge as to title then, of course, the shield of indefeasibility protects the registered proprietor. See, Teh Bee v. K Maruthamuthu [1977] 2 MLJ 7.

Second, a plaintiff who challenges the title of the registered proprietor must, in order to succeed, bring his case within one or more of the three sub-paragraphs of s. 340(2). Once he does that, the registered proprietor’s title will be defeated.

Third, the section uses two distinct expressions "proprietor" and "purchaser". These are separately defined by s. 5 of the Code as follows:

Hence, the "proprietor" in s. 340(1) is not the same person as the "purchaser" in the proviso to s. 340(3).

Fourth, by virtue of s. 340(3)(a), once the title of a registered proprietor is rendered defeasible on any of the grounds appearing in s. 340(2), it is liable to be set aside in the hands of all subsequent transferees. Further, by virtue of s. 340(3)(b), if the proprietor whose title is defeasible grants an interest, for example, a lease, that interest may also be set aside.

Fifth, to the wide reaching power to set aside subsequent dealings with the title by a proprietor whose title is defeasible one exception is stipulated. A bona fide purchaser for value of the land from a proprietor with a defeasible title is protected. That is the effect of the proviso to s. 340(3).

So, in my judgment, s. 340 should be read as follows. The title of a registered proprietor is indefeasible and good against the whole world. But it is not indefeasible in cases where it has been obtained by fraud, forgery, by means of an insufficient or void instrument, or by the exercise of a power purportedly conferred by written law. If a title is acquired by any of these means, then the title of the acquirer is liable to be set aside in the hands of the acquirer and all those to whom he transfers the land except a bona fide purchaser for valuable consideration. However, the fact that the title of a registered proprietor is indefeasible does not prevent the land from being forfeited or sold under a statutory power. Neither does it prevent the title being defeated by operation of law.

It is on this basis that Wan Yahya SCJ held, in M&J Frozen Foods Sdn Bhd v. Siland Sdn Bhd, citing Gibbs v. Messer as authority, that an acquirer who obtains his title by means of a void or voidable instrument obtains deferred indefeasibility. Accordingly, where title is acquired by means of a forged instrument of transfer, the title of the acquirer may be set aside in his hands even if he is a bona fide purchaser. However, the Federal Court in Adorna Properties Sdn Bhd v. Boonsom Boonyanit [2001] 2 CLJ 133, reversing this Court (whose judgment is reported in [1997] 3 CLJ 17) held that s. 340 of the Code admitted of immediate as opposed to deferred indefeasibility. Eusoff Chin CJ said:

It can be seen at once that the Federal Court equated a "proprietor" with a "purchaser". In doing so it overlooked s. 5 of the Code that provides separate definitions of these two words indicating in clear terms that they are different statutory concepts. It also overlooked the decision of the Supreme Court in M & J Frozen Foods. Accordingly, I am of the very respectful view that the decision of the Federal Court is per incuriam and not good law.

In Goverment of Malaysia v. Lim Kit Siang [1988] 1 CLJ 219; [1988] 1 CLJ (Rep) 63, Abdul Hamid CJ (Malaya) quoted with approval the following passage in the judgment of the English Court of Appeal in Young v. Bristol Aeroplane Co Ltd [1944] KB 718; [1946] AC 163 at p. 729:

Young v. Bristol Aeroplane Co Ltd is also authority for the proposition that where there are conflicting decisions of the Court of Appeal, this court is free to choose which it will follow. Further, in Midland Bank Trust Co Ltd v. Hett, Stubbs & Kemp [1979] Ch 384 Oliver J (later Lord Oliver of Aylmerton) suggested that where there are conflicting decisions of the Court of Appeal, a High Court is free to choose which decision to follow.

I accept that the observations in Young v. Bristol Aeroplane Co Ltd refer to the Court of Appeal. But I see no difference in principle in relation to this Court and the Federal Court. If it is demonstrated to a conviction that a decision of the Federal Court was arrived at – to borrow the words from Young v. Bristol Aeroplane Co Ltd – "in ignorance of the terms of a statute" are we nevertheless to apply it? I do not think so. In support I cite the following passage from the well respected work "Jurisprudence" by Professor Dias (1985):

In Ostime v. Australian Mutual Provident Society [1960] AC 459, the House of Lords had to consider its decision in Inland Revenue Commissioners v. Australian Mutual Provident Society [1947] AC 605 which had been decided without reference to the earlier decision of the House in New York Life Insurance Co. v. Styles 14 App. Cas. 381. Lord Denning said:

So too here. It is plain that the Federal Court in the Adorna Properties case did not have regard to the earlier decision of the Supreme Court in M & J Frozen Foods. Worse, it did not have regard to s. 5 of the Code. I do not think that I should fall off the proverbial cliff. I think that I must strike out in the right direction.

I take this view because the consequences of the judgment in Adorna Properties are startling. As a registered proprietor you can cling on to your issue document of title for dear life. Yet a rogue may by the use of forged documents obtain a duplicate of the issue document of title claiming the original to be lost and sell and transfer your land to a perfectly innocent purchaser. That is what happened in the Boonsom Boonyanit case. Yet, according to the judgment of the Federal Court, you cannot recover your property. The problem has arisen because, as I have already said, the Federal Court ignored the definition of "proprietor" and "purchaser" in s. 5 of the Code and also did not have regard to the M & J Frozen Foods case. If the Federal Court had hearkened to written law and to precedent, the steps of logical reasoning would have been as follows.

Pursuant to s. 340(1) of the Code, Adorna Properties was the proprietor "for the time being registered", that is to say, at the date on which Boonsom Boonyanit claimed title to the land as true owner. At that point in time Adorna Properties had obtained its title under a forged instrument. About that there was do doubt. Accordingly, Adorna’s case fell within s. 340(2)(b) of the Code because "registration was obtained by forgery, or by means of an insufficient or void instrument". Therefore Adorna’s title was defeasible. Put shortly, Adorna was the registered proprietor under s. 340(1) and not a purchaser within the proviso to s. 340(3).

By contrast, if Adorna had later sold and transferred the land to a third party, X, then s. 340(2)(b) would not be applicable because the transfer would not be a forgery. X’s title would be protected by the proviso to s. 340(3) if X paid value and acquired the land without notice of the forged transfer in Adorna’s favour. This points to deferred and not to immediate indefeasibility.

Accordingly, in my judgment our courts should no longer treat themselves bound by the Federal Court judgment in Adorna Properties Sdn Bhd v. Boonsom Boonyanit as it was decided per incuriam. It follows that this court and the High Courts must now proceed on the basis that the Code provides for deferred and not immediate indefeasibility.

In the present case, the learned judge found the appellant not to be a witness of truth and rejected his evidence. It is on that basis that he held the appellant not to be a bona fide purchaser of the subject land. The burden of establishing that he was a bona fide purchaser for value lay on the appellant: See, Pekan Nenas Industries Sdn Bhd v. Chang Ching Chuen & Ors [1998] 1 CLJ 793; Ong Chat Pang & Anor v. Valiappa Chettiar [1971] 1 MLJ 224. The finding of the court below that the appellant was not a bona fide purchaser is one of pure fact based on the credibility of witnesses. In accordance with the well settled practice of this court I will not interfere with such a finding.

For the reasons already given, I was compelled to the conclusion that this appeal is devoid of merit. It was dismissed without calling upon learned counsel for the respondent. Orders were made that are usually consequent upon a dismissal.

Saya telah membaca draf alasan penghakiman Gopal Sri Ram HMR dan saya bersetuju dengan penghakiman itu kecuali setakat mana penghakiman itu menyatakan bahawa keputusan Mahkamah Persekutuan di dalam kes Adorna Properties Sdn Bhd v. Boonsom Boonyanit [2001] 2 CLJ 133 (Adorna Properties) adalah per incuriam dan oleh itu mahkamah-mahkamah tidak perlu lagi menganggap mereka terikat dengan keputusan itu.

Berasaskan prinsip duluan kehakiman mengikat (judicial precedent), saya berpendapat mahkamah ini tidak mempunyai pilihan kecuali menerima dan mematuhi keputusan Mahkamah Persekutuan di dalam kes Adorna Properties. Edgar Joseph Jr, HMP di dalam kes Co-operative Central Bank Ltd (in receivership) v. Feyen Development Sdn Bhd [1997] 3 CLJ 365 berkata:

Ketara ungkapan penghakiman yang dipetik di atas mengandungi prinsip-prinsip dan hujjah-hujjah yang munasabah. Justeru itu, saya berpendapat semua mahkamah yang bidang kuasanya lebih rendah dari Mahkamah Persekutuan hendaklah mematuhi kes itu sehingga ianya ditolak atau digantikan dengan kes perundangan yang lain dari Mahkamah Persekutuan.

Di dalam kes ini hakim perbicaraan telah membuat penemuan fakta bahawa perayu bukanlah seorang saksi yang bercakap benar dan atas asas itu beliau telah memutuskan bahawa perayu bukanlah pembeli bona fide tanah yang menjadi pertikaian. Justeru itu, saya menolak rayuan ini dengan kos.