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									       IN THE HIGH COURT OF MALAYA AT KUALA LUMPUR

                       (CIVIL DIVISION)

                 CIVIL SUIT NO. S-22-731-2006

                           BETWEEN

DAYA BERSAMA SDN BHD (In Liquidation)
        (Company No: 12959-X)                     …PLAINTIFF


                             AND

1.   KIRON CHHOTALAL DOSHI

2.   NOR AZIMAN BIN SALLEH

3.   NOR AZURA BINTI AHMAD

4.   RAVICHANDRAN A/L VELLIAN

5.   FIDALIS @ PAUL A/L VINCENT

6.   CYNTHIA HOR MEI LAN                        …DEFENDANTS




              Judgment of Judicial Commissioner
                   Y.A Tuan Lee Swee Seng



                           Judgment
                              1
Prologue

In less than a perfect world, there will be occasions when two or more

innocent parties will suffer when a fraud is perpetrated by one or more

parties in conspiracy to defraud others. The fraudsters are not around when

legal action is taken and the Court would often have to decide which of two

or more innocent parties should suffer. This case explores this dilemma in

the context of a supposed sale of a property from the Plaintiff to the 1st

Defendant who subsequently sold it to the 6th Defendant.



Parties

At all material times, prior to the disposal of the land held under GM 2928,

Lot 35330, Mukim Kuala Lumpur, Daerah Kuala Lumpur (“the Property”),

the Plaintiff was the registered proprietor of the Property. The Plaintiff had

been wound up by the Government of Malaysia on 24.8.2000 and the

Official Receiver was appointed as the Provisional Liquidator. Sometime in

June 2003, the Plaintiff’s company was “stolen” by 3rd and 4th Defendant

who became the directors and shareholders of the Plaintiff in place of the

existing directors and shareholders.




                                       2
On 11.11.2003, the rogue directors entered into a sale and purchase

agreement with the 1st Defendant to sell the Property to the 1st Defendant

(“D1’s SPA”). On 19.1.2004, the 1st Defendant was registered as the

registered proprietor of the Property. The instrument of transfer, namely

Form 14A of the National Land Code 1965 (“the NLC”) was executed by

the 3rd and 4th Defendant purportedly as directors/ secretary of the Plaintiff

company.



On 17.10.2005, Lim Tian Huat was appointed as the Liquidator in place of

the Official Receiver.



The 1st Defendant entered into a sale and purchase agreement with the 6th

Defendant vide a sale and purchase agreement dated 20.10.2004 to sell

the Property to the 6th Defendant (“D6’s SPA”).



The 6th Defendant has not been registered as the registered proprietor of

the Property. The 6th Defendant became a party to this proceeding after

she successfully applied to intervene in this suit. She has intervened on the

basis that she has become the proprietor of the property having purchased


                                      3
the same from the 1st Defendant. The Memorandum of Transfer in her

favour and a charge in favour of her Bank has been presented to the Land

Office and is awaiting registration. The delay in registration is due to the

fact that a Registrar’s caveat has been filed against the property.



On 25.7.2006, the Plaintiff filed an action in this Honourable Court to inter

alia recover the Property.



Prayer

By a Summons in Chambers dated 15.12.2009 (“the Applicant”), the

Plaintiff filed an application pursuant to Order 14A of the Rules of the High

Court 1980 (“the RHC”) to determine the issues stipulated thereunder. At

paragraph 1.1 of the Application, the issue was stated as such:



“As the Plaintiff was wound up by an order of the Court dated 24.8.2000 at

Kuala Lumpur High Court Petition No: D2-21-70-2000 (“the Winding Up

Court”), whether the disposal and/or conveyance of a property held under

GM 2928, Lot 35330, Mukim Kuala Lumpur, Daerah Kuala Lumpur (“the

Property”) to the 1st Defendant by the Plaintiff on or about 19.1.2004,

                                      4
without the sanction of the Winding Up Court is void under section 223 of

the Companies Act 1965 and by reason of section 340(4)(b) of the National

Land Code 1965, the title of the 1st Defendant is defeasible.” (“the Issue”).



In respect of the Issue, the Plaintiff's counsel made an amendment to the

same to read as follows:

“As the Plaintiff was wound up by an order of the Court dated 24.8.2000 at

Kuala Lumpur High Court Petition No: D2-21-70-2000 (“the Winding Up

Court), whether the disposal and/or conveyance of property held under GM

2928, Lot 35330, Mukim Kuala Lumpur, Daerah Kuala Lumpur (“the

Property”) to the 1st Defendant by the Plaintiff on or about 19.1.2004,

without the sanction of the Winding Up Court is void under section 223 of

the Companies Act 1965 and by             reason of section 340(4)(b) of the

National Land Code 1965, the title of the 1st Defendant is defeasible or the

registration in favour of the 1st Defendant was obtained by means of

an insufficient or void instrument and is therefore defeasible by

reason of section 340(2)(b) of the National Land Code1965.” (“the 1st

Issue”)




                                      5
(the highlighted part is the proposed amendment to the question) and if the

answer to the above question is in the affirmative, then

1.2 Whether the Plaintiff could give a good title to the 6th Defendant.



The Plaintiff prayed that if the questions above are answered, in favour of

the Plaintiff, that the following orders be entered:

Against the 1st Defendant

3.1 A declaration that transfer of the piece of land held under GM 2928,

Lot 35530, Mukim Kuala Lumpur, Daerah Kuala Lumpur (“the

Property”) in favour of the 1st Defendant is null and void;

3.2 An Order that the 1st Defendant deliver up the issue document of title in

respect of the Property to the Plaintiff within 8 days from the date of receipt

of this Order;

3.3 An Order that the Registrar Of Land Titles do cancel the entries or

memorial in the register of land title in favour of the 1st Defendant and

restore the Plaintiff’s name as the registered proprietor of the Property

within 14 days from the date of receipt of this Order.

Against 6th Defendant




                                        6
3.4 A declaration that the 6th Defendant does not have and / or obtain any

right and / or any interest in the Property vide the Sale and Purchase

Agreement dated 20.10.2004 which was entered between the 1st

Defendant and the 6th Defendant.

3.5 An Order that the 6th Defendant delivers vacant possession of the

Property to the Plaintiff within the period of 14 days from the date of

this order.

4.0 Costs of this application to be borne by the 1st Defendant; and

5.0 Any further or other relief that this Honourable Court deems fit and

proper.



It is submitted that in view of the legal and equitable interest acquired by

the said 6th Defendant Cynthia Hor Mei Lan in the property, the Plaintiff’s

application under Order 14A against the 1st Defendant is untenable and

misconceived.



It is also submitted that even if the legal and equitable interest in the

property remained with the 1st Defendant, the dispute as to facts and the

issue of fraud puts the case outside the ambit of Order 14A.


                                       7
Principles

Whether O14A RHC procedure is appropriate

The Plaintiff has pleaded inter alia mainly two causes of action in the

Statement of Claim (SOC). The 1st cause of action is against the 1st

Defendant on grounds that the conveyance or transfer of the Property to

the 1st Defendant is void under section 223 of the Companies Act (“the

Act”) or that the transfer of the Property by the Plaintiff to the 1st Defendant

is defeasible under section 340(2) (b) of the NLC as the conveyance or

transfer was obtained through void and/or insufficient              instrument

(paragraph 14 and 15 of the SOC);

The 2nd cause of action is against the 2nd to the 5th Defendant for inter alia

fraud and/or conspiracy to defraud (paragraphs 16-20 of the SOC).



The basis of this application is premised on the 1st cause of action only.

The Plaintiff is not relying at all on the 2nd cause of action. Therefore, the

facts pleaded in relation to the 2nd cause of action against the 2nd to the 5th

Defendants are not applicable herein.




                                       8
The ambit of Order 14A is trite. Plaintiff's counsel referred to the decision of

the Court of Appeal in Seloga Jaya Sdn Bhd v UEM Genisys Sdn Bhd

[2008] 2 CLJ 686 (at pp 709-713).



Plaintiff's counsel submitted that the facts as set out so far are not

disputed. The above facts are sufficient to dispose of this matter and to

answer the issues to be determined as framed in the application. In the

circumstances,    Order    14A    is   clearly   applicable.   The   issues   for

determination, if determined, will dispose of a major part of this case. This

Court is in agreement with the approach taken by way of O14A RHC.



Counsel for the 1st Defendant submitted that the Plaintiff’s allegation that a

bogus board of directors had “stolen” the company and sold the property to

the 1st Defendant is an issue which is related to fraud. It is trite law that

fraud is an issue which cannot be tried by affidavit evidence or by way of

determination of issues. Hence it is submitted that Order 14A cannot be

resorted to when a transaction which is the subject matter of the suit is

tainted by fraud or illegality on the part of one party which in this case is the

alleged bogus board of directors. However, the Plaintiff is not proceeding


                                        9
with their second cause of action against the 2nd to 5th Defendants for fraud

in this O14A application.



The requirements under Order 14A are as follows:

(a)   the question of law or construction is suitable for determination

without the full trial of the action.

(b)   Such determination will be final as to the entire cause or matter or

any claim or issue therein.

(c)   The parties have had an opportunity of being heard on the question.



Counsel for the 1st Defendant further argued that a full trial is necessary in

view of the disputes as to facts which are apparent. He referred to the

passage from Malaysian Court Practice pages 140-143 which reads:

      “Cases which require extrinsic evidence should not be summarily

      determined. Where the issues of fact are interwoven with the legal

      issues raised, it would be undesirable for the Court to split the legal

      and factual determination for to do so would in effect be to give legal

      rulings in vacuo or on a hypothetical ruling which the Court will not do

      so”.


                                        10
Counsel for the 1st Defendant argued confidently that Order 14A is not

suitable nor appropriate for a case of this nature which involves complex

issues such as winding up, disposal of assets after winding up,

indefeasibility of title, subsequent purchaser (in this case the 6th Defendant)

claiming a right over the property, the issue of fraud, the issue of bona fide

purchaser for value without notice of the fraud and a myriad of other issues.



In Daya Bersama Sdn Bhd v Suruhanjaya Syarikat Malaysia and 4

Others [2008] 2 AMR 148 involving the same Plaintiff as in this case and

on the same issues, (except the property was a different one) the High

Court dismissed the Plaintiff's Order 14A application inter alia on the

following grounds:



      “The application will only be allowed if the case is clear and free from

      difficulty or material doubt, if there is a doubt as to the bona fide of

      the transaction and if the case is free from complicated questions of

      law. Otherwise the application must fail.”



It is submitted that the above authority is highly persuasive since it involves

the same Plaintiff and the same issues as in the present case before this
                                      11
Court. However on appeal to the Court of Appeal, the Court of Appeal had

allowed the appeal of Daya Bersama Sdn Bhd (In Liquidatiion) on 2.7.2010

vide Civil Appeal No.: W-02-699-2007.



Whilst generally what has been submitted so far by Counsel for the 1st

Defendant is true, yet one must not miss the point. The point here is that

however one may argue, the transfer of the Property to the 1st Defendant

was after the Plaintiff had been wound up and how else can the transfer be

done if it is not through the Official Receiver as liquidator. Since the Official

Receiver did not sign and neither was any sanction obtained from the

Official Receiver, what other conclusion can one arrive at other than that

the transfer was effected fraudulently through the rogue directors or that

the instrument employed to avoid the transfer was void or insufficient.

There is no escaping that. No one is suggesting nor can any one suggest

that the Official Receiver was in conspiracy or at least knew or ought to

have known of the transaction but stood idly by. The culprits here are the

3rd and 4th Defendants who have chosen not to defend themselves. It is

the action of a guilty person who did a disappearing act after having

perpetrated the fraud. Whilst at first blush, the issues may appear to be

complicated, yet when shorn of its trappings, it boils down to whether a
                                       12
transfer of the Property can be effected other than through the Official

Assignee.



Whether the 1st Defendant's title is defeasible

Section 340(2) (b) NLC

It is trite law that once a company is in liquidation, the board of directors of

the company is functus officio. (See: Abric Project Management Sdn Bhd

v Palmshine Plaza Sdn Bhd (formerly known as Jupiter Synergy Sdn

Bhd) [2005] 1 MLJ 333 at 337.



The liquidators (or in our case, the Official Receiver) displaces the directors

of the company and the control of the activities of the company are then

vested with the liquidator. (section 236 of the Companies Act)



Thus the acts of the rogue directors or company secretary (in this case the

3rd and 4th Defendants) of purportedly selling the Property is invalid (See:

Ayerst (Inspector of Taxes) v C&K (Construction) Ltd [1976] AC 167,

pp 176, 177).




                                       13
That being the case, D1’s SPA and the memorandum of transfer

transferring title to the 1st Defendant must be regarded as void and/or

insufficient instrument, attracting the exception to indefeasibility under S.

340(2)(b) NLC.



By virtue of the current principle of deferred indefeasibility that has been

laid down by the Federal Court in Tan Ying Hong v Tan Sian San & Ors

[2010] 2 CLJ 269 which overruled Adorna Properties Sdn Bhd v

Boonsom Boonyanit’s case, the 1st Defendant cannot hold a good title.



Plaintiff's counsel illustrates it this wise taking the learned Chief Justice’s

part of the judgment which gave an illustration on how to treat the

indefeasibility principle under section 340 NLC. The 1st Defendant stands

as “B”. As “B” or the 1st Defendant’s name on the register was obtained

through insufficient and/or void instrument, it is liable to be set aside by the

previous owner i.e. the Plaintiff (see: paragraphs 5, 7, 8, 10 and 11 at pp

279, 280 of the decision).




                                       14
On this ground, the 1st Defendant’s title is clearly defeasible and must be

set aside (See also: Mohamed Jamal bin Inche Im Salleh v Ernest

Cheong Yong Yin [2004] 3 MLJ 131 at 135-136).



Section 340(4) (b) as another exception to indefeasibility

Plaintiff's counsel submitted that section 340(2) NLC is not the only sub-

section that deals with the exception to the indefeasibility conferred by sub-

section (1) of section 340. He respectfully submitted that section 340(4) (b)

is another sub-section that deals with the exception to indefeasibility. In

support of that proposition, he referred to the Federal Court decision of

Krishnadas a/l Achutan Nair & Ors v Maniyam a/l Samykano [1997] 1

CLJ 636.



At page 644 of the judgment, Gopal Sri Ram JCA (speaking on behalf of

the Federal Court) had this to say:



“In our judgment, Parliament enacted s 340(4)(b) for the purpose of dealing

with fact patterns that do not fall squarely within the other exceptions to

indefeasibility that appear in the second subsection to s 340 of the code.

While recognizing that it is neither possible, nor desirable to predict with
                                      15
any degree of certainly the wide range of cases that, while failing to come

within the vitiating categories specified by the second subsection, may yet

come within the scope of s 340(4)(b), we cite, by way of illustration only,

cases decided under the Moneylenders Act 1951.”



Apart from the Federal Court decisions cited above, the Court of Appeal in

Subramaniam NS Dhurai v Sandrakasan Retnasamy & Ors [2005] 3

CLJ 539 at 549 was also of the same view when it said “Neither does it

prevent the title being defeated by operation of law”.



By reason of the foregoing, Plaintiff's counsel submitted that section 340(4)

(b) of the NLC is another exception to the indefeasibility provision. Thus

section 340(4) (b) of the NLC opens the gate for a registered proprietor’s

title to be defeasible by reason of there being a breach of other written

laws. These would include for e.g. breach of the Moneylenders Act as

highlighted in Krishnadas’ case.




                                      16
Counsel for the 1st Defendant submitted that in the absence of fraud,

forgery, insufficient instrument or unlawful acquisition, the 1st Defendant’s

title in the property become indefeasible.



Counsel for the 1st Defendant said that the Plaintiff has not alleged fraud or

lack of good faith against the 1st Defendant and it is clear therefore that the

provisions of Section 340 of the NLC to nullify a transaction do not apply

against the 1st Defendant.



However, there is no need for the Plaintiff to do so. If the 1st Defendant is a

party to the fraud then of course no Court would condone the transfer and

the transfer will be set aside as the title is clearly defeasible. If the 1st

Defendant is not a party to the fraud and is as clean and clear as can be,

still the transfer is liable to be set aside once the trasfer was effected by

forgery or by void or insufficient instrument whether or not the 1st

Dedendant is aware under s 340(2) NLC.



Counsel for 1st Defendant went on to submit that even if the Plaintiff were

to argue that the fraud by the alleged bogus board of directors affected the

legality of the transfer, it is submitted that by virtue of the decision of Majlis
                                        17
Agama Islam Negeri Pulau Pinang v Zaitun Ramli [2009] 1 CLJ 38 the

1st Defendant cannot be held liable for the following reasons which were

decided in the said case;

1)   there must be proof that the Purchaser was a party or privy to fraud

or misrepresentation.

2)   there must be averments in the affidavit in support to state that the

Purchaser was actively involved in the fraud and that he was not a

Purchaser of good faith.



However, that cannot be correct as the requirements of an innocent

purchaser acting in good faith and for valuable consideration only apply to

a subsequent purchaser and not the first purchaser.



Counsel for the 1st Defendant further submitted that Order 14A is not for

the purpose to determine whether or not a set of circumstances come

within a particular subsection of an Act especially when there are disputes

as to facts and law. Hence the Plaintiff’s argument that the transaction can

be set aside under section 340(4) (b) is untenable and misconceived

especially without oral evidence being given to establish the facts and

circumstances surrounding the transaction.
                                     18
I think to say that is to oversimplify the issues amenable to determination

under the O14A RHC procedure. What is necessary to trigger an O14A

RHC procedure is whether there are sufficient non-disputable facts which

are sufficient for formulation of questions of law which determination will

dispose of the whole suit.



Section 223 of the Act – void disposition after commencement of winding

up

Section 223 of the Act reads as follows:

“Any disposition of the property of the company including things in action

and any transfer of shares or alteration in the status of the members of the

company made after the commencement of the winding up by the court

shall, unless the court otherwise orders, be void.”



In Lian Keow Sdn Bhd (In liquidation) & Anor v Overseas Credit

Finance (M) Sdn Bhd & Ors [1988] 2 MLJ 449 the Supreme Court held

that the transfer of the portions of the land in question after the presentation

of the winding-up petition were void pursuant to section 223 of the Act.


                                       19
Further, the following cases have also held that the transfer of property of

the company to a 3rd party after the presentation of a winding-up petition

and/or the winding up of the company is contrary to section 223 of the Act

1965 as is therefore void.



See: (i)     Datin Hajjah Zaleha & Ors v Perkasa Trading Sdn Bhd &

Anor [1984] 1 MLJ 372 at 373;

     (ii)    Kimoyama Elektrik (M) Sdn Bhd v Metrobilt Construction

Sdn Bhd [1990] 3 MLJ 309 at 311;

     (iii)   Mohamed Jamal bin Inche Im Salleh v Ernest Cheong Yong

Yin [2004] 3 MLJ 131 at 135, 136.



One cannot run away from the inexorable, inevitable and irresistible

conclusion that it is abundantly clear that the sale and transfer of the

Property is void by virtue of Section 223 of the Act as there was no order

validating such sale.



In fact based on the same facts the Plaintiff had also made a similar claim

for a different piece of Property in Civil Suit No.: S1-22-665-2006 in High
                                     20
Court at Kuala Lumpur where the 1st Defendant is one Kenneth Too Heng

Khuen and the 2nd to 5th Defendants there are also the same 2nd to 5th

Defendants here. In that case there had been no subsequent transfer that

was sought to be effected. His Lordship Wahab Patail J (as he then was)

set aside the transfer to the 1st Defendant and on appeal to the Court of

Appeal on 2.7.2010 in Civil Appeal No.: W-02-1059-2007 the decision of

the High Court was affirmed.



Application of section 340(4) (b) of the NLC and section 223 of the

Companies Act 1965

Applying the principle expounded by the Federal Court in Krishnadas's

case (supra), the transaction and/or the registration of the Property is void

against section 223 of the Companies Act 1965, and by virtue of section

340(4) (b) of the NLC, the title or interest of the 1st Defendant in respect of

the Property is clearly defeasible by operation of law.



Counsel for the 1st Defendant argued that the winding up order was

conveyed to the Companies Commission of Malaysia almost 6 years after

the Plaintiff was wound up, and so submitted that disposal of the property

after the winding up order does not render it void. Here only the Plaintiff as
                                      21
a separate legal entity knew of the winding up order. The 1st Defendant was

not aware of this. The Plaintiff sold the property to the 1st Defendant, an

innocent purchaser for value. Counsel for the 1st Defendant argued that

that there is no allegation of fraud or misrepresentation against the 1st

Defendant. In the absence of such allegations, he submitted that the Court

should not declare the transaction as void but instead grant an order to

validate the transaction. As authority for this proposition he cited Seek Lai

Neo v Cheng Chuan Development Sdn Bhd and 2 others [1994] 4 CLJ

892 where it was held as follows:

     “The argument that the 1st defendant, having been wound up in 1988,

     had no authority to thereafter transfer the property to the 2nd and 3rd

     defendants, resulting in the transfer of the property to the latter in

     1990 being void under S. 223 of the Companies Act, which in turn

     rendered the instrument effecting such disposition equally void under

     S. 340(2) of the National Land Code (NLC), is only sustainable as

     against the 1st defendant. The argument cannot apply to the 2nd and

     3rd defendants, particularly so when there is no allegation of

     misrepresentation or fraud against them or that they had acted in

     concert with the 1st defendant to effect the disposition while aware

     that the latter had no authority to do so.”
                                      22
It was further held that:



      “By S. 223 of the Companies Act the Court is empowered to validate

      a transaction that would otherwise be void. On the peculiar facts of

      this case, the Court ought not to revert the dispute over title to the

      Official Assignee as it would only prolong the determination of the

      dispute altogether. In addition, it would also cause injustice to the 2 nd

      and 3rd Defendant, they being the bona fide purchaser for value

      having an indefeasible title to the property. In the premises, S. 223 of

      the Companies Act is hereby invoked and the disposition of the

      property is validated so as to confirm that the title on the property has

      passed to the 2nd and 3rd defendants.”




Counsel for the 1st Defendant submitted therefore that Section 223 of the

Companies Act will not apply to invalidate a transaction after a winding-up

of a company once the property is already registered in the name of the

purchaser who in this case is the 1st Defendant with the 6th Defendant

having the beneficial ownership.
                                      23
The case of Seek Lai Neo (supra) can be distinguished from this case

because there the 2nd and 3rd Defendants title to the property has been duly

registered and they have paid the full purchase price to the right party, the

1st Defendant developer before it was wound up. It was only discovered

subsequently that when the transfer instrument in Form 14A NLC was

executed, the 1st Defendant had wound up. The Official Receiver as

liquidator would have executed the transfer in favour of the 1st and 2nd

Defendants as purchasers anyway. It was the Plaintiff who was unhappy

and applied for inter alia that the transfer of the property be cancelled and

the property reverted to the Official Assignee. The 1st Defendant had earlier

repudiated their Sale and Purchase Agreement with the Plaintiff because of

the Plaintiff’s failure to pay the balance purchase price. Clearly it was a

case where the Court exercised its discretion to validate the transfer for not

to do so would cause injustice to the 2nd and 3rd Defendants.



However here the transfer to the subsequent purchaser in the 6th

Defendant has not been effected yet. It is unfortunate that the immediate

purchaser has to suffer because of the fraud perpetrated by some

egregious element in our society but that is where Parliament say the risk
                                      24
should fall. To allow the 1st Defendant to have a validated transfer in the

circumstance of a transfer clearly in breach of the law and indeed

fraudulent as against the Plaintiff would be to set a dangerous precedent

and provide the environment to encourage further fraud.



Counsel for the 6th Defendabt submitted that based on the facts of this

case, where it was stated that the winding up order was conveyed to the

Companies Commission of Malaysia almost 6 years after the Plaintiff was

wound up, the disposal of the property after the winding up order does not

render it void. However for so long as the claim was brought within the

limitation period, the Plaintiff cannot be faulted. The court takes into

consideration the fact that the Official Receiver’s office is very busy and as

soon as a private liquidator was appointed the suit was brought quite soon

thereafter.



Can the 1st Defendant give a good title to the 6th Defendant?

To answer this question, it is pertinent to note the following event and

position taken:

    (i)       that the 1st Issue is determined in favour of the Plaintiff; and


                                         25
    (ii)      that the 6th Defendant has not been registered as the registered

    proprietor of the Property.



Bearing in mind that the 6th Defendant is not registered as the registered

proprietor of the Property, the 6th Defendant cannot rely on Section 340 of

the NLC including the proviso of Sec 340(3) of the NLC. This is because

Section 340 of the NLC only applies to person or persons currently

registered on the register of title



See: (i)      Au Meng Nam & Anor v Ung Yak Chew & Ors [2007] 4 CLJ

526 at 542;

      (ii)    OCBC Bank (Malaysia) Bhd v Pendaftar Hakmilik Negeri

Johor Darul Takzim [1999] 2 CLJ 949 at 956.



In respect of section 340(3) of the NLC, it has also been specifically

pronounced that the section and the proviso only apply to the person who

is currently registered as a proprietor.



See: (i)      OCBC Bank (Malaysia) Bhd v Pendaftar Hakmilik Negeri

Johor Darul Takzim [1999] 2 CLJ 949 at 964, 965.
                                       26
      (ii)   Abu Bakar Ismail & Anor v Ismail Husin & Ors & Other

Appeals [2007] 3 CLJ 97 at 114.



As section 340(3) proviso of the NLC is not applicable to the 6th Defendant,

Plaintiff's counsel submitted that the normal common law principle will

apply to the position of the 6th Defendant. As the title of the 1st Defendant

was obtained by a void and insufficient instrument (as the instrument of

transfer was not executed by the liquidator but by the purported

director/secretary when the company was in liquidation), which is null and

void and of no effect, the 1st Defendant was and is clearly not able to confer

any title or interest to the 6th Defendant. You cannot give what you do not

have – nemo dat quod non habet.



See: (i)     Boonsom Boonyanit v Adorna Properties Sdn Bhd [1997] 2

MLJ 62;

      (ii)   OCBC Bank (Malaysia) Bhd v Pendaftar Hakmilik Negeri

Johor Darul Takzim [1999] 2 CLJ 949 at 962.



By reason of the foregoing, Plaintiff's counsel submitted that the 2nd Issue

should also be decided in favour of the Plaintiff herein.
                                      27
The remedy of the 6th Defendant against the 1st Defendant.

The 6th Defendant/Intervener by way of Summons in Chambers dated

9.8.2007 and supported by her Affidavit affirmed on 21.8.2007 obtained an

order by consent of the Plaintiff to intervene in these proceedings. The

Intervener purchased the property from the 1st Defendant for RM570,

000.00 which was partly financed with a bank loan. Both the Memorandum

of Transfer and the charge were presented to the Land Office and could not

be registered because of the Registrar’s caveat over the said Property. She

is also a bona fide purchaser of value and just like the 1st Defendant she

had no knowledge of any fraud affecting the sale.



As the 6th Purchaser has paid the full purchase price to the 1st Defendant,

this Court can make an order that the full purchase price is to be paid back

to the 6th Defendant by the 1st Defendant.



Pronouncement

Having heard all the submissions, this Court made the following orders in

Enclosure 38.     The Court answered Question 1.1 as amended by


                                     28
paragraph 2 of written submission in the Affirmative and Question 2 in the

Negative.

Flowing from that, an order in term is made of Prayer 3.1, 3.2, 3.3, 3.4, 3.5,

and further that the 1st Defendant do pay the 6th Defendant the sum

received for the purchase price i.e. RM570,000.00 together with interest at

8% per annum from date of filing of the 6th Defendant’s Counter Claim to

realisation and assessment of damages to be paid by 1st Defendant to 6th

Defendant to be made by Senior Assistant Registrar. Costs of RM5,000.00

to be paid by 1st Defendant to Plaintiff and costs of RM5,000.00 to be paid

by 1st Defendant to 6th Defendant.

This order fully and finally disposes of the whole action and Counter Claim.



Postscript

As can be seen, the decision is not a happy one for the 1st Defendant. The

law has to be applied as it has been enacted by Parliament and as

enunciated and elucidated by the Courts. Perhaps the time has now come

for the introduction by amendments to the National Land Code 1965 of a

Compensation Fund as found in some Torrens jurisdiction like in Australia

where all who transact at the land office will pay a sum towards this Fund

for meeting the claims of innocent purchasers who suffer through no fault of
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their own. It is a reflection of our solidarity with the falleness of human

nature that there will always be that egregious element in our midst that we

can never fully eradicate.




Dated: 12.11.2010.



                                                    Sgd
                                      Y.A. TUAN LEE SWEE SENG
                                         Judicial Commissioner
                                        High Court (Civil Division)
                                             Kuala Lumpur




For the Applicant/Plaintiff: C K Yeoh with Jason Tan
                              (Ranjit Ooi & Robert Low)

For the 1st Respondent/ 1st Defendant: Francis Brigged
                                   (Hamid Sultan Loga Chitra & Assc)
          th              th
For the 6 Respondent/ 6 Defendant: L A Gomez
                                    (L A Gomez Meor Shaazizi)
Date of Decision: 27.8.2010




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