Extra Lecture Notes Indefeasibility by Yasmin Norhazleena Bahari

Extra Lecture Notes Indefeasibility by Yasmin Norhazleena Bahari

Definition of indefeasibility
The definition of the phrase ‘indefeasible title’. In Muthammah v Masri Mohamed [2000] 5 MLJ 518 the Court held that the phrase ‘indefeasible title’ means

A title or an interest which is free of all adverse claims

or encumbrances not noted in the register.

Taken From [2002] 2 MLJ lxvi; [2002] 2 MLJA 66TITLE: Article: ON THE PROVISO IN SECTION 340(3) OF THE NATIONAL LAND CODE 1965

Immediate indefeasibility or deferred indefeasibility

The proviso in sub-s 3 is the cause of the problem on the interpretation of s 340. The proviso reads:
Provided that nothing in this sub-section shall affect any title or interest acquired by any purchaser in good faith and for valuable consideration, or by any person or body claiming through or under such
a purchaser.

Case law and the textbooks on land law have given this proviso two possible interpretations – the immediate indefeasibility interpretation and the deferred indefeasibility interpretation

Whether the Torrens system of a particular country shows immediate indefeasibility or deferred indefeasibility is a matter of construction of the relevant statutory provisions of the system.

Neither principle is necessarily superior to the other although one may argue that the immediate indefeasibility principle is truer to the intent of the Torrens system. By this principle, the registered titles of all purchasers in good faith (whether immediate or subsequent transferees) would be indefeasible while in the case of the deferred indefeasibility principle, the registered title of an immediate transferee would be defeasible and this would undermine the integrity of the central register.

On the other hand, it can be difficult to accept that an innocent owner of a land can unknowingly lose his land by forgery to a purchaser in good faith under the immediate indefeasibility principle.

In the first interpretation, the proviso is interpreted to apply to sub-ss 2 and 3 – if an immediate transferee is a purchaser in good faith, his title is immediately indefeasible even if his title is acquired under sub-s 2(b) or 2(c) which would make his title defeasible even if he is a purchaser in good faith, if not for the proviso. This is called the immediate indefeasibility principle since an immediate transferee who is a purchaser in good faith acquires immediate indefeasibility even if his title is obtained by, for example, forgery.

Fraud and misrepresentation under Section 340(2)the Malaysian Courts have adopted the definition of fraud in Assets Company Ltd v Mere Roihi [1905] AC 176. In Assets Company v Mere Roihi Lord Lindley defined fraud as meaning:actual fraud,which is dishonesty of some sort, not what is called constructive or equitable fraud.
In Subramaniam a/l NS Dhurai v Sandrakasan a/l Retnasamy & Ors [2005] 6 MLJ 120 the Court held that Adorna Properties Sdn Bhd v Boonsom Boonyanit @ Sun Yok Eng  [2001] 1 MLJ 241 was decided per incuriamfor three reasonsFirstly, the Federal Court had failed to consider the decision of the Supreme Court in M&J Frozen Food Sdn Bhd & Anor v Siland Sdn Bhd & Anor

Secondly, the Federal Court did not consider the distinctive use of the words proprietor’ and ‘purchaser’

in section 340 of the NLC.

Thirdly, the different statutory definitions of ‘purchaser’ and ‘proprietor’ under section 5 of the NLC were also not considered.

“purchaser in good faith”Meaning of the term good faith used above.

Good faith means bona fide which means absence of fraud, deceit and dishonesty.

Nature of deferred indefeasibilityAn instrument which is null and void before registration

remains equally null and void inter partes notwithstanding such registration and creates no indefeasible title until and unless the rights of some third person purchasing in good faith and for value on the faith of the registered instrument have supervened.

Synonyms of ‘supervene’

To occur after in time: ensue, follow, succeed.

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