Mrs Boonsom Boonyanit @ Sun Yok Eng was a Thai national. She owned 2 parcels of land in Tanjong Bungah, Penang. In 1988, a woman who claimed to be Mrs Boonsoom Boonyanit made a statutory declaration that she had lost the original titles to the two parcels of land. The Land Office issued her certified copies of the titles. The forger/impostor then sold the land to Adorna Properties Sdn Bhd for RM12 million.

After coming to know that Adorna Properties Sdn Bhd had become registered as the proprietor, Mrs Boonsom Boonyanit brought an action against Adorna Properties Sdn Bhd to have her land restored to her, but she failed in the High Court on 25 April 1995. She appealed to the Court of Appeal, and succeeded on 17 March 1997. Adorna Properties appealed to the Federal Court. The three-member panel of the country’s highest court comprising of Eusoff Chin, Wan Adnan Ismail and Abu Mansor Ali decided in favour of Adorna Properties Sdn Bhd. That was then 22 December 2000

"Whether an acquirer of a registered charge or other interest or title under the National Land Code 1965 by means of a forged instrument acquires an immediate interest or title."

ISSUE : WHETHER ADORNA PROPERTIES A BONA FIDE PURCHASER FOR VAUABLE CONSIDERATION WITHOUT NOTICE, ACQUIRED AN INDEFEASIBLE TITLE TO THE LAND BY VIRTUE OF SECTION 340(3)

HIGH COURT : ADORNA WAS A BONA FIDE PURCHASER FOR VALUE AND THUS CAME WITHIN THE PROVISO TO SECTION 340(3) , WITH THE RESULT THAT THEY OBTAINED A GOOD TITLE TO THE LANDS NOTWITHSTANDIN THE FORGERY. THE HC APPLIED IMMEDIATE INDEFEASIBLITY.

COURT OF APPEAL : THE COA HELD THAT THE WORDS “ANY PURCHASER” IN S340 OF THE CODE REFERES TO SUBSEQUENT AND NOT IIMEDIATE PURCHASER HENCE CREATING A DEFERRED INDEFEASIBLITY. THE TITLE OF AN IMMEDIATE PURCHASER IS DEFEASIBLE IF TAINETED BY ONE OR MORE OF THE ELEMENT IN S 340(2) BUT CREATES AN EXCEPTION IN FAVOUR OF A BONA FIDE PURCHASER WHO TAKES HIS TITLE FROM SUCH A REGISTERED PROPRIETOR. ADORNA’S REGISTERED TITLE WAS DEFEASIBLE UNDER SECTION 340(2) AND THAT THE PROVISO TO SECTION 340(3) HAD NO APPLICATION. THE COA APPLIED DEFERRED INDEFEASIBLITY.

A -- B(IMMEDIATE PURCHASER) -C (SUBSEQUENT PURCHASER)

INDEFEASIBLE TITLE

TRANSFEROR -------FORGERY---- IMMEDIATE TRANSFEREE

DEFEREED INDEFEASIBILITY

Stautory protection is conferred on the subsequent transferee who is a bona fide purchaser for value. Indefeasibility is postpone in favour of a transferee who subsequently acquires the tile or interest.

TRANSFEROR ----FORGERY > IMMEDIATE TRANSFEREE (BONA FIDE PURCHASER FOR VALUE) TITLE IS DEFEASIBLE-----SUBSEQUENT TRANSFEREE (BONA FIDE PURCHASE FOR VALUE) INDEFEASIBLE TITLE.

SECTION 340(1)

THE PROPREITOR WHOSE IN FAVOUR OF REGISTRATION HAS BEEN EFFECTED WILL OBTAIN AN INDEFEASIBLE TITLE TO OR INTEREST ON THE LAND.

SECTION 340(2)

HOWEVER THE TITLE OR INTEREST SO ACQUIRED IS LIABLE TO BE SET ASIDE BASED ON SUBSEC 2, WHERE IT HAS BEEN OBTAINED IN FRAUD OR FORGERY. IN THE CASE OF FRAUD, PROVIDES FOR THE TITLE OR THE INTEREST OBTAINED TO BE DEFEASIBLE WHERE THE PROPRIETOR OR HIS AGENT IS A PARTY OR PRIVY TO THE FRAUD. IN THE CASE OF FORGERY, PROVIDES FOR THE TITLE OR INTEREST SO ACQUIRED BY THE PROPRIETOR OR TRANSSFEREE IMMEDIATELY TO THE FORGERY TO BE DEFEASIBE AND LIABLE TO BE SET ASIDE. THIS IS SO IRRESPECTIVE OF WHETHER THE SAID PROPRIETOR OR TRANSFEREE ACTED IN GOOD FAITH IN ACQURING THE TITLE OR INTEREST. THIS IS BECAUSE THERE ARE NO SIMILAR REUIREMENT AS IN THE CASE OF FRAUD THAT HE MUST ALSO BE PARTY OR PRIVY TO THE FORGERY.

SECTION 340 AFFECT THE IMMEDIATE PROPRIETOR CHARGEE OR LEASSE EVEN IF HE BE A PURCHASER FOR VALUR OR INNOCENT PURCHASER.

SECTION 340 (3)

WHERE THE TITLE OR INTEREST IS SUBSEQEUNTLY TRANSFERRED,THIS SECTION PROVIDES THAT THE SUBSEQUENT PROPREITOR OR TRANSFEREE WILL SIMILARLY OBTAIN A DEFEASBILE TITLE OR INTERST.

PROVISO TO SECTION 340(3)

HOW EVER WHERE THE SUBSEQUENT PROPRIETOR OR TRANSFERRE ACTS IN GOOD FAIT AND GIVES VALUABLE CONSIDERATION FOR THE TITLE OR INTEREST IN QUESTION, THE PROVISO CONFERS PROTECTION ON SUCH A SUBSEQUENT PROPRIETOR OR TRANSFERRE SUCH THAT HIS TITLE OR INTEREST IS INDEFEASIBLE. INDEFEASIBLE.