Land Scams- in Malaysia

With the growing number of land scams and increased value of property involved, serious measures, including by the law, are urgently needed to overcome the problems.

WHEN Taiwanese businessman Chen Wei Pin, 56, acquired a piece of land in the heart of Kuala Lumpur in 1990, he never expected to be a victim of land fraud.
He was shocked to learn that the Land Office’s computerised records showed that a private caveat had been entered by a director of a company, claiming that Chen had sold the land to his company.

Chen denies any knowledge of the transaction and although he holds the original title to his land, attempts to retrieve records of his ownership at the Land Office have proved unsuccessful. There is also no memorandum of transfer on the sale to the private company. He has since lodged a report with the Anti-Corruption-Agency (ACA).

Chen’s case is not isolated; there have been numerous other cases of land fraud. In a parliamentary session recently, Deputy Internal Security Minister Datuk Johari Baharum said that 16 cases were recorded in 2001, 19 in 2002, 22 in 2003, 32 in 2004, 35 in 2005 and 40 in 2006. There were 16 cases in the first five months of this year.

Police statistics however reveal that in 2006, there were 80 cases involving land worth RM4,874,567.30, while this year (up to October) there have been 49 cases involving land worth RM10,402,559.00 (See table on Page 29).

MCA Public Services and Complaints Department, meanwhile, has received 18 such complaints involving land worth RM30mil in the past five years.

The department's legal adviser Datuk Theng Book believes that such cases are on the rise.
“After publicising Chen’s case, we received many more calls from lawyers about this problem. Many of these cases seem to happen in KL and Selangor where the value of land is high,” he said.

“We are concerned over the numerous unsolved cases. There is a problem; just how are we going to solve the problem then?” said National House Buyers Association Secretary-General Chang Kim Loong.

The situation where a landowner can lose his land even though he holds a good title is a direct result of the Federal Court's decision in Adorna Properties Sdn Bhd v Boonsom Boonyanit. This case concerned the interpretation of the law as laid out in Section 340 of the National Land Code (NLC) 1965 (see sidebar).

In this now-infamous case, Boonsom Boonyanit, a Thai national, owned some land in Penang. She eventually discovered that an impostor claiming to be her – and with supporting identification documents as well as statutory declarations – had declared that she had lost the original title and managed to obtain a replacement title from the land office.
The impostor subsequently sold the land to Adorna Properties, who bought it on good faith, and did not suspect that there was anything amiss in the transaction.
When Boonyanit sued for the return of the land at the Penang High Court, she was unsuccessful. She appealed to the Court of Appeal (COA), which decided in her favour. However, Adorna Properties then made an appeal to the Federal Court, and won. In essence, Boonyanit – who has since passed away – lost her land without receiving a single sen for it.
Because it was a decision of the highest court in the land, it has to be followed by every other (lower) court in the country. A subsequent attempt to overturn the previous decision, made by Boonyanit's estate, was also defeated in the Federal Court.
As a result of this case, assistant professor Dr Sharifah Zubaidah Syed Abdul Kader of the Public Law Department of the International Islamic University Malaysia said: “The law now does not protect landowners – especially in cases of forgery. Even if they are able to prove the title is theirs, they can still lose their land. The court will inevitably rule against them as long as it can be proven that the purchaser bought it on good faith.”

Roger Tan, the Malaysian Bar Council’s Conveyancing Practice Committee chairman, agreed with this “The Adorna Properties decision has wreaked havoc on every landowner in this country. It not only puts a landowner at risk of losing his property to fraudsters and forgers, but also when the landowner loses his land to these crooks, he loses everything without any compensation or remedy.”

The root of the problem, according to Tan, is that, “lawyers have always interpreted S340 as outlining the principle of ‘differed indefeasibility’. Our NLC is based on this concept, and this decision has affected that.”

What is more perplexing, said Tan, is that the Federal Court had another chance to review the law after a recent COA case in July this year (Au Meng Nam & Another v Ung Yak Chew & Others). The COA essentially did not follow the Federal Court's decision in Adorna Properties, and reverted the title back to the original owners. But when the purchasers applied for leave to appeal to the Federal Court, it was denied.

“They should have granted leave and then dealt with the Adorna case. However, they refused to confront it.”
As a result of the current situation, the Bar Council submitted a memorandum to the Natural Resources and Environment Minister Datuk Seri Azmi Khalid that listed proposed amendments to the relevant sections of the NLC on July 24.

, an amendment bill to the NLC was passed in the last Dewan Rakyat sitting, which concluded on Dec 19.
“The NLC amendments did not deal with this issue, and the Bar Council is disappointed with this. Also, there appears to be no urgency on the part of the government to look into it,” Tan commented.

He further stated, “We want to make it clear that the principle under section 340 is that of deferred and not immediate indefeasibility.”
Given the current position of the law, Tan advised that precautions be taken.
“The dealings usually involve lawyers, and they must be both diligent and vigilant. They should do a search before they advise their clients to purchase the property or release the money.”
To that effect, Tan said, the Bar Council is in the process of changing its solicitor account rules to ensure that all withdrawals from the clients' accounts are made by cheque and not by cash so as to ensure it can be traced.

“Proposals have been made and we hope to have the rule implemented by next year,” he informed.
But until the NLC is amended or the Federal Court reviews its decision, the responsibility is on landowners to ensure that title to their property has not been transferred without their knowledge.

“Do regular searches every three months or so, which costs less than RM100 per search. And it is best to go through lawyers whenever they buy or sell property,” Tan advised.
Chang hopes that an insurance scheme backed by the government is initiated.
“Indemnify anyone who loses in fraudulent land transfer. The land office is a government agency and the government should be responsible if its house is not in order,” said Chang adding that special squad by the Land and Mines department to identify weaknesses in the national computerised land registration system be set up.

Chang hopes that it doesn't reach a stage where the Land Office makes buyers sign a letter of indemnity, just as how the Road and Transport Department (JPJ) does when people buy used cars.
“This means that you are cannot sue JPJ if they make a mistake such as recording the wrong chassis number for instance. I am just worried that this will apply to property as well one of these days,” said Chang.

Theng, meanwhile, urges the police to set up a special task force made up of forensic and conveyance experts to look into the problem.
Commercial Crimes Investigation Department legal/inspectorate division principal assistant director ACP Tan Kok Liang at the 14th Malaysian Law Conference had suggested using fingerprinting during land and property transactions as it offered a unique security feature to prevent fraud and to identify impostors.

urges the government and relevant agencies to solve the problem as soon as possible.
“It will lead to serious loss of confidence in Malaysian property market and potential investors may well find it easier to invest in property elsewhere,” he said.
The Land and Mines Department was not available for comment.

By JOSEPH LOH and RASHVINJEET S. BEDI - the star 23rd Dec 207