Baskaran A/L Govindasamy v Chiew Yit Kin (W-01(NCvC)(W)-222-04/2023)

BRIGHT WAY HOLDINGS SDN BHD ... APPELLANTS AND CHIEW YIT KIN RESPONDENT [In the High Court of Malaya at Kuala Lumpur Civil Suit No.: WA-21NCVC-58-04/2022 Between Chiew Yit Kin ... Plaintiff and

Pengarah Tanah Dan Galian Wilayah Persekutuan

Kerajaan Malaysia

Beyond Opulence Sdn Bhd

Norhasmizi Bin Napi

Wan Muhamad Irywan Bin Wan Mohamad Sahini

Wan Zaiharatulhasra Binti Hamid (dahulunya berlatih di bawah nama dan gaya Tetuan Hasra Hamid & Associates)

Baskaran A/L Govindasamy

Ramola A/P P. Janardanan

Bright Way Holdings Sdn Bhd ... Defendants] CORAM: S. NANTHA BALAN, JCA COLLIN LAWRENCE SEQUERAH, JCA AHMAD KAMAL BIN MD. SHAHID, JCA JUDGMENT Introduction [1] This is an appeal by Baskaran A/L Govindasamy （ $ 7^{th} $ Defendant), Ramola A/P P. Janardanan （ $ 8^{th} $ Defendant） and Bright Way Holdings Sdn Bhd （the $ 9^{th} $ Defendant） against the decision of the High Court dated 30 March 2023 which was made in favour of Chiew Yit Kin (the Plaintiff) in relation to a purported fraudulent land transfer. [2] The Plaintiff alleged that her vacant land in Damansara Heights (subject land) was transferred to Beyond Opulence Sdn Bhd (the 3rd Defendant) and then to the $ 7^{th} $ and $ 8^{th} $ Defendants by fraud. [3] The Plaintiff instituted an action against: a. Pengarah Tanah Dan Galian Wilayah Persekutuan (the $ 1^{st} $ Defendant/land office) for negligence; b. Kerajaan Malaysia (the $ 2 ^{n d} $ Defendant/Government of Malaysia) for vicarious liability; c. the $ 3^{\mathrm{rd}} $ Defendant who was the first transferee of the subject land; d. Norhasmizi Bin Napi ( $ 4^{th} $ Defendant) and Wan Muhamad Irywan Bin Wan Mohamad Sahini ( $ 5^{th} $ Defendant) who were directors of the $ 3^{rd} $ Defendant for fraud; e. Wan Zaiharatulhasra Binti Hamid (the $ 6^{th} $ Defendant/lawyer) who falsely and purportedly attested the Plaintiff's execution of the transfer Form 14A in favour of the $ 3^{rd} $ Defendant; f. the $ 7^{th} $ to $ 8^{th} $ Defendants/buyers of the subject land for fraud and forgery and obtaining title through a void instrument; and g. the $ 9^{\mathrm{th}} $ Defendant who had entered a lien holder's caveat on the subject land. [4] We have carefully examined the Records of Appeal, and considered the submissions by both parties including the latest supplementary submissions filed by both parties on 17 February 2025 upon request of the $ 7^{th} $ to $ 9^{th} $ Defendants i.e. the Appellants in the present appeal, following the latest decision by the Federal Court in Malayan Banking Berhad v. Mohd Affandi bin Ahmad & Anor [2024] 6 MLJ 220 (2025) 1 MLRA 429; (2024) 10 CLJ 501 (Maybank's case). We thank counsel for their comprehensive written submissions and their oral clarification on the issues which were ventilated before this court. Background Facts [5] The Plaintiff was the sole proprietor of the subject land. The original issue document of title (IDT) for the subject land (genuine IDT) had always been and remained with the Plaintiff. At all material times, the Plaintiff never surrendered and/or parted with and/or disposed of the genuine IDT in any manner whatsoever to any third party whosoever. [6] The nightmare of the Plaintiff began when she was informed by her gardener that the subject land was sold and/or transferred to a new owner. A land search on the subject land and further investigation by the Plaintiff revealed that: a. the $ 3^{rd} $ Defendant entered a private caveat on the subject land through a Form 19B executed by the $ 4^{th} $ and $ 5^{th} $ Defendants, purportedly because the $ 3^{rd} $ Defendant had made a part payment of the purchase price to purchase the subject land from the Plaintiff as the seller; b. The Plaintiff had purportedly transferred the subject land to the $ 3^{rd} $ Defendant, and the title purportedly registered in the $ 3^{rd} $ Defendant's name (fraudulent transfer); c. The Plaintiff had purportedly executed a Form 14A as an instrument for transfer of the subject land in consideration for RM4,300,000.00 (fraudulent Form 14A) by purportedly signing the said document (forged signature); d. The $ 6^{\mathrm{th}} $ Defendant had purportedly witnessed and attested the Plaintiff's consent and the forged signature on the fraudulent Form 14A; e. The $ 4^{\mathrm{th}} $ and $ 5^{\mathrm{th}} $ Defendants had executed the fraudulent Form 14A as directors of the $ 3^{\mathrm{rd}} $ Defendant to purportedly receive the transfer of the subject land in the $ 3^{\mathrm{rd}} $ Defendant's name; f. The $ 1^{\mathrm{st}} $ Defendant registered the title of the subject land in the $ 3^{\mathrm{rd}} $ Defendant's name upon the presentation of the fraudulent Form 14A by the latter; g. Thereafter, the $ 4^{th} $ and $ 5^{th} $ Defendants executed the Form 14A as an instrument for transfer of the subject land to the $ 7^{th} $ and $ 8^{th} $ Defendants as joint purchasers; h. About 74 days after the fraudulent transfer, the $ 3^{rd} $ Defendant transferred the subject land to the $ 7^{th} $ and $ 8^{th} $ Defendants as joint purchasers; i. The $ 9^{\mathrm{th}} $ Defendant subsequently entered a lien-holder's caveat on the subject land; and j. After the transfer of the subject land to the $ 7^{th} $ and $ 8^{th} $ Defendants, the $ 4^{th} $ and $ 5^{th} $ Defendants resigned from the $ 3^{rd} $ Defendant. The $ 3^{rd} $ Defendant was subsequently dissolved and its name was struck off from the Register of Companies. The title of the subject land remained in the $ 7^{th} $ and $ 8^{th} $ Defendants' names. [7] At all material times, the Plaintiff had never consented to the fraudulent transfer to the $ 3^{rd} $ Defendant or any other party. Nor had she ever received any consideration from the 3 $ ^{rd} $ Defendant for the fraudulent transfer. [8] The Plaintiff further contended that the $ ^{3 rd} $ Defendant, as a RM2 shell company with zero current assets and negative cash balance, simply had no means to pay any consideration to purchase the subject land from the Plaintiff. [9] Upon discovery of the fraudulent transfer, the Plaintiff lodged a police report with the Royal Malaysian Police and filed the present civil suit in the High Court. IN THE HIGH COURT [10] Based on the Amended Statement of Claim, the Plaintiff contended among others, that: a. the $ 3^{rd} $ to $ 5^{th} $ Defendants have acted in concert and/or with the common intention to perpetrate the fraudulent transfer. As a result of the fraudulent transfer, the Plaintiff suffered loss and damage, including the loss of her proprietorship as a legal and beneficial owner over the subject land; b. The $ 6^{th} $ Defendant has made and/or caused to be made a false declaration and/or fraudulent representation to the $ 1^{st} $ Defendant that she has witnessed and attested the Plaintiff's execution of the fraudulent Form 14A by inscribing a hand-written signature on it. The $ 6^{th} $ Defendant has acted in concert and/or with the common intention together with the $ 3^{rd} $ to $ 5^{th} $ Defendants to perpetrate the fraudulent transfer; c. The $ 1^{\mathrm{st}} $ Defendant owes the Plaintiff a duty to exercise reasonable care by making necessary enquiries and/or conducting a fair assessment on the presentation of the instrument for a transfer of the subject land before effecting the fraudulent transfer; d. The $ 1^{\mathrm{st}} $ Defendant had failed to exercise reasonable care by negligently endorsing its memorial on the documents of title to the subject land when the presentation of the fraudulent Form 14A was unaccompanied by the genuine IDT. At all material times, the genuine IDT was and has always been in the custody of the Plaintiff; e. As a result of the $ 1^{\mathrm{st}} $ Defendant's gross negligence, the Plaintiff suffered loss and damage, including loss of her proprietorship as a legal and beneficial owner over the subject land; f. The $ 2^{n d} $ Defendant is vicariously liable for the negligence of the $ 1^{s t} $ Defendant; and g. The title obtained by and now registered in the $ 7^{th} $ and $ 8^{th} $ Defendants' names as immediate purchasers is defeasible in law and that they are not bona fide purchasers in good faith and for valuable consideration. [11] Therefore, in the suit, the Plaintiff prayed for the following reliefs: a. A declaration that the Plaintiff is the registered proprietor and the true legal and beneficial owner of the subject land; b. a declaration that all and any of the register and issue documents of title to the subject land, endorsed and/or issued by the $ 1^{\mathrm{st}} $ Defendant after the date of the genuine IDT, are not the true indicia of title to the subject land and are therefore null and void; c. an order for all and any of the IDT to the subject land, endorsed and/or issued by the $ 1^{\mathrm{st}} $ Defendant after the date of the genuine IDT, be produced and delivered by the $ 3^{\mathrm{rd}} $ to $ 5^{\mathrm{th}} $ $ 7^{\mathrm{th}} $ to $ 9^{\mathrm{th}} $ Defendants to the $ 1^{\mathrm{st}} $ Defendant to be cancelled and extinguished immediately; d. an order for all the memorials endorsed by the $ 1^{\mathrm{st}} $ Defendant which are appearing in the register document of title to the subject land relating to the interests of the $ 3^{\mathrm{rd}} $ to $ 5^{\mathrm{th}} $ $ 7^{\mathrm{th}} $ to $ 9^{\mathrm{th}} $ Defendants be cancelled and extinguished immediately by the $ 1^{\mathrm{st}} $ Defendant; e. an order for the removal of the lien-holder's caveat entered into by the $ 9^{th} $ Defendant on 20 May 2016; f. an order for all the lawful documents of title and records of the $ ^{1} \mathrm{st} $ Defendant be rectified to reinstate the genuine IDT and the Plaintiff as the registered proprietor of the subject land with immediate effect; g. an order for damages to be assessed, against the $ 1^{\mathrm{st}} $ to $ 6^{\mathrm{th}} $ Defendants; h. an order for exemplary damages to be assessed, against the $ 1^{st} $ to $ 6^{th} $ Defendants; i. costs on indemnity basis; and j. such further and other relief that the Honourable Court deems fit in the circumstances. [12] The $ 3^{\mathrm{rd}} $ to $ 6^{\mathrm{th}} $ Defendants did not enter appearances. The Plaintiff has obtained Judgments in Default of Defence against them on 19 September 2022. This leaves the $ 1^{\mathrm{st}} $ $ 2^{\mathrm{nd}} $ $ 7^{\mathrm{th}} $ $ 8^{\mathrm{th}} $ and $ 9^{\mathrm{th}} $ Defendants to fight in the battle. [13] Before the learned Judicial Commissioner (JC), the issues raised were: a. whether the title to the subject land was fraudulently transferred from the Plaintiff to the $ 3^{rd} $ Defendant without the Plaintiff's knowledge and consent, through the acts of fraud and forgery by the $ 3^{rd} $ to $ 6^{th} $ Defendants; b. whether the $ 1^{\mathrm{st}} $ and $ 2^{\mathrm{nd}} $ Defendants were liable to the Plaintiff for negligence in failing to exercise reasonable care in registering the transfer of the title to the subject land from the Plaintiff to the $ 3^{\mathrm{rd}} $ Defendant; c. whether the $ 7^{\mathrm{th}} $ and $ 8^{\mathrm{th}} $ Defendants were entitled to register and retain the title to the subject land in their personal names as bona fide subsequent purchasers of the subject land in good faith and for valuable consideration, if any; d. whether the $ 7^{\mathrm{th}} $ and $ 8^{\mathrm{th}} $ Defendants were immediate purchasers and not subsequent purchasers under the proviso to section 340(3) of the National Land Code 1965 (NLC) as they had acquired their title not from an immediate purchaser but from imposters of those entitled to the land; and e. whether the Plaintiff had absolutely assigned her right over the subject land to her daughter as a donee under a power of attorney and hence had no locus standi to file this suit. Findings of the Learned Judicial Commissioner [14] The learned JC had allowed the Plaintiff's claim in prayers 58.1 to 58.6 of the Amended Statement of Claim and damages to be assessed against the $ 1^{\mathrm{st}} $ and $ 2^{\mathrm{nd}} $ Defendants on, among others, the following findings and grounds (the sequence of issues are as per the arrangement in the Grounds of Judgment of the learned JC): a. Issue (e)- the Plaintiff has locus standi and is competent to file this suit to recover her land despite she has absolutely assigned her right over the subject land to her daughter as a donee under a Power of Attorney. b. Issue (a)- the title to the subject land was fraudulently transferred from the Plaintiff to the $ 3^{rd} $ Defendant, without the Plaintiff's knowledge and consent, through the acts of fraud and forgery by the $ 3^{rd} $ to $ 5^{th} $ and/or $ 6^{th} $ Defendants, inter alia, on the grounds: i. The Plaintiff never executed Form 14A for the fraudulent transfer, neither did she sign the application and related forms to change her name registered on the title to the subject land to anybody; ii. The Plaintiff's handwriting expert (PW1) testified in his conclusion "that there is a very high probability that the writer of the specimen signatures, the Plaintiff [Madam Chiew Yit Kin], is not the author of the disputed signatures". This was not challenged by the Defendants; c. Issue (b)- the $ 1^{\mathrm{st}} $ Defendant is liable to the Plaintiff for negligence in failing to exercise reasonable care in registering the transfer of the title to the subject land from the Plaintiff to the 3 $ ^{rd} $ Defendant because: i. the Plaintiff still has the genuine IDT with her. ii. The $ 1^{\mathrm{st}} $ Defendant's sole witness DW4 could not explain: a. how and why the land office had issued the computerised IDT for the subject land and allowed a change of name of the registered owner of the subject land when the genuine IDT is still with the Plaintiff; b. why the $ 1^{\mathrm{st}} $ Defendant failed to notify the Plaintiff by way of Form 19A as required under section 324(3) of the NLC when the $ 3^{\mathrm{rd}} $ Defendant lodged a caveat on the subject land; c. how the fraudulent transfer could have happened when the presentation was not accompanied by the genuine IDT; d. for the failure to produce Encik Zaini who handled the application to change the name and who is still serving at Pejabat Pusaka Kecil, Seremban as well as Puan Nor Laili binti Safiin who handled the application to lodge a caveat by the $ 3 ^{rd} $ Defendant and who allowed the fraudulent transfer. Thus, an adverse inference under section 114 Illustration (g) of the Evidence Act 1950 was drawn against the $ 1^{\mathrm{st}} $ Defendant that if they were to testify, their evidence would affect the $ 1^{\mathrm{st}} $ Defendant adversely. iii. Therefore, the $ 2^{n d} $ Defendant is vicariously liable for the said negligence of the $ 1^{s t} $ Defendant. d. Issue (d)-The $ 7^{th} $ and $ 8^{th} $ Defendants are immediate purchasers and not subsequent purchasers based on: i. the fact that the $ 7^{th} $ and $ 8^{th} $ Defendants did not acquire the subject land from a purchaser who bought the land from a fraudster seller. Instead, the subject land was transferred from the $ 3^{rd} $ Defendant to the $ 7^{th} $ and $ 8^{th} $ Defendants in circumstances where the $ 3^{rd} $ Defendant had obtained title fraudulently by executing a fraudulent Form 14A which contains the Plaintiff's forged signature; and ii. guidance provided in the Federal Court case of Kamarulzaman Omar & Ors v. Yakub Husin & Ors [2014] 1 CLJ 987; [2014] 2 MLJ 768; [2014] 1 AMR 493; [2014] 2 MLRA 432 FC (Kamarulzaman's case). The $ 7^{th} $ and $ 8^{th} $ Defendants are therefore, not entitled to indefeasibility of title as against the Plaintiff under the proviso to section 340(3) of the NLC. e. Issue (c) - the $ 7^{th} $ and $ 8^{th} $ Defendants have failed to discharge the evidential burden on them to show they had acted 'in good faith'. The reasons provided were: i. The $ 7^{th} $ and $ 8^{th} $ Defendants never produced in court the private land search purportedly conducted on the subject land on 19 August 2015 before entering into the Sale and Purchase Agreement on 1 September 2015 (SPA); ii. To pay 44.4 % of the purported purchase price, which is a large sum of RM2 million and also in cash, even before the $ ^{7} $ $ ^{th} $ and $ ^{8} $ $ ^{th} $ Defendants engaged DW1 to prepare the SPA is highly unusual. iii. The Lembaga Hasil Dalam Negeri Malaysia (LHDN) valued the market value of the subject land at RM5,269,000.The $ ^{7^{th}} $ and $ ^{8^{th}} $ Defendants purchased the subject land purportedly for only RM4.5 million. That means the discount was RM769,000. This is not a small sum; iv. The $ 7^{th} $ and $ 8^{th} $ Defendants did not produce any written confirmation of receipt by the $ 6^{th} $ Defendant or acknowledgement by the $ 3^{rd} $ Defendant to the effect that the RM 2.5 million was indeed paid to the $ 3^{rd} $ Defendant; v. The $ 7^{th} $ and $ 8^{th} $ Defendants had failed to call their alleged real estate agent Pathisaran A/L Anthonysamy, also known as Steven, and the $ 6^{th} $ Defendant as witnesses thus invited an adverse inference under Section 114 Illustration (g) of the Evidence Act 1950 that if they were to testify, their evidence would affect the $ 7^{th} $ and $ 8^{th} $ Defendants adversely; vi. The assessment notices did not show the $ 3^{rd} $ Defendant is the owner of the subject land; vii. The $ 7^{\mathrm{th}} $ and $ 8^{\mathrm{th}} $ Defendants had failed to prove they had indeed paid RM 4.5 million to the $ 3^{\mathrm{rd}} $ Defendant. Thus, they failed to discharge their evidential burden to prove they had provided valuable consideration as required under the proviso to Section 340(3) of the NLC; viii. the Plaintiff has failed to prove on a balance of probability, that the $ 7^{\mathrm{th}} $ and $ 8^{\mathrm{th}} $ Defendants are privy to the fraud and forgery perpetrated by the $ 3^{\mathrm{rd}} $ to $ 6^{\mathrm{th}} $ Defendants against the Plaintiff; and ix. The $ 9^{th} $ Defendant was not entitled to lodge a lien-holder's caveat on the subject land as the court has ruled that the Plaintiff is the rightful owner of the subject land. The Plaintiff is therefore entitled to an order for the removal of the $ 9^{th} $ Defendant's lien-holder's caveat on the subject land. The Appeal [15] The present appeal is by the $ 7^{\mathrm{th}} $ $ 8^{\mathrm{th}} $ and $ 9^{\mathrm{th}} $ Defendants. We note that there is no appeal filed by the $ 1^{\mathrm{st}} $ and $ 2^{\mathrm{nd}} $ Defendants. [16] Before us, the complaints by the $ 7^{\mathrm{th}} $ to $ 9^{\mathrm{th}} $ Defendants (as per Memorandum of Appeal) can be summarized as follows: - a. The JC erred in law and fact in holding that the $ 7^{th} $ and $ 8^{th} $ Defendants are immediate and not subsequent purchasers; and b. The JC erred in law and fact in holding that the $ 7^{th} $ and $ 8^{th} $ Defendants are not bona fide purchaser for valuable consideration under the proviso to Section 340(3) of NLC. Our findings The JC erred in law and fact in holding that the $ 7^{th} $ and $ 8^{th} $ Defendants are immediate and not subsequent purchasers. [17] The learned JC in coming in this finding that the $ 7^{th} $ and $ 8^{th} $ Defendants are immediate purchasers and not subsequent purchasers had stated in paragraphs 115 to 118 of his Grounds of Judgment as follows: "Are the $ 7^{\mathrm{th}} $ and $ 8^{\mathrm{th}} $ Defendants immediate purchasers and not subsequent purchasers? [115] The Federal Court has now clarified that a purchaser is not in law considered a subsequent purchaser under the proviso to Section 340(3) of the NLC if he has acquired his title not from an immediate purchaser but from imposters of those entitled to the land. [Kamarulzaman bin Omar & Ors V. Yakub bin Husin & Ors [2014] 2 MLJ 768, FC Held 1, Jeffrey Tan FCJ]. [116] Similarly, in this case the $ 7^{th} $ and $ 8^{th} $ Defendants did not acquire the Subject Land from a purchaser who bought from a fraudster seller. Instead, the $ 7^{th} $ and $ 8^{th} $ Defendants bought the Subject Land from the $ 3^{rd} $ Defendant who had obtained title fraudulently by executing a fraudulent Form 14A which contains the Plaintiff's forged signature. [117] Therefore, based on Kamarulzaman bin Omar & Ors v. Yakub bin Husin & Ors [2014] 2 MLJ 768 FC, the $ 7^{\mathrm{th}} $ and $ 8^{\mathrm{th}} $ Defendants are immediate purchasers and not subsequent purchasers. They are therefore not entitled to indefeasibility of title as against the Plaintiff under the proviso to Section 340(3) of the NLC. [118] On this ground alone, the Plaintiff is entitled to judgment against the $ 7^{th} $ and $ 8^{th} $ Defendants." [18] Having perused the evidence produced before this court, we are in the agreement with learned counsel for the $ 7^{th} $ to $ 9^{th} $ Defendants that the learned JC had erred in interpreting Kamarulzaman's case (supra). [19] In Kamarulzaman's case (supra), Saribu bte Badai (the deceased) was the registered co-proprietor of a one-third undivided share in two (2) lots of land situated in Sepang (the two (2) lots). She died in Indonesia in 1941 without issue. Some 43 years later, the first respondent applied for and obtained an order to distribute the deceased's share in the two (2) lots of land among himself and three (3) others (the first to fourth respondents). [20] The first to fourth respondents then transferred their share in the two (2) lots of land to the fifth and sixth respondents in consideration for the sum of RM25,000 and RM16,000 respectively. The appellants, who were the nephew and nieces of the deceased, filed a suit against the defendants whereby they sought to set aside the title to the two (2) lots acquired by the fifth and sixth respondents. The Federal Court in this Kamarulzaman's case (supra), in following the earlier Federal Court decision in Tan Ying Hong v. Tan Sian San & Ors [2010] 1 MLRA 1; [2010] 2 CLJ 269; [2010] 2 MLJ 1 (Tan Ying Hong's case), had held that the $ ^{5} $ th and $ ^{6} $ th respondents were not immediate purchasers at pages 795-797 as follows: - "[4] The Chief Justice, Zaki Azmi, who delivered a supporting judgment, was in total agreement with the Chief Judge of Malaya's view 'that the error committed by the Federal Court in Adorna Properties Sdn Bhd v Boonsom Boonyanit@ Sun Yok Eng [2001] 1 MLJ 241 was to read the proviso to subs (3) as being a proviso to sub-s (2) as well'. The Chief Justice thus approached s 340. I would like to look at s 340 of the NLC in a more simplified manner. Let us refer to the first owner of a piece of land as 'A' who then, transfers the same piece of land to 'B' and which subsequently is transferred to 'C'. As far as s 340(1) of the NLC is concerned, A's title to the land is totally indefeasible. In short if A's name appears on the registration, no one can come and claim for that title. The law will not entertain it at all. Now comes the next person, B, whose name appears in the register. If it can be shown that the title or interests obtained by B was obtained by fraud or misrepresentation by him or anyone else to which he was a party or privy then his claim to the title or interest can be defeated (see s 340(2)(a) of the NLC). Otherwise, B stands in the same position as A. The situation where it is proved that the registration in B's name was obtained by forgery or by means of an insufficient or void instrument is the same (see s 340(2)(b) of the NLC). His title or interest to the land is liable to be set aside by the previous owner who has a good title. In this latter instance, there is no need to show that B was a party or privy to that forgery or to obtaining the title or interest by a void instrument. The third instance where B's title or interest could be defeated is where it was unlawfully acquired through the exercise of any power or authority conferred by any law. Section 340(2)(c) of the NLC deals with one who was for example acting in his capacity as an agent to a power of attorney. Even if C is in the same position as B, sub-s (3) also does not give-protection to C unless he can show that he had acquired the title or interest in good faith and for valuable consideration. Any title or interest gained by any person thereafter is also liable to be set aside unless it could be shown that he had acquired it in good faith and for valuable consideration. This is what is called deferred indefeasibility of title. If his title or interest is challenged on similar grounds, the burden of proving there was valuable consideration and good faith lies on him. [43] In the instant case, both the trial court and the Court of Appeal held that the fifth and sixth respondents were bona fide purchasers. But unfortunately, both the trial court and the Court of Appeal failed to inquire whether the fifth and or sixth respondents were immediate or subsequent purchasers. Only a subsequent purchaser is entitled to raise the shield of at indefeasibility. An immediate purchaser of a title tainted by any one of the vitiating elements acquires a title that is not indefeasible. It flows from Tan Ying Hong that the bona fide of an immediate purchaser is not a shield to defeasibility. The defeasible title of a bona fide immediate purchaser is still liable to be set aside. The defeasible title of a bona fide immediate-purchaser only becomes indefeasible when it is subsequently passed to a bona fide subsequent purchaser. That the fifth and sixth respondents were bona fide purchasers could not by, that fact alone give a shield of indefeasibility. The fifth and or sixth respondents only acquired an indefeasible title if they were bona fide subsequent purchasers. But for the fifth and sixth respondents have been bona fide subsequent purchasers, there must have been an immediate purchaser in the first place. The first to fourth respondents, from whom the fifth and sixth respondents obtained title, were not immediate purchasers. Rather, they were imposters of those entitled to the estate of the deceased. They, like the fake Boonsom who impersonated the true Boonsom, had no title to pass to the fifth and sixth respondents. The fifth and sixth respondents who were the immediate purchasers, acquired a title that was not indefeasible. But when the fraudulent title of the first to fourth respondents were set aside by the default judgment, the defeasible title of the fifth and sixth respondents was also defeated." [21] Based on the Kamarulzaman's case (supra), we are of the view that:

The Federal Court in Kamarulzaman's case (supra) had approved and followed the Federal Court decision in Tan Ying Hong's case (supra);

(ii) If we were to apply the simplified explanation by the then Chief Justice, Zaki Azmi (as he then was) in Tan Ying Hong's case (supra) to the present case, the Plaintiff would be A, the $ 3^{rd} $ Defendant would be B and the $ 7^{th} $ and $ 8^{th} $ Defendants would be C;

(iii) The $ 3^{\mathrm{rd}} $ Defendant (B) is an immediate purchaser. If his title was obtained by fraud by him or anyone else to which he was a party or privy then his claim to the title will be defeated;

(iv) The $ 7^{\mathrm{th}} $ and $ 8^{\mathrm{th}} $ Defendants (C) on the other hand are subsequent purchasers. If the $ 7^{\mathrm{th}} $ and $ 8^{\mathrm{th}} $ Defendants can show that they had acquired the title or interest in good faith and for valuable consideration, their title to the subject land would be indefeasible;

In Kamarulzaman's case (supra), unlike the present case, there was no immediate purchaser or purchaser (regardless of whether the immediate purchaser was a party to the fraud). The first to fourth respondents were imposters of those entitled to the estate of the deceased. They, like the fake Boonsom who impersonated the true Boonsom, had no title to pass to the fifth and sixth respondents. They had obtained title from the deceased through fraud in the distribution of the estate of the deceased and not through a fraudulent sale and purchase; and

(vi) Given the above, Kamarulzaman's case (supra) can clearly be distinguished from the present case. The learned JC had erred in applying Kamarulzaman's case (supra) and holding that the $ 7^{\mathrm{th}} $ and $ 8^{\mathrm{th}} $ Defendants are immediate purchasers of the subject land. [22] Further, the Court of Appeal in Bitara Angkasa Sdn Bhd v Cheok Lam Chuan & Ors [2024] 1 MLRA 577, [2024] 1 CLJ 202; [2024] 1 MLJ 541 which involves similar facts to the current case has held as follows: - "Is Bitara Angkasa an immediate or a subsequent purchaser? [29] The learned High Court judge found that Bitara Angkasa is an immediate purchaser of the land by reason that Charles Oh has been involved in the fraud as claimed by LC Cheok because judgment in default has been entered against him; see para [21] above. [30] According to Bitara Angkasa, it is instead a subsequent purchaser of the land and thus entitled to rely on s 340(1) and (3) of the NLC. In other words, Bitara Angkasa enjoyed deferred indefeasibility of title to the land. [32] The interpretation of s 340 of the NLC on indefeasibility of title vis a vis an immediate purchaser and subsequent purchaser is a question of law which has been conclusively settled in Tan Ying Hong v Tan Sian San & Ors [2010] 2 MLJ 1; [2010] 2 CLJ 269 (FC) (overruling Adorna Properties Sdn Bhd v Boonsom Boonyanit @ Sun Yok Eng [2001] 1 MLJ 241; [2001] 2 CLJ 133 FC) where Arifin Zakaria CJ (Malaya) (later CJ) held as follows with emphasis added by us ... [33] We are however mindful that the learned High Court judge found Bitara Angkasa an immediate purchaser of the land based on the following dicta of Abang Iskandar FCJ (now PCA) in He-Con Sdn Bhd v Bulyah bt Ishak & Anor (as administrators for the estate of Nor Zainir bin Rahmat, the deceased) and another appeal with emphasis added by us: [102] The immediacy of the purchase relates to the vitiating vendor, not how far removed it is in the tally among the purchasers. To be a subsequent purchaser, it must have purchased the interest in the property that is being used as a security from a purchaser who is one that is bona fide for value. Any direct dealing with a rogue will necessarily vitiate the transaction rendering it defeasible, although it is duly registered. [37] Adopting the simplified manner of analysis of Zaki Tun Azmi CJ, we find that both the Adorna Properties Sdn Bhd v Boonsom Boonyanit @ Sun Yok Eng case and Tan Ying Hong v Tan Sian San & Ors case involved forgery by A. The transferred title of B was not set aside in Adorna Properties Sdn Bhd v Boonsom Boonyanit @ Sun Yok Eng case but the registered charge was set aside in the Tan Ying Hong v Tan Sian San & Ors case because B was held to be an immediate chargee that could not resort to the proviso in s 340(3) of the NLC. In respect of the CIMB Bank Bhd v AmBank (M) Bhd & Ors, it also involved forgery by A to discharge the charge and transfer of the title to B. C, the eventual charge of the charge created by B was held to be a subsequent chargee. As to the He-Con Sdn Bhd v Bulyah bt Ishak & Anor (as administrators for the estate of Nor Zainir bin Rahmat, the deceased) and another appeal, it is a case of competing interests in the land by reason of double dealings rather than strictly linear dealings between A and B and thereafter B and C that involved vitiating factors such as forgery or fraud. [38] Since the He-Con Sdn Bhd v Bulyah bt Ishak & Anor (as administrators for the estate of Nor Zainir bin Rahmat, the deceased) and another appeal case is strictly not a case that directly concerned s 340 of the NLC, the dicta of Abang Iskandar FCJ (now PCA) as reproduced in para [33] above must necessarily be obiter dicta only. [39] The relevant fact scenario here involved forgery by A but also with B in fraudulent cahoots (established by reason of the default Judgment) and thereafter transferred to C. [40] In this regard, it was held by Azahar Mohamed FCJ (later CJ (Malaya)) in Pushpaleela a/p R Selvarajah & Anor v Rajamani d/o Meyappa Chettiar and other appeals [2019] 2 MLJ 553; [2019] 3 CLJ 441 (FC) as follows on similar facts with emphasis added by us: [128] As a subsequent purchaser, the first defendant had purchased the land in good faith and for valuable consideration. The High Court found that the first defendant had at all material times neither knowledge nor notice of the commission of the fraud by the second defendant in cahoots with the fraudster that resulted in the transfer of the land to the second defendant. In respect of the sale of the land by the second defendant to the first defendant, the first defendant appointed its solicitors TS Teoh & Partners. Both the first defendant and its solicitors conducted land searches on the land before the entry of the sale and purchase agreement between the first defendant and the second defendant. The searches done on 13 July 2006 and 21 July 2006 revealed that the title was clean and free from caveats including the private caveat lodged by the plaintiff's son on 1 March 2001. [129] Applying the well-established principle to the present case, it is our considered opinion that the first defendant who conducted searches on the register and purchased the land in good faith and for valuable consideration, had, upon registration as the proprietor on the register document of title, acquired an indefeasible title, notwithstanding that the second defendant's title itself is defeasible. Hence, subsequent transfer of the land to the first defendant and the registration thereof in the name of the first defendant was indefeasible by reason that the first defendant was the bona fide purchaser for valuable consideration. [41] By analogy, we therefore hold that Bitara Angkasa is a subsequent purchaser that acquired deferred indefeasibility to the title of the land notwithstanding that Charles Oh had committed fraud in cahoots with LC Cheok's imposter. [42] We are further mindful that the fraud by Charles Oh here is only presumed based on the default judgment obtained by LC Cheak following the case of Kamarulzaman bin Omar & Ors v Yakub bin Husin & Os unlike in Pushpaleela a/p R Selvarajah & Anor v Rajamani d/o Meyappa Chettiar and other appeals where it was affirmatively proved; see Rajamani a/p Meyappa Chettiar v Eng Beng Development Sdn Bhd & Ors [2016] 3 MLJ 660; [2015] 2 AMR 767. [43] In the premises, we therefore find that the learned High Court Judge has plainly erred in law that justified our appellate intervention." (Emphasis added). [23] Given the above, we are of the view that the learned JC had erred in law and facts in holding that the $ 7^{th} $ and $ 8^{th} $ Defendants are immediate purchasers of the subject land and not subsequent purchasers. Whether the JC erred in law and fact in holding that the $ 7^{\mathrm{th}} $ and $ 8^{\mathrm{th}} $ Defendants are not bona fide purchasers for valuable consideration under the proviso to section 340 (3) of the NLC [24] There is a plethora of cases which had set out the law in respect of a purchaser in good faith and for valuable consideration. [25] In T Sivam A/L Tharamalingam (as representative administrator for the estate of Nagamuthu A/L Periasamy, deceased) V. Public Bank Bhd [2018] 4 MLRA 583; [2018] 6 CLJ 1; [2018] 5 MLJ 711) (T Sivam's case) Azahar Mohamed FCJ (as he then was) in delivering the judgment of the Federal Court had explained the scope and ambit of 'good faith' as follows: - "Good faith" [44] The rival contentions of the parties first bring into sharp focus the meaning of 'good faith' within the context of the proviso to s 340(3) of the NLC. As we have seen earlier, the meaning of 'good faith' is a matter of importance in this case. What does the term mean? 'Good faith is a weighty phrase. It implies, according to Concise Oxford English Dictionary (11th Ed) honesty or sincerity of intention. According to the authors of NS Bindra's Interpretation of Statutes (10th Ed) p 1636 'good faith' includes due inquiry and implies not only an upright mental attitude, and clear conscience of a person, but also the doing of an act, showing that ordinary prudence has been exercised according to the standards of reasonable person. According to the authors, 'good faith' contemplates an honest effort to ascertain the facts upon which exercise of the power must rest; it must, therefore, be summed up as 'an honest determination for ascertained facts'. The authors stated that 'good faith' precludes pretence of deceit, and also negligence and recklessness. The authors further said although the phrase may vary in the context of different statutes, subjects and situations, honest intent free from taint or fraud, or fraudulent design, is a constant element of its connotation. [46] In our opinion, the existence of good faith or otherwise would depend of the particular facts of each case; it is a question of fact in each case for the court to determine on the evidence. The overriding consideration is 'the particular circumstances of each case (see Pekan Nenas Industries Sdn Bhd v Chang Ching Chuen & Ors [1997] 2 MLRA 202; [1998] 1 MLJ 465; [1998] 1 CLJ 793; [1998] 1 AMR 169 and State Tailor Sdn Bhd v Nallapan [2005] 1 MLRA 116; [2005] 2 MLJ 167; [2005] 3 AMR 36) [49] The second case is Au Meng Nam & Anor v Ung Yak Chew & Ors [2007] 1 MLRA 657; [2007] 5 MLJ 136; [2007] 4 CLJ 526 where in holding that a purchaser in good faith did not include a purchaser who was careless or who had been negligent. Raus Sharif JC (as His Lordship the was) in discussing the element of good faith explained; Further, had the evidence adduces in this case been properly considered and assessed by the learned trial judge, a reasonable inference would be that the first defendant knew at the time he bought the said land, the purchase price was below the market value. But he wanted to take advantage of the low price. He did a fast track to complete the purchase. In doing so he disregarded his obligations to investigate the alleged proprietors and the genuineness of the documents. My respectful view is that a purchaser in good faith does not include a purchaser who is careless or who had been negligent. In Oliver v Hinton [1899] Ch D 264 Lindley MR said: To allow purchaser who acts with such gross carelessness to deprive a prior innocent mortgagee of her priority would be the greatest injustice. So too here. The first defendant is under the obligation to investigate properly all matters relating to the sale of the said land and not to just blindly accept what was claimed by the 'vendors' as correct and genuine. When he failed to take the ordinary precautions, which ought to be taken in such a matter he is not entitled to the protection of the court. [50] The principle underlying the above cases is that the law recognises and enforces an overriding rule that in making and carrying out conveyancing transaction that commonly deals with a number of transactions and dealing to transfer real property, parties should act in good faith. Good faith, therefore, does not simply mean absence of fraud, deceit or dishonesty; it also requires acting honestly, reasonably or fairly (see Stuart v Kinston [1923] 32 CLR 309 and Pekan Nenas Industries Sdn Bhd (supra). The elements of good faith are not closed; it must in all cases depend upon the circumstances. It is not enough for a purchaser to merely show absence of fraud, deceit or dishonesty; knowledge of a dispute as to the ownership of property and knowledge of fraud allegation, for example, could vitiate good faith." (Emphasis added) [26] The Court of Appeal in Wong Ing Tong v. Yap Piat Eng @ Yap Lien Eng & Anor and other appeals [2022] MLRAU 50; [2022] 4 CLJ 882; [2022] MLJU 301 held as follows: - [54] The word "good faith" has no exhaustive meaning. Generally, good faith is understood to mean honesty or sincerity of intention. The common features to look for in determining a purchaser of good faith are as follows:

Good faith does not simply mean absence of fraud, deceit or dishonesty. It also requires acting honestly, reasonably and fairly; (T Sivam A/L Tharmalingam (as representative/administrator for the estate of Nagamuthu A/L Periasamy, deceased) V. Public Bank Bhd [2018] 4 MLRA 583; [2018] 5 MLJ 711; [2018] 6 CLJ 1).

(ii) Knowledge of a dispute as to the ownership of property and knowledge of fraud allegation vitiate good faith; (T Sivam's case).

(iii) Elements of carelessness and negligence negate good faith; (Au Meng Nam & Anor V. Ung Yak Chew & Ors [2007] MLRA 657; [2007] 5 MLJ 136; [2007] 4 CLJ 526." [27] The issue before this court is whether the $ 7^{th} $ and $ 8^{th} $ Defendants are purchasers in good faith such that their title prevails over the Plaintiff. [28] Having perused the evidence produced before us, we are in the agreement with the learned JC's finding that the $ 7^{\mathrm{th}} $ and $ 8^{\mathrm{th}} $ Defendants have failed to discharge the evidential burden on them to show they had acted in good faith. Private Land Search [29] During the trial, the 7th Defendant testified that he had instructed his solicitors Messrs. Siga & Associates to conduct a private search on the said land on 19 August 2015 and that the results of the private search confirmed that the 3rd Defendant is registered owner of the land. [See: Witness Statement DW 3 Question & Answer: 12]. [30] However, the $ 7^{\mathrm{th}} $ and $ 8^{\mathrm{th}} $ Defendants failed to produce in court the private land search purportedly conducted on the subject land on 19 August 2015 before entering into the SPA dated 01 September 2015. [31] Their solicitor, Sigathambal A/P Periathamby (DW1) who was the $ 7^{th} $ and $ 8^{th} $ Defendants' solicitor who handled the SPA dated 01 September 2015 between the $ 3^{rd} $ Defendant and the $ 7^{th} $ and $ 8^{th} $ Defendants also did not produce the purported land search document. [32] Therefore, this Court is of the view that the $ 7^{\mathrm{th}} $ and $ 8^{\mathrm{th}} $ Defendants have not proven their assertion that the purchase of the subject land was made in good faith based on the result of a private land search conducted on 19 August 2015. RM2 million paid in cash [33] DW1, the solicitor for $ 7^{th} $ and $ 8^{th} $ Defendants, told the court, that the $ 7^{th} $ Defendant had told her that they had already paid upfront a total of RM2 million in cash before he engaged her to prepare the SPA. Since the purported purchase price was RM4.5 million, this constitutes 44.4 % of the purported purchase price. [34] We find the payment of RM2 million cash before signing of SPA is highly unusual. This is because the normal earnest deposit paid by a buyer is 2% to 3% of the purchase price. [35] Further, we are of the view that, for the $ 7^{th} $ and $ 8^{th} $ Defendants to pay 44.4% of the purported purchase price, which is a large sum of RM 2 million and also in cash, even before they engaged DW1 to prepare the SPA is highly unusual. What is even more unusual is that, RM2 million in cash is paid even before the purported seller (the $ 3^{rd} $ Defendant) agreed to the terms of the SPA and signed the SPA signifying that the $ 3^{rd} $ Defendant is bound by the terms therein. [36] Given the above, we are of the view that the $ 7^{\mathrm{th}} $ and $ 8^{\mathrm{th}} $ Defendants had failed to discharge their evidential burden to prove their assertion that the purchase of the subject land was made in good faith. The sale price was below market price [37] The $ 7^{\mathrm{th}} $ and $ 8^{\mathrm{th}} $ Defendants claimed that they purchased subject land purportedly for RM 4.5 million. The LHDN valued the market price for the subject land at RM 5,269,000.00. This means the $ 7^{\mathrm{th}} $ and $ 8^{\mathrm{th}} $ Defendants bought the subject land at a discount of RM769,000.00. [38] The $ 7^{\mathrm{th}} $ Defendant testified that he took the risk to pay RM2 million in cash even before signing the SPA and even before searches were done and that if anything went wrong then he would accept the responsibility. [See: Notes of Proceeding (NOP) as at pages 237-239)]. To us, that negates good faith. Notice of Assessment [39] We find that all the bills for assessment rates for the subject land were addressed to the Plaintiff's late husband. The $ 7^{th} $ and $ 8^{th} $ Dependants and their solicitors did not check and did not attend to the bills for assessment rates by DBKL. That too, negates good faith. [40] The $ 7^{\mathrm{th}} $ and $ 8^{\mathrm{th}} $ Defendants did not provide any documentary proof for the payments of assessment rates and quit rent. Upon perusal of the cause papers and evidence produced before the Court, we find that not a single document supports that bare assertion. Quite the opposite, the Plaintiff was able to show that DBKL's bills were addressed to her address at Bukit Pantai. [41] The Plaintiff produced receipts to prove that she has been paying the yearly assessment and quit rent. This continued even up to the year 2021 until the fraudulent transfer was discovered. [42] We are of the view that as land owners, the failure to complete the transfer of names with DBKL and, not paying assessment rates and quit rent are apparent indicators that the $ 7^{th} $ and $ 8^{th} $ Dependants are not bona fide purchasers. Payment of RM 2 Million to property agent. [43] The $ 7^{th} $ Defendant alleged that he paid RM 2 million in cash to the $ 3^{rd} $ Defendant through his estate agent Pathisaran A/L Anthonysamy also known as Steven. The $ 7^{th} $ Defendant alleged he received a receipt for each of the five (5) payments from the $ 6^{th} $ Defendant's law firm. [44] As proof, the $ 7^{\mathrm{th}} $ Defendant referred to five (5) cash/payment vouchers allegedly using cash/payment vouchers of the $ 9^{\mathrm{th}} $ Defendant for convenience, allegedly signed as recipient by Pathisaran A/L Anthonysamy and the five (5) letters from the $ 6^{\mathrm{th}} $ Defendant acknowledging receipt of the five (5) payments. [45] Having perused the evidence, we find that the testimony of the $ 7^{th} $ Defendant that the cash of RM2 million came from him is not supported by any documentary evidence. [46] Further, we find that the $ 7^{th} $ Defendant's testimony that the cash of RM2 million came from him also contradicted by his wife, the $ 8^{th} $ Defendant. Under cross-examination, the $ 8^{th} $ Defendant kept changing her story on the source of this RM2 million, as follows: a) First, she said it is the $ 7^{th} $ Defendant's money. [See: NOP, as at page 108 line 18]; b) Then she said it is a mixture of funds of the $ 7^{th} $ and $ 9^{th} $ Defendants. [See: NOP, as at page 183 lines 8-10]; and c) Then she said the RM 2 million actually belongs to her and the $ ^{7} $ th Defendant. [See NOP, as at page 203 lines 3-8]. [47] The five (5) cash/payment vouchers also showed contradictory facts. The payments were stated at line one as "In favour of Pathisaran A/L Anthonysamy". But the payments were stated at line four (4) as "Part deposit payable for Hasra Hamid & Associates on account of Damansara Property". [See at pages 198, 200, 202, 204 and 206, Record of Appeal, Enclosure 6] [48] The five (5) letters from the $ 6^{\mathrm{th}} $ Defendant purportedly acknowledging receipt of the five (5) cash payment also showed contradictory facts. They stated the payments as Earnest Deposit, $ 1^{\mathrm{st}} $ $ 2^{\mathrm{nd}} $ $ 3^{\mathrm{rd}} $ and $ 4^{\mathrm{th}} $ partial Balance Purchase Price. [See at pages 199, 201, 203, 205, and 207], Record of Appeal, Enclosure 6] [49] Given the above, we are of the considered view that the $ 7^{th} $ and $ 8^{th} $ Defendants paid large amounts of cash leaving no proper trail, the purported payment vouchers are highly irregular. The $ 6^{th} $ Defendant's confirmation letters were filled with errors and yet the $ 7^{th} $ and $ 8^{th} $ Defendants were not bothered at all. We find the $ 7^{th} $ and $ 8^{th} $ Defendants are far from genuine purchasers of the land. These are clearly fabricated evidence. These facts are elements which point towards a sham SPA. Adverse inference [50] Pathisaran A/L Anthonysamy, the property agent, was not called as a witness. Neither was the $ 6^{th} $ Defendant. Thus, there are no witnesses who can testify as to the authenticity of the five (5) cash/payment vouchers allegedly issued by the $ 9^{th} $ Defendant and the five (5) letters from the $ 6^{th} $ Defendant purportedly acknowledging receipt of the five (5) cash payments. There was no reasonable explanation for the failure to produce these two (2) material witnesses. The adverse inference would be that if they were to testify, their evidence would affect the $ 7^{th} $ and $ 8^{th} $ Defendants adversely. [51] In light of the above, this court holds that the $ 7^{th} $ Defendant has not proven that he had paid RM 2 million in cash to his real estate agent Pathisaran A/L Anthonysamy also known as Steven who paid the $ 6^{th} $ Defendant, the solicitor who then paid her alleged client/ the alleged seller ( $ 3^{rd} $ Defendant). Whether the $ 7^{\mathrm{th}} $ and $ 8^{\mathrm{th}} $ Defendants provided valuable consideration for their purchase [52] Based on the reasons given above, we are of the considered view that the $ 7^{\mathrm{th}} $ and $ 8^{\mathrm{th}} $ Defendants had failed to prove that they provided valuable consideration of RM4.5 million for the purported purchase of the subject land. The Plaintiff's claim against the $ 9^{\mathrm{th}} $ Defendant [53] The $ 9^{th} $ Defendant is a company in which the $ 7^{th} $ Defendant is majority shareholder. [See Witness Statement of the $ 7^{th} $ Defendant, Question & Answer 2]. The directors of the $ 9^{th} $ Defendant are the $ 7^{th} $ Defendant, $ 8^{th} $ Defendant and Ms Alice Michael. [See Witness Statement of the $ 7^{th} $ Defendant Question & Answer 3]. [54] We find that the $ 9^{\mathrm{th}} $ Defendant has not shown that it is entitled to lodge a lien-holder's caveat on the subject land as against the Plaintiff now that the Court has ruled the Plaintiff is the rightful owner of the subject land. The Plaintiff is therefore entitled to an order to remove the $ 9^{\mathrm{th}} $ Defendant's lien-holder's caveat on the subject land. Malayan Banking Berhad v. Mohd Affandi bin Ahmad & Anor [2024] 6 MLJ 220 (2025) 1 MLRA 429; (2024) 10 CLJ 501 (Maybank's Case) [55] In the course of our deliberation, we were alerted by learned counsel for the $ 7^{th} $ to $ 9^{th} $ Defendants of the latest Federal Court's decision of Maybank's case (supra) on the law regarding the issue of who is a bona fide purchaser for valuable consideration under the proviso to section 340(3) of the NLC. [56] For easy reference, the relevant paragraphs in the Federal Court's Judgment, are reproduced as follows: "[30] Hence, pursuant to s. 340(1), the proprietor whose name has been registered in the register document of title will obtain an indefeasible title to or interest in the land. However, such title or interest so acquired is liable to be set aside under s. 340(2) where it has been obtained by, inter alia, fraud or forgery. In the case of fraud, s. 340(2)(a) provides for the title or interest obtained to be defeasible where the proprietor or his agent is a party or privy to the fraud. In the case of forgery, s. 340(2)(b) provides for the title or interest so acquired by the proprietor or transferee immediately to the forgery to be defeasible and liable to be set aside. This is so, irrespective of whether the said proprietor or transferee acted in good faith in acquiring the title or interest. This is because there is no similar requirement, as in the case of fraud, that he must also be a party or privy to the forgery. In these circumstances, where the title or interest is subsequently transferred, s. 340(3)(a) provides that the subsequent proprietor or transferee will similarly obtain a defeasible title or interest. Also, under s. 340(3)(b), any interest subsequently granted out of a title which is defeasible under s. 340(2)(a) and (b) will attract the same consequence. However, where the subsequent proprietor or transferee acts in good faith and gives valuable consideration for the title or interest in question, s. 340(3) proviso confers protection on such a subsequent proprietor or transferee such that his title or interest will be indefeasible. This is what we call the concept of deferred indefeasibility. Our present appeal is concerned with the proviso of s. 340(3) of the NLC. [37] It is D3's stand that they are a subsequent purchaser in good faith for valuable consideration. This court in CIMB Bank Bhd v. AmBank (M) Bhd & Ors [2017] 9 CLJ 145 has held that a chargee, having acquired an interest in the land is a purchaser within the meaning of the proviso of s. 340(3) of the NLC. Therefore, D3, a chargee is a subsequent purchaser in the present appeal. Even the Court of Appeal in para. 46 of its judgment acknowledged the fact that the chargee (D3) is a subsequent purchaser. The issue is to what extent is good faith measured on the part of D3, the chargee, which we will address later in this judgment. [41] Question 4 requires this court to determine which of the conflicting decisions prevails, in the case of Bayangan Sepadu Sdn Bhd v. Jabatan Pengairan Dan Saliran Negeri Selangor & Ors [2022] 2 CLJ 1; [2022] 1 MLJ 701 and Au Meng Nam & Anor v. Ung Yak Chew & Ors [2007] 4 CLJ 526; [2007] 5 MLJ 136 as to measuring the extent of good faith and/or bona fide required of a purchaser within the meaning of s. 340(3) of the NLC. [47] This court made it clear as to the effect of s. 89 of the NLC in Pushpaleela R Selvarajah & Anor v. Rajamani Meyappa Chettiar & Other Appeals [2019] 3 CLJ 441; [2019] 2 MLJ 553 when it held that the effect of registration is to defeat all prior and subsequent unregistered claims. Richard Malanjum FCJ (as he then was) held that: [7] That the trend favors bona fide subsequent purchasers for value in all jurisdictions applying the Torrens system has been aptly summarized as follows in Baalman, The Singapore Torrens System at p 86: The Torrens System of land registration is predominantly a purchaser's system. Its aim is to facilitate the transfer of land as a commercial commodity by removing most of the risks of financial loss which beset purchasers under the general law. [8] Basically under the Torrens System the land register is conclusive evidence of the description of the land. A third-party conducting an inquiry of the land need not go beyond the register to ensure that the land he or she is about to purchase is not fraught with encumbrances... Azhar Mohamed FCJ (as he then was) further held in Pushpaleela that: [146]... once the scheme of the provisions of s. 89 is seen, it is apparent that since the register document of title is conclusive evidence of ownership and in the present instance since the register document of title bears the name of the first defendant as the registered proprietor, it follows and becomes conclusive evidence that the first defendant is the registered proprietor unless defeasible pursuant to s. 340 of the NLC. What appears on the registered document of title is conclusive as the register is everything under the Torrens System in Gibbs v. Messor & Co [1891] AC 248, Lord Watson said: The object is to save persons dealing with registered proprietors from the trouble and expense of going behind the register, in order to investigate the history of their author's title, and to satisfy themselves of its validity. That end is accomplished by providing that everyone who purchases, in bona fide and for value, from registered proprietor, and enters his deed of transfer or mortgage on the register, shall thereby acquire an indefeasible right, notwithstanding the infirmity of his author's title. [147] In the case of Teh Bee v. K Maruthamuthu [1977] CLJU 134; [1977] 1 LNS 134; [1977] 2 MLJ 7, it was held that "the fact that the register document of title was in the name of the appellant was conclusive evidence that the title to the land was vested in the appellant." The concept of indefeasibility of title under s. 89 of the NLC applies to the person whose name currently appears as the proprietor on the register of title and not to a former registered proprietor (see Yap Ham Seow). [49] Teh Bee v. K Maruthamuthu [1977] CLJU 134; [1977] 1 LNS 134; [1977] 2 MLJ 7 held the oft-quoted mantra that "Under the Torrens system the register is everything." [50] Before Bayangan Sepadu, this court had also adopted a similar approach in See Leong Chye & Anor v. United Overseas Bank (Malaysia) Bhd [2021] 6 CLJ 650; [2021] 5 MLJ 759, whereby Vernon FCJ in his judgment held that: [37]... The register document of title is accessible to the public in order to enable the public to conduct land searches at the land registry. The words "indefeasibility of title or interest" in the Torrens system connotes the measure of conclusiveness given to a title or interest in alienated land on registration of the dealing in statutory form. A title or interest is registered, it cannot be set aside except otherwise statutorily provided under sub-s 340(2) of the NLC... The register is everything in the sense that the register document of title is conclusive evidence of entries thereon (see s. 89 of the NLC ). [65]... The NLC is based on the Torrens land administration system which is a system of titles and interests by registration under which the register is conclusive or as some would put it - the register of titles is everything (see s. 89 of the NLC; Teh Bee v. K Marumuthu [1977] CLJU 134; [1977] 2 MLJ 7)... persons need not be concerned to ascertain the validity of the information pertaining to the land as indicated on the register and the circumstances under which such proprietor came to be registered. (Emphasis added) [51] This court in the aforesaid cases upheld the conclusiveness of the register document of title which does not require any person dealing with the land to go behind the register document of title to investigate or to ascertain the validity of the title. It is our judgment that this is the correct position of the law. [58] In other words, T Sivam and Liputan Simfoni appear to have preferred the broader concept of good faith as laid down in Au Meng Nam, namely to discharge the burden of showing that it is a purchaser in good faith and valuable consideration to seek protection under the proviso of s. 340(3) of the NLC, the purchaser must not only show the absence of fraud, deceit or dishonesty but also that it had taken the ordinary precautions that a reasonably prudent purchaser would have taken in the circumstances. Special emphasis on the statement that the question of whether a purchaser has acted as a reasonable prudent purchaser or not would have to be decided on the particular facts of the case (Refer to para. 74 of Liputan Simfoni's judgment). [59] From the sentiment as expressed, by relying on Au Meng Nam, it would also appear that a subsequent purchaser who is not tainted by the fraud or forgery would not be deemed a bona fide purchaser for good value if he was negligent or careless. This manner of interpretation of the proviso may lead to uncertainty in land dealings and run against the very grain and primary intent of the Torrens system, which is to provide certainty and security of titles and interests once acquired and registered. [64] Given the aforesaid, it is our judgment that Au Meng Nam (which was adopted in T Sivam and Liputan Simfoni) ought not to be taken as authority for the blanket proposition that carelessness or negligence negates good faith under the proviso to s. 340(3) of the NLC. The reason is this. This court should uphold the conclusive nature of the register document of titles and as far as our present appeal is concerned because of the conclusive nature of the register of titles (whereby D2 is the registered proprietor), there was no legal duty on the chargee, D3 to carry out inspection of the property prior to accepting the charge. The chargee was entitled to rely on the register. Even if the chargee did not carry further enquiries prior to the creation of the charge, at most what can be said of the D3 is that, they have been negligent in not carrying out further enquiries but negligence per se does not and cannot amount to fraud, as the register of title disclosed that D2 was the registered owner and there was no encumbrance on the land and there was no fraud in the present appeal. Under the Torrens system, the register is everything. By accepting and imposing a blanket proposition that carelessness or negligence negates good faith under the proviso to s. 340(3) of the NLC, would tantamount to undermining the very intent and purpose of the Torrens system, namely to give certainty to the register as reflecting the correct particulars on legally recognised land dealings in land matters. [65] In addition, s. 340(3) of the NLC would not apply in Au Meng Nam as the case concerned an immediate purchaser. Even if it did, he could not fall within the definition of a bona fide purchaser, as he was a party or privy to the fraud as interpreted by Lord Lindley in Assets Company v. Mere Roihi [1905] AC 176, at p. 210 which had been adopted over and over again by this court where, Lord Lindley articulated that: fraud means actual fraud, ie, dishonesty of some sort, not what is called constructive or equitable fraud. The fraud which must be proved in order to invalidate the title of a registered proprietor for value must be brought home to the person whose registered title is impeached or its agents. The mere fact that he might have found out fraud if he had been more vigilant, and had made further enquiries, which he omitted to make, does not by itself prove fraud on his part. But if it were shown that he abstained from making enquiries for fear of learning the truth, the case is very different and fraud may be properly ascribed to him. A person who presents for registration a document which is forged or has been fraudulently or improperly obtained is not guilty of fraud if he honestly believes it to be genuine document which can be properly acted upon. [66] The rationale as stated by Lord Lindley as aforesaid ought to be the correct approach, so as to align the facts of Au Meng Nam within the definition of fraud under s. 340(2)(a) of the NLC. However, one cannot widen the scope of the duty imposed on the subsequent purchaser to enable to seek the protection under the proviso of s. 340(3), in the manner alluded to, by the Court of Appeal at paras. 46 and 47 in their judgment. [75] There is thus no place for the English equitable doctrine of notice to apply against a subsequent purchaser under s. 340(3) of the NLC in the absence of fraud, deceit or dishonesty, given the conclusiveness of the register document of title as provided in the same, and the clear and deliberate omission of the element of notice (which would otherwise be relevant under the UK deed system) from the proviso to s. 340 of the NLC. [84] The approach taken by the Court of Appeal in this appeal means that a potential purchaser of land will have to trace all previous transactions of the land and to ensure that all the factors affecting these previous transactions are valid and cannot be impugned, despite registered title has been issued. A subsequent purchaser must conduct inquiries and checks on the validity of every single transaction since the registered title was issued to determine the proper provenance of the land. [86] Hence it is our judgment that the Court of Appeal had erred when it held that although D3 has no notice of or knowledge of any impropriety of the plaintiffs' unregistered interest in the lands, D3 should go beyond the register document of title and the sale and purchase transaction to which D3 was not a party, to ascertain the propriety of the sales and purchase agreement between D1 and D2. [93] We have alluded in the previous paragraphs in this judgment that, in the absence of any notice of actual fraud, deceit or dishonesty of D3, D3 was not obliged to investigate the underlying sale and purchase transaction between D1 and D2, given that D2 is the registered proprietor on the register of title, and there is no encumbrance on the land. [109] It is our judgment that the Court of Appeal in deciding against D3/appellant, had erred when it contradicted settled principles of land law under the Torrens system, namely a register document of title is conclusive evidence of ownership which defeats all prior unregistered claims thus avoiding the need for one dealing with the land to go behind the registered document of title to investigate and ascertain the validity of the said title." [57] Based on the above, the following principles of law can be distilled: i. The conclusiveness of the register document of title does not require any person dealing with the land to go behind the register document of title to investigate or to ascertain the validity of the title; ii. The case of Au Meng Nam v Ung Yak Chew & Ors [2007] 1 MLRA 657; [2007] 4 CLJ 526; [2007] 5 MLJ 136 (Au Meng Nam's case) (which was adopted in T Sivam's case (supra) and Liputan Simfoni Sdn Bhd v. Pembangunan Orkid Desa Sdn Bhd [2019] 1 CLJ 183 FC ought not to be taken as authority for the blanket proposition that carelessness or negligence negates good faith under the proviso to Section 340(3) of the NLC. Negligence per se does not and cannot amount to fraud. By accepting and imposing a blanket proposition that carelessness or negligence negates good faith under the proviso to Section 340(3) of the NLC, would tantamount to undermining the very intent and purpose of the Torrens system, namely to give certainty to the register as reflecting the correct particulars on legally recognized land dealings in land matters; iii. Section 340(3) of the NLC would not apply in Au Meng Nam's case (supra) as the case concerned an immediate purchaser. Even if it did, he could not fall within the definition of a bona fide purchaser, as he was a party or privy to the fraud; and iv. In the absence of actual fraud, deceit or dishonesty and given the conclusiveness of the register document of title, a subsequent purchaser under Section 340(3) of the NLC would be deemed a purchaser in good faith. [58] Having perused the Maybank's case (supra) to the facts in our present case, we are of the respectful view that Maybank's case (supra) is not applicable to our present case. [59] We find that the facts in Maybank's case (supra) are entirely different. The party claiming to be bona fide is Maybank, a financial institution which accepted the property as security charged for a term loan. Maybank argued that the charge was valid. However, in the present case, fraud has been proven and committed brazenly against the Plaintiff. The $ 7^{th} $ to $ 9^{th} $ Defendants are attempting to take benefit of the subject land title as opposed to a financial institution ie. Maybank which disbursed a loan and suffered loss. [60] We find that even though Au Meng Nam's case (supra), is distinguished by Maybank's case (supra), T Sivam's case (supra) is still good law and followed by Maybank's case (supra). The $ 7^{th} $ to $ 9^{th} $ Defendants too, failed the good faith requirement as required by T Sivam's case (supra). [61] In our view, the $ 7^{\mathrm{th}} $ and $ 8^{\mathrm{th}} $ Defendants are two (2) individuals who obtained the transfer of the subject land to themselves but had failed to prove payment of purchase consideration, produced dubious payment vouchers and letters, and with no land search conducted before purchase. These are all findings of fact by the High Court and which we had discussed in paragraphs 27 to 54 above at length. The above findings of fact are fatal to the $ 7^{th} $ to $ 9^{th} $ Defendants' stance that they are bona fide purchasers for valuable consideration. Conclusion [62] Based on the aforesaid reasons, we conclude that, despite our finding that the learned JC had erred in finding that the $ 7^{th} $ and $ 8^{th} $ Defendants are immediate purchasers, we find no appealable error or misdirection on the part of the learned JC in his finding that the $ 7^{th} $ and $ 8^{th} $ Defendants are not bona fide purchasers for valuable consideration. [63] As a result, we see no reason to interfere with the final decision of the learned JC. We therefore, unanimously affirm the decision of the High Court and dismissed the appeal with costs of RM20,000.00 subject to allocator. Dated: April 2025 Ahmad Kamal Bin Md Shahid Judge Court of Appeal Counsel appearing: For the appellant: Mr. R. Ramanthan (together with Mr. S. Selvarajah, Mr. James Lopez and Mr. Joseph Tan) [Messrs Fernandez & Selvarajah] For the respondent: Mr. Marcus Lee Min Lun (together with Miss Emily Wong) [Messrs Marcus Lee]